Guide for Saving Energy in the Hydrogen Industry: 45V Optimization Strategy

The hydrogen industry is making a concerted effort to communicate the real cost benefits of hydrogen projects to key senators, as they aim to extend the 45V tax credit through December 31, 2029.

This extension, if successful, would allow enough projects to "matriculate" that the beginnings of a strong U.S. industry could emerge. The push for the tax credit extension has received support from several senators, including Senators Joe Manchin, John Barrasso, and Tammy Duckworth.

The current scenario is somewhat challenging for the hydrogen industry. The draft reconciliation bill passed by the House in May terminates the 45V credit for any facilities not already under construction by the end of 2025. This essentially knocks federally funded hydrogen hubs out of the running.

However, the hydrogen industry remains optimistic that the final version of the bill will extend the 45V tax credit to December 31, 2029. Frank Wolak, who leads the Fuel Cell and Hydrogen Energy Association, stated that the industry is executing a "surgical" approach to achieve this.

The industry's focus has shifted from discussing guidance specifics to educating key senators on the real cost benefits of hydrogen projects. This education campaign has been ongoing, with the hydrogen industry having been actively working to reinforce the merits of the industry to key lawmakers, including the Trump administration.

The hydrogen industry has gained traction with key senators, such as Louisiana Sen. Bill Cassidy, West Virginia Sen. Shelly Capito, West Virginia's Jim Justice, Louisiana's John Kennedy, Texas' John Cornyn, Utah's John Curtis, Kansas' Jerry Moran, and Pennsylvania's Dave McCormick.

Meetings with stakeholders on Capitol Hill have evolved to prioritize states with hydrogen work already underway, such as Louisiana, West Virginia, Texas, and Utah. Pennsylvania Sen. Dave McCormick, who chairs the Committee on Energy and Natural Resources' subcommittee on energy, has recently shown support for the hydrogen industry.

The 45V tax credit is a $7 billion line item in a $3 trillion bill, making it relatively inexpensive compared to other IRA tax credits. The hydrogen industry's ask is solely to extend the 45V credit to December 31, 2029, as there was a lot of pressure from congressional and Senate supporters to come in with a common ask.

The domestic hydrogen sector is overall "optimistic" that the final version of the bill will expand 45V's timeline, but is also aware that the outcome of the bill will determine what happens next for domestic hydrogen. If Congress decides to cut 45V off for projects that don't break ground before the end of the year, the domestic market will become stagnant, and companies will have to look for opportunities overseas.

The hydrogen sector is arguing that maintaining stability could allow it to get ahead of China in the hydrogen market. Some domestic activity will continue, but it won't be at the same level as the rest of the world without the extended tax credit. The fate of federal funding for the hydrogen hubs will be determined by the Department of Energy, and the hydrogen funding for these hubs, though essential for the industry, isn't part of the industry's ask.