Powering tomorrow Navigating the energy transition landscape 2024 - Flipbook - Page 12
Paired with
renewables,
hydrogen and
biofuels are primed
to accelerate the
energy transition
After years of cost constraints and
regulatory uncertainty, low-emission
hydrogen production is poised for
rapid growth — and regulators have
laid out a series of incentives that will
further cement its role in the global
energy transition. Meanwhile, markets
for biofuels such as renewable diesel
and sustainable aviation fuel (SAF) are
maturing, enabling major corporations
to pursue lower emission targets in the
short-term while electrification ramps up.
Green hydrogen production to accelerate
While hydrogen energy has been around
for over a decade, the European Union
(EU) and the United Kingdom (UK) have
recently recognized it as one of the few truly
carbon-neutral energy transportation and
storage options. To capitalize on this, the
EU has reached a provisional agreement in
its Renewable Energy Directive (RED) III to
ensure that hydrogen production is largely
green—that is, fueled by renewable energy
production rather than hydrocarbon fuel
sources—by 2030.
For its part, the United States (U.S.) Treasury
Department is contemplating the adoption of
similar measures as business leaders look to
leverage the In昀氀ation Reduction Act (IRA)’s
45V tax credit, which is aimed at incentivizing
low-carbon hydrogen production. Stricter
Treasury Department guidance would require
that hydrogen producers utilize clean energy
sources to qualify for the credit. Such a policy
would have the power to reduce carbon
dioxide emissions by somewhere between
250 and 640 million metric tons—but has
generated pushback from industry.
As biofuel markets mature, demand for SAF to
bolster the sector
Tier 1
Infrastructure, Project Finance
and Development
Legal 500 UK, 2024
12
The outlook for the biofuel industry in the
U.S. remains promising—and decidedly less
uncertain. The IRA’s 45Z tax credit will also
subsidize biofuels with lower greenhouse gas
emissions for the next decade, a stark contrast
to the yearly tax credit renewals legislators
have o昀昀ered in the past.
Hogan Lovells | Powering tomorrow: Navigating the energy transition landscape
