• Investment Clarity: Final rules address key issues, enabling certainty for clean hydrogen projects under the Inflation Reduction Act.
• Lifecycle Emissions Standards: Establishes strict greenhouse gas (GHG) criteria for qualifying hydrogen, with credit tiers based on emissions intensity.
• Industry Feedback Incorporated: Rules reflect extensive stakeholder input, streamlining pathways for clean hydrogen production.

The U.S. Department of the Treasury and IRS released final rules for the section 45V Clean Hydrogen Production Tax Credit, aiming to drive industry growth while meeting stringent emissions standards. These rules clarify eligibility for producers using electricity, natural gas with carbon capture, renewable natural gas (RNG), and coal mine methane.

“These rules incorporate helpful feedback from companies planning investments which will drive significant deployment of clean hydrogen to power heavy industry and help create good-paying jobs,” said U.S. Deputy Treasury Secretary Wally Adeyemo.

Key Provisions:

1. Lifecycle Emissions Threshold:
   • Qualifying clean hydrogen must emit no more than 4 kg of CO₂e per kilogram produced.
   • Credits are tiered, with lower emissions earning higher incentives.
   • Both direct and significant indirect emissions are considered.
2. Electrolytic Hydrogen (Green and Pink Hydrogen):
   • Safeguards ensure hydrogen production aligns with emissions standards, incorporating:
     • Incrementality: Electricity from new or expanded clean power sources within 36 months of facility operation.
     • State Policies: Robust state-level GHG caps (e.g., California, Washington) qualify electricity as incremental.
     • Hourly Matching: Transition to hourly renewable electricity tracking by 2030 ensures alignment with grid demands.
3. Methane-Based Hydrogen (Blue Hydrogen):
   • Incorporates national and project-specific methane leakage rates for credit calculations.
   • Expands eligibility for biogas sources like wastewater and landfill gas.
   • Supports development of “book-and-claim” systems for RNG by 2027.

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“Clean hydrogen can play a critical role decarbonizing multiple sectors across our economy, from industry to transportation, from energy storage to much more,” said U.S. Deputy Energy Secretary David M. Turk.

Industry Alignment:

The Treasury considered 30,000 public comments and collaborated with agencies like the Department of Energy and EPA. Updated tools, such as the forthcoming 45VH2-GREET model, will support accurate emissions calculations and ensure compliance.

“Extensive revisions we’ve made in this final rule provide the certainty that hydrogen producers need to keep their projects moving forward and make the United States a global leader in truly green hydrogen,” said John Podesta, Senior Advisor to the President for International Climate Policy.

These measures promise to catalyze investments, streamline regulatory compliance, and establish the U.S. as a global leader in clean hydrogen innovation.

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