FOR IMMEDIATE RELEASE
CRS Supports Treasury’s Proposed Guidance on Clean Hydrogen Production Tax Credit
CONTACT
Jeff Swenerton
Communications Director
415-561-2119
jeff.swenerton@resource-solutions.org
The nonprofit Center for Resource Solutions (CRS) applauds the Department of the Treasury’s proposed regulations for implementing the Clean Hydrogen Production Credit (26 U.S. Code § 45V) under the Inflation Reduction Act. This tax credit is an important step in incentivizing the domestic production of one of the most promising fuel sources for a clean energy economy. Hydrogen produced from renewable energy can replace fossil fuel use in sectors that are more difficult to electrify, including transportation, energy storage, and heavy industrial processes.
CRS also supports Treasury’s proposed requirement that current market-based instruments be used for tracking the generation and use of renewable electricity in the production of clean hydrogen, including energy attribute certificates (EACs) and renewable energy certificates (RECs). As they currently do for the retail renewable energy market in North America, these established instruments will facilitate credible greenhouse gas (GHG) emissions accounting for the production and use of clean hydrogen. They also enable new electrical load from hydrogen production to be time-matched with clean electricity generation from new local generators to help prevent inadvertently increasing polluting electricity generation.
By requiring renewable energy for clean hydrogen production, the proposed rules will encourage the development of new domestic renewable capacity. The existing voluntary renewable energy market will also support this new renewable capacity by both enabling renewable energy project developers to move forward within the prescribed 3-year timeframe while hydrogen production facilities are being built and by providing a market for renewable generation outside of the times when hydrogen is produced.
Additionally, the proposed rules are in alignment with CRS’s Green-e® Energy certification program, the largest and most stringent renewable energy certification program in North America. In 2022, Green-e® Energy certified 114 million retail MWh, an increase of over 26% over the last two years. Under the current proposed rules, renewable electricity generation meeting the requirements for hydrogen production also meets the requirements of the Green-e® certification program, which provides built-in third-party assurances of environmental quality to the new hydrogen market. The Green-e® certification program also has the capability now to verify the “three pillars” for EACs used to track generation and use of clean hydrogen— incrementality, regionality, and time matching. CRS is in the process of including clean hydrogen in the Green-e® standards, an update that will dovetail with the proposed rules.
In support of the establishment of an infrastructure and market for clean hydrogen, over the past year CRS provided information and resources to assist the agencies responsible for establishing the market rules. Recent CRS whitepapers, including Readiness for Hourly: U.S. Renewable Energy Tracking Systems and The Legal Basis for Renewable Energy Certificates, are cited in the proposed rules and in the supporting analysis released by DOE.
CRS looks forward to continuing to support the expansion of the new green power market for hydrogen. With the current REC and EAC market infrastructure in place, and improvements for more granular tracking and accounting, clean hydrogen production and use can be a significant means to ending the use of fossil fuels.