Reuters reports that potential producers of hydrogen in the USA are seeking to provide input into the revision of rules around the granting of 45V tax credits for clean hydrogen production. As with any subsidy program, the specifics of the rules are important, and in the case of clean hydrogen production under the Inflation Reduction Act of 2022, the US Treasury has heard that the guidance it released in December of last year may not lead to the outcomes intended.

Australian company Fortescue, for instance, has argued that its green hydrogen project in the Pacific Northwest, which has received Department of Energy funding, would not be eligible for 45V tax credits (which stand at US$3.00/kg of hydrogen produced) because the renewable energy it plans to use has not been built recently. As they stand, the rules require that energy production is from recently installed renewable sources in the same region as the project, and that the power was used when the hydrogen was produced.

Some of the lobbying has been quite moderate – for example, relaxing the rules such that 10% of the energy could be sourced from pre-existing ultra-low carbon power generation (such as nuclear power). Other hydrogen companies, such as Hy Stor, have urged the Biden administration not to change the rules, fearing that a weakening of them could undermine the reputation of the green hydrogen industry.

Whatever shape in which the rules are finalised will undoubtedly have an effect on how the industry develops; though they may be overshadowed to some extent by if ‘natural’ hydrogen extraction takes off considerably (though how the rules apply to natural hydrogen will also be of interest).