The American Clean Power Association (ACP) released a proposed framework to support the development of a new green H₂ industry in the U.S. H₂ made with clean power—green H₂—is the most promising solution for decarbonizing heavy industrial manufacturing and chemical processes that are essential to the U.S. economy.

The Inflation Reduction Act provides significant incentives to make green H₂ cost competitive with more carbon-intensive forms of H₂ production. There is active debate over the appropriate structure of the H₂ tax incentives in the early years for this new industry. 

After significant internal deliberation and engagement with external stakeholders and members, ACP is proposing an implementation roadmap that will create a viable green H₂ industry while accelerating clean power deployment and reducing emissions. The new proposal includes recommendations on several emissions safeguards advanced by environmental leaders. 

ACP proposes the government limit green H₂ production incentives to companies demonstrating they are relying on new, additional sources of clean electricity to power H₂ production. Green H₂ facilities must also ensure that there is a degree of alignment in time between when clean energy is generated and the time when a green H₂ facility is operated. To ensure these environmental safeguards, ACP proposes that companies must embrace rigorous constraints on where and when clean energy credits can be produced.

These constraints will ensure the emissions integrity of the increased power demand on the grid from green H₂ production. The strict timing requirements under our proposal, which align with the EU’s green H₂ standards, will take effect after a limited phase-in period. Under ACP’s approach, “first-mover” projects that start construction before the end of 2028 receive greater flexibility on the timing of when clean energy credits can be produced. This early flexibility will ensure the green H₂ industry reaches commercial viability and can support decarbonization. 

“ACP’s aim is to strike a balance that inspires a new clean domestic industry while ensuring near- and long-term climate benefits. It is essential that public funds are used to develop and deploy technology that supports climate goals. However, if government requirements are too burdensome at the outset, we will never build a green H₂ industry. The stakes are high to get this right,” said Jason Grumet, CEO of ACP. 

“Green H₂ is key to reaching America’s net-zero goals by aggressively reducing emissions from difficult to decarbonize sectors. I am proud that ACP has reconciled divergent viewpoints amongst its members and developed a compromise policy framework that supports both early market deployment and a rigorous standard for green H₂ production over time,” said ACP Chair-Elect Susan Nickey, Executive Vice President & Chief Client Officer of HASI.