Nonprofits, NGOs, and Advocacy Organizations
National Caucus of Environmental Legislators
On June 8th, the National Caucus of Environmental Legislators, a nonprofit, submitted a letter to the Treasury, the White House, and DOE urging them to require that hydrogen producers source the electricity used to run their facilities from new clean energy sources not already on the grid (pro-additionality), deliver the electricity into the same grid where the electrolyzer is located (pro- regional deliverability), and operate during the same hours in which the new clean energy project operates (hourly matching).
More than 130 state legislators from 36 states and territories co-signed the letter, which stated:
“We are deeply concerned about Treasury implementing loose guidelines that may subsidize hydrogen projects with up to four times worse emissions than today’s business-as-usual hydrogen… The three criteria will support substantial industry growth and establish a durable and truly clean hydrogen market.”
The Caucus stated that both grid-connected hydrogen projects and behind-the-meter projects must be required to meet the three criteria.
Natural Resources Defense Council
The Natural Resources Defense Council, a non-profit international environmental advocacy group, has been one of the most prolific voices advocating for implementation of strict additionality, deliverability, and time matching requirements. They have spoken to press, spent six figures on advertisements, commissioned reports, submitted a comment to the IRS docket, and self published several statements.
April 17, 2023 – Joint comment with CATF submitted to IRS on Legal Necessity of the three-pillars of additionality, deliverability and hourly matching. The memo explains why the three pillars are legally required in order to effectuate the statute’s purpose in reducing greenhouse gas emissions and to accurately determine whether hydrogen producers meet the IRA’s threshold to receive the subsidy. Crucially, the “new supply” additionality pillar is legally necessary for all projects—grid-connected and behind-the-meter.
April 24, 2023 – Self-published blog – “All studies support the conclusion that three-pillar compliant projects can be cost-competitive from day one.”
June 1, 2023 – Presentation to EESI – “The three pillars: • Are necessary to prevent significant emissions increases and meet the IRA’s requirements • Will support robust industry growth • Require simple reporting”
June 13, 2023 – Joint Comment with CATF submitted to IRS – Response Letter to NEI Commentators on the legal necessity of “new clean supply” requirements for all electrolytic hydrogen projects- both behind-the-meter and grid-connected.
Colorado Hydrogen Network
The Colorado Hydrogen Network – a non-profit, membership-based hydrogen advocacy organization.
On July 17, the Colorado Hydrogen Network submitted a white paper titled “Tracking Renewable Energy for the 45V Hydrogen Production Tax Credit Without Hourly Matching” to the IRS Docket about the hydrogen tax credit. They argue that hourly matching is unnecessary to to track renewable energy between a source and hydrogen electrolysis generator (load) to achieve decarbonization, opening the submission with, “This paper will show that the renewable energy generation and hydrogen use do not have to occur simultaneously in order to achieve decarbonization as long as the energy quantities reported during a billing interval match.” They also state that if hourly matching is adopted, a majority of hydrogen generators will not be able to access the tax credit.
Union of Concerned Scientists
Union of Concerned Scientists – nonprofit science advocacy organization.
On May 25, 2023, UCS published a piece stating that the Treasury should not allow use of book-and-claim accounting by fossil fuel users.
On April 3, 2023, they published a piece declaring the criticality of the three requirements of additionality, deliverability, and time-based matching, specifically articulating the need for hourly tracking systems.
Industry Associations and Coalitions
American Clean Power
American Clean Power – a trade association “representing the renewable energy industry in the United States, representing 750 utility-scale solar, wind, energy storage, green hydrogen and transmission companies.”
In their Green Hydrogen Framework published in June 2023, ACP proposed a framework that is neither entirely strict nor lenient regarding the three pillars.
Time matching:
Phase in an hourly accounting system, enabling “investors to start the project development process under annual time-matching so long as projects begin construction before the end of 2028.” Projects that begin construction before 2029 are eligible for the full hydrogen PTC with annual matching for the life of the tax credit.
Additionality:
Electrolyzers would satisfy additionality rules if they source electricity from clean energy projects that are:
- “New”: (the clean energy project becomes operational no earlier than 36 months prior to the electrolyzer becoming operational),
- “Repowered”: A renewable energy project that meets the 80/20 repowering rule will be considered to be “new”—applying the 36- month rule, and
- “Congested”: Green H2 facilities that draw electricity from renewable energy projects that experience persistent congestion shall be considered “new” facilities, provided a framework is put in place to verify that the renewable energy projects have been experiencing chronic curtailment and/or zero or negative realtime power prices, based on a historical assessment.
Regionality:
An electrolyzer must source clean energy from a project that is physically located in the same electrical balancing authority or the clean energy project must be physically delivered into the same electrical balancing authority as the electrolyzer if it is not physically located in the same balancing authority.
Nuclear Energy Institute
Nuclear Energy Institute – U.S. nuclear industry trade association, represents the nuclear technologies industry.
In a comment to the IRS and Treasury on February 9, 2023, NEI advocated for regionality and time matching.
In a comment to the IRS and Treasury on March 24, 2023, NEI argued against additionality, stating:
“Such a requirement is inconsistent with the text, structure, and purpose of section 45V, would create uncertainty and delay in the emerging clean hydrogen market, and would result in less efficient capital allocation for clean energy investments.”
National Hydropower Association
National Hydropower Association – a trade association dedicated to promoting the growth of clean, renewable hydropower and marine energy. NHA’s members own roughly 85% of U.S. hydropower generating capacity, which includes over 100 GW of hydropower and pumped storage capacity.
In a report published on June 20, 2023, the NHA opposed any additionality requirements.
NHA otherwise advocates for a phased in approach:
“A phased-in approach with clear guideposts and timelines for increased stringency is recommended to signal to developers, both domestically and internationally, and to ensure the effectiveness of hydrogen as a decarbonization pathway.”
Politicians
Several powerful Senate Democrats have weighed in on the 45V debate.
Sen. Joe Manchin III (D-W.Va)
Sen. Manchin has been particularly outspoken against strict additionality, regionality, and time-matching criteria. His support was critical to the passage of both the Infrastructure Act and the Inflation Reduction Act.
“That was never in the bill, never talked about,” he told E&E News by Politico. “I guarantee there’ll be a lot of problems if they go down that path. A lot of problems.”
The Appalachian Regional Clean Hydrogen Hub (ARCH2), which includes Manchin’s home state of West Virginia, is expected to be one of the likely grant recipients.
Manchin has gone a step further with an amendment to a 2024 fiscal year spending bill that would prevent the Treasury Dept. from imposing new restrictions on the hydrogen industry not found in the original legislation.
In a statement reported by the Washington Post, Manchin said the amendment “reaffirms Congress’s intent to keep the hydrogen production tax credit free of agency-created requirements that would kneecap the emerging hydrogen industry.” The amendment was approved by the Appropriations Committee.
Sen. Tom Carper (D-Del.)
Sen. Carper has expressed quieter concerns about an overly strict interpretation of clean energy.
“We need hydrogen to decarbonize, among other things, big trucks, big buses, and there may be some use to address aviation emissions,” said Sen. Carper.
Sen. Carper is the Chair of the Senate Committee on Environment and Public Works and is usually highly supportive of Biden administration environmental policy.
A Carper staffer told E&E News that Treasury needs to balance the need to produce as little emissions as possible from hydrogen with the need to allow the nascent hydrogen industry to grow.
Sen. John Hickenlooper (D-Colo.)
Sen. Hickenlooper also opposes overly strict rules. “We don’t want to put the cart before the horse,” he said.
Sen. Martin Heinrich (D-N.M.)
Although he said he is placing “a lot of trust into the Biden administration and DOE to figure this out,” Sen. Heinrich also spoke of the importance of allowing the hydrogen industry to grow.
“Where we want to get is eventually real-time matching, but you have to create capacity,” he said.
Oil Supermajors
BP
BP submitted a comment to the IRS Docket on December 3, 2022 encouraging annual time matching and discouraging hourly time matching, adding, “We encourage the IRS and Treasury to adopt flexible criteria on “additionality” especially at this nascent stage.”
Hydrogen Industry
Plug Power
Plug Power, one of the largest electrolyzer manufacturers, published a blog post with an accompanying video titled “The Road to Clean Hydrogen: Getting the Rules Right” on July 19 on their website urging against additionality, deliverability, and hourly time matching requirements. They wrote:
“Proposals for additionality, deliverability/regionality, and hourly matching are inconsistent with Congress’ intent via the Inflation Reduction Act to quickly scale the clean hydrogen economy. They would also undercut our economic and emissions goals.”
Air Products
Air Products, the world’s largest hydrogen producer, has emerged as a vocal supporter of stringent requirements. “We need real and verifiable emissions reductions,” said Eric Guter, vice president of hydrogen at Air Products. “And for clean hydrogen projects or electrolysis-based projects, you need stringency around how you do that.”
Environmental Organizations and Firms
Evolved Energy Research
Evolved Energy Research – a consulting that advises on strategies for deep decarbonization of the energy economy.
In a June 2023 self-published 34 page report, they stated:
“We find that enforcing these three pillars, compared to scenarios which impose only limited requirements (no new supply requirements; no hourly matching requirements; and no deliverability requirements) improves emissions outcomes and still allows for the rapid scaleup of clean hydrogen production in the U.S. While it does impose additional costs on clean hydrogen production, this incremental cost is from a subsidized cost close to zero in some regions by 2030, and this incremental cost goes towards facilitating the type of operations for electrolyzers that is desired in the long-term (flexible production that tracks variable renewable electricity generation).”
“This analysis was supported by the Natural Resources Defense Council. Evolved Energy Research conducted this research in the spring of 2023.”
Clean Air Task Force
Clean Air Task Force – an environmental organization.
December 3, 2022 – Comment submitted to IRS and Treasury
“The three additional criteria outlined below are necessary guardrails for ensuring that hydrogen produced from electrolyzers consuming grid electricity results in emissions reduction.”
April 10, 2023 – Legal analysis co-published by CATF and NRDC, submitted to IRS and Treasury
Clean Air Task Force and NRDC “have previously submitted comments urging the Department of the Treasury to mandate additionality (i.e., “new supply”), deliverability, and hourly-matching (the “three-pillars”) in its regulations implementing the 45V clean hydrogen tax credit. The following analysis elaborates on our prior submission to explain that such an additionality mandate is not only supported by the Inflation Reduction Act, but is indeed required in order to effectuate the statute’s purpose in reducing greenhouse gas emissions and to accurately determine whether hydrogen producers meet the threshold to receive the subsidy.”
Evergreen Collaborative
Evergreen Collaborative – left-of-center insider policy advocacy group. Over 6,200 individuals submitted the same statement to the IRS on June 29, 2023, stating, “Additionality, deliverability, and hourly-matching should all apply immediately to all applicants.”
Energy Innovation
Energy Innovation – nonpartisan energy and environmental policy firm.
In an April 2023 self-published 40 page report, Energy Innovation concluded that the three pillars can unlock robust scale for the industry and that “dead on arrival” claims are false.
“We analyzed the economics of co-located, hourly-matched, new wind, solar, and electrolyzer projects (i.e., export-only configurations), finding they are financially viable from the outset.” The report also “illustrates different project configurations and demonstrates that colocated electrolyzer and clean energy projects—which are easier to understand and clearly compliant with 45V emissions rates—are profitable business models in parts of the U.S. with favorable renewable resource quality.”
EFI Foundation
EFI Foundation – a nonprofit organization dedicated to educating the public on issues relating to harnessing the power of technology and policy innovation to accelerate the clean energy transition.
In a July 7, 2023 report titled “A success-oriented approach for clean hydrogen 45V rules” EFI advocates for a transition from annual to hourly time matching, and a relatively loose interpretation of regionality and additionality.
Time matching
“A transition from annual to hourly matching should be midterm, aligned with the phase-in adopted by the European Union. The EU Hydrogen Delegated Act adopts a phase-in of hourly matching for all projects by 2030 and does not allow any grandfathering of projects under the more flexible initial rules beyond that date.”
Regionality
“[It is] important that the IRS does not unduly geographically restrict clean hydrogen deployment to only those areas of increasing clean electricity deployment… While the principal focus should be on linking new clean electricity supplies to new clean hydrogen production within defined geographical areas, such as proposed hydrogen hubs or established electricity grids, the IRS could address exceptions through special rules for projects to procure clean electricity across eGRID regions. Special rules could include, for example, a rule where a hydrogen producer would need to demonstrate that the average difference in locational marginal prices (LMPs) between relevant eGRID subregions or congestion regions in the year prior to the in-service date of the hydrogen project was less than some appropriately low threshold.”
Additionality
“There should be expanded options for additionality, aimed at supporting the nascent industry while safeguarding against long-term emissions increases.” These technology-neutral options include new builds, uprates and repowered facilities, clean electricity not delivered to load, and avoided retirement or license-extending opportunities of existing clean generators.
Research Institutes
MIT Energy Initiative
MITEI is “MIT’s hub for energy research, education, and outreach. Our mission is to develop low- and no-carbon solutions that will efficiently meet global energy needs while minimizing environmental impacts and mitigating climate change.”
In an April 25, 2023 comment on the IRS Docket, MITEI advocated for a phased approach to time matching, with annual matching in the near term, and an automatic conversion to hourly matching at a designated time in the future.
“According to our findings, annual time-matching is adequate and cost-effective to meet the (0.45 kgCO2eq/kg H2) Tier 1 limit in the short-term while demand for electrolytic H2 is still relatively small. Once demand for electrolytic H2 becomes substantial, switching to hourly time-matching would be necessary to avoid high emissions.”
An April 2023 MITEI Working Paper titled, “Producing hydrogen from electricity: How modeling additionality drives the emissions impact of time-matching requirements” explored various additionality and time matching scenarios:
“Our key finding is that we confirm that the consequential emissions from producing electrolytic H2 are conditional upon how the additionality requirement is modeled. Under the “compete” framework, an hourly time-matching requirement is the only possible way to reach consequential emissions under the threshold needed to receive any PTC (and not even all analyzed hourly time-matching scenarios this is guaranteed). In contrast, under the “non-compete” framework annual time-matching requirements are sufficient in all cases to meet the threshold needed to receive the highest $3/kg PTC.”
“Finally, we have argued that since the demand for green H2 is still relatively small today and VRE deployment continues to grow, the current context more strongly resembles a “non-compete” framework in which low consequential emissions impacts with annual time-matching are likely. However, with declining electrolyzer capital costs, as demand for green H2 grows, the risk of higher consequential emissions impacts increases under annual time-matching, as the paradigm shifts to exhibit characteristics of the modeled “compete” framework. Hence, we argue for a “phased approach” in the requirements for the attribution of the PTC: annual matching in the near term with a re-evaluation leaning towards hourly matching later on in the decade.”
Utility Companies
Northern California Power Agency
NCPA is a public Joint Powers Agency established to make investments in energy-generation facilities and manage power resource needs on behalf of the agency’s 16 member systems, which include city-owned electric utilities, public special districts, a public utility district, and a rural electric cooperative. NCPA owns and operates one of the cleanest portfolios of power plants in the nation and serves approximately 700,000 electric customers in Central and Northern California.
NCPA is against additionality, reasoning that curtailment is already too high in California.
“In areas like California where there is already so much clean electricity that over 1.25 million megawatt hours were subject to curtailment in the second quarter of 2023 alone the solution to curtailment is certainly not additionality. In fact, where curtailment is already a significant issue (and expected to get worse), an additionality requirement would only exacerbate the problem, and make no practical sense or further any policy goals.”
NextEra
NextEra Energy is a utility that plans to invest $20 billion in green hydrogen since the passage of the IRA, banking on “lucrative credits”. NextEra is the largest clean energy company in the United States and one of the largest renewable energy producers in the world with a current generating capacity of around 30,000 MW, mostly from solar and wind. They are also one of the largest nuclear power producers in the US.
NextEra supports a phase-in to hourly matching:
“Starting off with annual matching will jumpstart green hydrogen, leading to more investment and greater overall decarbonization potential over the next five years. That will give the industry the appropriate runway to develop the first wave of hydrogen projects and build industry knowledge by the end of 2028, before transitioning to hourly matching.”
NextEra launched an advertising campaign promoting annual matching through 2028. Phil Musser, vice president of federal government affairs at NextEra, said in an emailed statement to the Washington Post that the ads sought to correct “significant misinformation and poorly informed analysis peddled around about how to constructively implement the hydrogen production tax credit” and to “separate fact from fiction.”
Coalitions
Fuel Cell and Hydrogen Energy Association
The Fuel Cell and Hydrogen Energy Association – the trade association for the fuel cell and hydrogen energy industry. FCHEA is the national industry association representing over 90 leading companies and organizations that are advancing innovative, clean, safe, and reliable hydrogen technologies and solutions.
The FCHEA has been one of the most active voices against additionality requirements, submitting letters to federal agencies and speaking to the press.
FCHEA, the U.S. Chamber of Commerce, and more than 50 organizations call on the Treasury Department to implement 45V tax credits without additionality requirements via a Letter to Treasury on May 4, 2023.
These signatories included: 3M, ADL Ventures, Air Liquide Hydrogen Energy U.S. LLC, American Center for Mobility (ACM), Baker Hughes, Ballard Power Systems, Inc., BayoTech, Bloom Energy, Business Council for Sustainable Energy, California Hydrogen Business Council, CF Industries, Constellation Energy, Cummins Inc., Douglas County Public Utility District, ENGIE North America, Inc., FirstElement Fuel, Inc., FRIEM America, FuelCell Energy, General Motors LLC, GKN Hydrogen, Honeywell International Inc., Howard Energy Partners, HyAxiom, Inc. – A Doosan Company, Hyundai Motor America, IHI Turbo America, Co., ImaGEN Inc., Infinity Fuel Cell and Hydrogen, Inc., JERA Americas, John Cockerill, Methanol Institute, Mitsubishi Power Americas, Inc., Monolith, National Hydropower Association, Nebraska Public Power District, Nel Hydrogen, Nikola Corporation, Nuclear Energy Institute, OCI Global, PDC Machines LLC, Phillips 66, Plug Power Inc., Proteum Energy LLC, Puget Sound Energy, Renewable Innovations, Renewable Hydrogen Alliance, Robert Bosch LLC, Swagelok Chicago │ Milwaukee │ St. Louis, Taylor-Wharton, Terrestrial Energy USA, Toyota Motor North America, Twelve Benefit Corporation, U.S. Chamber of Commerce, W. L. Gore & Associates, and ZeroAvia.
FCHEA and the same group of signatories submitted another Letter to the Department of the Treasury on June 20, 2023, stating:
“It is the view of the undersigned companies and organizations that the lifecycle analysis calculation must include the use of market-based mechanisms such as renewable energy credits (REC), power purchase agreements (PPAs), or energy attribute certificates (EACs) without any additionality restrictions.”
FCHEA, Accelera/Cummins, U.S. Chamber of Commerce and 31 other organizations submitted a Letter to DOE, Treasury, White House, and IRS on July 24, 2023, stating:
“We believe that overly restrictive proposals for hourly matching, additionality, and deliverability have the potential to skew the balance between clean hydrogen growth and environmental integrity in the nascent life of this market… In sum, requiring one industry to disproportionately carry the burden and cost of grid decarbonization would be counterproductive and have a chilling effect on domestic clean hydrogen projects.”
Following is the complete list of signatories: Global Energy Institute (of U.S. Chamber of Commerce), Plug Power, Accelera by Cummins, Air Water America Inc., Air Water Gas Solutions Inc., CarbonBridge Inc. CF Industries, Chart Industries, Inc., City of Lancaster, FASTECH, Fortescue Future Industries, GKN Hydrogen, HyAxiom, Inc., Hyzon Motors, Ivys, In. (dba Ivys Energy Solutions), Johnson Matthey, LanzaTech Global, Inc., Mitsubishi Power Americas, Inc., Monolith, National Grid – NY, Nel ASA, Nikola, PDC Machines, PowerTap Hydrogen Fueling Corp., Raven SR, Ricardo, Santa Cruz Metropolitan Transit District, Taylor-Wharton America Inc., Standard Hydrogen Corporation, U.S. Energy (a U.S. Venture Company), Universal Hydrogen Co., and The Chemours Company.
Nuclear Energy Institute
Nuclear Energy Institute, Constellation Energy, Energy Harbor, Public Service Enterprise Group, and Vistra Corporation
In a May 5, 2023 joint response to NRDC-CATF comment. The Nuclear Energy Institute and its co-signatories, which collectively own more than 75% of the merchant nuclear plants in the U.S. argued against additionality. NEI argues that the adoption of an additionality requirement would conflict with EPA implementation of the Clean Air Act and adoption of an additionality requirement would violate the statutory language of Section 45V.
“Had Congress wanted to impose an “additionality” requirement, it would not have directed Treasury to allow existing nuclear plants to qualify for the clean hydrogen tax credit but would have adopted vintage-based eligibility criteria for Treasury to implement. The absence of any express authority for an “additionality” requirement stands in contrast to the numerous other vintage-based requirements that Congress did expressly impose in Section 45V.”
Clean Hydrogen Future Coalition
Clean Hydrogen Future Coalition is composed of energy companies, labor unions, utilities, NGOs, equipment suppliers, and project developers. BP and Chevron are among its members.
On Apr 26, 2023, CHFC submitted a comment to the IRS Docket, encouraging the implementation of annual time matching and regional deliverability restrictions. They urged against additionality requirements:
“Starting a renewable energy project today, once there is an interconnection agreement, is roughly a 7-year process. Assuming an interconnection agreement date of April 2023, this means the renewable electricity would become operational in April 2030, at the earliest, which is towards the end of the 45V tax credit program. Very few projects would be able to come online before the credit expires in 2032.”
CHFC board members include BP, Chevron, ExxonMobil, Nuclear Energy Institute, American Gas Association, Southern Company, Linde, ClearPath Action Fund, Bayotech, TC Energy, Equinor, Williams, Nikola, ONE Gas, TVA, Shell, Apex Clean Energy, and GTI Energy. Some of CHFC general members include Nel Hydrogen, GE, Siemens Energy, American Public Gas Association, EERC, American Clean Power, INGAA (Interstate Natural Gas Association of America), and NextEra Energy