My Comments on Section 45V Credit for Production of Clean Hydrogen
Regulatory changes are published online through the Federal Register and subject to a comment period. Citizens are able to publish comments on whatever regulations are proposed. For example, the IRS is proposing a change to the hydrogen tax credit portion of the Inflation Reduction Act which would make the tax credit dependent on upstream energy sources. My public comment is below.
I want to voice my disagreement with the change proposed to the 45V tax credit policy mandating low carbon emissions as a prerequisite for hydrogen production tax credits. I am concerned that this will have the negative effect of stalling the necessary hydrogen fuel industry at a time when we need to be “all hands on deck” in a green energy transition.
The Inflation Reduction Act, passed in 2022, was designed to incentivize the production of new hydrogen hubs and allow the country’s manufacturing might to kickstart the industry by reducing prices and growing capacity as soon as possible.
Any policy changes to slow down this progress will have exponential effects. The learning rate for solar is roughly 20%. That is, for every increase in magnitude, the unit price of solar drops 20%. That means if it takes an extra year or two for hydrogen production to scale, we are much farther behind in our transition.
Transitions lead to growing pains. The tax credits from the same law allocate funds towards purchasing electric vehicles. There is no stipulation that the electricity which charges these vehicles must be clean. If your town’s power is supplied by coal, it might be dirtier to charge an EV than to burn oil.
Of course, that’s a bad faith argument. It’s clear that our national grid is quickly getting greener. That then trickles down to everything connected to the grid, including EVs. It is clear that coal is falling and renewables are rising. Wherever these hydrogen hubs are located, it’s clear that those facilities will be powered by renewable, clean energy sooner rather than later. Why? Because of the learning curve, applied over many years, solar is already the cheapest form of energy in history.
In a few years, this discussion will seem like squibbling for no reason. However, if by that time we still have not developed a hydrogen energy, we will have to work even harder to mitigate climate issues due to the continuation of polluting techniques which cannot be simply replaced by renewable energy.
