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ExxonMobil is lobbying the Biden Administration to have hydrogen derived from natural gas with carbon capture – the so-called blue hydrogen – be eligible for the generous tax credits under the Inflation Reduction Act (IRA), Bloomberg reported on Wednesday, citing an internal company memo it had seen.
The IRA, passed in August last year, has nearly $370 billion in climate and clean energy provisions, including investment and production credits for solar, wind, storage, hydrogen, and critical minerals, funding for energy research, and credits for clean energy technology manufacturing such as wind turbines and solar panels.
The Act provides for the so-called 45V credit for the production of clean hydrogen made from electrolysis. But the U.S. Treasury Department has yet to provide detailed guidance on who is eligible for the subsidy, which could be as high as $3 per kilogram of hydrogen.
Exxon, which bets on blue hydrogen produced from natural gas through carbon capture and storage (CCS) to remove most emissions, is now lobbying for hydrogen from natural gas to be eligible for subsidy. Blue hydrogen is one of Exxon’s pillars in its low-carbon solutions division, together with CCS and biofuels.
The U.S. supermajor argues its gas-made hydrogen could be ‘clean’ enough to qualify for the highest tax credits under IRA should it be allowed to do so, Matt Furman, vice president of public and government affairs at Exxon, told Bloomberg in an interview.
Exxon’s findings of how clean its blue hydrogen is are supported by U.S. government officials who ran the modeling, Furman added.
“Their view is the model would say that hydrogen we can produce has lower carbon emissions and therefore would qualify for a higher tax incentive,” Exxon’s executive said.
Environmental campaigners are against the U.S. Administration giving blue hydrogen any government incentive as this would only raise fossil fuel production, they argue.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.