The Department of Energy (“DOE”) issued on 12 January 2024 Department Circular No. DC2024-01-001 (“Circular”), otherwise referred to as the Hydrogen Energy Guidelines, providing for the national policy framework and roadmap for the development, production and utilization of Hydrogen in the energy sector. Recognizing the role of Hydrogen in the energy sector, the Circular ultimately aims to attain a more sustainable and low-carbon future and the reduction of greenhouse gas emissions.
The Circular applies to all activities related to the establishment, construction, operation, maintenance, decommissioning, and disposal of Hydrogen projects or facilities which involve research, development, production, storage, transmission, distribution, and utilization of Hydrogen Energy resources. This does not, however, cover activities pertaining to the exploration, development and production of Native Hydrogen and its Derivatives which are governed by Department Circular No. DC2023-11-0031 and PD 87.
In support of Hydrogen in the energy sector, the Circular articulates an important feature, that is, the availment by any qualified Hydrogen Energy Industry Participant (“Participant”) of the fiscal and nonfiscal incentives (“Incentives”), provided the Participant complies with Republic Act No. 11534, otherwise known as the Corporate Recovery and Tax Incentives for Corporate Entities Act (“CREATE Act”).
Projects whose primary purpose is to produce, import and export Green Hydrogen and Green Hydrogen Derivatives for power generation and other applications may avail of certain incentives under the Renewable Energy Act of 2008 and its Implementing Rules and Regulations (“IRR”). Likewise, activities related to the application of Hydrogen Energy in the transportation sector that utilize Fuel Cells may be entitled to the incentives under Republic Act No. 11697 or the Electric Vehicle Industry Development Act (EVIDA law) and its IRR.
Projects involving Hydrogen and its derivatives production from nuclear energy shall be deemed as energy efficiency projects and shall therefore be subjected to evaluation for the availment of incentives under the Republic Act No. 11285, otherwise known as the Energy Efficiency and Conservation Act (ECC Act).
In the same manner, enterprises engaged in research and development, establishment of support infrastructure, production or manufacture of machinery, equipment, materials, and components using Hydrogen and its derivatives, excluding Green Hydrogen, and Hydrogen Energy projects that are under the Strategic Investment Priority Plan (SIPP), may also benefit from the mentioned incentives.
Whenever a Hydrogen Energy project is qualified for two or more incentives, the Participant must only select one (1) to the exclusion of others. Furthermore, the registration or accreditation of a Hydrogen Energy project to avail of the incentives under one incentive regime shall, as a corollary, disqualify the same project from availing of incentives under all other incentive regimes.
To strengthen the implementation of the Circular, DOE organized the Hydrogen Industry Energy Committee (HIEC), which, among others, is responsible for the development, implementation, supervision, monitoring, and updating of the roadmap for Hydrogen Energy industry in the country; conduct capacity building activities; and impose fines and penalties on persons or entities found to have violated the following prohibited acts:
- Engagement of any Hydrogen Energy Industry Activity without prior notice to the DOE;
- Noncompliance with the Existing Hydrogen Energy Project of the Circular;
- Failure to provide accurate information or provision of false or misleading information as required;
- Violation of any of the responsibilities of the Hydrogen Energy Industry Participant enumerated under Section 18 hereof;
- Refusal to submit to on-site inspections and monitoring; and
- Non-submission of reportorial requirements.
To access the checklist requirements for Hydrogen Energy Projects and other relevant documents, a copy of the Circular may be accessed through DOE’s website.