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Major Tax, Appropriations, and Policies for Hydrogen and Fuel Cell Industry Passed by Congress

Client Updates

On December 21, 2020, the Senate and the House passed H.R. 133, the proposed COVID-19 stimulus bill. In addition to providing relief related to the effects of COVID-19, the legislation also contains crucial provisions for the hydrogen and fuel cell industry, including appropriations funding, policy authorizations, and tax incentive extensions.  It is important to note, however, that the bill has not yet been signed into law. 

Appropriations Funding

The legislation includes funding for the Department of Energy (DOE) related to hydrogen and fuel cells. This appropriated funding includes $150 million for the Hydrogen and Fuel Cell Technologies Office located within the Office of Energy Efficiency and Renewable Energy. The legislation also provides for $30 million in funding for the Solid Oxide Fuel Cell Program within the Office of Fossil Energy.

Policy Authorizations

The legislation also provides a number of authorizations for hydrogen and fuel cell-related policies, including the following:

  • Authorizes a research, development, and demonstration program to modernize and improve nuclear facilities, which includes a focus area on hydrogen production. The legislation authorizes $20 million in FY 2021, $30 million in each of FY 2022 and FY 2023, and $40 million in each of FY 2024 and FY 2025.

  • Provides for technical assistance and grants for energy storage and microgrid projects that include hydrogen energy storage as an eligible technology. The legislation authorizes $15 million in each of FY 2021 through FY 2025.

  • Authorizes a research, development, and demonstration program and large-scale pilot program for carbon capture and sequestration that includes hydrogen steam methane reforming process (SMR) plants, as well as fuel cell technologies for modular power systems. The legislation authorizes $1,050 million in each of FY 2021 and FY 2022, $900 million in each of FY 2023 and FY 2024, and $450 million in FY 2025.

  • Authorizes a research, development, and demonstration program for gas turbines that include fuel flexibility to run with high proportions of hydrogen. The legislation authorizes $50 million in each of FY 2021 through FY 2025.

  • Directs the DOE to conduct a study on research and development needs for blue hydrogen technology.

  • Authorizes a research, development, and demonstration program for reducing industrial emissions that includes a focus area on hydrogen. The legislation authorizes $20 million in FY 2021, $80 million in FY 2022, $100 million in FY 2023, $150 million in each of FY 2024 and FY 2025.
  • Expands eligibility for the DOE Loan Program to include technologies for reducing industrial greenhouse gas emissions, including hydrogen production.

Hydrogen and Fuel Cell-Related Tax Incentive Extensions

The bill includes a “Taxpayer Certainty and Disaster Tax Relief Act of 2020,” which contains significant extensions of renewable and clean energy tax credits.  Relevant extensions for the hydrogen and fuel cell industry include:

  • One-year extensions for the section 30(B) fuel cell vehicle credit and the 30(C) hydrogen refueling station credit that were set to expire at the end of 2020, as well as pushing out the phaseout for the section 48(a)(7)(A) fuel cell investment tax credit (ITC) by two years.

  • The investment tax credit has been extended at its current 26 percent level to construction begun by the end of 2022, and at a 22 percent rate for property that begins construction by the end of 2023.In all cases, construction would have to be completed before 2026.

  • Importantly for blue hydrogen, the Act would also extend by two years (to January 1, 2026) the deadline for beginning construction of a carbon capture facility eligible for the carbon capture and sequestration credit under section 45Q.

 

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