Poorly devised PTC rules could hamper hydrogen market, industry warns
Image Credits: Plug Power Inc.
Amid the ongoing development of guidance for clean hydrogen production tax credits in the US, sector major Plug Power Inc (NASDAQ:PLUG) and other entities sent a letter to the Biden Administration on Monday to warn about the possible negative impact overly strict restrictions could have.
The letter in question addresses the implementation of the Section 45V Clean Hydrogen Production Tax Credit (PTC) that was introduced with the signing into law of the Inflation Reduction Act (IRA) last summer. While the US Treasury Department currently devises the PTC rules, the process has ignited a debate in connection with the three so-called pillars of tax credit calculations: additionality, deliverability, and hourly time-matching.
“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,” the letter reads. “[...] requiring one industry to disproportionately carry the burden and cost of grid decarbonisation would be counterproductive and have a chilling effect on domestic clean hydrogen projects. We must scale clean energy technologies concurrent with decarbonising the grid; one cannot wait for the other. This approach is consistent with other clean energy and electrification deployments.”
According to a technical and policy impact analysis developed by Plug, overly strict restrictions could lead to domestic investment reductions of 65% by 2032 and the loss of more than 500,000 jobs over the next seven years.
“If PTC rules are too restrictive, we risk forgoing hundreds of thousands of jobs, conceding hydrogen leadership overseas, compromising our energy security, and failing to achieve decarbonization goals – especially in hard-to-abate sectors like steel and chemical production,” Plug’s CEO Andy Marsh stated.
Apart from Plug, the letter was signed by the US Chamber of Commerce and 31 other organisations and sector players including electrolyser manufacturers Accelera by Cummins and Nel ASA, project developers like Fortescue Future Industries (FFI) and hydrogen products maker CF Industries.