US Law Firm Troutman Pepper Calls for Clarity on Clean Hydrogen Regulations
Key Ideas
  • Troutman Pepper's report highlights the importance of clear tax credits and rigorous certification rules for the viability of clean hydrogen as an energy source in the US.
  • The complexities and caveats of current legislation pose challenges for American clean hydrogen projects, with concerns raised about stringent IRS regulations on Section 45V.
  • Developers and utilities fear that the strict regulations could increase costs and hinder the establishment of projects in the emerging clean hydrogen sector.
  • Efforts like the Biden administration's funding for hydrogen hubs aim to boost infrastructure development, with a target to produce 50 million tonnes of clean hydrogen by 2050 in the US.
A recent industry report by US law firm Troutman Pepper emphasizes the need for greater clarity in tax credits and certification rules to propel the adoption of clean hydrogen as a viable energy source in the United States. The report suggests that alongside tax credits and certification standards, the US should focus on boosting exports, enhancing domestic manufacturing, and prioritizing infrastructure development to mitigate project risks. The Inflation Reduction Act and Bipartisan Infrastructure Law have stirred commercial interest in American clean hydrogen initiatives, but the intricate nature of the regulations poses hurdles for industry players. One major concern highlighted in the report is the stringent IRS regulations on Section 45V, which are viewed as challenging for companies aiming to receive incentives for producing clean hydrogen. Moreover, the requirement for hydrogen to meet specific criteria to qualify as 'clean' has raised apprehensions among developers and utilities. These concerns mainly revolve around the restrictions on power sources for hydrogen facilities and the need for electricity generation and hydrogen production to be closely linked geographically. Despite the challenges, efforts are underway to advance the hydrogen sector in the US. The Biden administration's allocation of $7 billion for the establishment of hydrogen hubs across 16 states is a significant step towards achieving the goal of producing 50 million tonnes of clean hydrogen by 2050, marking a substantial increase from current levels. However, stakeholders stress the importance of addressing regulatory complexities and ensuring a conducive environment for the development of clean hydrogen projects.
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