Hydrogen

Tax credit uncertainty leads to hydrogen hub dropout

CNX cited delays and increasing uncertainty over implementation rules guiding the use of the 45V hydrogen production tax credit provisions of the Inflation Reduction Act (IRA) and an inability to reach final commercial terms with project developers in its decision.
Tax credit uncertainty leads to hydrogen hub dropout
A rendering of the Adams Fork project (Credit: Adams Fork)

Citing delays and increasing uncertainty over implementation rules guiding the use of the 45V hydrogen production tax credit provisions of the Inflation Reduction Act (IRA) and an inability to reach final commercial terms with project developers, CNX Resources Corporation announced it has ended coordination with the Adams Fork project and is evaluating several viable alternative sites in southern West Virginia for clean hydrogen projects.

The Adams Fork project fell under the Appalachian Regional Clean Hydrogen Hub (ARCH2), which will receive up to $925 million in federal funding as part of the recent hydrogen hub announcements. The ARCH2 project includes West Virginia, Ohio, Kentucky, and Pennsylvania and will leverage the region’s access to natural gas to produce low-cost clean hydrogen and store the associated carbon emissions (A process known as “Blue Hydrogen”).

CNX says it remains committed to supporting ARCH2 via use of its local feedstock, which it says is ideal for clean hydrogen production in historically disadvantaged energy communities across Appalachia. CNX says its final investment decision remains contingent upon tax credit guidance that unambiguously supports low carbon intensity feedstock projects that will facilitate the development of the regional clean hydrogen hubs, including ARCH2.

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The ARCH2 hub includes a diverse group of partner companies, including Battelle, Air Liquide, The Chemours Company, CNX Resources Corp, Dominion Energy Ohio, Empire Diversified Energy, EQT Corporation, Fidelis New Energy, First Mode, Hog Lick Aggregates, Hope Gas Inc., Independence Hydrogen Inc., KeyState Energy, MPLX, Plug Power and TC Energy.

The U.S. Department of Energy (DOE) on Oct. 13 named seven regional clean hydrogen hubs to receive $7 billion in federal funding, a long-awaited announcement for an initiative aimed at accelerating the commercial-scale deployment of clean hydrogen and driving down its cost.

Funded by the Infrastructure Investment and Jobs Act (IIJA), the seven H2Hubs are located around the U.S. and aim to jumpstart a national network of clean hydrogen producers, consumers and connective infrastructure. Each hub will include clean hydrogen production, storage, delivery and end-use components.

Clean Hydrogen is expected to play a particularly important role in cleaning up hard-to-decarbonize sectors like refining, chemicals, and heavy-duty transport.