The hydrogen industry has called upon the US Treasury Department to alleviate expected environmental requirements tied to new tax credits. Industry leaders have voiced concerns that the proposed stipulations might stifle the burgeoning hydrogen sector.
The Treasury, along with the Internal Revenue Service (IRS), conducted public hearings on the guidelines issued in December for the deployment of the Clean Hydrogen Production tax credit, also known as 45V credit. This incentive presented in the 2022 Inflation Reduction Act is earmarked as one of the most substantial, offering a decade-long stimulus for clean hydrogen production amounting to $3.00 per kilogram.
Both industry groups aspiring to instigate projects and environmental advocates cautious about an inflow of hydrogen projects have been lobbying intensively for the credit. Critics argue this could inadvertently escalate energy demand and increase greenhouse gas emissions.
The Treasury’s [proposal](https://www.reuters.com/sustainability/climate-energy/us-unveils-clean-hydrogen-plan-nuclear-power-role-uncertain-2023-12-22/) mandates hydrogen producers, seeking the 45V credits, to demonstrate they have utilized recently constructed, geographically matching clean electricity. Concurrent power and hydrogen production is also a condition.
However, these requirements could adversely impact certain projects. An example given was an undertaking by the Australian firm Fortescue in the Pacific Northwest, a beneficiary of [Energy Department support](https://www.reuters.com/business/energy/hydrogen-hubs-located-pennsylvania-among-winners-7-bln-federal-grants-2023-10-11/) in the previous year. The company plans to leverage surplus hydropower and other renewable sources, which will disqualify them from the tax credit according to Fortescue North America CEO, Andrew Vesey.
The Fuel Cell and Hydrogen Energy Association suggested these conditions had dissuaded potential investors in hydrogen projects, consequently lobbying for a waiver for projects initiated before finalizing the guidelines.
Simultaneously, Dorothy Davidson, CEO of the DOE-backed Midwest hydrogen hub, urged the Treasury to permit projects to draw at least 10% of their power from established zero-carbon sources like nuclear energy, alongside the sanctioned use of renewable natural gas from agricultural areas and garbage dumps.
On the contrary, certain green hydrogen companies and numerous NGOs have petitioned the IRS to maintain the stipulated requirements.
