An amendment to the Senate’s version of the budget reconciliation bill would extend the 45V tax credit for clean hydrogen production by another two years, a boost for projects nearing construction. Backers of the tax credit, including a coalition of more than 200 companies and industry groups, have lobbied the Senate to keep the credit in place until at least 2029. The credit was created as part of 2022’s Inflation Reduction Act (IRA).
As we noted recently in Danger Zone, hydrogen projects that begin construction before 2033 are eligible under the IRA to receive the credit, which tops out at $3/kg (see chart below). Under the version of the budget bill passed by the House a few weeks ago, projects had to begin construction by December 31, 2025, to be eligible for the tax credit — essentially ending any long-term incentives for clean hydrogen production. The Senate version pushes the deadline back to December 31, 2027.
The changes to 45V could also help kill off the development of seven regional hydrogen hubs, each funded by 2021’s Infrastructure Investment and Jobs Act (IIJA) and made up of numerous smaller projects that rely on the tax credit. The hubs already face additional uncertainty as their funding could be reduced or eliminated amid a Department of Energy review of the program.
There’s still a ways to go before a final reconciliation bill would become law — the Senate is working on its version, with a vote anticipated by Wednesday. Then, the two chambers would have to address the differences between their versions before a final version could be sent to President Trump.
