CEG Comments on the Clean Hydrogen Production Tax Credit within the Inflation Reduction Act

Clean Energy Group submitted comments to the U.S. Department of the Treasury and the Internal Revenue Service Notice 2022-49 request for comments on certain energy generation incentives. The comments focus on implementation of the Inflation Reduction Act’s 45V Clean Hydrogen Production Tax Credit (PTC), specifically the determination of emissions attributable to hydrogen produced through grid-connected electrolysis. In the comments, CEG strongly recommends that the Treasury Department and the IRS fully account for the carbon emissions associated with powering electrolysis production of hydrogen through grid electricity and that the agencies do not allow for offsetting these emissions through market-based procurement mechanisms, such as renewable energy credits (RECs) and power purchase agreements (PPAs). CEG notes that researchers have determined that allowing for the offsetting of grid-powered hydrogen production emissions through these types of market mechanisms will not result in the level of low-carbon hydrogen production required to be eligible for the 45V Clean Hydrogen PTC. In fact, electrolysis power by grid electricity can result in higher emissions intensity than fossil-fuel derived gray hydrogen, even when clean energy is procured through RECs or PPAs. Only behind-the-meter clean energy resources, such as solar and wind, directly tied to a hydrogen production facility can verifiably meet the definition of a zero-emission resource resulting in low-to-zero emission hydrogen production.

CEG submitted a similar set of comments and recommendations to the U.S. Department of Energy, Energy Efficiency and Renewable Energy, Hydrogen and Fuel Cell Technologies Office is response to the agency’s request for stakeholder feedback on draft guidance on a Clean Hydrogen Production Standard.