A Lucrative Tax Credit for Making Clean Fuel Won’t Be So Easy to Get

The Biden administration on Friday issued its long-awaited plan to provide lucrative tax breaks to companies that make hydrogen, a clean-burning fuel, proposing new rules meant to ensure that the policy doesn’t inadvertently lead to a spike in planet-warming emissions.

Hydrogen is widely seen as a promising tool to tackle climate change, as long as it can be produced without creating any greenhouse gases. When burned, hydrogen mainly emits water vapor, and it could be used instead of fossil fuels to make steel or fertilizer, or to power large trucks or ships.

But making hydrogen requires energy, and very little so-called clean hydrogen exists today. Currently, most hydrogen is made from natural gas in a process that emits planet-warming carbon dioxide.

Congress approved a tax credit last year to encourage companies to make more hydrogen from renewable energy and other carbon-free sources, setting off fierce lobbying by businesses focused on who should be able to claim the credit.