There was plenty of speculation about whether the long-delayed rules around the 45V tax credit for clean hydrogen production, which were published in the waning days of the Biden administration after more than two years of debate, would be at risk of reversal by the Republican-led Congress under the Congressional Review Act (CRA). But if Congress intends to act, it will need to act fast.
The CRA gives the new Congress 60 days to review rules — such as the 45V tax credit — issued near the end of the previous presidential administration. As we noted in Rules of the Road, the final rules around the tax credit were published January 3. Given the 60-day review window, that means Congress would need to act by March 4.
The final 45V rulemaking included some key concessions to industry groups, some of which had complained that the initial guidance made it too hard to qualify for the tax credit and/or that the guidance wasn’t practical in the real world. More than 100 companies signed onto a letter in mid-February asking Congress to maintain the tax credit rules, arguing that the industry has already been hamstrung by regulatory delays under the Biden administration. The letter said the tax credit would help drive economic growth, advance U.S. energy dominance, and boost energy abundance at a time when energy demand is projected to rise.
Under 45V, credits worth up to $3/kg are available (left axis in chart below) based on the rate of lifecycle greenhouse gas (GHG) emissions during a clean hydrogen facility’s first 10 years of operation. The tax credit includes a base rate (blue bars) and a bonus rate (orange bars), the latter of which is 5X the base rate for producers meeting prevailing wage and apprenticeship requirements. Lifecycle GHG emissions are calculated by examining every step in the production process, starting with the generation of electricity. The emissions ranges for each tier of the tax credit are shown by the black arrows and right axis in the chart below.
