Eric Guter, Vice-President, Hydrogen at Air Products, told a Treasury public hearing on the proposed Inflation Reduction Act (IRA) 45V clean hydrogen PTC guidance, the industrial gas giant applauds the “strict standards.”
Eric Guter © Air Products
Amid a wealth of calls for a relaxation of the proposed “three pillar” rules of additionality, temporal and geographical correlation for electrolytic hydrogen producers, Guter said “weak rules” would contradict the IRA and increase emissions.
Under the proposed guidance US green hydrogen producers will have to source renewable electricity from the same regional grid, from assets that are no older than three years old at the time of hydrogen production start-up, to gain access to the 45V’s top tier $3/kg PTC.
It also mandates that producers must match renewable electricity and electrolyser operation within the same calendar year until 2027, before hourly matching from 2028.
“For hydrogen to be truly clean, all three pillars must be implemented together,” he told the hearing. “Without one the system falls apart and risks increasing emissions.”
As the first to testify in the three day hearing, Guter told Treasury and IRS officials, “You will hear from a range of companies. Some of these companies are the largest, most technically capable organisations in the world, but claim they can’t do what Air Products is already doing.
“Even more of the companies you will hear from have no experience in the hydrogen industry. They’ve never produced a molecule of hydrogen. But groups are asking Treasury to implement a weak standard for producing electrolytic hydrogen in exchange for the most lucrative climate subsidies in the world.
“They’re asking you to lower the bar and subsidise the taxpayers’ expense investments in hydrogen that will increase emissions.”
Guter urged the hearing to be sceptical of “false claims” that would “increase emissions” on the grid.
He claimed, “Any deviation from the three pillars will set us on a perilous path to slow down rather than accelerate decarbonisation. It will also unfairly disadvantage compliant projects which Air Products is proving are already possible.”
Calls for the proposed 45V rules to be amended have been heard from numerous high-level companies and organisations across the hydrogen sector, warning such requirements could limit the industry’s ability to scale up to meet targets.
Significantly, the US Regional Clean Hydrogen Hubs (H2Hubs) selected for $7bn of federal funding, warned the proposed guidance could have “far-reaching negative consequences for the entire domestic clean hydrogen industry.”
Read more: US H2Hubs: Revise 45V guidance to ensure hydrogen investments and jobs
Having ended on Wednesday (March 27), the three day hearing concluded the public feedback period on the guidance.
The 45V hydrogen tax credit: Defining controversy in clean energy policy
The comment period for the US Government’s proposed regulations regarding eligibility for the 45V clean hydrogen production tax credit (PTC) closed on February 26, 2024. There were almost 30,000 responses from a wide range of sources, including individuals, industry, non-profits, unions and even a collective comment from the Department of Energy’s (DOE) selected clean hydrogen hubs.
This has been one of the most controversial tax regulations in US history. It is impossible to capture the full spectrum of comments, but for many, the real focus was whether or not the government should adopt some form of the European Union’s “three-pillars” approach to electricity usage in electrolysers (additionality / incrementality, time matching / correlation and geographic / regional correlation), which were reflected in the proposed 45V regulations.
Although the proposed regulations drew criticisms from both sides of the three-pillars debate it is not necessarily a sign that the regulations struck the right balance. This is particularly true for the nuts and bolts of how the rules are expected to apply in practice. Arguments over the three pillars obscure other critical issues that need to be addressed if the US clean hydrogen industry is going to achieve lift off. This article summarises some of these critical issues that we believe have not received enough attention, either in the comments submitted to date or in the wider public debate about the proposed 45V regulations…
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