Hydrogen Producers Concerned Over Federal Guidance on 45V Tax Credit Amid Regulatory Hurdles and Uncertainty

Hydrogen energy producers are raising concerns about federal guidance on the 45V tax credit’s implementation due to unproductive rulemaking by the U.S. Treasury and the IRS. The tax credit, which was introduced from the Inflation Reduction Act, aims to reduce the tax burden on eligible hydrogen producers that help reduce greenhouse gas emissions. However, it may be unclear if certain methods of hydrogen production, such as ‘blue’ hydrogen production created from natural gas and carbon capture technology, will be excluded from receiving the credit. This could affect ‘Hydrogen hubs’ relying on this pathway, which has been supported by a $7 billion investment from the Bipartisan Infrastructure and Jobs Act. The controversy is part of a trend where the Biden administration’s policies are being challenged by new regulatory hurdles, excessive labor regulations and restrictive federal permitting laws. Activists argue that this could allow the administration to make good on its promises for cleaner domestic energy production.