Senate Environment and Public Works Committee Chairman Tom Carper (D-DE) and twelve other Democratic senators have written to Treasury Secretary Janet Yellen urging her to reconsider the “overly stringent” three-pillars approach taken in proposed requirements for the Code Section 45V Credit for Production of Clean Hydrogen (Section 45V Credit).
The letter was also sent to Senior Advisor to the President for International Climate Policy John Podesta, Office of Management and Budget Director Shalanda Young, Secretary of Energy Jennifer Granholm, and Environmental Protection Agency Administrator Michael Regan.
“Treasury’s guidance would jeopardize billions of dollars of investment in clean hydrogen projects, render the cleanest forms of hydrogen uneconomical, and imperil efforts to decarbonize hard-to-abate sectors of our economy,” the senators wrote.
“Simply put, unless revised. … the proposed guidance will undermine our shared goal of creating an enduring domestic clean hydrogen industry capable of significantly reducing economy-wide carbon emissions.”
Under 26 USC 45V, to qualify for the Section 45V Credit, hydrogen must be produced through a process that results in a lifecycle greenhouse gas emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen.
In proposed regulations, Treasury has further said that the clean energy used to produce hydrogen eligible for the credit must meet the “three pillars” of temporality (time-matching), additionality, and regionality.
The letter proposes amending each of these requirements to make hydrogen development more likely.
The letter says Treasury should not impose the incrementality requirements where generation facilities are located in a state with enforceable clean energy mandates, that are located in a grid region with significant rates of curtailment (demonstrated through a facility’s operational history), or that demonstrate retirement risk.
In addition, all generation from hydroelectric and nuclear facilities issued license extensions following promulgation of the final 45V rule should be exempt from incrementality. Treasury should also offer an allowance for owners of existing, minimally emitting sources of electricity to provide their power to clean hydrogen producers.
Treasury must provide a workable alternative to the hourly matching requirement, the letter says.
Instead, Treasury should forgo temporal matching requirements for any projects that begin construction prior to January 1, 2028, and establish monthly matching requirements for any projects that begin construction after January 1, 2028 and before December 31, 2032.
Treasury’s proposed deliverability maps also should be revised to better reflect real-world grid operations, the letter said.
In regions with insufficient clean energy resources, project sponsors should receive an allowance when they need to access clean power for hydrogen production beyond Treasury’s proposed geographic boundaries, the letter says.
Providing this allowance will also provide near-term relief from persistent interconnection backlogs and from the long lead times required to build new transmission infrastructure, the letter said.
