Cspan is your unfiltered view of government funded by these Television Companies and more including comcast. You think this is just a Community Center . No, it is way more than that. Comcast is partnering with 1000 Community Centers to create wifi enabled so students from low income families can get the tools they need to be ready for anything. Comcast support cspan is a Public Service along with these other television providers, giving you a front row seat to democracy. Next a discussion about tax benefits for Clean Hydrogen fuel approved under last years Inflation Reduction Act. Speakers talk about the implementation of new measures and programs created by the treasury department. This is one hour 15 minutes. Good afternoon. Thank you. Welcome, im shannon wolf, the Vice President for institutional strategy. In case you did not know, rff is an independent environmental think tank focused on the environment and a thriving economy. Thank you for being with us for this important conversation. The 45 hydrogen in tax credit considerations for treasury guidance. Its a complicated topic and we have a fantastic panel of experts here today. Jason, ceo of american clean power, nathan, senior associate at the u. S. Program. Already durbin, associate for policy at chamber of congress. Paul, policy engagement for electric hydrogen and kevin, fellow and director of our Climate Program will be serving as a moderator for todays conversation. The event is being broadcast live and also recorded. The recording will be available after the event so visit our website to check it out. I want to say hello to our virtual audience. You can ask questions in the q a box on your screen and we will be monitoring questions and get to as many as we can. Finally, if you would like to join the conversation on twitter, use the rff live. I want to thank supporters. We could not be having this conversation without you today, so thank you so much for being here and joining us. And for that, i will turn it over to kevin. Thank you to everyone for being here online, here in person. Thank you to our panelists for contribute in thoughts and perspectives as well. So to reach the u. S. Decarbonization goal is going to require a huge set of tools and lots of policy. Hydrogen has emerged as one of those tools because it has a lot of beneficial properties. You can use it as a fuel, feedstock, Energy Storage and 2d carbonized sectors that are challenging to decarbonizing and do not have other options. For these reasons, lawmakers recognized the value of hydrogen and Clean Hydrogen in particular. And invoked the 45 v tax credits in the Inflation Reduction Act. Now Current Hydrogen production is generally done from natural gas almost exclusively. Which unless you capture the emissions resulting from the process, can lead to emissions that are undermining potential decarbonization benefits of hydrogen. But you can also generate hydrogen from electrolysis, living hydrogen and oxygen from water which does not produce emissions but consumes a lot of electricity. In doing so, it does contribute to the Carbon Footprint of the hydrogen. So lawmakers were aware of this as well and they wrote it into the statute for 45 that they should account for the lifecycle of gas emissions when you are coming for the eligibility for the credit as well as the value of the credit that is actually given to producers. Now since the Inflation Reduction Act passed hydrogen has taken on increasing prominence. The epa proposed regulations for stationary sources generating electricity. It actually proposed including hydrogen as one of the best systems of Emission Reductions for natural gas units. In addition there has been a tremendous amount of activity on the outside, helping for the rules developed by treasury to be developed and thought about. We have had multiple fullpage ads that have been produced in prominent newspapers. My wife does not follow climate and energy but reports that Hydrogen Shows up in all of her favorite content. There is a looming showdown as reported between joe manchin and President Biden about the ultimate Implementation Plan that the treasury puts out, so theres a lot going on. There are a lot of groups on different sides of what the implementation guidance should look like but theres a lot of agreement on a very high level about the opportunity that hydrogen poses for contribute into decarbonization goals in the United States economy and the opportunity to grow a very domestic Clean Energy Industry that is currently basically in its infancy and capture a great opportunity. It a lot of agreement on those points. Tension and disagreement comes from thinking about how to incentivize and get that industry off the ground with minimal obstacles to slow it down. While also setting rules for the long term. So that the decarbonization benefits of hydrogen actually are recognized and the hydrogen is produced and electrolyzers onboard are ready to reinforce the d carbonized grid. So today we are going to, you know, be able to explore some perspectives on different approaches implementing the 45 tax credits. Im looking forward to the conversation and hearing what everybody here thinks, getting it right in the context of treasury guidance. Thank you very much for being here. The way we are going to structure the program is we will have each panelist give opening remarks, then we will have a moderated panel discussion, then we will open it up to the great people in the audience an online to ask questions and we will go from there. Thank you again for being here. Take it away. Thank you, kevin. Good to be here at rff with lots of old friends. The last day of july, we are in a windowless room talking about 45v and mission alley. Im sorry. We are here because this actually does matter. And i want to give you a sense of why the American Clean Power Association thinks this matter so much. Talk about the larger challenge, which is really fundamentally the rff sweet spot of decisionmaking under uncertainty and innovation policy. And then a little sense of how theyve tried to balance this. As kevin said, there are people on all sides of these issues and they are all members. We have folks on all sides of the issue and we decided to come out with a pathway to navigate uncertainty. On why we were here, we are all working on Climate National security things for a long time and there is one sentence that gives you a little bit of a sense of how this might be possible. Basically to electrify everything you can while decarbonizing the grid. Easy to describe, hard to achieve. The problem is you cannot electrify everything as kevin indicated. Big parts of our economy domestically and globally do not lend themselves to electrification. Steel, heavy freight transport, aviation, so that has always been the missing piece. In this narrative of success. So here is where Green Hydrogen fits the bill. As kevin said, it can do a little bit of everything. The clean Energy Transition. So it matters, right . If we do not figure out a way to provide a zero carbon solution, we are not going to solve it. So there is a lot of urgency and imperative to get it done. Here is the problem, none of us know the answer. The industry does not exist. We do not have a Green Hydrogen industry. We do not have zero and nisshin steel facilities, airplanes that travel. We are all making projections about a very important future. The stakes are high but the truth is none of us know. Interestingly in the past in an absence of knowledge, that tended to create a sense of humility. That is not how washington works today. The reason i think this issue is theologically intense is everyone is just making it up. We are all making our best guesses based on models. All models are wrong, some models are useful. Were tried to figure it out together. So here is where atp has tried to come forward with what we think is kind of a balanced proposal. That is recognizing remember the issue in simple terms is Green Hydrogen is great, it can make clean power. But what if we start to build electrolyzers faster than we have clean power . That could require other power, is not zero omissions and you create an indirect increase in omissions. Worth noting, we do not worry about that in the transportation sector right now. When it comes to electrifying transportation, the thought was we have to change the demand from fossilbased transportation to electric based transportation. The grid is going to clean up, it will all work out. We decided to take a different approach when it comes to Green Hydrogen. There is a reason for that. We are worried that if we start to build electrolyzers to fast we are going to outpace Clean Energy Production and that could increase emissions. So we talked about region audi and additionality. Time managing. We will get into all of these. I would suggest what we have proposed is just to acknowledge fundamentally, you can turn the dials too far in either direction. If you dont have constraints at all, we are concerned that actually we will not be moving toward the public goal of decarbonization. We are embracing originality, making sure that the new power is in the same place being used. We are embracing additionality. Not everybody on the stage is going to agree with that. You have to have brandnew clean zero emission power. To power your electrolyzer if you want the green credit. That was a tough one. We are committing to a transition. Youre going to love this one, annual to hourly time matching. We will get there. But basically to make sure clean power is generating power at the same time as we are using the power. That would be incredibly expensive right outofthebox. All those things right away, you basically do not have a Green Hydrogen industry. If you have none of those things are not putting enough ambition behind the system. We are suggesting tight regionality and phasing in a management so that facilities that Start Construction before the end of 2028 can have a more flexible annual requirement that then transitions. We are all guessing about how much power will fall into the more flexible regime. Our goal is to provide enough first movers that you actually have an industry. Modeling makes us think 10 of the goal will happen in that first period. We are encouraging the first 10 in the industry. Maybe it is 4 , maybe it is 16 , we do not know. But its basically how do you make sure that we get off the ground . If we dont we will not have a strategy to achieve our climate goals by mid century. Possum, thank you so much for those comments and thank you for having me awesome, thank you so much for those comments and thank you for having me. Im a senior associate at the Rocky Mountain institute and we are a clean Energy Think Tank focused on decarbonizing the Global Economy as rapidly as possible. We have experts including experts in clean energy procurement. Who have intimate knowledge of the Hydrogen Industry and are experts on industrial decarbonization of all flavors. There is a lot to discuss today but my comments will focus on grade connected electrolysis. He Hydrogen Production tax credit caught all of our eyes in 2021 when the bill was proposed by congress. The top credit is the most valuable credit by head and shoulders in the Inflation Reduction Act in terms of dollars per energy as well as dollars per energy abated. If the hydrogen is used to abate dirty Gray Hydrogen and 400 50 per ton of co2 abated if you add on the stack ability of the Clean Electricity credits. 300 if you exclude it. Low Cost Hydrogen as jason mentioned is a core Building Block of a low carbon economy. And if designed well, the credit is perfectly designed to cover and make decarbonization of financially competitive in heavy industries critical to the modern economy. But to achieve this vision of decoupling from fossil fuel, there is a puzzle at the heart of this credit. That puzzle will define the next era of the Energy Transition. Over the past two years the puzzle has drawn in 20 staff across every program. Almost every program in our institute. And lead to all beds, countless reports and fancy baseball podcast advertisements. It centered around one question, how do you prove the electricity you are consuming is low carbon when you have a dirtier grade . To understand this challenge you first must understand the law. The log refers to a lifecycle admissions calculation and specifically to a model, the greek model, in order to calculate omissions. In this model grid connected producers have one option, use the grid average omissions. If you look at the grid model, the output is 20 kilograms of co2 per kilogram of hydrogen. That is double d omissions rate of currently methane produced Green Hydrogen. 30 to 60 times depending on where you are dirtier than being able to qualify for the credit. No grid connected project would qualify for any credit in any grid. The logical next step is to say great. May be an off grid system powered by zero carbon electricity should count and this would be simple and noncontroversial and treasury could release guidance enabling this pathway today read but that was the end of the story, we would not be here today. In the congressional record there is an opportunity. A phrase that is the foundation of all of this debate. The intent of congress is to enable a claim system that reduces effective Greenhouse Gas emissions. So breaking this down if a producer books or ads clean capacity or power to the system, they could to claim this capacity for their hydrogen facility. In the system has to reduce effective Greenhouse Gas emissions. It cannot just move emissions from one pocket into the other and claim the pocket has no omissions while the overall emissions remain increased. In the omissions we have a term that describes the system that reduces effective Greenhouse Gases. That term is additionality. It means quite simply the system is effective at reducing emissions. As a result, not any one standard or requirement. It is an ideal, a goal, a point of an omissions counting system. It is the accounting framework that treasury is tasked to design. Lets be clear about the complexity of the task. There are many tools that you can use to build a system like this in the real world. Time matching, vintage, location contracts, double counting. The list goes on. We included our recommendations in the blog we released last week. Two types as jason mentioned, we risk forcing all projects behind the meter and not getting the outcomes that we want. To lose the rff would be unable to do his was between the lowest Carbon Hydrogen in the country and risks poisoning the well or confusing all the industries that rely on hydrogen. In that messy middle is a solution. A solution space that is productive but not perfect, that balances omissions and appointment. Some might ask kevin we already solved this system . And yes, in the first phase, sure. Renewable energy was scarce, expensive and you could drive the transition forward by covering the extra cost, buying Renewable Energy certificates and these tools served their purpose well. But now clean energy is cheap, the Inflation Reduction Act is law in the binary bottleneck is not always money. Study after Study Confirms that the wrecks of the past have been inaccurate and ineffective and we are in the next phase of the transition. Treasury will need a system that can do better, we all do. It needs to be calibrated to the current economic, technological and policy landscapes to achieve its congressional attempt. Congressional intent. The controversy flooding the zone is not just about the facts or the law. There is a lot of money on the line and Everyone Wants in. This standard is so much more important than any single project or any single company. This Emissions Accounting system blessed by the u. S. Government potentially for decades will have ripple effects. A lot depends on truly Clean Hydrogen. International trade agreements for clean steel and fertilizer procurement programs. Epa clean power plant rule as mentioned. State policies, even fcc Disclosure Rules to avoid greenwashing. As the largest credit, this will set a national president. It could be a huge step forward. Its durable and effective at reducing emissions in the real world. While the structure of the credit for subquestion for hydrogen first, this is not the last time that we will have this debate. In the european union, india, state officers and boardrooms across industrial electrification, the same questions emerge. This is not a debate about emissions versus deployment. It is about solving the dual challenge of decarbonizing the grid while adding massive new loads. If in omissions and economics are aligned as the law requires, then we have not only the opportunity f