Comments on the Proposed Guidance for the 45V Tax Credit
This public comment addressed to the Internal Revenue Service focuses on the role of state energy and climate policies and the risks associated with using the annual emissions rate in the 45V clean hydrogen tax credit.
These comments focus on two aspects of the proposed guidance for the 45V tax credit (26 USC 45V).
- Binding state policies, such as an emissions cap or renewable portfolio standard, can lead to equivalent lifecycle emissions as the proposed approach based on incrementality, deliverability and hourly matching. States could use modeling to demonstrate this equivalence and receive the equivalent tier of the tax credit.
- The calculation of emissions rates on an annual basis will subject the use of electrolyzers to significant risks, potentially interfering with markets for unbundled EACs, making it more challenging to finance electrolyzers, and increasing hydrogen prices. Basing the credit on hourly emissions rates would mitigate these risks.
