Treasury’s 45V Regulation Risks Killing US Hydrogen In The Cradle

Absent a major change of course, the US Treasury Department is poised to issue guidance on new regulations governing Inflation Reduction Act-related hydrogen incentives that few players in the industry seems to favor. The controversy revolves around a draft regulation issued in December governing implementation of expanded tax credits in Section 45V of the IRA, which President Joe Biden signed into law in September, 2022.

That December draft seemed to please almost no one in the hydrogen space, not even those involved in projects to make “green” hydrogen using an electrolysis process powered by wind, solar or other zero-emission power generation. Because the making of hydrogen is such an energy-intensive process, the ability to access the full level of the 45V credit is crucial to the economics of most projects in the planning stages.

As the guidance was proposed, critics claim that makers of green hydrogen would be required to source all their energy directly from wind or solar projects to ensure they would receive the full $3 per kg. credit. Projects sourcing power from a public grid would be unlikely to qualify at that level and would be forced to certify the power used had come from renewable facilities to claim even a lower level of it.