The National Association of Manufacturers is warning federal authorities that a new plan aimed to increase the use of clean methods for producing hydrogen through tax credits will fail to incentivize growth and investment.
On Dec. 22, the U.S. Treasury Department and the Internal Revenue Service introduced a Clean Hydrogen Production Credit, funded through the 2022 Inflation Reduction Act.
It would give companies that meet established employee wage requirements a tax credit ranging from $.60 to $3.00 per kilogram of hydrogen produced, depending on the level of greenhouse gas emissions from the production process and the amount of fossil fuel used.
NAM President and CEO Jay Timmons, however, said in a statement the proposed regulations that go along with the tax credit need much more flexibility and manufacturers were “deeply disappointed” with the announcement.
“The hydrogen tax credit has the potential to be the world’s strongest tool to build a hydrogen economy, but the Treasury Department proposal would impose so many hurdles to qualifying for the credit that the Biden administration will be left unable to achieve some of its top economic and environmental goals,” Timmons said.
“If these regulations are put into place, America will lose out on job-creating investments across the country. To incentivize truly transformative growth in the necessary infrastructure to produce, transport and use hydrogen, the Biden administration should finalize a flexible credit that rejects additional requirements that were not included in the original legislation.
“And to realize the full potential of Inflation Reduction Act provisions, the CHIPS and Science Act and more, permitting reform must be a top priority in the new year.”
The NAM has been urging the Treasury Department to create a flexible credit that rejects additionality and time matching provisions and provides a mechanism that supports carbon capture.
More information on the NAM’s advocacy and the impact of these tax credit provisions can be found here.