On November 3, 2022, Pennsylvania Governor Wolf signed Bill 1059, which amends the Commonwealth’s Tax Reform Code and, among other things, establishes the Pennsylvania Economic Development for a Growing Economy (“PA EDGE”) program, consisting of tax credits for four economic areas. https://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?sYear=2021&sInd=0&body=H&type=B&bn=1059.
Much of the publicity surrounding the bill has focused on tax credits available to promote a “hydrogen center” and the use of hydrogen-based technologies. over a period of 20 years.
In explaining his support for Bill 1059, Governor Wolf began by noting his belief in the importance of hydrogen’s role in addressing the effects of climate change. In its latest report, the Intergovernmental Panel on Climate Change notes that “hydrogen is a promising energy carrier for a decarbonized world” and points to hydrogen’s potential to “provide low-carbon heat for industrial processes or be used to direct reduction of iron”. ore.” https://www.governor.pa.gov/wp-content/uploads/2022/11/20221103-1059.pdf.
The governor then went on to note his belief that the use of hydrogen must be responsibly linked to emissions reductions and consideration of Environmental Justice.
That said, I recognize that for hydrogen to play a significant role in reducing emissions, we need to ensure that the hydrogen used is truly “clean” through strict emissions standards. We must also commit to protecting strong and equitable communities to prevent impacts on already overburdened communities and guide benefits to communities that need them.
Perhaps the most controversial provisions of the bill, or at least the ones that got the most attention in much of the press, were the provisions that also authorized a tax credit for the use of natural gas in the manufacture of petrochemicals or fertilizers. In explaining his support for these provisions, the governor highlighted his belief that they are stop-gap measures to help build a bridge to the future.
About, [the bill] also authorizes a tax credit based on the use of natural gas. This provision was included as a short-term backstop in case a production facility is built and clean hydrogen is not initially available. While I do not believe it would be possible for a project facility that was funded as part of a DOE regional clean hydrogen hub to use natural gas instead of hydrogen for a significant period of time, the bill requires a company to apply the credit. to sign a letter of commitment specifying the date by which it will start purchasing clean hydrogen. I expect this period of time will not exceed a year or two.
In addition to focusing on hydrogen technology, House Bill 1059 also provides tax credits for Pennsylvania milk processing, biomedical manufacturing and research, and semiconductor manufacturing. In his statement, the governor specifically acknowledged the need for even greater support for semiconductor manufacturing in the Commonwealth. “This program is a first step in helping chipmakers and their suppliers build new facilities in Pennsylvania, but we must continue to invest to make Pennsylvania a leader in this industry.”
Founding Father Benjamin Franklin wrote that “nothing can be said to be certain in this world, except death and taxes.” With the benefit of 21St In hindsight, maybe we can add hydrogen, natural gas and climate change to the list. . . ?