Final Regulations for Clean Hydrogen Production Tax Credit: Boosting Green Energy in the US
Key Ideas
  • The Clean Hydrogen Production Tax Credit under Section 45V aims to promote low-carbon hydrogen production in the US, offering up to US$3 of credits per kilogram of eligible clean hydrogen.
  • The Final Regulations issued in January 2025 provide clarity on eligibility requirements, certification processes, and credit calculation, facilitating investor confidence in clean hydrogen projects.
  • Key additions in the Final Regulations include guidelines on Energy Attribute Certificates, flexibility on Incrementality, Temporal Matching, and Deliverability Requirements, and rules for Renewable Natural Gas and Methane-Based Hydrogen.
  • The regulations are expected to propel the US towards a clean hydrogen energy economy, supporting the Biden Administration's green energy initiatives and offering a clear path for claiming the tax credit.
The Clean Hydrogen Production Tax Credit introduced under the Inflation Reduction Act of 2022 in the United States is a key initiative to drive the production of low-carbon hydrogen as part of the Biden Administration's commitment to green energy. This tax credit offers substantial incentives, with up to US$3 of credits per kilogram of eligible clean hydrogen generated by qualified facilities. The recent issuance of Final Regulations by the Treasury Department and the IRS in January 2025 has brought much-needed clarity and precision to the process of claiming this tax credit, instilling confidence in investors and developers in the clean hydrogen sector. The Final Regulations address critical aspects such as Energy Attribute Certificates, which allow for flexibility in determining greenhouse gas emissions during hydrogen production. These regulations also introduce modifications to the Incrementality, Temporal Matching, and Deliverability Requirements, providing additional guidelines and easing certain standards for claiming the tax credit. Furthermore, the Final Regulations extend support to technologies like Renewable Natural Gas and Methane-Based Hydrogen, incorporating rules to calculate the GHG emissions rate accurately. Overall, these regulations are seen as a significant step towards establishing a clean hydrogen energy economy in the United States, aligning with the country's green energy goals. By offering clear guidelines and support for investors and developers, the Final Regulations are anticipated to boost confidence in clean hydrogen projects and drive the transition towards a sustainable and environmentally friendly energy landscape.
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