Davis Polk & Wardwell is renowned for providing top-tier legal services to businesses globally, emphasizing industry knowledge and collaboration. The recent release of final regulations by the U.S. Treasury Department and IRS regarding the clean hydrogen production tax credit signifies a significant step towards promoting clean energy initiatives and investment in the United States. These regulations outline the specifics of the tax credit, offering incentives for clean hydrogen production based on environmental considerations and project requirements. The Section 45V production tax credit for clean hydrogen incentivizes producers with up to $3.00 per kilogram of hydrogen produced, adjusted for inflation. The credit structure includes tiers based on carbon intensity, rewarding processes with lower greenhouse gas emissions. The rules clarify eligibility criteria, including energy sources such as natural gas with carbon capture and renewable natural gas. Compared to the initial proposed rules, the final regulations expand the scope to include additional energy sources and enhance flexibility. Notably, the credit now extends to hydrogen produced using electricity from specific states with emissions limits or from select nuclear power plants at risk of closure. This expansion aims to encourage a broader range of clean hydrogen production methods. With the improved certainty and flexibility offered by the finalized regulations, there is an anticipated uptick in deal activity within the hydrogen production sector. However, industry stakeholders are advised to stay informed about potential policy changes under the new administration. These developments highlight the evolving landscape of clean energy regulation and its impact on business operations and investment decisions.