Key Developments in Clean Hydrogen Production Tax Credit Regulations
Key Ideas
- Final regulations for the section 45V Clean Hydrogen Production Tax Credit, published after review of 30,000 comments, provide guidance for hydrogen producers seeking the credit.
- The regulations include specifications on the 45VH2-GREET model for calculating the credit value based on greenhouse gas emissions and requirements for electrolytic hydrogen production.
- Enhanced flexibility in incrementality, hourly matching, and deliverability requirements aim to facilitate access to the tax credit for clean hydrogen producers.
- The regulations also address the eligibility criteria for using electricity from clean sources in hydrogen production and provide options for demonstrating incrementality.
Arnold & Porter’s Energy and Energy Transition team highlighted key legal and regulatory developments on January 10, 2025. The IRS and Treasury Department finalized regulations for the section 45V Clean Hydrogen Production Tax Credit, offering guidance for eligible hydrogen producers. These regulations, established under the Inflation Reduction Act of 2022, address aspects like incrementality, hourly matching, and deliverability requirements for energy attribute certificates. The 45VH2-GREET model determines credit value based on greenhouse gas emissions, with the most recent model version required. The regulations aim to increase flexibility for hydrogen producers while ensuring compliance with clean hydrogen production standards. Specific provisions cover electrolytic hydrogen production, including requirements for electricity sourcing and options for demonstrating incrementality. The regulations seek to streamline access to the tax credit while promoting clean energy practices. These developments are crucial for companies navigating the energy transition landscape in the U.S., with potential impacts on investment decisions and operational strategies.