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Rules of the Road - Final Rules for 45V Tax Credit Could Help Clear a Path for Clean Hydrogen

The long-delayed rules around the federal government’s Hydrogen Production Tax Credit (PTC), also known as 45V, had been the subject of heated debate — and lobbying — since passage of the Inflation Reduction Act (IRA) way back in August 2022. But after more than a year of speculation — and with the Biden administration in its last days — the final rulemaking has at last been published. In today’s RBN blog, we’ll look at how the final rulemaking compares with the initial guidelines established in December 2023, detail the key areas where the rules have been made more lenient, and explain why clean hydrogen still faces an uncertain future, while also previewing our first Drill Down report of 2025. 

There was a lot of enthusiasm around hydrogen after passage of the IRA, with the initial guidance around the PTC widely expected to be announced within a year, or by August 2023. It soon became clear that extensive debates over the rulemaking continued inside the Biden administration and that informal deadline came and went without much notice. The initial guidance was finally rolled out in late December 2023, which closely followed a draft that was leaked a couple weeks earlier. Publication of the proposed rulemaking then began a 60-day comment period.

Given all the hubbub about the proposed rules, there is little surprise that current and potential hydrogen producers, clean-energy advocates, industry experts and scientific skeptics — along with everyday taxpayers — had a lot to say during the public-comment period, which ended February 26, 2024. Nearly 30,000 public comments were posted about the rule (most were from cut-and-paste templates), with about 400 submitted by corporations or organizations, an indication of how interested people are in the idea of clean hydrogen.

The IRS held a two-day public hearing about the rulemaking in March 2024, featuring comments from more than 100 witnesses, including supporters and critics of the administration’s clean-hydrogen push. But not much of substance had happened since then. Given that 2024 was a presidential election year, perhaps it’s unsurprising that the final rulemaking wasn’t published during the middle of the campaign. But the delay caused nothing but uncertainty for those planning to develop projects in the U.S. and frustrated those who see clean hydrogen’s long-term potential to help decarbonize hard-to-abate industries, like refining and steelmaking. The Biden administration’s stated goal of publishing the final rulemaking before the end of 2024 came and passed without explanation, with the final rules rolled out on January 3. 

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