A new study published in IOP Publishing’s journal Environmental Research: Energy shows why new safeguards adopted by the US Treasury Department will not only avoid climate impacts but also save up to $1 trillion in taxpayers’ money over 10 years.
Without safeguards, hydrogen producers could potentially claim the highest level of tax credits ($3 per kilogramme) for producing ‘gray’ hydrogen from fossil natural gas, by blending in small amounts of biomethane or waste methane.
Allowing this blending could support about 35 million metric tonnes of hydrogen production per year, leading to the extra taxpayers’ costs and excess emissions of around three billion tonnes of CO2 versus scenarios assuming strict methane control.
On 3rd January 2025, the US Treasury Department finalised regulations that align with several of the recommendations from the new study, a draft of which was submitted to the Treasury Department as a public comment earlier in the rulemaking process.
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