Biden Makes a Big Bet on Clean Hydrogen With New Tax Credits

By Julianne Geiger - Jan 03, 2025

The US Treasury Department finalized rules for a $3/kg clean hydrogen tax credit, aiming to boost domestic production.

The new rules expand eligibility beyond renewable energy to include nuclear power, natural gas with carbon capture, and even methane from waste sources.

This policy aims to accelerate clean hydrogen development in the US but sparks debate over the inclusion of fossil fuel-derived hydrogen sources.


In the high-stakes race to dominate the clean hydrogen market, the Biden administration just handed out a golden ticket—or rather, loosened the strings on who can cash in. New rules for a tax credit worth up to $3 per kilogram of hydrogen are a boon for companies eager to turn this clean-burning fuel into big business. After months of lobbying and a draft that left many industry players fuming, the Treasury Department has delivered a rulebook that’s friendlier to hydrogen hopefuls.

The revisions don’t just extend the timeline for renewable energy integration. They also expand eligibility to include nuclear power, natural gas with carbon capture, and even methane from sources like wastewater and manure, meaning your trash is now potentially treasure. Nuclear plants, previously a bit of an afterthought in clean energy debates, can now be counted as a clean energy source—a win for companies like Constellation Energy, whose shares ticked up 2.6% on the news.

Hydrogen is hailed as the fuel of the future, crucial for cleaning up industries like steel and cement production, not to mention heavy transport. But the devil has been in the details. Critics have pointed out that the U.S. hydrogen plan, including its $7 billion for regional hydrogen hubs, risks becoming a subsidy buffet for Big Oil. Skeptics argue that expanding eligibility to fossil fuel-derived hydrogen, even with carbon capture, feels like putting a green bow on a dirty package.

Still, for project developers, this clarity is what they need to move forward. “The extensive revisions…make the United States a global leader in truly green hydrogen,” said senior climate adviser John Podesta. Whether this will create the hydrogen utopia that advocates envision or just another battleground in the clean energy debate remains to be seen. But one thing’s certain: the hydrogen gold rush is on, and everyone’s suiting up.


By Julianne Geiger for Oilprice.com