Manufacturers Warn Treasury Guidance on Hydrogen Tax Credit May Undercut Global Competitiveness

WASHINGTON, D.C. — January 6, 2025 — The National Association of Manufacturers (NAM) is calling for changes to newly released U.S. Department of the Treasury guidance on the hydrogen production tax credit, warning that current restrictions could hamper America’s ability to compete globally in the emerging hydrogen economy.

NAM President and CEO Jay Timmons responded to the Treasury’s guidance with cautious support, acknowledging the importance of low-carbon hydrogen as a key piece of America’s future energy mix—but also urging policymakers to address cost and implementation concerns that risk putting U.S. producers at a disadvantage.

“Hydrogen offers a critical opportunity to diversify our energy supply, enhance grid reliability, and cut emissions,” said Timmons. “But if the U.S. wants to lead the world in hydrogen development, we must ensure our tax incentives are structured to encourage—not inhibit—domestic investment.”

Treasury Guidance Draws Industry Scrutiny

The hydrogen production tax credit, created under the Inflation Reduction Act (IRA), offers up to $3 per kilogram of hydrogen produced using low-carbon methods. However, the Treasury’s newly issued guidance adds qualifying criteria—such as hourly matching of renewable power and stringent emissions accounting—that critics say could make hydrogen projects more complex and less economically viable, especially during the early years of infrastructure development.

Industry stakeholders argue that while environmental safeguards are necessary, an overly rigid framework could stifle innovation and delay private sector investment in facilities, electrolyzers, and hydrogen pipelines.

Global Race for Hydrogen Leadership

Timmons emphasized that global competitors such as the European Union, China, and Gulf States are rapidly investing in hydrogen infrastructure with simpler incentive models and fewer administrative barriers.

“Manufacturers support a clean energy future,” Timmons noted, “but we must also be pragmatic. America should be the best place in the world to build, scale, and export hydrogen technology—and that means creating a business environment that rewards early movers.”

A Call for Balanced Policy

The NAM is urging Treasury and the Biden administration to consider more flexible rules for early-stage projects, including broader credit eligibility and phased-in compliance standards that account for the realities of energy market operations and grid availability.

Hydrogen is viewed as a crucial fuel source for decarbonizing hard-to-electrify sectors such as heavy industry, maritime shipping, and long-haul transportation. Manufacturers and energy developers see the hydrogen tax credit as a cornerstone policy—but only if it is designed to drive rapid deployment.

As the federal government continues to refine implementation of the IRA’s energy provisions, industry voices like NAM’s are increasingly vocal in seeking common ground between climate goals and economic growth.

Bottom line: Without course correction, U.S. hydrogen investments may fall behind. With the right policy balance, the nation has the potential to lead a global clean energy revolution—built by American manufacturers.