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Gimme Three Steps - Clean Hydrogen Rules Focus on 'Three Pillars,' Strict Approach to Hourly Matching

The long-delayed rules around the federal government’s Hydrogen Production Tax Credit (PTC), also known as 45V, have been the subject of heated debate (and lobbying) since passage of the Inflation Reduction Act (IRA) in August 2022. While some industry groups argued for looser guidelines around the PTC that would allow the low-carbon hydrogen industry to grow quickly, others called for a stricter set of rules from the start, arguing that an approach that was too lax would lead to an increase in greenhouse gas (GHG) emissions. In today’s RBN blog, we’ll look at how those newly published rules rely on the so-called “three pillars” of clean hydrogen, how they prioritize production of green hydrogen at the expense of its blue and pink varieties, and explain the rules around temporal matching and why it might be hard to hit the administration’s 2028 target date for implementation. 

The guidelines around the PTC were widely expected to be announced by August 2023, but as summer turned into fall, and fall into winter, it was clear that the debates over 45V were continuing inside the Biden administration. The rules were finally rolled out on December 22. (They closely followed a leaked draft of the guidelines, which we discussed in the December 6 edition of our Hydrogen Billboard report.) Publication of the proposed rulemaking began a 60-day comment period. The industry now has until February 26 to comment on this set of proposed rules before the issuance of a “final” rule which may not come out until several weeks later.

The implementation of those rules is important, as the Biden administration has made clean hydrogen a major element in its decarbonization plans, with the federal government’s Regional Clean Hydrogen Hubs (H2Hubs) initiative intended to accelerate the process. As we noted in The Contenders, the Department of Energy (DOE) opened up $7 billion in funding in September 2022 for the development of several regional hubs. After sifting through dozens of concept papers and months of deliberation, the DOE in October 2023 picked seven hub projects intended to help meet the Biden administration’s targets of producing 10 million metric tons per annum (MMtpa) of clean hydrogen by 2030, 20 MMtpa by 2040, and 50 MMtpa by 2050.

Breakdown of 45 V Tax Credit

Figure 1. Breakdown of 45 V Tax Credit. Source: Treasury Department 

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