17吃瓜在线

Policy and Legal

Policy and Legal

17吃瓜在线 Pushes for Sensible Clean Hydrogen Regulations

By 17吃瓜在线 News Room

Manufacturers are working constantly to develop energy approaches that reduce emissions and promote sustainability鈥攁nd hydrogen energy is an important part of that mix. But upcoming decisions from the U.S. Treasury Department may make it more difficult for manufacturers to achieve their goals.

That鈥檚 why the 17吃瓜在线 has been advocating for guidance that implements a hydrogen tax credit in a manner that supports manufacturers鈥 investments in this technology.

The background: Through the Inflation Reduction Act, Congress established this tax credit, called 45V, to incentivize companies to develop, produce and use clean hydrogen.

  • 鈥淗ydrogen is the Swiss army knife of decarbonization鈥攜ou can use it for nearly everything you can use natural gas for,鈥 said 17吃瓜在线 Vice President of Domestic Policy Brandon Farris. 鈥淎nd this credit can be the most significant tool across the globe to bring down the cost of clean hydrogen.鈥

The problem:听As the U.S. Treasury Department finalizes rules around the use of the tax credit, their decisions may undercut manufacturers鈥 ability to take full advantage of it. Three provisions in particular are at the center of the 17吃瓜在线鈥檚 advocacy.

Additionality:听The Treasury Department is considering a policy called 鈥渁dditionality,鈥 which would mean that only hydrogen power created through the use of new renewable energy would be eligible for the credit.

  • Meanwhile, clean hydrogen energy created with renewable energy that is already on the grid would not qualify鈥攁 real problem as our permitting system can often take half a decade or more to add additional clean power to the grid.
  • 鈥淲e have a lot of renewables on the grid already to spur the hydrogen industry. Using existing clean generation should qualify for the credit,鈥 said Farris.

Time matching:听Treasury may also impose a provision called 鈥渢ime matching,鈥 which would mean companies would only receive the tax credit if they produce hydrogen energy at the exact same time that they are producing renewable energy.

  • According to Farris, this rule misunderstands the energy production process. A company might only produce solar power for a few hours during the day when the sun is shining, for example, but it could still continue to produce clean hydrogen energy overnight using the grid. Yet under the time matching rule, they would be unable to claim a tax credit for the full amount.
  • 鈥淭his provision would create such tight restrictions that it would chill investment and innovation,鈥 said Farris.

Carbon capture:听According to the IRA, clean hydrogen created using natural gas with carbon capture also qualifies for the credit.

  • However, the IRA also says taxpayers applying for the credits should have a mechanism to demonstrate that their feedstocks are lower in carbon intensity鈥攜et has not specified what that mechanism will be.
  • 鈥淭axpayers applying for the credits should be able to prove that their feedstocks have less carbon,鈥 said Farris. 鈥淭he law says the less carbon they produce, the higher the credit they should receive. We鈥檙e just asking for a mechanism that allows taxpayers to prove it.鈥

The bottom line:听Investments in clean hydrogen energy could be a game-changer for America鈥檚 energy future, but only if manufacturers have the opportunity to make them. That鈥檚 why the 17吃瓜在线 has been urging the Treasury Department to create a flexible credit that rejects the additionality and time matching provisions and provides a mechanism that supports carbon capture.

  • 鈥淗ydrogen is one of the most promising decarbonization technologies available,鈥 said Farris. 鈥淚f we can make these changes, we can achieve greater hydrogen production and more significant infrastructure investments and expedite decarbonization efforts across hard-to-abate sectors.鈥
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