Hydrogen Gets a Boost

Electric aircraft will someday transform travel but won’t replace jetliners anytime soon — if ever. While electricity powers new urban mobility products, jets will increasingly rely on Sustainable Aviation Fuel, a drop-in substitute for JetA. For the long-term, the major air-framers and engine manufacturers are focused on hydrogen.

Indeed, hydrogen combustion has already fueled aircraft: in 1988, the experimental Tupolev Tu-155. became the world’s first liquid hydrogen-powered commercial aircraft.

After initial tests using hydrogen, the Tu-155 was converted to use liquefied natural gas. Eventually, with the fall of the Soviet Union, it was put into storage. 30 years later, hydrogen-fueled aircraft are again on the cusp of reality.

Hydrogen gets a big boost from the Inflation Reduction Act which includes a “Clean Hydrogen Production Credit” (Section 45V) which provides an incentive of up to $3.00 per kg for the least carbon-intensive hydrogen. Alternatively, producers can choose to defray initial facility cost via the Section 48 Investment Tax Credit of up to 30% (again, the percentage depends on the carbon intensity of the production process).

The Act also extends the 30% fuel cell ITC through 2024 before transitioning in 2025 to a technology-neutral clean-energy ITC. Similarly, a new 30% energy storage ITC also includes hydrogen storage through 2024 before transitioning to a technology-neutral clean-energy investment tax credit.

Other tax incentives to accelerate use of clean hydrogen include an increase to the 30% credit cap for the Alternative Fuel Refueling Property Credit from $30,000 to $100,000 along with credits for fuel cell vehicles.

Once the ink dries on the agency regulations, expect lots of hydrogen project announcements before 2022 is out because of the tight time limit to qualify for the highest subsidy levels.