U.S. wholesale electricity prices could increase by up to 10 percent if the Treasury Department loosens qualification requirements for the “clean hydrogen” production tax credit, according to a new report from think tank Energy Innovation: Policy and Technology.
Weakened rules for the 45V credit, which was created in the Inflation Reduction Act, also could increase greenhouse gas emissions and set back efforts to cut U.S. climate pollution by 2030, according to the think tank.
Some hydrogen producers and over a dozen congressional Democrats have criticized Treasury’s proposed rules for 45V, which is named after its place in the tax code. Many critics oppose “incrementality” — the Biden administration requirement that companies prove they are using new clean energy so that hydrogen production doesn’t divert renewable power from the rest of the grid.
But Energy Innovation found that dozens of studies support Treasury’s so-called three-pillar approach. Along with incrementality, the approach calls for eligible projects to draw clean energy from the same geographic area — known as “deliverability” — and use that energy when hydrogen production is occurring in a process called “hourly matching.”
