US H2Hubs: Revise 45V guidance to ensure hydrogen investments and jobs | Policy

© DCStockPhotography / Shutterstock

© DCStockPhotography / Shutterstock

The US Regional Clean Hydrogen Hubs (H2Hubs) selected for a combined $7bn of funding have called on the government to amend the proposed guidance on the Inflation Reduction Act’s (IRA’s) clean hydrogen production tax credit (PTC).

In a joint letter to the Treasury Secretary and a Senior White House Advisor, leaders of the H2Hubs said the guidance on the 45V PTC may have “far-reaching negative consequences for the entire domestic clean hydrogen industry.”

Under rules proposed by the Treasury in December (2023), US green hydrogen producers will have to source renewable electricity from the same regional grid, from assets that are no older than three years old at the time of hydrogen production start-up, to gain access to the 45V’s top tier $3/kg PTC.

It also mandates that producers must match renewable electricity and electrolyser operation within the same calendar year until 2027, before hourly matching from 2028.

Read more: US Treasury reveals three pillar requirements for IRA clean hydrogen tax credit

In October 2023, ARCH2, ARCHES, HyVelocity, Heartland, MACH2, MachH2, and PNWH2, were been named as the successful H2Hubs that will receive a combined $7bn of funding from the Department of Energy (DOE) to create a network of production, consumption and infrastructure.

Originally slated as a way to catalyse $40bn of private investments into hydrogen and create over 330,000 jobs, H2Hub leaders have now warned, those benefits will “not fully materialise” unless the Treasury’s guidance is “significantly revised.”

The letter reads, “The proposed guidance poses a significant risk to the ability for the US to be global leader in the hydrogen economy.

“The DOE’s own projections say we will need 10 million tonnes of hydrogen by 2030 to meet our nation’s climate goals. It is important that the final regulation [does] not disadvantage any type of clean hydrogen production by limiting it exclusively to new sources, and ensure the credit remains flexible and technology neutral.”

While the so-called three pillars of additionality, geographical and hourly correlation will ensure the climate credentials of green hydrogen, vast numbers of hydrogen players have expressed dissatisfaction with the rules.

Upon proposal of the guidance, coalition Hydrogen Forward described the guidance as “misguided,” adding the “restrictive and unworkable” requirements counter congressional intent and the Biden administration’s climate goals.

The H2Hub leaders stressed the guidance would potentially limit the hydrogen market’s development.

“Requiring overly restrictive policies on an industry that is just beginning to emerge will introduce additional risks and costs into clean hydrogen production projects, prevent achieving the Administration’s H2 Earthshot goal ($1/kg), and limit the ability to achieve hydrogen market lift-off and decarbonise our economy,” the letter said.

It continued, “To accelerate technological breakthroughs that will bring down costs and increase access to clean hydrogen, we need current projects like the hubs to move forward at full capacity. We strongly urge the US Treasury Department to reconsider and revise its proposed guidance on the hydrogen PTC.

“It is essential to strike a balance that encourages the growth of the clean hydrogen industry, protects jobs preserves environmental gains and fosters for disadvantages communities.”

Comments on the 45V guidance closes in the next few days, ahead of final publication. Sources have told H2 View the rules are expected to become statute before the November US election.