Transcripts For CSPAN Discussion 20240704

Wherever you are. The opinion that matters most is your own. This is what democracy looks like. Cspan, powered by cable. Not to a discussion on the new Green Hydrogen Tax Credit Program made possible through the 2022 Inflation Reduction Act. To provide incentives to companies to jumpstart the Hydrogen Fuel industry in the u. S. Good afternoon. Thank you. Welcome, im shannon wolf, the Vice President for institutional strategy. In case you did not know, rff is an independent environmental think tank focused on the environment and a thriving economy. Thank you for being with us for this important conversation. The 45 hydrogen in tax credit considerations for treasury guidance. Its a complicated topic and we have a fantastic panel of experts here today. Jason, ceo of american clean power, nathan, senior associate at the u. S. Program. Already durbin, associate for policy at chamber of congress. Paul, policy engagement for electric hydrogen and kevin, fellow and director of our Climate Program will be serving as a moderator for todays conversation. The event is being broadcast live and also recorded. The recording will be available after the event so visit our website to check it out. I want to say hello to our virtual audience. You can ask questions in the q a box on your screen and we will be monitoring questions and get to as many as we can. Finally, if you would like to join the conversation on twitter, use the rff live. I want to thank supporters. We could not be having this conversation without you today, so thank you so much for being here and joining us. And for that, i will turn it over to kevin. Thank you to everyone for being here online, here in person. Thank you to our panelists for contribute in thoughts and perspectives as well. So to reach the u. S. Decarbonization goal is going to require a huge set of tools and lots of policy. Hydrogen has emerged as one of those tools because it has a lot of beneficial properties. You can use it as a fuel, feedstock, Energy Storage and 2d carbonized sectors that are challenging to decarbonizing and do not have other options. For these reasons, lawmakers recognized the value of hydrogen and Clean Hydrogen in particular. And invoked the 45 v tax credits in the Inflation Reduction Act. Now Current Hydrogen production is generally done from natural gas almost exclusively. Which unless you capture the emissions resulting from the process, can lead to emissions that are undermining potential decarbonization benefits of hydrogen. But you can also generate hydrogen from electrolysis, living hydrogen and oxygen from water which does not produce emissions but consumes a lot of electricity. In doing so, it does contribute to the Carbon Footprint of the hydrogen. So lawmakers were aware of this as well and they wrote it into the statute for 45 that they should account for the lifecycle of gas emissions when you are coming for the eligibility for the credit as well as the value of the credit that is actually given to producers. Now since the Inflation Reduction Act passed hydrogen has taken on increasing prominence. The epa proposed regulations for stationary sources generating electricity. It actually proposed including hydrogen as one of the best systems of Emission Reductions for natural gas units. In addition there has been a tremendous amount of activity on the outside, helping for the rules developed by treasury to be developed and thought about. We have had multiple fullpage ads that have been produced in prominent newspapers. My wife does not follow climate and energy but reports that Hydrogen Shows up in all of her favorite content. There is a looming showdown as reported between joe manchin and President Biden about the ultimate Implementation Plan that the treasury puts out, so theres a lot going on. There are a lot of groups on different sides of what the implementation guidance should look like but theres a lot of agreement on a very high level about the opportunity that hydrogen poses for contribute into decarbonization goals in the United States economy and the opportunity to grow a very domestic Clean Energy Industry that is currently basically in its infancy and capture a great opportunity. It a lot of agreement on those points. Tension and disagreement comes from thinking about how to incentivize and get that industry off the ground with minimal obstacles to slow it down. While also setting rules for the long term. So that the decarbonization benefits of hydrogen actually are recognized and the hydrogen is produced and electrolyzers onboard are ready to reinforce the d carbonized grid. So today we are going to, you know, be able to explore some perspectives on different approaches implementing the 45 tax credits. Im looking forward to the conversation and hearing what everybody here thinks, getting it right in the context of treasury guidance. Thank you very much for being here. The way we are going to structure the program is we will have each panelist give opening remarks, then we will have a moderated panel discussion, then we will open it up to the great people in the audience an online to ask questions and we will go from there. Thank you again for being here. Take it away. Thank you, kevin. Good to be here at rff with lots of old friends. The last day of july, we are in a windowless room talking about 45v and mission alley. Im sorry. We are here because this actually does matter. And i want to give you a sense of why the American Clean Power Association thinks this matter so much. Talk about the larger challenge, which is really fundamentally the rff sweet spot of decisionmaking under uncertainty and innovation policy. And then a little sense of how theyve tried to balance this. As kevin said, there are people on all sides of these issues and they are all members. We have folks on all sides of the issue and we decided to come out with a pathway to navigate uncertainty. On why we were here, we are all working on Climate National security things for a long time and there is one sentence that gives you a little bit of a sense of how this might be possible. Basically to electrify everything you can while decarbonizing the grid. Easy to describe, hard to achieve. The problem is you cannot electrify everything as kevin indicated. Big parts of our economy domestically and globally do not lend themselves to electrification. Steel, heavy freight transport, aviation, so that has always been the missing piece. In this narrative of success. So here is where Green Hydrogen fits the bill. As kevin said, it can do a little bit of everything. The clean Energy Transition. So it matters, right . If we do not figure out a way to provide a zero carbon solution, we are not going to solve it. So there is a lot of urgency and imperative to get it done. Here is the problem, none of us know the answer. The industry does not exist. We do not have a Green Hydrogen industry. We do not have zero and nisshin steel facilities, airplanes that travel. We are all making projections about a very important future. The stakes are high but the truth is none of us know. Interestingly in the past in an absence of knowledge, that tended to create a sense of humility. That is not how washington works today. The reason i think this issue is theologically intense is everyone is just making it up. We are all making our best guesses based on models. All models are wrong, some models are useful. Were tried to figure it out together. So here is where atp has tried to come forward with what we think is kind of a balanced proposal. That is recognizing remember the issue in simple terms is Green Hydrogen is great, it can make clean power. But what if we start to build electrolyzers faster than we have clean power . That could require other power, is not zero omissions and you create an indirect increase in omissions. Worth noting, we do not worry about that in the transportation sector right now. When it comes to electrifying transportation, the thought was we have to change the demand from fossilbased transportation to electric based transportation. The grid is going to clean up, it will all work out. We decided to take a different approach when it comes to Green Hydrogen. There is a reason for that. We are worried that if we start to build electrolyzers to fast we are going to outpace Clean Energy Production and that could increase emissions. So we talked about region audi and additionality. Time managing. We will get into all of these. I would suggest what we have proposed is just to acknowledge fundamentally, you can turn the dials too far in either direction. If you dont have constraints at all, we are concerned that actually we will not be moving toward the public goal of decarbonization. We are embracing originality, making sure that the new power is in the same place being used. We are embracing additionality. Not everybody on the stage is going to agree with that. You have to have brandnew clean zero emission power. To power your electrolyzer if you want the green credit. That was a tough one. We are committing to a transition. Youre going to love this one, annual to hourly time matching. We will get there. But basically to make sure clean power is generating power at the same time as we are using the power. That would be incredibly expensive right outofthebox. All those things right away, you basically do not have a Green Hydrogen industry. If you have none of those things are not putting enough ambition behind the system. We are suggesting tight regionality and phasing in a management so that facilities that Start Construction before the end of 2028 can have a more flexible annual requirement that then transitions. We are all guessing about how much power will fall into the more flexible regime. Our goal is to provide enough first movers that you actually have an industry. Modeling makes us think 10 of the goal will happen in that first period. We are encouraging the first 10 in the industry. Maybe it is 4 , maybe it is 16 , we do not know. But its basically how do you make sure that we get off the ground . If we dont we will not have a strategy to achieve our climate goals by mid century. Possum, thank you so much for those comments and thank you for having me awesome, thank you so much for those comments and thank you for having me. Im a senior associate at the Rocky Mountain institute and we are a clean Energy Think Tank focused on decarbonizing the Global Economy as rapidly as possible. We have experts including experts in clean energy procurement. Who have intimate knowledge of the Hydrogen Industry and are experts on industrial decarbonization of all flavors. There is a lot to discuss today but my comments will focus on grade connected electrolysis. He Hydrogen Production tax credit caught all of our eyes in 2021 when the bill was proposed by congress. The top credit is the most valuable credit by head and shoulders in the Inflation Reduction Act in terms of dollars per energy as well as dollars per energy abated. If the hydrogen is used to abate dirty Gray Hydrogen and 400 50 per ton of co2 abated if you add on the stack ability of the Clean Electricity credits. 300 if you exclude it. Low Cost Hydrogen as jason mentioned is a core Building Block of a low carbon economy. And if designed well, the credit is perfectly designed to cover and make decarbonization of financially competitive in heavy industries critical to the modern economy. But to achieve this vision of decoupling from fossil fuel, there is a puzzle at the heart of this credit. That puzzle will define the next era of the Energy Transition. Over the past two years the puzzle has drawn in 20 staff across every program. Almost every program in our institute. And lead to all beds, countless reports and fancy baseball podcast advertisements. It centered around one question, how do you prove the electricity you are consuming is low carbon when you have a dirtier grade . To understand this challenge you first must understand the law. The log refers to a lifecycle admissions calculation and specifically to a model, the greek model, in order to calculate omissions. In this model grid connected producers have one option, use the grid average omissions. If you look at the grid model, the output is 20 kilograms of co2 per kilogram of hydrogen. That is double d omissions rate of currently methane produced Green Hydrogen. 30 to 60 times depending on where you are dirtier than being able to qualify for the credit. No grid connected project would qualify for any credit in any grid. The logical next step is to say great. May be an off grid system powered by zero carbon electricity should count and this would be simple and noncontroversial and treasury could release guidance enabling this pathway today read but that was the end of the story, we would not be here today. In the congressional record there is an opportunity. A phrase that is the foundation of all of this debate. The intent of congress is to enable a claim system that reduces effective Greenhouse Gas emissions. So breaking this down if a producer books or ads clean capacity or power to the system, they could to claim this capacity for their hydrogen facility. In the system has to reduce effective Greenhouse Gas emissions. It cannot just move emissions from one pocket into the other and claim the pocket has no omissions while the overall emissions remain increased. In the omissions we have a term that describes the system that reduces effective Greenhouse Gases. That term is additionality. It means quite simply the system is effective at reducing emissions. As a result, not any one standard or requirement. It is an ideal, a goal, a point of an omissions counting system. It is the accounting framework that treasury is tasked to design. Lets be clear about the complexity of the task. There are many tools that you can use to build a system like this in the real world. Time matching, vintage, location contracts, double counting. The list goes on. We included our recommendations in the blog we released last week. Two types as jason mentioned, we risk forcing all projects behind the meter and not getting the outcomes that we want. To lose the rff would be unable to do his was between the lowest Carbon Hydrogen in the country and risks poisoning the well or confusing all the industries that rely on hydrogen. In that messy middle is a solution. A solution space that is productive but not perfect, that balances omissions and appointment. Some might ask kevin we already solved this system . And yes, in the first phase, sure. Renewable energy was scarce, expensive and you could drive the transition forward by covering the extra cost, buying Renewable Energy certificates and these tools served their purpose well. But now clean energy is cheap, the Inflation Reduction Act is law in the binary bottleneck is not always money. Study after Study Confirms that the wrecks of the past have been inaccurate and ineffective and we are in the next phase of the transition. Treasury will need a system that can do better, we all do. It needs to be calibrated to the current economic, technological and policy landscapes to achieve its congressional attempt. Congressional intent. The controversy flooding the zone is not just about the facts or the law. There is a lot of money on the line and Everyone Wants in. This standard is so much more important than any single project or any single company. This Emissions Accounting system blessed by the u. S. Government potentially for decades will have ripple effects. A lot depends on truly Clean Hydrogen. International trade agreements for clean steel and fertilizer procurement programs. Epa clean power plant rule as mentioned. State policies, even fcc Disclosure Rules to avoid greenwashing. As the largest credit, this will set a national president. It could be a huge step forward. Its durable and effective at reducing emissions in the real world. While the structure of the credit for subquestion for hydrogen first, this is not the last time that we will have this debate. In the european union, india, state officers and boardrooms across industrial electrification, the same questions emerge. This is not a debate about emissions versus deployment. It is about solving the dual challenge of decarbonizing the grid while adding massive new loads. If in omissions and economics are aligned as the law requires, then we have not only the opportunity for exponential growth in the industry, but also exponential decarbonization. That is the only force that will get us to the finish line in time. Thank you and i look forward to our discussion. Thank you, kevin. Thank you for the invitation to be here today. Marty with the u. S. Chamber of commerce. And i appreciate the comments and several panelist here. It is often described as it was today that this is a very complex and complicated question that we have in front of us. I would argue we have made it complicated and it can actually be fairly simple. On how best to address this and meet the shared goal. To take a step back, some things we all agree on that we have heard. Everyone agrees we need to be focused on accelerating decarbonization of the economy at large. I think we all agree that we need to be building out the hydrogen economy, especially to help those hard to abate sectors of the economy. We would all agree that one of the things you need to make that happen is private sector capital. How do you bring the investment into the sector to make that happen . In our view, congress was clear about the intent. The intent of the provision as we have heard again and again is to provide incredible funding and incentives to help the buildout of the hydrogen economy. And in order to do that, in order to help not only decarbonizing those hard to abate sectors but Broader Energy security, job creation and that is one of the reasons youve got such a focus on these Hydrogen Hubs that we have seen it i like to look back a few years and see what the u. S. Has done to put in place policy that will help us move toward ambitious climate objectives, starting with the energy act of 2020, which im happy to say was a very bipartisan effort that really helped the drive toward innovation. And the role that the federal government plays. Following up not only the funding of those programs but the bil, chips and science act, ira provisions, all of these things are putting the u. S. In an incredibly favored position to be able to drive toward these broader objectives. So the question is why then would we consider putting unnecessary restrictions in place for the 45 v tax credit that we know will be in a normas driver of investment into the sector across the entire sector and supply chain. Producers, distributors, the infrastructure and of course those who are using it at the end, the off takers if you will. And there has been huge interest of almost every player in the sector, here in the u. S. But also from around the world. Companies looking to the u. S. To be able to be part of what is going to be a growing sector, a growing industry here. That is because of things like 45 v, probably that more than anything else. In our sense, to address the emissions tradeoff issues, you address that by focusing and prioritizing on the most challenging, most challenging sectors in the longerterm emissions horizons. So theyre very well may be higher emissions at the front end of this but when you know that the overall goal if we want to have an economy in place that can drive emissions down throughout especially in these are hard to abate sectors, thats what we need to be focusing on. The fact that we need to keep in mind is that the electric grid, electricity is green today and getting cleaner thanks in large part to a lot of the incentives that exist in the ira and other bills that have been out there. We believe it is crippled that we have flexible credit rules that will help to grow the demand for that hydrogen center, that will help further incentivize the types of investment and innovation for producers and those who are going to be building out the infrastructure necessary to get us there. I am confident that the market will help to drive further those innovations and that investment and help drag down those costs of hydrogen. That is, you know, i will not call it a Virtuous Cycle but thats whats going to help get everyone very focused. We can build on not having to wait for just the right mix of emissions and the grid and what have you. No, lets get this out there now and get the industry built out as quickly as we can. So that we can start to incentivize the innovation that we have seen again and again. I will tell you as a quick side example and some may not like the analogy, i of course went to api 2009 at the beginning of the shale revolution. I looked at that saying no one had predicted what was coming, that we would be producing as much natural gas as we should be in a short timeframe because the market was driving people toward this. When it up not only becoming the Worlds Largest producer driving Carbon Emissions down because we were displacing coal, facilitating and acceleration of renewables on the grid. Those were not predicted and those were driven by market factors. Ill tell you another story at the front end of that. It took a company about 32 days from the day to getting it into production. Within one year it was down to three days. The amount of innovations that you can start to drive through incentives, these were just market incentives. Here weve got actual tax credits that can drive through the economy. I do think it is worth noting that im sure some have seen certainly we have looked at the analysis and power to show what is the cost of having restrictive credit rules. And you know, in sum, their Analysis Shows less investment, fewer jobs, less demand from the hard to abate sectors that we need to be able to drive production here. In a loss of abatement potential overall. I should also just note that we do not want to be in a place where we think that just because you are not linked to new solar for Hydrogen Production, you are not bad. We are all trying to get to the same place as far as Hydrogen Production and Getting Hydrogen to drive down emissions. So i will kind of wrap up by saying we know that there are existing challenges to getting more transmission out there, whether that is permitting or interchange rules are as we saw from the doe report on the pathway to hydrogen, in order to get we take 200 gigawatts of new renewable to produce 10 Million Metric Tons in 2030, i would not be optimistic about getting that much on the grid in that time. But overall, i will just say this type of incentive, the incentive with Everything Else is really a shining example on how u. S. Government, the biden administration, they are driving us toward ambitious climate objectives that we all share, so thank you. Hi, im paul wilkins, Vice President for Public Policy and government engagement in electric and i want to thank heaven and resources for the future for having us today and having this panel. Last week my wife was on a run one morning and she came back and said i was listening to my Spotify Beyonce playlist and i got this ad for Clean Hydrogen. Isnt that the thing you are always talking about . So that tells me either spotify needs a better algorithm or there is a lot of money being thrown around at this issue. I will get into why there is a lot of money being done around but let me introduce electric hydrogen first. Electric hydrogen is a startup of electrolyzer systems. We are headquartered in boston and the bay area and we Just Announced in may our first gigafactory located in evans, massachusetts. This debate has been framed in the press as a debate between emissions and deployment. And electric hydrogen, we only think that gets the issue about half right, here is why. First it is about omissions. You heard from nathan and other panelists. If you get the rules for grid connected electrolysis wrong you will drive up emissions and all the best studies indicate that. Its also about deployment, but it is less about the volume of deployment and more about the type of deployment. Thats a really important issue for the industry and how so i will get to that point in a second and unpack that, but first i would like to talk, as marty did, about what we agreed on. Every buddy here agrees that hydrogen is an essential tool in the Energy Transition and for hydrogen to have the role that it needs to to keep pace on the Energy Transition, we need to produce about millions of metric tons of Green Hydrogen by 2020 2030. You need 100 gigawatts of electrolyzers online by 2030, if they are producing at a utilization rate at 60 . That is what we agree on. So what are the conditions that are going to help us get to that and set the stage for that level of deployment . I think there are two things. One, you have to have a rocksolid integrity around the molecule. Taxpayers and customers need to know that the dollars they are spending is getting the decarbonization they have been promised. You also have to have Cost Reduction and domestically produced Hydrogen Production storage and consumption. Lets compare, for a second, how well the three fillers or not having those requirements performs in trying to drive that condition. Ill start with temporal matching because we think that is the key driver for the type of Hydrogen Industry youre going to get. Lets also take one step back and level on what the big cost drivers are in a Green Hydrogen development project. The biggest levers are three things. What the is cap x is of your life riser electrolyzer. It reduces the cost of hydrogen and your lco h. If we are taking a look at what no requirements would mean for each of those factors and grading the type of Hydrogen Industry we all want. Creating the type of Hydrogen Industry that we all want. If you dont have a requirement for temporal matching, there you are essentially incentivizing them to run their electrolyzer as close to 100 as possible. This means that hydrogen developers, incentivized by a lowlevel electrolyzer, would not ramp up production. They would not have to. This might seem like a wonky concern, something deep in the weeds, but it is the whole ballgame, heres why. And electrolyzer that does not need to ramp, increase its missions, and electrolyzer that cannot ramp increases cost for other electric users because it cannot be responsive to price signals. An electrolyzer that cannot ramp increases great congestion and brownout possibilities. It is also more likely to be produced in china. By next year, the u. S. And canada will have about three gigawatts per year of manual production capacity. China will have 13 gigawatts, four times what we have. And 90 of the market in china is dominated by lowtech electrolyzers with limited ramping capability. Why would we adopt rules to incentivize the kind of electrolyzers that are a third of the cost of those in the west . If the treasurer requires treasurer requires hourly matching, you will notice credibility hits because the molecule is created at the same place and time Renewable Energy is printed on the grid. The developer cannot rely solely on utilization in order to drive down the cost of hydrogen. You will have to play with those other two levers. And that creates price competition which forces down price and the cap acts of your life riser. This also forces you to find the highest capacity makes us wind and of wind and solar production. It also incentivizes innovation. We dont know what the grid will look like in 10 years, but we know that it is going to have a higher percentage of renewables on that grade. So we need to make sure that we are innovating, incentivizing a flexible Hydrogen Production storage and consumption system. In the u. S. , we do did innovation better than anybody else. If we incentivize innovation, we are confident that the u. S. Industry is going to win. If the treasury incentivizes lowtech, china does that very well and to scale. I will conclude by saying the rules risk creating a bridge to nowhere for the u. S. Hydrogen energy. Temporal matching is key to drive innovation, Cost Reduction, environmental integrity, and a domestic industry which has the conditions for longterm success. Thank you and i look forward to your questions. Thank you to all of the for those. You for those. I want everybody to see how well eveready kept up with the knowledge here. Heres last piece on temporal matching, lets catch everybody up with what he was referring to by hourly matching. The idea that when youre an electrolyzer is running, that the Clean Electricity that you are saying you are using is also running at the same time, so you can only actually take the electricity that is running at the same time that the hour that the electrolyzer is running. That is a key fundamental piece that has been referred to as one of the pillars, big three pillars that were talked about. Lets talk about that a bit. You made a compelling case for why hourly matching is an important piece, you did not talk about quite as much, that is a piece of art extension. Jason, you said that matching it is a good idea in the future but not out of the gate. Lets start with, marty, i think we think that it is right out of the gate, you said, but it might be good in the future. Lets talk about that first piece, the facing end. Phasing in. Are we ashley ready for hourly matching out of the gate, and if not, when would we you ready based on the availability of timestamps and environmental attribute credits and all of that within the domestic market . The key thing is the industry. Its a big, complicated industry. We have made a strong case for why your technology would do really well with hourly matching, and it sounds like a wonderful thing. There are other Business Models that have a different imagination. And the premise that would bring forward is that innovation is messy, uncertain, and we are trying to invest hundreds of billions of dollars. This entire community has gone from desperation to overconfidence in the signing of legislation. Remember offshore wind and how it would basically too cheap to meter . Look at today. We are struggling with supply chains, permitting issues. We have to find a little bit of humility in that space between everything and nothing. Acp, we need hourly matching, that is where europe is moving, we need to have a unified global premise and as this moves forward and as everything gets cheaper we think that the industry can handle that restraint and stay competitive. The first facilities, maybe in 2027 or 2028, they are going to get the first ones online, you are going to need three or four years of space so that you can bring this technology forwards and have people have the confidence to invest in that. I think we are arguing that if you Start Construction before january 2 of 2029, which gives you four years to place the machine and service, before 2033, you can create a time match with the additionality requirement, and the risk to the environment would be very very small and the payoff very very great. That is our proposed transition. Its easy to argue everything and for nothing, and we have to make a compromise in the middle. Put some dates down. We put some dates down. Are they perfect . No. But they are the other ones out there, so they are perfect. Because no one is struggling with this kind of challenge. They Accounting System is not ready, the manufacturing system is not ready, the economics are not ready, ready in five or six years . Absolute. Absolutely. And you think that Hydrogen Cells will be active in 2028 . It could be 2031. We have all watch this innovation process happen. Thank goodness they stuck it out. That was a lot of lot tougher than we thought. Its tough. We have to have a little bit of humility and in innovation policy. We may never get off the ground if they make it too precise. Its been a while since we spent time picky about temporal matching. I would agree with jason that policy probably needs to be somewhere in the messy area. Lets keep in mind a couple of pounds. For those who are familiar with it, the you struggled with this question, where they settled was hourly matching after 2030, no grandfathering projects. There is a wealth of differences between the u. S. And the eu. In the new, they have to implement a policy. We dont have that. Registries just have to adopt it. The largest rto in the country already offers hourly matching. Most other pets of the country can offer it. Parts of the country can offer it. The tools are out there and Market Players are starting to do utilize hourly matching. The tools are there. Is there going to be a little bit on bass . You have to be humble about it . Yes. But the tools are there. The second thing that i would say is that you can make a compelling case for having a face and to allow for earning to make sure that the tools are airtight and built out. There is risk in waiting too long and it here is one of the big risks. If you have a standard that happens in the late 20 20s and you can safe harbor equipment that will last for a few years, you can really wait to purchase your electrolyzer until into the 20 30s and then you have a project potentially grandfathered in. You are incentivizing some of those developers to wait as long as possible in the hope that electrolyzers come down in cost. We also need to get deployment out there because we are going to have to learn by doing and we are going to have to make some mistakes. But you need to get election visors out there, you are incentivizing producers to actually wait to purchase their election visors. Electrolyzers. This is not ready today. We did cite the you and the you and their faces so we dont have a perfect date on that. But i think more broadly, if the criteria are too restrictive at this point, that 2027 date could just keep going out. Add to that the issues with permitting and Everything Else. We have to do all we can as quickly as we can to incentivize players to get into the space. Across the board. From the electrolyzers to the demand side of this. What we have to do is drive the innovation needed so that we can get to the Emissions Reductions sooner, and in what i think will be a more meaningful way. I would like to add that we believe in phaseout system of annual matching is also possible. It is possible if you have a good amount of that low growth rate of industry to have more flexible standards, to make sure that there is not a dependency in some regions of the economy where maybe electrolyzers can thrive but the systems are not ready. As jason mentioned, it is not a matter of dates. The dates that we have proposed publicly is 2028. Europe is 2030. After that, all systems will be required to match do hourly matching. When you are talking about a National Scope to emissions, one backed by the largest single credit in the inflation protection act, reduction act, crating that structure will have ripple effects. Out until 2042. And we might have problems in the Emissions Accountings world where nobody knows what is legitimate. It might be worth noting, why do push for people push for annual matching over hourly matching, and it has to do with what resources they think they have available and what technologies that they are pulling into this problem. If you have a solar only system, hourly matching will be challenging, and it is not going to be the first system built. If you have a lot of wind or storage or batteries or a lot of different parts of your system, then hourly matching can, in fact, work for that specific region. Some areas are blessed with more clean power than others. It is also worth questioning why is annual matching so much cheaper than hourly matching . And the answer is that it is expensive to provide base loads of clean power. Youre not getting base load clean for 708090 dollars per megawatt hour. If you produce at a time when lowcost renewables are available, you can create an optimal system at a lower cost. Remember, 70, 80, 90, . 30 per kilo of hydrogen. A lot of people who have done this optimization work think that there is need for these systems to get to those Cost Reductions that we all believe that we need. And we are going to need to firm this hydrogen, not necessarily with the most extensive electrical farming systems, but by storing it firming systems, but by storing it in banks or caverns because we find that its cheaper to get that same outcome. When you look at the optimization, the need for flex ability is ever present. And, of course, there is a need to transition to that system, but it is important to know that the reason why it is cheaper to do annual matching is because we are firming with natural gas. With fossil fuels. There is that dependence that you are baking into the optimization process, that is the most optimal way forward. We are trying to move away from fossil fuels at a point when the industry is about to go parabolic. That is why we believe that 2028 2032 range is the right phase for the phaseout. So we can build a system that action works. We are all in on clean power. And theres two ways to make it simple. You can have a renewables only, Hydrogen Production concept, where you dont use electro lights all the time, we are working on it, but is still in intermittent power source and there is a model that makes that work in some cases. There are some cases where you can optimize for just renewables and run the electrolyzer 4550 of the time. Sometimes that works. And sometimes you feel like you need to run at 90 of the time. Both of those options make sense, but neither of them is the only one that makes sense. We just need to think if we are actually going to try to innovate and build a brand new instant industry with this much uncertainty, the government should be trying to encourage a bunch of different experiments in that space. We can argue about what is the right timing, we are all circling on this. The intensity of our circling is what i have a hard time understanding, since we are all making it up based on complicated models. I feel like we are all moving in that kind of direction. The details do matter. Ultimately, by the mid century, if we have any hope of having any kind of sustainable, noncarbon, net zero secure power, we are going to have to address this large segment of our comic and there is no other solution that anybody has suggested on the scale of Green Hydrogen. We need to be careful not to be so exact that we actually take away the larger benefit of the program. I want to follow up on one thing that nathan was saying. And actually, in the paper that they put out, its not that there should be a transition in 2028, but that starting with hourly matching with potential risk being deleterious to the industry getting off the ground. Is that correct . What we see across the board, if youre actually trying to build clean power to meet the new clean load and not depending on fossil assets is that there are a lot of regions in the country where they are kind of on the line. They are close to being productive, but not quite there. We need a little bit more Cost Reduction, a little bit more time, in order to get to a place where we really do believe longerterm that these are optimal regions for electrolyte Hydrogen Production, knots, not, say, and electrolyte pathway. Within that first time. , its really hopeful to say we can move forward with these marginal projects and really get this sort of phasing of projects that can truly be competitive. It is kind of a choice, a Technology Pathway that you can actually move a lot of projects into one that is closer to it and electrolyte it electrolytic and nonfossil fuel resource. We found that timescale up to 20 32, with all of these models based on sensitivities, we found that was optimal for emissions reduction. We do agree that a phaseout. For annual matching does make a lot of sense. I want to tack onto what both of them were saying, and we need a flexible approach here. Clear and flexible from the treasury. I greatly respect coming up with a date and all of the Emissions Accounting that you guys do, its incredibly helpful to get into the process and instructive. But they are also models. Some of the unknowns we have seen in other cases, like with natural gas, get the market moving out there and see if competition will continue to have drivers from shareholders and investors and the work force of the company trying to become part of the hydrogen economy. Low competition, then trying to create their own center there, i dont see people sitting back and taking the easy road. They will try to figure out how they can be the most innovative and efficient and how we can drive down costs. That is where i think there is some risk. Im dying to continue to dive into these questions. But im going to take it back a second. You have all talked about uncertainty here and decisionmaking under uncertainty. What can the treasury do to actually allow itself to not be locked in to any given approach. So that it can be revisited in time, treasury is hopefully listening right now, i dont know. [laughter] they have to lay something down. There is a cost and an action. Paul can tell you as a developer, all of our members. People are waiting to make hundreds of billions of dollars. Based on the treasury doing something. Our hope is that the treasury is willing to take that first step. The great thing about democracy is that it is always changing. These are not the rules, the forever rules of the industry, just like the epa continues to make change all the time. But they need to lay something down and be confident that people can be reliant on thirtyyear investments in energy infrastructure. If they dont believe that the treasury can be relied on for investments they are going to canoe to wait. Continue to wait. If they are going to make an active i dont know if theyre going to be inactive or restrictive, we just need flexible rules that we can count on for a decade. I will jump in and say that the treasury needs to set the rules of the road and make them as clear as they possibly can. The reason that we have a level of confidence around the ability to meet those requirements is looking at historical precedent. The clear Clean Air Act amendments are a classic example of a lot of industries saying this guy was going to fall and costs would be too high, the rules came out and lo and behold, industry and innovation and competition one the day and it is one of the most successful environment or programs that we have. Similarly, when deq announced their version of the three pillars after in the time since the announcement in february 2 now, you had projects go up by 10 , just announce projects, but the number of projects in advanced planning or some kind of interim planning actually went up by 30 . We are confident and developers are out there developing three pillars compliant projects. The sooner they get the rules of the better, the clearer they are the better, but we are confident that they have high standards. It is worth questioning, when there is uncertainty, what way is bias . If they designed this system that is not perfect and does not produce booking claims or Greenhouse Gas emissions, does the treasury say, you know what, everybody qualifies. We could not figure this one out and this is going to be standard, and we are going to be expensive with who is in. A party where everybody is invited. Or we could not figure this out and therefore i am sorry this is not a pathway, yet. I think that there is a bit of an asymmetry when you set up this kind of standard because you can start with some strict standards which we are very very sure about and keep adding overtime. I know with state harbor systems we have seen additions of new pathways as we have figure them out, as the rubber hit the road and the industry learn things and we needed to add new options. For a lot of these things, we dont have a good idea, how do we do with curtailment . Clean power does not necessarily come from Nuclear Power or new clean capacity, but we know that there is probably an option to make that work. I think that is a big one. And there is going to be continual pathways that you could continue to add to say this route actually does work, this route does work, lets add that. This route we were wrong about. This does not work. Is the treasury going to pull that route and potentially topple over all of the projects that depended on it . Thats not a good outcome, and it would make the lobby push that we see here today look like a walk in the park. There is this asymmetry about flex ability in uncertainty and we learn more and more as we go, but we think that if there is going to be humility and caution moving forward, thinking about are we actually reducing effective Greenhouse Gas emissions and are we sure about that, that is the foundation for certainty and your ability to meet the standard for the decades to come that it needs to last. And we need to stick together to defend these rules. Like it or not, we are in this together. I should know, marty is out on his position allie, i think you are giving him a real light right on this. No offense, marty. Little back, if you had to build new, noncarbon power to add to have an electrolyzer gain access to that credit, its not bad. It not perfect. But there are still opportunities where you could have countries where the grid connections will have shortterm increases in emissions. You could