The GHG emissions impact of additional electricity demand in the United States can vary vastly over time given the American grids’ overall generation mix and the generating units running on the margin change throughout the day. Therefore, the real-time emissions resulting from grid-powered electrolytic hydrogen production can range from significantly in the amount of CO2 generated when producing H2 on a given day.
If the IRS does include hydrogen made from grid electricity, then it must consider whether emissions should be tallied on an hourly, monthly, quarterly, annual, or unrestricted temporal accounting method. Temporal accounting refers to the degree of alignment between the times when the electrolyzers are consuming grid power for operation and the times when procured clean energy projects are generated.
The more granular the time period, such as an hourly accounting method, the more assurance the government will have that the hydrogen producers are effectively offsetting induced emissions from their grid-powered electrolyzers with clean energy operating in real time. This is of particular importance because, as solar and wind generation increases on the grid, the daily variation of grid emissions increases, meaning a sub-daily measurement is required for accurate emissions accounting. In contrast, annual accounting schemes entail loose correlation between electrolyzers’ load and clean energy generation and allow electrolyzers that drive significant increases in grid emissions to be considered clean. Climate risk may occur when electrolyzers operate during times of high marginal grid emissions, such as at night when gas plants are running and renewable generation is low and supplement their electricity consumption with annual EACs generated by clean facilities with low marginal emissions abatement, such as from new solar projects in California that displace other renewables and insufficiently displace marginal gas plants.
Presently, there are significant challenges that make certain intervals of matching infeasible and costly. Notably, there is no harmonized and consistent national accounting standard and tracking system for all-day hourly matching. Although limited regional standards and systems exist, significant effort must be made to establish a new accounting system for temporal matching and for these standards to gain national acceptance.
Notably, the European Union (EU) contemplated the same temporal measurement issue last year. Ultimately, the EU reached a compromise this past February to phase in standards that count hydrogen as coming from renewable sources when its production is matched by generation on an hourly basis starting in 2030.
