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Hill hydrogen hubbub

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Feb 28, 2024
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Illustration: Tiffany Herring/Axios

The fight over hydrogen tax credits is reaching a climax on the Hill and in the federal comment docket.

Why it matters: Monday marked the end of the public comment period for Treasury's proposed rules on the 45V hydrogen incentive. Companies and green groups are scrambling to spell out their version of congressional intent.

State of play: A bevy of comments scooted in under the deadline, illustrating how some in the industry are in a panic about Treasury's guidance.

  • The U.S. Chamber of Commerce, American Council on Renewable Energy and Edison Electric Institute have all written comment letters seeking changes to the initial guidance.
  • "The three pillars as contemplated under the proposed regulations are a flawed proxy for the incentive Congress enacted and could significantly limit a domestic clean hydrogen market that has yet to take its first steps," ACORE wrote.

What they're saying: "What I'm trying to do as the author of this is to try to find the balance we talked about in committee," Senate Finance Chair Ron Wyden told Axios.

  • He largely declined to get into specifics but said there's "more work to do" on the credit.
  • "I'm really hopeful that they'll pay attention to striking the right balance," said Sen. Chris Coons. "We could have a generational global leadership … but not if those tax interpretations come out all the way at one end of the spectrum."
  • On the GOP side, Sen. Shelley Moore Capito wrote to Treasury last week arguing that the three pillar approach is "not established in statute and will undermine bipartisan efforts to spur a hydrogen economy."

Context: The Treasury Department's proposed rulemaking included the three-pronged guardrails that climate activists wanted.

  • To qualify, hydrogen projects would have to be connected to new low-carbon power, be produced in the same region as that power, and be matched on an hourly basis by "clean" energy by 2028.

Zoom in: Along with its own written comments, the American Clean Power Association unveiled a study Monday declaring Treasury's proposed time matching requirements as unfriendly for "green" hydrogen (that is, produced via renewables).

The other side: Environmental groups — and some hydrogen companies — push back on the idea that Treasury's proposed guidance would devastate the industry.

  • "[Congress] wanted to promote low-carbon hydrogen that would reduce overall greenhouse gas emissions," the Clean Air Task Force wrote in its comment.
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