Congresswoman Lizzie Fletcher (TX-07), Congressman Troy Carter (LA-02), and Congresswoman Sylvia Garcia (TX-29) led their colleagues in sending a letter urging the Biden administration to ensure the Texas Gulf Coast hydrogen industry can benefit fully from the clean energy tax credit in the Inflation Reduction Act (IRA).  The letter comes as the Biden administration is set to finalize rules for the 45V Tax Credit for Production of Clean Hydrogen (45V).

The letter recommends the following in relation to the 45V Clean Hydrogen Production Tax Credit:

1. Interregional Transmission Delivery: 45V final rules should allow interregional transmission delivery of renewable resources – such as between the Delta, Plains, and Texas regions defined by the DOE Transmission Needs Study – rather than enforcing strict deliverability requirements;
2. Phased-in Hourly Matching: 45V final rules should include a phased-in adoption of hourly temporal matching and project-specific extension policy for hourly temporal matching;
3. Lower Emission Gas Feedstock: 45V final rules should include a mechanism that provides credit for a lower emissions gas feedstock as part of an applicant facility’s emissions value determination and should acknowledge and reward projects that accelerate industrial decarbonization by producing and then using hydrogen in a looped manufacturing or production cycle; and,
4. Midterm Review: 45V final rules should require the U.S. Treasury Department to establish a midterm review procedure to determine the readiness of each region.

The members noted that, “an overly stringent final rule will drive first-mover electrolytic hydrogen producers to places with ample existing renewable power rather than locations with high decarbonization potential and hydrogen demand, like the Gulf Coast. This disincentive for production in the Gulf Coast would undermine the purpose of the credit and the Inflation Reduction Act to decarbonize industrial sectors with high hydrogen demand.  Stringent 45V rules could also hinder significant federal regional investments, including the HyVelocity Hydrogen Hub award for the Gulf Coast from the Department of Energy and the $50M Build Back Better award for the H2theFuture project spearheaded by Greater New Orleans Inc.”

In November 2021, Congresswoman Fletcher voted for the Infrastructure Investment and Jobs Act, which, among other things, authorized $8 billion for the U.S. Department of Energy (DOE) to establish the Regional Clean Hydrogen Hub Program.  The hubs in this program will create networks of hydrogen producers, consumers, and local connective infrastructure to accelerate the use of hydrogen as a clean energy resource.  In August 2022, Congresswoman Fletcher voted for the IRA, which, among other things, established the 45V tax credit.

In September 2022, Congresswoman Fletcher led a bipartisan effort advocating for a hydrogen hub to be established in Houston.  In March 2023, during an Energy & Commerce Committee hearing, Congresswoman Fletcher discussed Houston’s energy innovation and promoted Houston as a location for the hub. In October 2023, the Biden administration announced the selection of Houston as one of seven locations across the U.S. for a Regional Clean Hyrdrogen Hub.

The Houston HyVelocity Hub is a collaborative comprised of non-profit research organizations, academic institutions, and leading energy companies—including Rice University, Port Houston, and the Center for Houston’s Future—that is working to advance the clean hydrogen ecosystem in Texas and along the Gulf Coast.

The success of the Houston HyVelocity Hub, which DOE selected as one of the regional hydrogen hubs and awarded up to $1.2 billion to develop, will depend on a workable final rule that incentivizes a robust emerging market for hydrogen.

To read the full text of this year’s letter, click here.