Last week’s highly anticipated public hearing on the Clean Hydrogen Production Tax Credit (45V) stirred up a whirlwind of discussions after more than 30,000 comments were submitted on the draft guidance released this past December.
Many who testified underscored the proposed regulation’s instrumental role in driving investments in renewable energy infrastructure, citing examples of job creation, technological innovation, and reduced greenhouse gas emissions. However, given the proposed rule’s financial and environmental implications, as well as the impact it will have on the success of the National Clean Hydrogen Strategy and the administration’s program to create seven regional clean hydrogen hubs across the country, there was no shortage of dialogue amongst industry leaders, environmental advocates, policymakers, and stakeholders across the clean hydrogen ecosystem during the hearing.
Industrial gases firm Air Products called for the government to ignore industry feedback, citing that it is already developing projects with these rules in mind, while environmental groups like Earthjustice advocated for even more stringent regulations on carbon accounting. Conversely, voices of caution echoed concerns about the tax credit’s fiscal and development impacts, which could halt an emerging industry. As expected, the “three pillars” of temporal matching, additionality, and deliverability were a major topic of discussion. For example, the requirement to use new clean power sources would take five years or more to fulfill, delaying operations and increasing costs by 20 percent, according to Fortescue Future Industries CEO Andy Vesey.
What’s next for 45V? As stakeholders eagerly await the Treasury Department and Internal Revenue Service to finalize regulations in late April, only a handful of companies have announced plans to move forward with major hydrogen projects that comply with the Treasury’s rules. For many, the development of clean hydrogen has taken a hard pause, as these tax credits would make several planned hydrogen projects no longer economically viable. In the coming weeks, continued engagement and collaboration between policymakers, industry representatives, and advocacy groups will be crucial in shaping the trajectory of a clean hydrogen economy.
