Federal Fuel Cell Incentives Expire, but the States are Active

Stations  /   /  By Jim Motavalli

In early 2015, subsidies for fuel-cell vehicles are strictly on the state level, though that could soon change. On December 31, 2014, several important federal income tax credits expired, including an up-to-$8,000 credit for the purchase of a hydrogen-powered car, a 50-cent-per-gallon credit for liquefied hydrogen, and a credit worth up to 30 percent of the cost (with a $30,000 cap) of “hydrogen fueling equipment,” ie, filling stations.

The latter is a not-inconsiderable benefit, but it would be worth a lot more without that cap (because stations can cost several million dollars to build). As with subsidies for wind and solar, the hydrogen incentives could well be extended sometime soon, though the uncertainty is a damper on the market. Automakers, with Honda in the lead, are lobbying to have the hydrogen credits reinstated.

solar hydrogen refueling

Honda’s solar-powered hydrogen station in California with an FCX Clarity. (Flickr/Wintuth Tanyakul )

The $8,000 purchase credit was enacted in 2005 under President George W. Bush (a big hydrogen supporter) and applied to cars through 2014. It’s ironic, then, that commercial fuel-cell cars are finally hitting the market in 2015, just as the credits (which were essentially worthless for a decade) expire.

The Fuel Cell and Hydrogen Infrastructure Act of 2014, introduced by Senator Richard Blumenthal (D-CT) would have been a big boon for fuel cell infrastructure, since it would have increased the tax credit for refueling properties from 30 to 50 percent, and also remove the dollar limit. But the bill never made it out of the Finance Committee.

bush supports hydrogen

Secretary of Energy Spencer Abraham meets then-GM VP Larry Burns to look at an early fuel-cell car back in the day. The Bush Administration was a big supporter. (Energy.gov photo)

The scene on the state level is much more robust, especially in California, where fuel-cell cars are counted as zero-emission vehicles (ZEVs) by the important California Air Resources Board (CARB). That alone is an incentive for automakers to sell them there, but state subsidies are also available.

California’s Clean Vehicle Rebate project allows owners of fuel-cell cars to obtain $5,000 rebates. Through the end of 2014, 84 such rebates had been issued or reserved.

The California Energy Commission (CEC) awarded $46.6 million through the Alternative and Renewable Fuel and Vehicle Technology program to develop 28 new hydrogen stations (and one mobile refueler) in the state. Among the recipients of that funding are FirstElement Fuel, HyGen Industries, Linde LLC, ITM Power, HTEC Hydrogen Technology & Energy Corporation, Ontario CNG Station and Gas Technology Institute.

Honda said last year that it would supply $13.8 million to FirstElement Fuel to enhance the $27.6 million grant that the company got from the state of California to build stations. Toyota, introducing the Mirai, said it would also make a big contribution—12 stations in the Northeast (Connecticut, Massachusetts, New Jersey, New York and Rhode Island) to be built with partner Air Liquide. And that’s in addition to its $7.3 million loan to FirstElement to support 19 California stations announced in spring last year.

Fuel cells are also part of the Zero Emission Vehicle Action plan announced in late 2014 by eight states (California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island and Vermont) designed to put 3.3 million ZEVs on state roads by 2025.

Other state plans have some indirect benefits. Colorado offers a tax credit for businesses that convert their trucks to alternative fuels, including hydrogen. Connecticut supports stationary fuel cells, as does New York. If hydrogen fuel-cell trucks existed, Georgia residents could get a $20,000 tax credit for buying one. It’s unclear if forklifts qualify.

Fuel cell car buyers in Massachusetts can get a $2,500 rebate, the same deal that applies to electric car purchasers. In Pennsylvania, a $1,000 rebate applies.

Nothing in the U.S. even remotely compares to the full-court-press underway in Japan, where the government is committing $385 million to support fuel-cell stations and vehicle deployment in advance of the 2020 Olympics in Tokyo. Prime Minister Shonozo Abe was presented the first Toyota Mirai and proclaimed it “very comfortable” and said he wants all his agencies to have them. The aim is to put 6,000 fuel-cell cars on Tokyo’s roads by Olympics time.

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