Moderate Democrats fume over Biden hydrogen proposal

Moderate Democrats are fuming over the Biden administration’s decision to propose significant climate change-related stipulations on the use of a lucrative tax credit for hydrogen energy producers.

Sen. Joe Manchin (D-W.Va.), a frequent critic of the administration’s climate policies, said the proposal “makes absolutely no sense.”

And moderates who have been more supportive of the administration, like Sen. Tom Carper (D-Del.), are also pushing back on Biden’s rules. 

The hydrogen energy issue divides Democrats, with more conservative Democrats pressing for the flexibility they say will help a nascent industry that could be important in the climate fight. Liberals argue loose rules could make hydrogen energy a climate change problem rather than a solution.

Hydrogen energy can be made by either using electricity to separate the hydrogen out of water molecules in an electrolyzer or through a reaction between steam and methane, a key component of natural gas.

The fuel could be a key tool for cutting emissions from industries whose climate pollution is difficult to mitigate, including aviation and making chemicals, cement and steel. 

The Inflation Reduction Act signed by President Biden last year provided a tax credit for hydrogen that is intended to jumpstart production of hydrogen made using low- and no-emitting power sources.

But the question of who can qualify is a contentious one, and moderate Democrats argue the administration is going too far with its new rules. 

“This Administration cannot keep itself from violating the Inflation Reduction Act in their relentless pursuit of their radical climate agenda,” Manchin said in a written statement.

He said that the move would “kneecap the hydrogen market before it can even begin.”

Manchin vowed to fight the proposal, saying: “Today’s proposed rule doesn’t just violate the law — it makes absolutely no sense, and I will continue to fight this Administration’s manipulation of the IRA.”

Manchin, who is not running for reelection but has flirted with a third-party presidential bid, has criticized a number of Biden administration climate policies, including its handling of a tax credit for people who purchase electric vehicles, saying it was applied to vehicles too broadly and that a new guidance is too loose on Chinese battery components. 

Such criticisms sometimes leave Manchin on an island in the Democratic party, but that wasn’t the case Friday.

Carper, a frequent Biden ally who chairs the Senate’s Environment and Public Works Committee, also criticized the guidance.

“When developing the Inflation Reduction Act, we intended for the clean hydrogen incentives to be flexible and technology-neutral,” Carper said in a written statement.

“Treasury’s draft guidance does not fully reflect this intent, potentially jeopardizing the clean hydrogen industry’s ability to get off the ground successfully,” he added. 

Sen. Sherrod Brown (D-Ohio), who faces a tough reelection battle next year in an increasingly red state, also said that the proposed guidance would “undermine” the law’s goals of lower energy costs and innovation.

“These new proposed rules will slow down and ultimately undermine our country’s ability to produce the clean hydrogen needed to build the energy economy of the future,” Brown said in a statement. “The proposed rules’ lack of flexibility will cut out Ohio workers and Ohio businesses from creating the energy of the 21st century.”

This pushback is not a surprise. Last month, 11 Democrats signed a letter pushing for flexible rules for the hydrogen industry. Carper was not on that letter but also sent a missive calling for flexibility.

At issue is whether to require hydrogen producers to build new clean power sources to fuel hydrogen production, or whether electrolyzers should be allowed to pull existing power off the grid. 

Climate hawks warn the latter could result in more fossil fuel use because it could drive up power demand in general and push planet-warming gas plants online. 

They have also called for this new power to be in the same geographic region and produced within the same hour that it is used to try to limit hydrogen’s impacts on power demand overall. 

“I applaud the Biden administration for taking this important step to ensure that we develop a truly clean hydrogen industry,” Sen. Jeff Merkley (D-Ore.) said in a statement. “Hydrogen has the potential to be a key part of the climate solution, but only if we get it right.”

“Creating hydrogen energy can be very greenhouse gas-intensive. I and others have pushed hard for high standards because if hydrogen is not clean, then it cannot be a solution for hard-to-decarbonize sectors like heavy industry, and could even take us in the wrong direction,” he added. 

Merkley led a letter in October pushing for stringent standards and was joined by seven of his colleagues.

Sen. Martin Heinrich (D-N.M.) who signed the letter, also praised the rule in a post on X, formerly known as Twitter. 

“.@USTreasury’s hydrogen tax credit guidance includes the climate safeguards that will ensure the hydrogen economy of the future is clean,” he wrote. 

“The alternative would have made the problem worse, not better. I applaud the Biden Administration’s leadership here,” he added.