The US’ proposed Inflation Reduction Act of 2022 bill, announced last week, will extend tax credits for the hydrogen sector.

Projects making clean hydrogen could get a tax credit of up to $3/kg if lifecycle CO₂ emissions are below 0.45kg per kg of hydrogen produced and if labour rules are met.

Producers then receive less support on a sliding scale as the emissions intensity of their hydrogen production increases. Hydrogen manufacture that emits more than 4kg of CO₂ per kg of hydrogen produced will receive no support.

The compromise ‘July surprise’ announced by Senate majority leader Chuck Schumer and West Virginia Senator Joe Manchin—both Democrats—sets aside $369bn to support climate initiatives.

The 725-page bill is expected to go to the Senate floor later this week, and each party has ten hours of debate before the start of a process known informally as a ‘vote-a-rama’, when any senator can offer amendments to strategise or wear down the bill’s backers. Such debate could take many hours.

“This will create thousands of new jobs and help lower energy costs in the future” Biden, US president

But not all Democratic lawmakers are on board and the party needs every vote—they hold only a 51/50 majority in the Senate and all Republican senators remain opposed.

Centrist Democrat Kyrsten Sinema of Arizona has not said whether she will support the bill as she opposes a measure in the bill to close a loophole that allows hedge fund managers to pay lower taxes.

Covid could also be a factor in the bill’s future, and at least one senator, Dick Durbin of Illinois, has recently tested positive and may therefore be absent for voting.

If the bill passes the Senate, then it moves to the House of Representatives—the lower house of Congress, which is in recess. House Democratic leaders say they can hold a vote with just 24 hours and that they likely have enough votes in the lower house because of the provisions in the bill for climate and for lowering drug prices.

If the bill then reaches the stage of presidential approval, Joe Biden is expected to sign it.

“We will improve our energy security and tackle the climate crisis… by providing tax credits and investments for energy projects. This will create thousands of new jobs and help lower energy costs in the future,” Biden said in a statement after Schumer and Manchin announced the bill.

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Author: Ros Davidson