Final Regulations on Clean Hydrogen Production Tax Credit and GREET Model Updates
Key Ideas
  • The Final Regulations on the Clean Hydrogen Production Tax Credit address key issues and provide clarity on emissions rate calculation and subsidy eligibility.
  • Taxpayers can lock-in the 45VH2-GREET model upon construction start, reducing the risk of unfavorable updates and ensuring credit continuity for a decade.
  • Prohibitions on feedstock blending, clarification on 'well to gate' emission boundaries, and allowance for co-location of carbon capture equipment highlight the regulatory developments.
  • The regulations underscore the importance of accurately determining the emissions rate of hydrogen production processes and emphasize compliance with anti-abuse provisions.
The Department of the Treasury has finalized regulations governing the Clean Hydrogen Production Tax Credit under section 45V, aimed at promoting qualified clean hydrogen production. The regulations offer guidance on calculating the emissions rate using the 45VH2-GREET model or Provisional Emissions Rate. Notably, the Final Regulations clarify the use of Energy Attribute Certificates for substantiating emissions rates. Key takeaways include the lock-in option for the 45VH2-GREET model, adjustments in electricity EAC requirements, and prohibitions on feedstock blending. Furthermore, the regulations define 'facility' for co-location benefits under sections 45V and 45Q, allowing interconnected property components for hydrogen production and carbon capture equipment. The well-to-gate scope for emissions calculation is detailed, excluding emissions from certain hydrogen processing stages. The ban on feedstock blending and the necessity to evaluate emissions for each production process are emphasized. Overall, the regulations aim to incentivize accurate emissions rate determination and adherence to anti-abuse provisions for claiming tax credits in the clean hydrogen sector.
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