ACP Statement on Administration Guidance for Green Hydrogen Tax Credits

WASHINGTON, December 22, 2023 – The American Clean Power Association (ACP) released the following statement from ACP Chief Executive Officer Jason Grumet after the U.S. Treasury Department released proposed guidance on clean energy investment and production tax credits for green hydrogen projects:

“The Biden Administration’s proposal attempts to launch a green hydrogen industry while guarding against any possibility of emissions increases during initial commercial deployment. Unfortunately, the Administration proposal contains a fatal – but fixable – flaw that must be addressed to realize the economic, environmental, and climate benefits of commercially scaling a domestic green hydrogen industry.

“While ACP embraces the basic structure of the Administration’s three-pillar approach, the rushed imposition of the most burdensome restrictions fails to acknowledge the market realities of new technology deployment. Specifically, imposing an hourly matching provision too early for first-wave green hydrogen projects will discourage a significant majority of clean power companies from investing in green hydrogen manufacturing and facilities. ACP is encouraged to see that the Treasury Department has specifically requested comment on the adequacy of the transition schedule. The proposed timeline is a fundamental obstacle to the commercialization of green hydrogen in the U.S.

“An ACP analysis concludes that offering additional flexibility in time-matching requirements will enable investment in a first wave of 20 to 40 commercial-scale facilities by 2032. While adequate to jumpstart the green hydrogen industry, this deployment represents only 3-5 percent of the Administration’s 50 MMT annual green hydrogen production goal and presents little risk of a material increase in emissions. However, the proposed rule jeopardizes the economic feasibility of these early projects, and with them, the future viability of the green hydrogen industry.

“The environmental risk that green hydrogen, a critical decarbonization solution, will remain on the sidelines for the next 30 years is vastly greater than the perceived risk associated with providing additional flexibility in the transition timeline. It is perplexing to see the Biden Administration propose a short-term strategy that could threaten net-zero ambitions and long-term energy security and economic goals.

“ACP member companies’ overarching goal is the rapid deployment of wind, solar, and battery storage technologies. In its present form, the Administration’s rule will inhibit clean energy deployment. Fortunately, the rule can be fixed. We are optimistic that the Administration will make the necessary changes.”