Deluzio Comments on Final Hydrogen Energy Tax Credit, calls it a “Swing and a Miss” for the Biden Administration
CARNEGIE, PA — Today, Congressman Chris Deluzio (PA-17) released a statement on the Department of Energy’s final guidance for the hydrogen energy tax credit created by the Inflation Reduction Act (IRA). For over a year, Congressman Deluzio has pushed the Biden Administration to reconsider restrictions in previous versions of the 45v Clean Hydrogen Production Tax Credit that could hinder job-creating and carbon-neutral hydrogen projects in places like Western Pennsylvania. The text of the final rule was released on January 3, 2025. The final version is slightly improved from the draft rule but still falls far short of what is needed to kickstart the kinds of hydrogen power projects that could be game changing in Western Pennsylvania.
Following consultation with stakeholders and workers in his Western Pennsylvania district, Congressman Deluzio released the following statement on the final rule for the 45v tax credit:
“Western Pennsylvania has powered the nation’s energy economy for a long time, and I want to keep it that way.
“There is enormous potential for hydrogen power in our region, and that is why I have been working for over a year with unions, industry, and others to push the Biden Administration to structure the new hydrogen production tax credit to supercharge our region, with strong jobs driving cleaner and cheaper energy.
“The Biden Administration missed a big opportunity to strengthen our domestic energy supply with carbon neutral hydrogen power fueled by nuclear energy and natural gas.
“With more than thirty potential hydrogen projects hoping to use this tax credit to get off the ground, this was a massive chance to grow Western Pennsylvania’s economy. This new regional hydrogen industry was estimated to create hundreds of thousands of union jobs and hundreds of billions in economic output—but they were counting on the ability to use the full 45V tax credit.
“This could have been a home run for Western Pennsylvania. Instead, it’s a swing and a miss. The Biden Administration let us down.
“Through months of our work, we were able to push the Biden Administration to ensure that the final version of the rule did not completely ice out Western Pennsylvania workers and industry.
“But the final rule is still not enough to unlock the full potential of hydrogen power in our region.
“Even where the tax credit was expanded for nuclear-powered hydrogen, nuclear power in the region is still left in limbo. The Biden Administration did not provide certainty to help power the production of this new energy source and, as a result, left a nuclear plant in my district guessing if they can even use the 45V incentives to help make carbon-free energy and grow good, union jobs. Kicking the can down the road has real costs.
“President Biden and his Administration in its closing days missed a big opportunity to stand with the workers and people of Western Pennsylvania.
“While this is a setback, I won’t give up on growing good, clean energy jobs in my district.
“I will work with our federal delegation and the incoming Administration to do all I can to boost hydrogen energy production and job growth in Western Pennsylvania.”
The Inflation Reduction Act passed in 2022 and is a historic policy package largely focused on bringing down costs and taking on the climate crisis. One of the incentives to help grow new, cleaner energy sources included the 45v Clean Hydrogen Production Tax Credit, which was included to encourage the production of clean hydrogen energy. Hydrogen can be made with a variety of energy sources such as natural gas, nuclear energy, solar energy, wind energy, and others. With technologies like carbon capture, it is now possible to produce hydrogen with zero or minimal emissions regardless of the original energy source.
Southwestern Pennsylvania lost over 65,000 jobs over the last five years—a rate of employment decline that exceeds the rate of national employment decline during the Great Recession. Regional industry groups like the Allegheny Conference on Community Development identified more than thirty projects that could be deployed within the next 15 years if full 45V tax credits were made available to coal mine methane utilization in blue hydrogen production. Each project, according to the Conference, would generate close to $145 million in state taxes and close to $550 million in federal taxes, and the full project portfolio would result in almost $5 billion in state and $18.5 billion in federal tax revenue. These projects would create over 200,000 direct construction jobs and support an additional 490,000+ jobs on an indirect and induced basis, all while generating an estimated economic output of more than $213 billion.
Initially, Treasury released guidance of the rule that included strict “pillars” that would virtually eliminate nuclear power as qualifying feedstock and give unrealistic standards that would leave green hydrogen made from wind, solar, and other specific renewable energies as the sole recipient of this tax credit.
To help improve this guidance, in July of 2024, the primary Congressional authors of this tax credit wrote a letter to Treasury Secretary Yellen explaining that the original intent was to allow all energy technologies to qualify for the credit. Congressman Deluzio wrote a similar letter shortly after and has been a leading voice pushing for the inclusion of blue and pink hydrogen in the final guidance of this 45V incentive.
Unfortunately, in their final guidance, the Biden Administration largely left the blue hydrogen industry in stifling uncertainty. Some positive movements were made in expanding the types of nuclear projects eligible for the tax credit, but the final rule still leaves certain power plants questioning their ability to use the incentive. Projects utilizing natural gas and carbon capture, the very projects that the Administration included in their designation of regional “Hydrogen Hubs,” have largely been either abandoned or left in further uncertainty with unresolved definitions and calculations that would allow them to qualify. This means that thousands of good paying union jobs may be lost and the hydrogen industry, of which Western Pennsylvania was poised to be at the center, may struggle to reach its full potential on the timeline we need to reach a cleaner future.
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