Final Regulations for Clean Hydrogen Production Tax Credit Released by Treasury Department and IRS
Key Ideas
  • The Final Regulations under Code Section 45V provide leniency with respect to the three pillars for hydrogen production (incrementality, temporal matching, and deliverability), offering flexibility to taxpayers.
  • Guidance is provided on claiming the 45V Credit for hydrogen produced using methane reformation technologies, including rules for calculating lifecycle GHG emissions and introducing Gas EACs.
  • A book-and-claim framework is endorsed for hydrogen produced using RNG or coal mine methane systems, allowing taxpayers to claim use of these sources without direct exclusive pipeline connections.
  • The Final Regulations also establish requirements for monthly matching and geographic deliverability within the contiguous United States for Gas EACs to satisfy temporal and deliverability requirements.
The Treasury Department and IRS have released final regulations for the Clean Hydrogen Production Tax Credit under Internal Revenue Code Section 45V. This tax credit is provided for the production of clean hydrogen at qualified facilities for 10 years from the service commencement date. The regulations focus on technology-neutral qualification criteria, with the credit amount based on the kilograms of qualified clean hydrogen produced and the applicable rate determined by the GHG emissions rate. The Final Regulations offer leniency in the 'three pillars' of incrementality, temporal matching, and deliverability for hydrogen production using clean power. Additionally, guidance is given on claiming the credit for hydrogen produced using methane reformation technologies, including rules for calculating lifecycle GHG emissions and introducing Gas Energy Attribute Certificates. A book-and-claim framework is endorsed for hydrogen produced using RNG or coal mine methane systems, permitting taxpayers to claim use of these sources without a direct pipeline connection. Overall, the regulations aim to provide flexibility and clarity for taxpayers seeking to benefit from the Clean Hydrogen Production Tax Credit.
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