This has probably been the biggest year for hydrogen so far. Momentum is growing faster than ever behind the idea that hydrogen will play a crucial role in decarbonizing our economy. In honor of National Hydrogen and Fuel Cell Day, which was established in 2015 and falls annually on October 8 to reflect the atomic weight of hydrogen (~1.08 u), Venable's attorneys publish this update on the state of hydrogen work at the firm. As the hydrogen economy takes shape, Venable's attorneys and advisors have been counseling businesses and policymakers alike on pressing, emerging questions regarding the treatment of hydrogen in the U.S. economy. Below are some of the highlights of Venable's work in the hydrogen space.
Inflation Reduction Act
Perhaps the biggest development for hydrogen this year was the passage of the Inflation Reduction Act ("IRA"). Building upon last year's Infrastructure Investment and Jobs Act, the IRA implemented the first of its kind hydrogen production tax credit. Venable's Senior Policy Advisor James Reilly worked to secure this provision in the IRA. The credit applies to production of qualified green hydrogen from a facility built before 2033 for the first 10 years of the facility's operation. The credit is valued between $0.6 and $3 a kilogram, depending on the lifecycle greenhouse gas emissions of the hydrogen produced. This game-changing policy (estimated at $13 billion over 10 years) is expected to be dramatically effective at lowering the cost of green and low-carbon hydrogen, compared with conventional hydrogen and other fuels.
Debate Over Hydrogen Pipeline Regulation
Another emerging issue regarding hydrogen energy has been how hydrogen pipelines can, will, and should be regulated. Venable's Energy Practice Group is the vanguard on the issue of hydrogen pipeline regulation. This is an important topic, as regulatory uncertainty is seen as holding back investment in new infrastructure. This May, associate William Bolgiano published an article in the Energy Law Journal ("ELJ") arguing that FERC's existing authority under the Interstate Commerce Act could apply to the regulation of hydrogen pipelines. This article was chosen as the ELJ's lead article, and Venable hosted a well-attended panel discussion related to it. This July, the head of Venable's Energy Practice Group, Richard Powers, testified before a hearing of the Senate Environment and Natural Resources Committee on the operations of different pipeline regulatory regimes as well as the implications of regulating hydrogen under them.
One specific policy proposal regarding hydrogen pipelines emerged from Sen. Joe Manchin's Energy Independence and Security Act of 2022, which is principally aimed at reforming the federal permitting process. That proposal, which was not included in last month's continuing resolution but may re-emerge, would have regulated hydrogen broadly as natural gas under the Natural Gas Act. Venable's Energy Group quickly published a short analysis of the implications of this approach, which cautioned of the far-reaching unintended consequences. Next week, on October 12, 2022, counsel Joseph Hicks will present and participate in a debate on hydrogen pipeline regulation hosted by the Energy Bar Association at the organization's Mid-Year Energy Forum. Joe and the other panelists will debate which, if any, of the existing laws apply to hydrogen transportation and will discuss legislative and regulatory actions that could be taken to encourage the growth of the industry while ensuring reasonable transportation rates.
Exciting Hydrogen Projects
This year also saw a dramatic increase in investment in hydrogen products, making clear that the excitement about hydrogen is not all hype. Globally, nationally, and locally, there is a growing urgency from private businesses and policymakers to invest in hydrogen. By one estimate, there are large-scale projects worth US $240 billion announced through 2030 (a 50 percent increase since last year), including $22 billion in projects that have reached FID or further. Venable's clients are among those private companies considering and undertaking important hydrogen projects. This past year, Venable attorneys, including partners J. Joseph (Max) Curran III and Christopher Gunderson and associates Emily Wilson and Nathan Keithline, have also advised potential hydrogen developers on all aspects of their projects. These included the state and federal energy, environmental, safety, and other regulatory issues associated with the production, transportation, and sale of hydrogen.