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America’s hydrogen-fueled future stalls over tax credits

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Inside Plug Power's Liquid Green Hydrogen Plant In Georgia
Hydrogen is loaded into a truck at the Plug Power Inc. liquid green hydrogen plant in Woodbine, Georgia.

Agnes Lopez/Bloomberg

Two years after President Joe Biden’s landmark climate law promised to kick-start green hydrogen production with generous tax credits, companies still don’t know who will qualify. 

Billions of dollars in investments sit on the sidelines as a result. 

The Biden administration sees green hydrogen as a critical component of the energy transition, a way to clean up heavy industries that can’t easily run on electricity. But the nascent hydrogen economy has been paralyzed waiting for final rules on a key tax credit, which will provide up to $3 for every kilogram of the fuel produced. 

Hydrogen companies considered the initial guidelines issued by the Treasury Department late last year too strict and warned that many of their planned plants wouldn’t qualify for the full incentive. Developers have since been left in limbo as they await adjustments before the final rules are approved. 

Hy Stor Energy, for example, plans to produce hydrogen in Mississippi using on-site wind and geothermal energy and be operational in 2027.

“Our project has multiple gigawatts of renewables and is holding off billions of dollars in investment,” said chief commercial officer Claire Behar. “That is just one project. If you multiply it by 10 to 20 projects, it’s a massive investment that’s being stalled.”

The delay isn’t simply a case of slow-moving bureaucracy. Industry and environmentalists have engaged in a months-long lobbying fight over the rules, with the federal government trying to strike a balance. But the lack of progress could impede the nation’s decarbonization efforts.

“People in the industry are very frustrated,” said Frank Wolak, chief executive officer of the Fuel Cell and Hydrogen Energy Association. “The longer people defer investments, the less committed they are.”

Almost all hydrogen produced today is stripped from natural gas in a process that gives off carbon dioxide. But there are cleaner ways to make the fuel, such as capturing the CO2 or splitting the hydrogen from water using renewable electricity. Those cleaner methods are the focus of the Inflation Reduction Act tax credit. The size of the credit available to each project rests on three so-called pillars: ensuring hydrogen is produced using new clean energy sources rather than existing ones, aligning hydrogen production with electricity generation times and adhering to stringent carbon intensity requirements. 

Without strict rules on each, environmentalists argue, hydrogen production plants risk driving up greenhouse gas emissions rather than cutting them. 

“The first draft in December was an excellent framework that will attract the truly green projects,” said Fred Krupp, president of the Environmental Defense Fund. “Whatever happens, it’s critical that Treasury uphold this framework and not add exemptions that would water down the emissions integrity.”

Companies counter they need looser rules, at least at first, to get the industry off the ground. 

In addition to the tax credits, the federal government has set aside $8 billion to create a series of hydrogen hubs that would match producers of the fuel with customers using it. But leaders of the regional hubs are so worried about the current tax credit guidance that they sent the Treasury Department a letter in February arguing many of their own projects won’t happen unless the rules are changed. The hubs, they said, are expected to generate $40 billion in private investment and support 334,280 jobs.

“Unfortunately, these investments and jobs will not fully materialize unless Treasury’s guidance is significantly revised,” they wrote.

The Treasury Department says it is carefully considering all the many comments it has received as it drafts the final rules, but officials haven’t given any timeline for finishing the work. “Finalizing rules that will help scale the clean hydrogen industry while implementing the environmental safeguards established in the law remains a top priority for Treasury,” a department spokesperson said in an email. 

Finding the right balance has been hard. John Podesta, Biden’s senior adviser for international climate policy, called the IRA’s hydrogen incentives “the most complex of the credits, technically and legally” at an event this week celebrating the second anniversary of the law’s passage. He acknowledged the mixed reaction the government’s preliminary guidelines received. “Some people loved it,” Podesta said. “Some people didn’t.”

Even if new guidelines are published now, companies might wait until after the election to see if they need to comply with them, according to Martin Tengler, an analyst at BloombergNEF. Donald Trump has promised to target the IRA if he retakes the White House in November, but his attitude toward hydrogen is unclear. 

Policy uncertainty is not confined to the US. German company Thyssenkrupp Nucera in July abandoned its 2025 forecast for its business selling electrolyzers, the machines that split water into hydrogen and oxygen. 

“Progress on the regulatory side is recognizable, but at the same time not yet sufficient to accelerate investment momentum again,” Thyssenkrupp Chief Executive Officer Werner Ponikwar said in a statement. “The result is further delays to new projects on the customer side.”

Rival Siemens Energy AG has invested €30 million to produce electrolyzer stacks in Berlin together with industrial gas company Air Liquide. 

“In the short term, we do observe delays in the release of funding commitments due to regulatory uncertainties, for example in the US and in Europe,” Chief Financial Officer Maria Ferraro said in an analyst call in May. Long-term prospects for the business, however, remain intact, she added. 

Some in the industry expect the Treasury Department to soften its rules — although that hasn’t happened yet. Andy Marsh, CEO of Plug Power Inc., said he expects new guidance soon.

“We won’t be surprised if there’s some announcement after the Democratic convention and a further announcement after the election,” he said during the company’s earnings call last week. “I think it’s really clear that the regulations on the three pillars are going to become much looser.”

Carbon-free green hydrogen remains far more expensive than hydrogen from natural gas, and until that changes, companies have little incentive to start using it as a fuel. But costs won’t come down until the wave of planned green hydrogen plants start opening, Tengler said. And they won’t move forward until the federal government finalizes its tax rules.

“The only way green hydrogen becomes cheaper is by building projects, but with these early projects stalled, the industry is being choked before it’s even born,” Tengler said.

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IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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