13 senators call on Treasury to loosen rules for hydrogen energy tax credit

More than a dozen Democratic senators called on Treasury Secretary Janet Yellen to relax guidelines around federal tax subsidies for the hydrogen industry in a letter this week.

The current guidance, backed by green and progressive advocates, requires eligible companies use new energy rather than preexisting energy from the grid, while also ensuring that new clean energy is produced at the same time and in the same geographic region as hydrogen projects.

Signers of the letter argued the guidelines’ “three-pillar” standard could discourage investment and “undermine our shared goal of creating an enduring domestic clean hydrogen industry capable of significantly reducing economy-wide carbon emissions.” They called for flexible alternatives to the standard, including allowing owners of “minimally emitting” electricity sources to provide power to hydrogen producers.

The letter also calls on the Treasury Department to allow alternatives to the “stringent and problematic” requirement that the new energy be produced at the same time as the hydrogen project. It suggests instead using a “commence-construction” standard similar to that used under the solar tax credit, in which the project is eligible for the credit the year the project begins construction.

“Treasury’s [current] guidance would jeopardize billions of dollars of investment in clean hydrogen projects, render the cleanest forms of hydrogen uneconomical, and imperil efforts to decarbonize hard-to-abate sectors of our economy,” the senators wrote. “Simply put, unless revised according to the suggestions below, the proposed guidance will undermine our shared goal of creating an enduring domestic clean hydrogen industry capable of significantly reducing economy-wide carbon emissions.”

The letter, led by Sen. Alex Padilla (D-Calif.), was also signed by Democratic Sens. Tom Carper (Del.), Maria Cantwell (Wash.), Sherrod Brown (Ohio), Bob Casey (Pa.), Chris Coons (Del.), Tammy Duckworth (Ill.), Dick Durbin (Ill.), John Fetterman (Pa.), Kirsten Gillibrand (N.Y.), John Hickenlooper (Colo.), Amy Klobuchar (Minn.) and Patty Murray (Wash.) Casey and Brown are both up for reelection in swing states this November.