US Finalizes Clean Hydrogen Tax Credit Regulations Amid Uncertainty
Key Ideas
- Final regulations for the Section 45V Clean Hydrogen Production Tax Credit have been released by the Treasury and IRS after a year of review and industry feedback.
- Modifications in the Final Rules aim to provide flexibility without compromising integrity, ensuring that clean hydrogen production meets lifecycle emissions standards.
- Key changes include flexibility in EAC requirements, pathways for hydrogen production using electricity and methane sources, and new rules for incrementality and temporal matching.
- The Biden Administration's recent $1.66 billion loan guarantee to Plug Power highlights continued efforts to promote clean hydrogen production, amidst potential future uncertainties under a new administration.
On January 3, 2025, the US Department of the Treasury and the Internal Revenue Service (IRS) finalized regulations for the Section 45V Clean Hydrogen Production Tax Credit, following a year-long process that included public feedback and a three-day hearing. The Final Rules aim to balance industry concerns with the need for integrity in clean hydrogen production, allowing flexibility while ensuring compliance with emissions standards. Notable changes include modifications to Energy Attribute Certificate (EAC) requirements, enabling tax credit pathways for hydrogen from various sources, and addressing concerns about indirect emissions. The Biden Administration's announcement of a $1.66 billion loan guarantee for Plug Power showcases ongoing support for clean hydrogen despite potential uncertainties with a new administration. Key changes in the Final Rules include provisions for incrementality, with flexibility in uprate rules, allowances for restarted facilities, and inclusion of qualifying nuclear reactors and Carbon Capture and Sequestration (CCS) technologies. Additionally, the rules maintain the hourly-matching requirement for EACs but delay implementation until 2030, offering producers more time to comply voluntarily.