IRA: Towards Clean Hydrogen Leadership in the U.S. Notes de l'Ifri, June, 15, 2023
Although late in adopting clean hydrogen (H2) and defining a national strategy–a draft was presented by the Department of Energy (DOE) in September 2022–, the United States (US) has strongly reinforced its support to clean hydrogen with the passage of the Inflation Reduction Act (IRA) in August 2022.
The IRA’s support and technology-neutral approach has spurred investors’ interest, accelerated clean hydrogen projects and driven investment in electrolyzers manufacturing capacity. There are now over 100 clean hydrogen production projects announced across the country, with a production capacity of 12 million tons (mt) of hydrogen per year (12mtH2/y) in 2030.
The US is well on track to meet its medium-term objectives. Pathways for clean hydrogen to decarbonize applications have been informed by demand scenarios for 2030, 2040 and 2050, with strategic opportunities for 10 mtH2/y of clean hydrogen demand by 2030, before ramping up to 20 mtH2/y by 2040 and 50 mtH2/y by 2050, representing a cumulative investment opportunity of $85-215 billion through 2030, and $800–1,100 billion cumulative by 2050.
Several issues remain to be addressed–the most urgent one being the implementation guidance of the IRA’s clean hydrogen tax credits.
The sheer scale of US support to clean hydrogen, combined with US assets, could make the nation one of the leading producers, consumers and exporters of clean hydrogen and its derivatives. Moreover, while the US missed the early opportunity to expand into electrolyzer production, the IRA has been a pivotal point, attracting US and European electrolyzer manufacturers to invest in manufacturing plants in the US and challenging China’s and Europe’s dominance. In April 2023, California-based EvolOH accounted for the largest share of projects planned to be operational in the world by 2030. The US could even become the cheapest producer globally and start exports of clean ammonia by 2027.
The strong business incentives for clean hydrogen have shaken up the global hydrogen industry and triggered new policy measures around the world.