Republicans in Congress uniformly opposed the Inflation Reduction Act signed by President Biden Tuesday, but it includes clean energy tax credits that have lit a fire among proponents of clean energy tech like hydrogen and carbon capture and storage.
Plug Power, a maker of green hydrogen and fuel cell products based in Latham, New York, praised the IRA for its impact on the hydrogen energy industry. The company is considered the largest in the hydrogen energy sector with a $13 billion market capitalization. It makes fuel cell systems and fueling stations and counts Walmart and Amazon as customers. The IRA provides a clean hydrogen production tax credit to incentivize the production of clean hydrogen.
The production tax credit in the IRA provides “a major inflection for the world to achieve net zero by 2050 and for hydrogen, especially green hydrogen, to provide 20% of the world’s energy,” Plug Power CEO Andy Marsh said in an August 9 earnings call, according to a Motley Fool transcript.
He told analysts that the IRA provides a “trifecta effect” that is good for the climate, good for jobs and good for national security. “Our electrolyzer business has benefited from the push in Europe to become energy independent from corrupt regimes,” he said. “We are seeing the benefit as our orders already have exceeded by 50% our projection for the year, with most of that coming from Europe. Now the momentum will grow rapidly here in the states with the [production tax credit] as demonstrated by our deal with New Fortress Energy, a 120-megawatt order announced last week which can grow to 500 megawatts.
“With the passage of the act, we expect a boom for our electrolyzer and green hydrogen business,” Marsh added. Companies that use so-called gray hydrogen today, such as fertilizer manufacturing, will now be able to buy green hydrogen at a competitive price. Companies look to move to hydrogen like steel and concrete and natural gas heating will “have a path to dramatically reduce their carbon footprint cost competitively. Everyone wants green hydrogen. Now there is a path that makes it competitive.”
Applications that use feedstocks in industrial manufacturing account for 26% of the world’s CO2 footprint, Plug Power said.
With increased purchases of its green hydrogen capabilities, Plug Power sees a revenue goal of $925 million in 2022 tripling to $3 billion in 2025, Marsh added.
Plug’s electrolyzers use technology called PEM [polymer electrolyte membrane] water electrolysis that can be paired with renewable energy such as solar, wind and hydro-electric to produce green hydrogen at low cost.
The IRA provides a $3 per kilogram production tax credit for hydrogen produced with an electrolyzer powered by clean energy such as solar or wind, putting it nearly on part with gray energy produced through a conventional steam methane reforming process. Green hydrogen production costs from $2.50/kg to $6/kg, depending on the power source, while conventional gray hydrogen typically costs $1 to $2/kg to produce, according to Energy Intelligence.
The credit for production of clean hydrogen in the IRA is contained in Section 45V of the Act, H.R. 5376 on page 119 of a PDF of the 273 page bill.
Aside from encouraging hydrogen production for energy needs, researchers at Princeton University expect policies in the IRA to increase use of carbon capture 13-fold by 2030, about 200 million tons per year of CO2 captured for storage. That number could rise to 450 tons each year by 2035.
The White House has focused on various measures in the omnibus IRA beyond clean energy and emissions reductions, such as cutting prescription drug costs and imposing a 15% minimum tax on the largest corporations. However, clean energy and reduction of greenhouse gases make up $370 billion in federal initiatives, partly because of the cost to the U.S. government of tax incentives.
RELATED: U.S. House passes IRA with major green tech; Biden to sign soon
Measures in the IRA will reduce greenhouse gas emissions by 1 gigaton in 2030, 10 times more than any other single piece of legislation, the White House said in a fact sheet posted Tuesday.
The act also helps fund 950 million solar panels, 120,000 wind turbines and 2,300 grid-scale battery plants.
Other measures call for electric vehicle tax credits of up to $7,500 for new electric vehicles and $4,000 for used EVs. A 30% tax credit for installing solar panels will result in $300 in savings for a family per year.