The Cost of Clean Hydrogen with Robust Emissions Standards: A Comparison Across Studies

Recent peer-reviewed research has demonstrated that the ‘Three Pillars’ standard for clean hydrogen carbon accounting – new supply, deliverability, and hourly matching – is necessary to avoid significant excess emissions from government-subsidized electrolytic hydrogen production in the United States. However, some parties have argued that the cost of meeting the Three Pillars would be large enough to overwhelm the $3/kg clean hydrogen production tax credit introduced in the Inflation Reduction Act (IRA), rendering the US clean hydrogen industry “dead on arrival.” Others argue that while the Three Pillars standard appears necessary to avoid near-term emissions inconsistent with IRA’s statutory requirements, that the Treasury Department faces an unavoidable trade-off between implementing “strict” emissions accounting rules and prioritizing rapid electrolyzer deployment and improvements and thereby preventing the realization of much larger emissions reductions over the long term. However, this asserted trade-off only holds if the Three Pillars approach truly prevents grid-connected hydrogen projects from being economically viable under reasonable conditions. As this memo demonstrates, such claims are not substantiated