Final tax credit rules for clean hydrogen production in the US released
By on January 15, 2025
US Treasury clarifies 45V guidelines
Click to learn more. The US Department of the Treasury has released final guidelines for the 45V tax production credits.
Long-awaited guidelines for tax credits for the production of “clean” hydrogen in the USA have been released, which include “significant changes” and additional flexibility compared to the first draft. Hydrogen producers using electricity from a variety of sources (including nuclear), gas-based production with carbon capture, “renewable natural gas”, and coal mine methane can now determine their eligibility for credits, given that prevailing wage and apprenticeship standards are met.
The Department of Energy will soon release an updated version of its 45VH2-GREET model that producers will use to calculate emissions to the point of production (and the subsequent tax credit available). To qualify as clean hydrogen, the lifecycle GHG emissions of the production process must be no greater than 4 kg of carbon dioxide equivalents (CO2e) per kg of hydrogen produced, with four credit tiers available below this threshold.
Over the past two years, our administration has listened to stakeholders across the hydrogen industry, states, advocates, and others. The 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.
John Podesta, Senior Advisor to the President for International Climate Policy in the US Department of the Treasury’s official press release, 3 Jan 2025
The Department of Energy has made various resources available to producers to begin assessing their eligibility (including some practical examples). Compared to the first daft, flexibility around matching of low-emission electricity to hydrogen production (hourly matching to be phased in by 2030, annual matching before then), ensuring the use of electricity generation added to the grid (additional pathways provided to “incrementality”), and use of electricity from the same grid region (pathways now available to demonstrate electricity transfer between regions) has been included. The final rules maintain the “three pillars” approach, while incorporating stakeholder feedback.