Hydrogen advocates and industry stakeholders have redoubled efforts in Washington DC to make sure 45V production tax credits survive what is expected to be a bruising battle to pay for GOP tax cuts.
"After a period of silence in January, we're seeing a sense of unity within the industry and we've gotten a lot more reception from members of Congress and the administration," said Frank Wolak, chief executive officer of Fuel Cell & Hydrogen Energy Association (FCHEA), while attending the CERAWeek S&P Global conference in Houston, Texas, last week. "That is a huge, milestone difference from even a month ago. I'm guardedly optimistic."
President Donald Trump's flurry of executive decisions targeting clean energy supports inserted a new round of uncertainty for developers hoping to tap the lucrative tax credit, which came out of former President Joe Biden's signature climate bill, the Inflation Reduction Act (IRA). While the tax credit is still intact, the administration's embrace of fossil fuels has ignited concerns that 45V could be vulnerable as the GOP seek offsets to pay for a multi-trillion-dollar tax cut.
As a part of the tax code, 45V requires an act of Congress to overturn it, which protects the incentive from the vagaries of executive decisionmaking but still leaves it exposed to opposing interests in a budget fight. During negotiations related to the national debt, a special parliamentary procedure can be triggered to expedite federal budget legislation by overriding the need for a super majority of votes.
"Everything is on the chopping block," said Wolak.
Hydrogen proponents point to the broad coalition that has emerged as an encouraging sign, with oil and gas companies throwing their political heft into the effort to protect 45V and Republican lawmakers publicly lauding the job creation by IRA-related tax credits.
Powerful friends
One major energy company is advocating directly and indirectly through trade associations to keep 45V intact. It believes the credits are crucial to erecting a new industry in the US and will become less necessary as the market matures and drives down costs. ExxonMobil chief executive officer Darren Woods, who expressed support for the tax credit during the company's fourth-quarter earnings call, also said the credits are an interim step for a nascent market.
"We believe these incentives are critical to establishing a fully market-based future where hydrogen competes head-to-head with traditional fuels," he said in January.
Last week, 21 Republican legislators whose districts have benefited economically from investments driven by the IRA issued a letter of support for incentives amid what it called "efforts to repeal or reform current energy tax credits."
"Affordable and abundant energy will be critical as the President works to onshore domestic manufacturing, supply chains, and good paying jobs, particularly in Republican-run states due to their business-friendly environments," said the letter, which was organized by Rep. Andrew Garbarino (R-New York.) Garbarino issued a similar letter last fall urging House leader Mike Johnson (R-Louisiana) to protect IRA tax credits and picked up three more signatures this time.
"This is significant," said Paul Dainora, chief commercial officer of electrolyzer maker Ohmium, in reference to the letter. "These tax credits are really important for our customers to build a business case." The Silicon Valley-based company is pursuing up to 250 megawatts of projects in the US this year but none of the larger projects will reach final investment decision before the fate of 45V is certain, said Dainora, who was also attending CERAWeek.
The credits are considered so important for US hydrogen prospects that the chief executive officer of another global electrolyzer manufacturer has visited Washington from Europe multiple times in the last month to participate in efforts to buttress support for 45V, said a person involved in the visits who was unauthorized to speak publicly about them.
Instead of focusing on hydrogen's cleaner emissions, industry talking points have coalesced around America's interest in maintaining energy dominance, said the person. Pointing to rising demand from the European Union and Asian countries like Japan and South Korea for cleaner burning fuels, 45V supporters are stressing that China is poised to dominate the industry if the US doesn't build its own hydrogen capacity.
While businesses await an outcome, advocates take comfort from the fact that the process will wrap up in the next couple of months and allow companies to advance to FID.
"We sat idle for two and a half years waiting for determination of what these tax rates would look like," said Wolak of the FCHEA, referring to the long period of uncertainty during which the Biden administration finalized the exact rules for 45V.
"This next phase is make-or-break time but it's a short-term window.
