Environmental Groups Sound Alarm on the Clean Hydrogen Credit

Environmental Groups Sound Alarm on the Risk of Polluters Co-opting the Clean Hydrogen Credit

WASHINGTON – Friends of the Earth was joined by 75+ other environmental and justice groups in submitting joint comments to the Internal Revenue Service and Department of the Treasury regarding implementation of the new clean hydrogen credit created under the Inflation Reduction Act (IRA). The comments note the need for improved methodology that would prevent harmful false solutions from being repackaged as clean hydrogen. The comments also alert that the Treasury and the IRS did not address the potentially disastrous loophole that could be created by methane biogas offsets. This loophole would allow highly polluting ‘gray’ hydrogen production to inaccurately qualify as clean. 

“There is a significant risk that this hydrogen credit allows Big Oil and other toxic industries to continue their polluting status quo on taxpayers’ dime,” said Sarah Lutz, Climate Campaigner at Friends of the Earth US. “Any definition of clean hydrogen must exclude hydrogen produced from energy that is harmful to our communities and climate. The Treasury Department and IRS must ensure its implementation of this credit does not just create another giveaway to dirty energy industries.”

The comments demanded that the Treasury and the IRS better align hydrogen emissions estimates with the best available science. Specifically, groups called for the final rule to ensure:

  • Strong guardrails to prevent hydrogen producers from obscuring their true emissions with methane biogas “offsets.”
  • Hydrogen producers accurately report emissions on a climate relevant timeframe from combustion or gasification of forest wastes and electricity produced from burning woody biomass.
  • The essential ‘three pillars’ of electrolysis proposed in the draft rule are strengthened and no loopholes are created for the toxic nuclear industry.
  • Default methane leakage assumptions are raised to align with the peer reviewed science. 


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