Ambient Fuels Statement on New Hydrogen Rule

In response to the IRS finalizing the rules for using the Section 45V hydrogen tax credit under the Inflation Reduction Act of 2022, Jacob Susman, CEO of clean hydrogen developer Ambient Fuels, has issued the following statement:

“Clarity is critical, and this release is an important step forward for the clean hydrogen industry. The time for debate over the rules has passed. Now it’s time to unite behind this guidance so we can get to work deploying projects, scaling up clean hydrogen production, and decarbonizing our most carbon-intensive sectors such as chemicals, ammonia, mobility, and other heavy industries. With this guidance in place, we can focus on what matters most: driving down emissions and building a cleaner, more sustainable future.”

To ensure projects receive the full value of the 45V tax credit, clean hydrogen developers must adhere to the key requirements outlined in the guidance. Here is what that means:

• Additionality/Incrementality: Projects must use newly built clean energy sources to power electrolyzers. In general and in the near to medium term, this means only new renewable energy resources like wind and solar will be eligible, though some existing nuclear power will be allowed, if the plant would otherwise be retired.
• There is also a carve out for electricity generated in states with robust GHG emissions caps paired with clean electricity standards or renewable portfolio standards. Currently, both California and Washington state would qualify under this exemption.
• Time matching: Renewable energy used to produce hydrogen must be matched on an hourly basis from 2030 onward, with annual matching permitted until then for early-mover projects. 
• Practically speaking, this time matching requirement means most clean hydrogen projects will need to be financed based on hourly matching. Projects will need to use an optimized portfolio of power sources — balancing wind and solar to keep the electrolyzers running at a high capacity factor.
• Deliverability: Renewable electricity must be procured from the same region, or from other nearby regions by fulfilling additional requirements.

Ambient Fuels | https://ambientfuels.com/