Group Urges Hourly Matching Implementation for Hydrogen Credit
DATED JUL. 18, 2023
July 18, 2023
The Honorable Janet L. Yellen
Department of the Treasury
Dear Secretary Yellen:
We the undersigned companies, writing as a coalition and understanding the release of Treasury's guidance for the implementation of the 45V tax credit may be imminent, encourage the Administration to consider rules that will deliver near‐term scaling of clean hydrogen infrastructure while ensuring the environmental integrity of the credit in the long run. To further that aim, we believe the IRS should require hourly time‐matching between hydrogen production and new clean energy projects that source the hydrogen production, allowing a reasonable but brief transition period for Regional Transmissions Organizations and balancing authorities to implement hourly matching nationwide, ending no later than January 1, 2030, regardless of the project's start of construction or start of operations date.
To ensure that a hydrogen project is truly clean, it must operate during the same hours in which the contracted new clean energy project operates. A looser correlation (e.g., weekly, monthly, annually) would dramatically underestimate the lifecycle emissions of a hydrogen project. A faster phase‐in period will direct private capital in the U.S. to develop a flexible hydrogen production industry that can interact with the variable nature of renewables on the grid to reduce emissions, relieve capacity constraints, and bolster international trade.
Hourly matching is currently no more complex to implement than annual matching. M‐RETS — the largest North American credit tracking system — has over 120 million hourly RECs in its system and is ready to provide hourly certificates nationwide. PJM, the largest RTO in the country, began offering hourly RECs in March of this year. Transitioning to hourly matching no later than 2030 is also consistent with the time‐matching standards recently established by the European Union's Delegated Act, which sets the benchmarks in the EU as one of the world's largest potential clean hydrogen importers, providing potential project financiers with regulatory certainty and enabling the creation of a sustainable international import and export market.
Regarding the pillars of additionality and regionality, this coalition endorses the positions adopted by our industry colleagues at the American Clean Power Association.
The signatories stand ready to work with Treasury, DOE, and the White House to design and implement a technically and economically feasible system. Please do not hesitate to reach out to us should you have questions about the items we have put forward.
Vice President, Regulatory & Legislative Affairs,
Managing Director for Hydrogen,
Vice President, Government Affairs,
Senior Director, External Affairs,
Leeward Renewable Energy.