Evidence Shows Three Pillars Remain Crucial for 45V Hydrogen Tax Credit to Protect Climate, Consumers, Industry

The research note advocates for "strong 45V rules" based on three pillars: incremental, deliverable, and hourly-matched clean electricity. The author contends that weakening these rules would allow dirty hydrogen production to qualify for subsidies, potentially increasing net CO2 emissions by 100-200 MMT per year and raising wholesale electricity prices by 10%. Conversely, strong rules are presented as a way to drive domestic manufacturing of flexible electrolyzers, align U.S. standards with the European Union, and ensure the long-term viability of the hydrogen industry beyond the tax credit's expiration.

• Weakening the 45V rules could hinder U.S. efforts to meet its 2030 Nationally Determined Contribution (NDC) of 50-52 percent emissions reductions by increasing net climate pollution by 100-200 MMT of CO2 per year, which is equivalent to adding 48 million cars to the road.
• Proposed exemptions to the three pillars would allow significant volumes of dirty hydrogen to be subsidized. For example, exempting 5-10 percent of existing clean energy could drive 34-136 MMT of CO2 emissions, while allowing relicensed nuclear and hydroelectric plants to count as incremental could drive 140-280 MMT of CO2 emissions.
• Weak 45V rules risk increasing wholesale electricity prices by approximately 10%, whereas strong rules can mitigate or lower prices by requiring new clean energy to be built in parallel with electrolyzers and encouraging the use of flexible electrolyzers that absorb excess energy.
• Strong rules promote the domestic manufacturing of high-tech, flexible electrolyzers (such as proton exchange membrane or PEM) and reduce reliance on cheaper, inflexible alkaline electrolyzers from China.
• The three-pillars framework aligns the U.S. with the European Union, which adopted a similar standard in June 2023, facilitating U.S. access to the EU market and creating a unified international standard.
• Evidence suggests that strong rules will not significantly slow the deployment of electrolytic hydrogen; one group of companies reported readiness to build over 50 GW of compliant electrolyzers, and modeling by Evolved Energy Research shows comparable production volumes (11 MMT annually by 2032) regardless of the three pillars.

APA

Esposito, D. (2024). Evidence Shows Three Pillars Remain Crucial for 45V Hydrogen Tax Credit to Protect Climate, Consumers, Industry. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Evidence-shows-three-pillars-remain-crucial-for-45V-hydrogen-tax-credit.pdf

Chicago

Esposito, Dan. Evidence Shows Three Pillars Remain Crucial for 45V Hydrogen Tax Credit to Protect Climate, Consumers, Industry. Energy Innovation, 2024. https://energyinnovation.org/wp-content/uploads/Evidence-shows-three-pillars-remain-crucial-for-45V-hydrogen-tax-credit.pdf.

Wikipedia

{{cite report |last1=Esposito |first1=Dan |title=Evidence Shows Three Pillars Remain Crucial for 45V Hydrogen Tax Credit to Protect Climate, Consumers, Industry |publisher=Energy Innovation |date=July 2024 |url=https://energyinnovation.org/wp-content/uploads/Evidence-shows-three-pillars-remain-crucial-for-45V-hydrogen-tax-credit.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{esposito2024evidence, author = {Esposito, Dan}, title = {{Evidence Shows Three Pillars Remain Crucial for 45V Hydrogen Tax Credit to Protect Climate, Consumers, Industry}}, institution = {Energy Innovation}, year = {2024}, month = jul, url = {https://energyinnovation.org/wp-content/uploads/Evidence-shows-three-pillars-remain-crucial-for-45V-hydrogen-tax-credit.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }