Growth Energy Comments on IRS’ Proposed 45V Hydrogen Regulations

Thank you for the opportunity to comment on the Internal Revenue Service’s (IRS) proposed regulations regarding the Section 45V Credit for Production of Clean Hydrogen. If properly implemented, the incentives for producing low-emissions sources of energy and fuel in the Inflation Reduction Act (IRA) will drive significant reductions in greenhouse gas (GHG) emissions and grow American jobs. Growth Energy is the nation’s largest association of biofuel producers, representing 97 U.S. plants that each year produce 9.5 billion gallons of low-carbon, renewable fuel; 115 businesses associated with the production process; and tens of thousands of biofuel supporters around the country. Our members are committed to developing a robust low-carbon, renewable fuel market in the United States, including sustainable aviation fuels (SAF), consistent with national climate goals and commitments. A number of our members
have already made substantial investments in SAF and low carbon intensity on-road transportation fuel production, and the IRA’s Section 40B and 45Z tax credits have the potential to greatly accelerate this trend.

Growth Energy’s comments below focus on the IRS’ proposed application of the Greenhouse gases, Regulated Emissions, and Energy use in Transportation model (commonly referred to as the “GREET model”) for calculating the lifecycle emissions of hydrogen. Similar to the IRA’s provisions on SAF and clean fuel qualification, Section 45V establishes certain lifecycle GHG emissions standards in order to qualify as “clean hydrogen.” Section 45V provides that lifecycle emissions will be “determined under the most recent [GREET] model developed by Argonne National Laboratory, or a successor model (as determined by the Secretary). In the proposed rule implementing the Section 45V tax credit, the IRS interprets “most recent GREET model” to mean “the latest version of 45VH2–GREET developed by Argonne National Laboratory (ANL) that is publicly available on the first day of the taxpayer’s taxable year in which the qualified clean hydrogen for which the taxpayer is claiming the section 45V credit was produced.” The 45VH2-GREET model is, however, a successor GREET model modified specifically for this context and distinct in various features from the GREET model for calculating hydrogen’s lifecycle emissions in existence when the IRA was enacted.

As explained further below, a proper interpretation of the IRA demonstrates that Congress’ intent was for the Argonne GREET model used for over a decade before enactment of the IRA, and which is annually updated in accordance with new science and data, to be the “most recent GREET model” referenced by the statute. The 45VH2-GREET Model is a successor model, and as such, must adhere to the best available science for calculating lifecycle GHG emissions consistent with the function and principles of the original Argonne GREET model. These foundational principles are similarly applicable to deployment of any 40B-GREET and 45Z-GREET model the
Department of Energy may develop and IRS may require. Doing so will not only ensure adherence to the IRA and the accuracy of the lifecycle analysis, but also create stability and certainty regarding the significant investments being made in low-carbon energy and fuel sources.

Growth Energy appreciates that the IRS requests comment on the 45VH2–GREET model in the proposed rulemaking on the 45V hydrogen tax credit. We urge the IRS to provide a similar opportunity to comment on any other “successor” GREET model contemplated for use in the Section 40B and 45Z tax credit contexts. Doing so would ensure that stakeholders, such as Growth Energy’s members, are provided a full and fair opportunity to be heard on such a critical regulatory decision affecting their businesses.

Growth Energy appreciates the IRS’s consideration of this input as it finalizes the 45V hydrogen tax credit regulations and would welcome the opportunity to provide comments on behalf of its members regarding future rulemakings to implement the 40B and 45Z credits. We look forward to engaging further on this important work and would be happy to meet with your staff to present on these issues in more detail and answer any questions.