Joe Manchin’s new tax bill could help hydrogen electric vehicles

Hydrogen is “the dumbest thing I could imagine for energy storage,” Tesla CEO Elon Musk told the Financial Times.

“It doesn’t happen naturally on Earth, so you either have to split the water by electrolysis or crack the hydrocarbons.”

Lithium in its pure form also does not occur naturally on Earth, but Musk did not address the discrepancy.

Yet Musk’s statement is correct: Hydrogen does not occur naturally on Earth. So, while hydrogen is the most abundant element on Earth, it must be separated from other elements to obtain its pure form.

In addition, producing green hydrogen (i.e. hydrogen produced by electrolysis with renewable energy) is expensive, between $3.73/kg and $6.50/kg in the United States. , according to the latest figures from analyst S&P Global Platts.

In the United States, hydrogen produced from natural gas costs between $1.71/kg and $2.18/kg. Not surprisingly, most hydrogen comes from coal or natural gas.

However, the Inflation Reduction Act, a tax and climate bill announced by Democratic Majority Leader Chuck Schumer (NY) and Sen. Joe Machin (DW.Va.), could significantly reduce the price of production green hydrogen in the United States.

This could help boost interest in hydrogen vehicles, also known as fuel cell electric vehicles (FCEVs), according to the International Energy Agency (IEA).

A Hyundai Motor Nexo hydrogen car is refueled at a hydrogen station in Seoul, South Korea, August 13, 2019. (Kim Hong-Ji/Reuters)

Green energy credits

The $433 billion Cut Inflation Act of 2022 is not yet in effect. However, with the backing of recalcitrant precedents Manchin and Sen. Kyrsten Sinema (D-Arizona), passage to the Senate is all but assured. Passage to the House is also likely given to the Democratic majority.

If passed, the bill will give U.S. producers of “qualified clean hydrogen” tax credits of up to $3/kg for green hydrogen. This could bring the cost of producing green hydrogen below the price of producing blue or gray hydrogen and make green hydrogen produced in the United States the cheapest in the world.

The tax credits are degressive according to the life cycle emissions of the hydrogen produced. This also includes upstream emissions, meaning manufacturers will likely try to use carbon capture and storage where possible.

Competing “green” technology

Electric vehicles (EVs) and FCEVs are “zero-emission” vehicles because they produce no greenhouse gas (GHG) emissions at the point of use. An EV has no exhaust from an exhaust pipe, and FCEVs emit water vapor and hot air, according to the Department of Energy (DOE).

Additionally, an electric vehicle plugs into a charger and uses the power mix from the grid to store energy in its batteries for later use. Several factors impact charging time and can range from 30 minutes to over 10.5 hours, according to Kelly Blue Book.

Similar to an EV, FCEVs use electricity to power an electric motor. But instead of relying on energy stored in a battery, FCEVs generate electricity using a hydrogen-powered fuel cell. They can fill up in about four minutes.

Notably, according to the DOE, the energy density of hydrogen is about seven times that of lithium-ion batteries, and FCEVs have a range similar to that of an internal combustion engine (ICE) vehicle. FCEVs are also lighter than electric vehicles, which increases fuel range. In addition, compressed hydrogen tanks take up less space than batteries.

Epoch Times Photo
U.S. Vice President Kamala Harris speaks with SemaConnect CEO Mahi Reddy at the Brandywine Maintenance Facility in Prince George’s County during a visit to announce the company’s electric vehicle charging action plan Biden administration, in Brandywine, Maryland, on December 13, 2021. (Kevin Lamarque/Reuters)

Moreover, the predicted reduction in greenhouse gas emissions for the mass adoption of FCEVs is lower than that of the mass addition of EVs.

“The greenhouse gas (GHG) implications of charging battery-powered EVs with today’s electric grid are serious. Given that on average 52% of our electricity in the United States comes from coal and the efficiency of the grid is only around 35%, GHGs would be much more important for electric vehicles than for Hydrogen FCEV, assuming most of the hydrogen was made by natural reforming. gas for the next decade,” reports the DOE.

However, a significant detractor of FCEVs is the cost of fuel.

The Biden administration is touting electric vehicles as the solution to high-priced gasoline and pain at the pump. And there is no doubt that it has spurred consumer interest and an increase in the adoption of electric vehicles. The Biden administration carefully avoids questions about future increases in energy costs.

In contrast, FCEVs require paying for hydrogen much like a person pays for gas, but depending on available credits, it can be even more expensive. An IEA market analysis report indicates that interest in the FCEV is lagging: “Few commercial FCEV models are available and high fuel costs and purchase prices are driving up total cost of ownership higher than electric vehicles.”

Employees of Toyota Motor Corp.  work on an assembly line at Toyota
Employees of Toyota Motor Corp. work on the assembly line of the Mirai fuel cell vehicle (FCV) at Toyota’s Motomachi plant in Aichi prefecture, Japan, May 17, 2018. (Issei Kato/Reuters)

Price parity with gasoline

A California Energy Commission report found that hydrogen must reach price parity with gasoline for FCEVs to take off. The information surfaced in 2020, and hydrogen struggled to achieve that goal. As a result, Toyota’s Mirai and Hyundai’s Nexo failed to gain traction with consumers, despite the billions invested in them.

Still, FCEVs have significant benefits, and countries like the United States, China, Japan and Korea are building their hydrogen fueling stations in hopes of increased demand, according to the IEA.

Manchin’s support for the Cut Inflation Act could contribute to the above if hydrogen prices drop to acceptable levels for consumers.

Katie Spence

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Katie covers energy and politics for The Epoch Times. Prior to beginning her journalism career, Katie proudly served in the Air Force as an Airborne Operations Technician on JSTARS. She received her degree in Analytical Philosophy and a minor in Cognitive Studies from the University of Colorado. Katie’s writing has appeared on CNSNews.com, The Maverick Observer, The Motley Fool, First Quarter Finance, The Cheat Sheet and Investing.com. Email her at katie.spence@epochtimes.us

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