It’s no secret that members of Congress are considering repealing parts of the Inflation Reduction Act. While I support re-evaluating this legislation, it is critical that credits supporting emerging and innovative parts of the energy industry, like hydrogen, be preserved.
Specifically, I hope to see the 45V tax credits for clean hydrogen production among those kept intact, especially in light of their value for agriculture.
Many Americans may not realize the importance of hydrogen for farming, but grain farmers likely do. Ag producers across Iowa will tell you that fertilizer prices have risen recently. Still, these credits offer an opportunity for a more affordable and sustainable path forward.
Nitrogen fertilizer has been a foundational pillar of U.S. agriculture for decades, and it is essential for growing the crops that feed the world. This fertilizer relies heavily on hydrogen production, and the 45V tax credit incentivizes companies to invest in lowering the carbon-emission score from these processes. These credits also mean companies can produce hydrogen, and thereby fertilizer, more cost-effectively. Lower fertilizer costs help farmers, which means lower food prices that benefit everyone.
You need hydrogen to produce ammonia, the main ingredient in nitrogen fertilizer. Today, most hydrogen is made using natural gas. That process, known as steam methane reforming, is energy-intensive and emits significant carbon dioxide. So, while it is reliable, it is also a prime target for emissions scrutiny.
Farmers already know that the broader agriculture industry is one of the targets for reducing carbon emissions. I see any opportunity to reduce these emissions while maintaining our current way of life and practices as a victory.
This is where carbon capture and sequestration technology (CCS) comes in. The 45V tax credits allow companies to produce hydrogen from natural gas and sequester the resulting carbon emissions, making clean hydrogen economically feasible and environmentally friendly. This approach preserves our existing infrastructure while upgrading it to be compatible with the energy and environmental realities of the future.
While the benefits of supporting 45V tax credits are clear, some challenges need to be addressed to realize their potential. The initial investment required for hydrogen production facilities and related infrastructure can be substantial. However, the 45V tax credits help offset some of these costs, making it more feasible for farmers to adopt clean hydrogen technologies.
Rural communities also stand to benefit substantially. By providing financial incentives for companies to invest in hydrogen, Congress is helping farmers access more stable, affordable fertilizer prices without sacrificing the reliability of domestic energy sources. This also creates opportunities for rural communities to host new hydrogen production and CCS facilities. With some projects already in the development phase, companies are bringing jobs, investment and an expanding tax base to the areas that need them most.
The Midwest is emerging as a hub for clean hydrogen projects. In 2023, the United States announced $7 billion in federal funding for seven regional Hydrogen Hubs, with the Midwest being one of the top regions. And, the Midwest Alliance for Clean Hydrogen received $22 million from the Department of Energy to plan several projects, three of which are in Michigan, and nine scheduled for Indiana, Illinois and Iowa.
We should be clear-eyed about what is at stake. Weakening or repealing the 45V tax credit will hand the future of ag inputs to foreign producers, leaving American farmers with outdated infrastructure. China and Saudi Arabia are moving quickly on hydrogen production, including for fertilizers. If we slow down, we’ll not only lose out on a chance to modernize our fertilizer production but also increase our dependence on imports.
American farmers and energy workers deserve better.
Congress doesn’t need to choose between agriculture and energy or economic growth and environmental protection. With tax credits like 45V, we can do all this and more, and I urge Congress to preserve it.
