The 45V hydrogen tax credit: Defining controversy in clean energy policy

The comment period for the US Government’s proposed regulations regarding eligibility for the 45V clean hydrogen production tax credit (PTC) closed on February 26, 2024.  There were almost 30,000 responses from a wide range of sources, including individuals, industry, non-profits, unions and even a collective comment from the Department of Energy’s (DOE) selected clean hydrogen hubs.

This has been one of the most controversial tax regulations in US history.  It is impossible to capture the full spectrum of comments, but for many, the real focus was whether or not the government should adopt some form of the European Union’s “three-pillars” approach to electricity usage in electrolysers (additionality / incrementality, time matching / correlation and geographic / regional correlation), which were reflected in the proposed 45V regulations.

Although the proposed regulations drew criticisms from both sides of the three-pillars debate it is not necessarily a sign that the regulations struck the right balance.  This is particularly true for the nuts and bolts of how the rules are expected to apply in practice. Arguments over the three pillars obscure other critical issues that need to be addressed if the US clean hydrogen industry is going to achieve lift off. This article summarises some of these critical issues that we believe have not received enough attention, either in the comments submitted to date or in the wider public debate about the proposed 45V regulations.

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