Science
After Fierce Lobbying, Treasury Sets Rules for Billions in Hydrogen Subsidies
The Biden administration on Friday made final its long-awaited plan to offer billions of dollars in tax credits to companies that make hydrogen, in the hopes of building up a new industry that might help fight climate change.
When burned, hydrogen mainly emits water vapor, and it could be used instead of fossil fuels to make steel or fertilizer or to power large trucks or ships.
But whether or not hydrogen is good for the climate depends on how it is made. Today, most hydrogen is produced from natural gas in a process that emits a lot of planet-warming carbon dioxide. The Biden administration wants to encourage companies to make so-called clean hydrogen by using wind, solar or other low-emission sources of electricity.
In 2022, Congress approved a lucrative tax credit for companies that make clean hydrogen. But the Treasury Department needed to issue rules to clarify what, exactly, companies had to do to claim that credit. The agency released proposed guidance in 2023 but many businesses have been waiting for the final rules before making investments.
The final guidelines that were released Friday followed months of intense lobbying from lawmakers, industry representatives and environmental groups and roughly 30,000 public comments. They include changes that make it somewhat easier for hydrogen producers to claim the tax credits, which could total tens of billions of dollars over the next decade.
“Clean hydrogen can play a critical role decarbonizing multiple sectors across our economy, from industry to transportation, from energy storage to much more,” said David Turk, the deputy secretary of energy. “The final rules announced today set us on a path to accelerate deployment.”
Initially, Treasury had imposed strict conditions on hydrogen subsidies: Companies could claim the tax credit if they used low-carbon electricity from newly built sources like wind or solar power to run a machine called an electrolyzer that can split water into hydrogen and oxygen. Starting in 2028, those electrolyzers would have to run during the same hours that the wind or solar farms were operating.
Without those conditions, researchers had warned, electrolyzers might draw vast amounts of power from existing electric grids and drive a spike in greenhouse gas emissions if coal- or gas-fired power plants had to run more often to meet the demand.
Yet many industry groups and lawmakers in Congress complained that the proposed rules were so stringent, they could throttle America’s nascent hydrogen industry before it even got going.
Among the concerns: The technology to match hydrogen production with hourly fluctuations in wind and solar power is still in its infancy. Owners of nuclear reactors also said that they had been left out.
So the final rules contain several significant tweaks:
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Hydrogen producers will get two extra years — until 2030 — before they are required to buy clean electricity on an hourly basis to match their output. Until then, they can use a looser annual standard and still claim the tax credit.
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In certain states that require utilities to use more low-carbon electricity each year, hydrogen producers will now have an easier time claiming the credit, on the theory that those laws will prevent a spike in emissions. For now, Treasury said, only California and Washington meet this criterion, but other states could qualify in the future.
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Under certain conditions, companies that own nuclear reactors that are set to be retired for economic reasons can now claim the credit to produce hydrogen if it would help the plants stay open. Existing reactors that are profitable would not be able to claim the credit.
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The final rules also lay out criteria under which companies could use methane gas from landfills, farms or coal mines to produce hydrogen — if, for instance, the methane would have otherwise been emitted into the atmosphere.
The guidelines “incorporate helpful feedback from companies planning investments,” said Wally Adeyemo, the deputy Treasury secretary.
Some hydrogen producers said that many, though not all, of their biggest concerns had been addressed in the final guidance, which runs nearly 400 pages.
“There’s a degree of relief that the rules are, on balance, an improvement from the original draft,” said Frank Wolak, chief executive of the Fuel Cell and Hydrogen Energy Association, a trade group. “But there’s a lot in the details that needs to be evaluated.”
The lack of clear guidance had been holding up investment, said Jacob Susman, chief executive of Ambient Fuels, a clean hydrogen developer that is planning roughly $3 billion in projects across the United States. “Now that we actually have something solid, we can get down to the business of building,” he said.
Environmentalists said that most of the safeguards in the original proposal to prevent emissions from surging had been kept in place.
“The extra flexibilities granted to the green hydrogen industry are not perfect from a climate perspective,” said Erik Kamrath at the Natural Resources Defense Council. “But the rule maintains key protections that minimize dangerous air and climate pollution from electrolytic hydrogen production.”
The Energy Department estimates that the use of cleaner forms of hydrogen could grow to 10 million tons per year by 2030, up from virtually nothing today.
But political uncertainty looms. A new Congress could repeal the tax credits, although hydrogen generally enjoys support from both Democrats and Republicans and a number of oil and gas companies have invested in hydrogen technologies. The Trump administration could also revise the rules around the credits, although that could take years.
Economics are another hurdle. Producing cleaner hydrogen still costs $3 to $11 per kilogram, according to data from BloombergNEF. By contrast, it costs about $1 to $2 per kilogram to make hydrogen from natural gas.
The new tax credit will be worth up to $3 per kilogram, which could bridge the gap in some cases but not all. Technology costs would have to decline sharply.
Even with hefty subsidies to produce hydrogen, it’s not clear that enough buyers will emerge. Around the world, hydrogen companies have canceled several major projects over the last few years because of lack of demand. Steel makers and electric utilities that might have interest in the fuel often balk at the costly equipment required to use it.
“These new rules will probably help, even if they don’t go as far as many in industry wanted,” said Aaron Bergman, a fellow at Resources for the Future, a nonpartisan Washington research organization. “But there’s still the challenge of finding the people to consume the hydrogen you produce.”
Science
China Launches Reusable Rocket in Race With SpaceX
Video released by Chinese state media shows a state-owned aerospace company launching a rocket and recovering part of it on Friday. The successful launch of a reusable rocket was a major step for China toward challenging SpaceX’s satellite internet dominance.
Science
Nobel Prize winner leaving UC Berkeley for new role in China
Nobel Prize recipient Omar Yaghi is leaving his role at UC Berkeley to lead the development of a new artificial intelligence institute at Tsinghua University in Beijing, the Chinese university announced.
Yaghi will head the AI Chemistry and Materials Research Institute at Tsinghua, where he was appointed an honorary professor in 2022. Known as AIMATRY (AI × Materials × Chemistry), the new center will focus on material design and synthesis through artificial intelligence, according to a statement from the university.
In 2025, Yaghi shared the Nobel Prize in chemistry with Susumu Kitagawa of Kyoto University and Richard Robson of the University of Melbourne for their development of metal-organic frameworks, a type of super-porous material in which metal ions and carbon-based molecules combine to form crystals with exceptionally large surface areas.
The material has the potential to combat climate change by capturing and storing carbon or other pollutants, and by extracting water from the atmosphere in water-scarce areas. Upon awarding the prize, a member of the Nobel committee likened the technology’s ability to store enormous amounts of stuff in seemingly compact spaces to Hermione Granger’s enchanted handbag in the Harry Potter series.
Yaghi’s Irvine-based company, Atoco, has said it will start taking orders later this year for its technology that harvests water from the air.
A representative for Yaghi said he was not yet available to respond to questions.
China is one of several countries that has been actively recruiting scientists from the U.S., where the Trump administration has slashed science funding, suspended research grants, fired science advisors and tightened immigration restrictions.
“For many, many years, our funding was very competitive; if you worked hard and you were doing good research, you would get funding,” Yaghi said of the U.S. in an interview with Scientific American earlier this year. “The current state is not so encouraging because of the cutting back on grants and support of science by the very agencies that many university researchers rely on.”
Yaghi was born in Jordan to Palestinian refugees, and immigrated to the U.S. when he was 15 to study.
“We’ve learned over and over in human civilization that scholars can move across borders,” Yaghi told the New York Times last year. “This is how knowledge spread and how vast regions of the world lifted themselves out of poverty.”
Science
Trump administration seeks to limit federal funding that doesn’t ‘advance’ presidential policies
A new rule proposed by the White House Office of Management and Budget would fundamentally overhaul the way federal grants are awarded and overseen — a sweeping change that one scientific society said “would all but end the use of scientific merit in the selection of grants and programs across the government.”
Proposed in late May, the rule would give political appointees unprecedented control over federal grants for research, education and infrastructure, and specifies that government funds can only be spent on projects “aligned with administration policies and priorities,” according to a copy of the proposed rule.
The rule would also restrict research topics, limit U.S. scientists’ ability to collaborate with colleagues in other countries and make it easier for the government to suspend or cancel grants at any time.
The changes are intended to improve “transparency, accountability, and oversight for Federal awards” while “ensuring that American tax dollars are not wasted or misused,” according to the White House office.
But critics say that if the rule is implemented, the final sign-off for grants will no longer be in the hands of subject-matter experts within individual agencies, but in those of political appointees.
“This touches all parts of American life,” said Dr. Eric Rafla-Yuan, a psychiatrist who practices at the Veterans Administration and San Diego County’s psychiatric hospital.
“Control of how all of the federal grants and programs are funded will fall under a small group of highly partisan individuals who would have very few limits on how they spend these billions of taxpayer dollars,” said Rafla-Yuan, who also chairs the Committee to Protect Public Mental Health advocacy group. “This touches everyone’s life, even if they don’t realize it.”
OMB published the proposed rule May 29, opening a 45-day comment period that closes July 13.
Opposition to the proposed rule has mobilized multiple sectors of society. Professional groups representing cancer researchers, civil engineers, county governments, medical schools, housing agencies, city and municipal governments, nonprofits and others have publicly expressed concerns about potential consequences.
By midday Thursday, the Federal Register logged nearly 100,000 comments about the proposal, many of them expressing concern.
“I understand the need for oversight, fiscal responsibility, and accountability. That is not the issue,” wrote Jack Feldman, a neuroscientist who holds the David Geffen School of Medicine Chair in Neuroscience at UCLA. “The issue is whether scientific research is to be judged by scientific merit, or whether it can be approved, denied, or terminated according to broad political criteria that may change from one administration to the next.”
Crucially, the rule converts policies governing federal grants from “guidance” into binding regulations that all agencies would be required to follow. It would give political appointees power to override federal agencies’ merit-based reviews and mandate that a political appointee review decisions to ensure that all awards “demonstrably advance the President’s policy priorities.”
The elevation of political appointees in what were previously merit-based decisions has alarmed many scientists.
“The proposed rule changes would all but end the use of scientific merit in the selection of grants and programs across the government,” read a statement from the Planetary Society, a nonprofit dedicated to space research.
Researchers and science groups have also expressed concern about a section of the rule prohibiting the promotion of “theories of disparate-impact liability” — a legal concept that refers to policies that appear neutral but cause disproportionate harm to certain groups.
The section’s vague language and many loopholes could have a chilling effect on any research that studies the effects of a disease, policy or public health intervention on any specific group of people, Rafla-Yuan said.
As an example, he said, “if there’s a specific age range that is at higher risk for suicide, and we want to figure out, well, what’s going on with people that are aged 14 to 19 … we can’t do that under the wording in this rule.”
New restrictions on collaborations with scientists in other countries would hinder opportunities for U.S. researchers and limit innovation, said Joanne Padrón Carney, chief government relations officer for the American Assn. for the Advancement of Science.
“Science is a global enterprise. Especially in biomedical and public health fields, diseases don’t care about borders or government policies,” she said.
California’s congressional delegation sent a letter Wednesday asking OMB to rescind the proposal, outlining concerns about its impact on scientific innovation, U.S. competitiveness and the fiscal stability of local governments, many of which rely on federal grants for local services.
The proposed rule grants the federal government broad powers to suspend or cancel grants for any reason, introducing “unprecedented unpredictability into local governance,” the lawmakers wrote, “leaving vital infrastructure projects unfinished and abandoning vulnerable populations who rely on these services.”
Republican Sen. Susan Collins has also asked the White House to withdraw certain parts of the letter and extend the public comment period, saying the proposed rule as written would “harm small and rural communities, undermine scientific and biomedical research, and conflict with Congress’ control over the federal funding process.”
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