The advertising blitz behind Bidens hydrogen tax credits

Publish date: 2024-07-30

Good morning and welcome to The Climate 202! Happy Friday. Today we’re reading about what to name the European heat wave. (We’re Team Gary.)

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In today’s edition, we’ll have an exclusive on a bipartisan bill that would empower the Federal Emergency Management Agency to address extreme heat. We’ll also cover the Interior Department’s proposed updates to oil and gas leasing on public lands. But first:

No, you’re not imagining all those ads about “green” hydrogen

Ordinarily, we would expect the hydrogen subsidies in the Inflation Reduction Act to foster a dry, technical debate among energy experts at Washington think tanks.

But rather than a private discussion among policy wonks, the hydrogen subsidies have fueled an extraordinarily public advertising blitz aimed at influencing the Biden administration and public opinion.

Let’s back up for a second. As we previously reported, the Inflation Reduction Act provides billions of dollars in tax credits for “green” hydrogen, a fuel that can be used to power factories or ships without any greenhouse gas emissions.

Newer methods of making green hydrogen rely on electrolyzers, or devices that use electricity to split water into hydrogen and oxygen. The process requires an enormous amount of electricity.
The Treasury Department is preparing to issue guidance on how truly clean this electricity must be to qualify for the tax credits.

Again, this would normally be a sleepy issue. But in recent weeks, environmental and industry groups have run splashy advertisements in some of the nation’s biggest newspapers — including The Washington Post — aimed at influencing Treasury’s guidance.

For example, the Fuel Cell & Hydrogen Energy Association, a trade group whose members include the oil giant ExxonMobil and the utility Constellation Energy, took out a full-page ad in the New York Times last week urging looser rules.

The ad features a striking yellow sign that warns of a “FACTORY CLOSURE.” It urges Treasury not to impose “additionality” requirements, which would mandate that hydrogen producers draw power from new sources of clean electricity, rather than grid power that may rely on fossil fuels.

Frank Wolak, executive director of the Fuel Cell & Hydrogen Energy Association, said overly strict rules would prevent the nascent hydrogen industry from getting off the ground.

“We would like Treasury to recognize that the intent of the IRA was to jump-start this industry as quickly as possible, not to succumb to those who want to constrain it out of the box,” he said.

Emily Pontecorvo, a reporter for Heatmap News, also spotted an ad in Semafor from NextEra Energy, a utility with plans to invest in hydrogen:

It's pretty wild to me that this ad campaign exists. (This one from Semafor.) What % of news consumers do you think know what the phrases "annual matching" and "hourly matching" mean? pic.twitter.com/iKKw0FtHjU

— Emily Pontecorvo (@emilypont) June 28, 2023

Phil Musser, vice president of federal government affairs at NextEra, said in an emailed statement that the ads sought to correct “significant misinformation and poorly informed analysis peddled around about how to constructively implement the hydrogen production tax credit” and to “separate fact from fiction.”

‘Sort of a sleeper’

In contrast, a coalition of environmental groups took out an ad in The Post last Friday urging tight guardrails on what counts as green hydrogen under the climate law.

The coalition, which included the League of Conservation Voters, the Natural Resources Defense Council and Evergreen Action, has pushed for strict requirements around additionality and two other concepts:

Deliverability requires hydrogen producers to use local sources of clean electricity that are physically deliverable to the electrolyzer.
Hourly matching requires hydrogen producers to match their hourly consumption of grid power with the hourly power generation from a new renewable facility.

Matthew Davis, vice president for policy at the League of Conservation Voters, said the green groups were trying to “counter” the industry ads and “elevate a topic that otherwise would be sort of a sleeper of an issue.”

Craig Segall, vice president of policy at Evergreen Action, said he hopes the ad reached administration officials.

“Policymakers read the paper, from the White House on down,” he said. “And we want to make clear to the administration that they cannot let billions of dollars flow the wrong way.”

Rachel Fakhry, policy director for emerging technologies at the Natural Resources Defense Council, said the coalition spent “close to six figures” on the ads. (The industry groups declined to disclose what they paid for their ads.)

Not black-and-white

Fakhry also emphasized that the energy industry is not a monolith, and some companies support stricter rules.

“I’m really hoping the battle of the ads isn’t seen as environmentalists versus industry, because it absolutely isn’t,” Fakhry said. “There are a lot of folks in industry who know they can do this right and still make a lot of money.”

Indeed, Air Products, the world’s largest hydrogen producer, has emerged as a vocal supporter of the stringent requirements.

“We need real and verifiable emissions reductions,” said Eric Guter, vice president of hydrogen at Air Products. “And for clean hydrogen projects or electrolysis-based projects, you need stringency around how you do that.”

But Shannon Angielski, president of the Clean Hydrogen Future Coalition, whose members include BP and Chevron, said her group opposes additionality and hourly matching. She said these requirements would be “so cost-prohibitive that the molecule of hydrogen that would end up being sold would not be competitive in the market.”

Hydrogen on the Hill

The debate has extended to Capitol Hill, where Sen. Joe Manchin III (D-W.Va.) has secured an amendment to a fiscal 2024 spending bill that would prevent Treasury from imposing new restrictions on the hydrogen subsidies.

The Appropriations Committee-approved amendment “reaffirms Congress’s intent to keep the hydrogen production tax credit free of agency-created requirements that would kneecap the emerging hydrogen industry,” Manchin said in a statement.

Yet a Democratic staffer on the Senate Finance Committee, which drafted the tax credits in the Inflation Reduction Act, noted that the law reserves the subsidies for hydrogen with low “lifecycle greenhouse gas emissions” but otherwise leaves the details to Treasury.

“We intended to leave a lot of discretion to Treasury, and we always knew the lifecycle greenhouse gas emissions would be the subject of additional scrutiny,” the staffer said.

On the Hill

Exclusive: Bipartisan bill would empower FEMA to address extreme heat

Rep. Earl Blumenauer (D-Ore.) and Resident Commissioner Jenniffer González-Colón (R-Puerto Rico) today will introduce a bill that grants the Federal Emergency Management Agency more authority to prepare for and respond to natural disasters fueled by global warming, especially extreme heat, according to details shared first with The Climate 202.

The Empowering Resilient Communities Act comes as the world is experiencing its hottest single month on record, with scientists predicting that such record-shattering temperatures could become more common as the planet warms.

The bill would accomplish the following objectives:

Direct FEMA to issue its first-ever guidance for extreme temperature events, including heat waves and freezes.
Improve FEMA’s definition of communities most at risk of natural disasters.
Require the Government Accountability Office to produce a report on the impact of extreme temperatures and poor indoor air quality.

Blumenauer told The Climate 202 that the bill could be a first step toward authorizing FEMA to declare deadly heat events as disasters. Proponents say a federal disaster declaration could save lives by reimbursing states for opening cooling centers, distributing water and checking on residents door-to-door.

“It was stunning to me that FEMA actually didn’t have responsibility for extreme temperature events,” Blumenauer said. “The legislation is a great way to initiate these conversations, but I hope it’s just the first step among many to deal with circumstances unlike any we’ve ever seen before.”

Senate confirms David Uhlmann as EPA enforcement chief

The Senate yesterday confirmed David Uhlmann to lead the Environmental Protection Agency’s enforcement office in a 53-46 vote, as the Biden administration aims to crack down on polluters and violators of federal air, water, land and chemical laws.

Republican Sens. Bill Cassidy (La.), Lisa Murkowski (Alaska) and Susan Collins (Maine) voted with most Democrats to confirm Uhlmann. Sen. Joe Manchin III (D-W.Va.) voted against the nomination.

President Biden first nominated Uhlmann, an environmental law professor at the University of Michigan Law School, to lead the EPA’s Office of Enforcement and Compliance Assurance in June 2021. But the nomination expired in 2021 and 2022, leading the White House to renominate him this year. Uhlmann previously served as a federal prosecutor for 17 years, including seven as the top cop in the Justice Department’s environmental crimes unit.

Agency alert

U.S. wants oil and gas companies to pay much more to drill on federal lands

The Interior Department yesterday proposed requiring oil and gas drillers to commit more than 10 times as much money to guarantee their wells won’t pollute, under the first update to the federal oil and gas leasing program in more than a half-century, The Post’s Timothy Puko reports.

Interior’s Bureau of Land Management said the most significant change would be raising the bonding requirement to $150,000 per lease from $10,000. The increased funding would help pay to plug abandoned wells if firms go out of business.

“We don’t want the taxpayers holding the bag in the future,” Laura Daniel-Davis, Interior’s principal deputy assistant secretary for land and minerals management, said in a phone interview.

Interior tees up first offshore wind lease sale in Gulf of Mexico

The Interior Department yesterday released the details of its first-ever offshore wind lease sale in the Gulf of Mexico, a region long dominated by the oil and gas industry.

The sale, which will take place on Aug. 29, includes one area offshore Lake Charles, La., and two areas offshore Galveston, Tex. Together, the areas have the potential to produce enough clean energy to power nearly 1.3 million homes.

President Biden yesterday touted the announcement in Philadelphia, where he toured a shipyard and praised the upcoming construction of a union-built offshore wind vessel, Jarrett Renshaw and Jeff Mason report for Reuters.

“When I think climate, I think jobs, union jobs,” Biden said.

In the atmosphere

Viral

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