US Hydrogen Tax Credit Rule Faces 2024 Delay Amid Disputes Over Design

(Reuters) — The Biden administration could push the release of a highly anticipated rule guiding the use of clean hydrogen tax credits into next year as Treasury officials struggle to resolve disputes between environmentalists and the industry over how "green" to make the incentive, according to two sources familiar with the administration's plans.

Treasury officials were expected to release the rules for the hydrogen production tax credit - one of the most generous in President Joe Biden's landmark bill - by the end of the year, but internal squabbling over its design has some officials signaling to stakeholders a release as late as March.

"They are basically nowhere on resolving the disagreements," said a source who is working with the administration on promoting hydrogen projects.

Treasury spokesperson Ashley Schapitl said: “The Treasury Department expects to release guidance on the Clean Hydrogen Production Tax Credit by the end of the year.”

Biden is banking that clean hydrogen will replace natural gas to fuel manufacturing plants and power plants as part of the administration's ambitious plan to decarbonize the economy in order to fight climate change. Last month, Biden awarded $7 billion in grants to proposed "hydrogen hubs" in 16 states to jump-start the emerging industry

The issue holding up the Treasury is a question over whether to restrict the tax credits only to hydrogen producers who use new sources of clean electricity to run their plants, instead of tapping power already on the grid.

Industry - and their legislative backers - want the administration to allow projects fueled by existing energy sources, including natural gas, hydroelectricity and nuclear, to be eligible for the tax credits.

The high-stakes decision could impact billions of dollars of investments.

The White House is still hoping to get the rule out before the end of the year and could put pressure on the Treasury to make a decision, one of the sources said.

John Podesta, who has been overseeing the White House's sprawling climate change efforts, was asked last week about the timing of the rule release.

"We're trying mightily to ensure that we have the guidance out by the end of the year," he said. 

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