45V Exemptions Need Strong Guardrails To Protect Climate, Grow Hydrogen Industry

New Energy Innovation analysis shows the Treasury Department is considering a design flaw in its draft guidance for the 45V clean hydrogen production tax credit that could undermine its success, despite containing the “three pillars” approach required for truly clean electrolytic hydrogen. Our analysis finds a “general carve-out” for exempting some share of existing clean energy from Treasury’s “incrementality” requirement would be disastrous for the tax credit’s integrity. For example, a 5 percent carve-out would allow for approximately 1.5 million metric tons (MMT) of dirty electrolytic hydrogen production per year, contributing roughly 30 to 60 MMT of CO2 emissions annually. That’s up to 13 million cars’ worth of climate pollution.

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