Updated Regulations for Clean Hydrogen Production Tax Credits
Key Ideas
- Final regulations under section 45V credit provide clarity on clean hydrogen production facility definitions and emission rate calculations.
- Taxpayers can use the GREET model to determine GHG emissions rates with flexibility on model selection based on construction date.
- Energy Attribute Certificates (EACs) can be used to offset GHG emissions with specific requirements for temporal matching, deliverability, and incrementality.
- Regulations also address the necessity of using clean electricity near the hydrogen production facility with considerations for transfers and imports between regions.
The Treasury Department and the IRS have issued final regulations under the section 45V credit to incentivize the production of clean hydrogen. The regulations offer guidance on defining qualified clean hydrogen production facilities, updating emission rate calculations using the GREET model, expanding the use of Energy Attribute Certificates (EACs) for offsetting GHG emissions, and streamlining verification procedures. Taxpayers can now claim credits based on the quantity of clean hydrogen produced with a maximum credit of $3 per kilogram over a 10-year period. Stakeholders' feedback has influenced the final regulations, addressing concerns across various industries. The regulations emphasize the importance of using the correct GHG emission rates, introducing flexibility in model selection based on the facility's construction date, and setting criteria for the use of EACs in emissions offsetting. Furthermore, the regulations stress the need for temporal matching, deliverability, and incrementality of the EACs. By clarifying these rules, the final regulations aim to encourage clean hydrogen production and enhance environmental sustainability.