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PowerTap Says Approval of New U.S. Inflation Reduction Act Gives Company Incentive to Expand Outside California in the United States

PowerTap’s CEO Says the New U.S. Inflation Reduction Act Will Allow the Company to Expand its Focus Into the Rest of America Due to the Attractive Incentives to Build Hydrogen Infrastructure

PowerTap Hydrogen (NEO: MOVE) (OTC: MOTNF) (FRA: 2K6B) provided investors with an update on the U.S. Inflation Reduction of Act (IRA) of 2022 recently signed by President Biden, which allows PowerTap to expand outside of California since the incentives are now also at the federal level.

The Inflation Reduction Act (IRA) of 2022 will result in an investment of $369 billion in energy and climate change programs and will avoid 6.3 billion tons of cumulative greenhouse gas emissions by 2030 (Princeton University ZERO Lab Preliminary Report: The Climate and Energy Impacts of the Inflation Reduction Act of 2022), amounting to a 40 percent annual emissions reduction compared to 2005 levels. The IRA provides the government support that PowerTap and the hydrogen industry have been waiting for to prioritize hydrogen as a solution that propels private sector investment in clean hydrogen. According to a recently published analysis from global law firm Shearman and Sterling, this critical legislation positions the USA as among the most competitive places in the world to develop green hydrogen projects across the value chain. It will inevitably spur other countries to develop subsidies of their own to ensure domestic production, and the IRA should therefore be viewed as a momentous boost to the development of a worldwide hydrogen economy. This significant U.S. government investment is a major step toward reducing the United States’ greenhouse gas emissions, which leads to the conclusion that hydrogen will play a meaningful part in that effort.

According to a detailed analysis provided by Recharge, the world’s leading business intelligence source for the renewable energy industries, the $433B Inflation Reduction Act of 2022 creates a tax credit that would pay PowerTap and other clean hydrogen producers up to $3 per kilogram (adjusted for inflation). PowerTap intends to maximize the available tax credits, closely following the criteria identified here. The size of the tax credits available to U.S. clean hydrogen producers depends on each project’s lifecycle greenhouse gas (GHG) emissions — and, more importantly, on how much staff are paid. The basic tax credit rate for “qualified clean hydrogen” is set at $0.60/kg, with a sliding scale depending on lifecycle emissions — measured in carbon dioxide-equivalent (CO2e) — of the hydrogen produced. Hydrogen manufactured with less than 0.45kg of lifecycle CO2e emissions per kg of H2 would receive 100% of the credit, followed by 33.4% for 0.45-1.5 kg CO2e/kgH2, 25% for 1.5-2.5 kg and 20% for 2.5-4 kg. The lifecycle emissions would have to be verified “by an unrelated third party,” and only projects that start construction before 2033 would qualify, providing benefits for PowerTap projects that will begin construction starting in 2023. However, the wage requirement in the new bill seems to be the most important part of the deal — multiplying the size of the tax credit by a factor of five. Producers would be eligible for this boost if they ensure “that any laborers and mechanics employed by contractors and subcontractors in the construction of such facility… shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor.” Importantly, these lifecycle emissions are calculated from “well-to-gate” — in other words, they would include upstream methane emissions in the production of blue hydrogen (which is made from natural gas with incomplete carbon capture and storage).

Source: ACB News YouTube

????Also Read: PowerTap Takes Part in Hydrogen Leadership Summit in Sacramento, California

PowerTap CEO Raghu Kilambi commented on the news, stating:

“The IRA will allow PowerTap to expand its focus into the rest of the USA (outside of California) due to the needed attractive incentives to build hydrogen infrastructure. We are also pleased that this legislation is awarding federal incentives, including tax credits, to both green and blue hydrogen producers in the United States. While we believe in green hydrogen (electrolysis) and have several investments in the green hydrogen space, we believe that blue hydrogen is the appropriate solution for the United States for the next decade due to the high cost of electricity that is needed to produce green hydrogen. We agree with Wes Edens’ (Co-Founder, Principal and Co-CEO of Fortress Investment Group, a US$ 50 billion asset manager) recent comments on CNBC that “blue hydrogen has the potential to have a much larger market share in the USA than green hydrogen due to cost advantages and the use of natural gas and renewable natural gas.”

With PowerTap’s focus on the use of a blend of renewable natural gas (RNG) and natural gas to ensure a zero to negative carbon intensity for its PowerTap Gen3 modular hydrogen production and dispensing unit (MHPDU), PowerTap’s blue hydrogen is the perfect solution for the USA market given the abundance of natural gas and book-and-claim RNG infrastructure as described in its May 2021 press release. With the passage of the IRA, the future of hydrogen as the green fuel of choice for heavy-duty long-haul transportation and existing fuel cell electric vehicles is all but assured. Given this and the current reality that there are only 100 active hydrogen fueling stations in the USA, thousands of hydrogen fueling stations are needed now and will be needed in the future.

In addition, this hydrogen USA federal tax credit that PowerTap expects to qualify for is on top of the State of California LCFS (Low Carbon Fuel Standard) hydrogen refueling infrastructure and dispensing carbon credits that PowerTap and other hydrogen producers will receive.

Click here to view the latest LCFS guidance from the State of California.

Learn more about PowerTap: Website | Investor Deck | MOVE Chart

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PowerTap Hydrogen Capital Corp. is a paid client of Wealthy V.C.

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Ryan Troup

Ryan Troup is the Editor in Chief of Wealthy VC and TCI. Ryan has 15+ years of investing experience. Twitter | Email

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