Coal gasification for hydrogen production is influenced by a range of policies across major economies, including subsidies, emissions standards, and regulatory frameworks. The approach varies significantly between the U.S., China, and the EU, reflecting differing energy priorities, resource availability, and environmental commitments.

In the U.S., coal gasification has historically been supported through federal and state-level incentives, particularly for projects incorporating carbon capture and storage (CCS). The 45Q tax credit provides financial incentives for carbon sequestration, which can make coal-derived hydrogen more economically viable when paired with CCS. The credit offers up to $85 per ton of CO2 stored permanently, a critical factor for coal gasification projects given their high emissions profile. Additionally, the Department of Energy has funded research initiatives under the Clean Coal Power Initiative and the Hydrogen Shot program, which aims to reduce the cost of clean hydrogen, including that from fossil sources with CCS. However, stringent emissions regulations under the Clean Air Act impose limits on pollutants such as sulfur dioxide and nitrogen oxides, increasing operational costs for coal gasification plants. States like Wyoming and North Dakota, with abundant coal reserves, have pursued state-level policies to support coal gasification, but federal climate goals emphasizing decarbonization have limited broader adoption.

China’s approach to coal gasification is more aggressive, driven by its reliance on domestic coal reserves and growing hydrogen demand for industrial use. The Chinese government has included coal-based hydrogen in its national hydrogen energy strategy, particularly for applications in refining and chemical production. Provincial governments in coal-rich regions like Inner Mongolia and Shanxi have implemented subsidies for coal gasification projects, often coupled with mandates for CCS to mitigate emissions. China’s national carbon trading scheme, launched in 2021, imposes a cost on CO2 emissions, indirectly incentivizing cleaner coal gasification processes. However, enforcement of emissions standards remains inconsistent, and many projects proceed without stringent CCS requirements. The 14th Five-Year Plan emphasizes the development of "blue hydrogen" from coal with carbon capture, but the lack of a unified national policy framework has led to regional disparities in implementation.

The EU’s regulatory environment is the most restrictive toward coal gasification due to its focus on decarbonization and renewable energy. The EU Emissions Trading System (ETS) imposes a high carbon price, making coal-based hydrogen economically uncompetitive unless paired with CCS. The revised Renewable Energy Directive (RED II) excludes hydrogen produced from fossil fuels without CCS from counting toward renewable energy targets, further disincentivizing coal gasification. However, certain member states with lingering coal dependencies, such as Poland, have explored coal-derived hydrogen as a transitional measure. The EU’s Carbon Border Adjustment Mechanism (CBAM) may also impact the competitiveness of hydrogen imports derived from coal, depending on their carbon footprint. Funding mechanisms like the Innovation Fund support CCS and low-carbon hydrogen projects, but few have focused on coal gasification due to the preference for electrolysis and other renewable pathways.

A comparative overview of key policies:

| Region | Key Subsidies | Emissions Standards | CCS Requirements |
|--------------|-----------------------------------|-----------------------------------|--------------------------------|
| U.S. | 45Q tax credit, state incentives | Clean Air Act regulations | Encouraged but not mandatory |
| China | Provincial subsidies, carbon trading | Variable enforcement | Required in some regions |
| EU | Innovation Fund, RED II exclusion | Strict ETS pricing, RED II rules | Mandatory for eligibility |

The future of coal gasification for hydrogen will depend on evolving policy landscapes. In the U.S., federal climate targets may further constrain coal-based hydrogen unless CCS becomes widespread. China’s balancing act between energy security and emissions reductions will shape its continued reliance on coal gasification. The EU’s stringent carbon policies make coal a marginal player in its hydrogen strategy, with limited exceptions for transitional cases. Regulatory frameworks in all three regions are increasingly tying support for fossil-based hydrogen to verifiable carbon mitigation, ensuring that coal gasification must adapt to remain relevant.

The interplay between subsidies, emissions regulations, and CCS mandates creates a complex environment for coal gasification. While it remains a significant hydrogen production method in some regions, its long-term viability hinges on the ability to align with tightening environmental standards and carbon reduction goals. Without substantial advancements in CCS technology and cost reductions, coal-derived hydrogen may face declining policy support in favor of cleaner alternatives.