The companies under a pending merger said the Inflation Reduction Act of 2022 contains incentives for the production of green hydrogen that should allow the post-combination company, Verde Clean Fuels, Inc, to add green hydrogen production to its existing syngas to gasoline plus other products (“STG+®”) process. By adding an external source of green hydrogen to Verde’s STG+® process, Verde expects to be able to utilize approximately two-thirds less feedstock while maintaining the same gasoline output with no change in total capital expenditures for its first facility to be constructed in Maricopa, Arizona.

The green hydrogen incentives are in the form of 10-year production tax credits that equate to as much as $3.00 per kilogram of green hydrogen produced. Verde’s initial facility is anticipated to use green hydrogen volumes that would result in the generation of approximately $20 million per year of production tax credits. The generation of these production credits could provide Verde with new and attractive financing alternatives.

Bluescape is currently in discussions with several green hydrogen providers to either acquire electrolyzer assets or form a joint venture to provide green hydrogen to Verde’s initial facility as well as to planned future Verde renewable gasoline facilities.