US Finalizes Regulations for Clean Hydrogen Tax Credits with Key Changes
Key Ideas
  • The US IRS and Treasury issued final regulations for clean hydrogen tax credits under sections 45V and 48(a)(15) of the Internal Revenue Code, addressing methodology, verification, and requirements.
  • The regulations include key changes such as expanding the eligibility for Energy Attribute Certificates (EACs), transitioning to hourly matching by 2030, and allowing interregional delivery to meet deliverability standards.
  • New regulations also introduce provisions for using methane from biogas, renewable natural gas, and fugitive sources, requiring Gas Energy Attribute Certificates (gas EACs) for specific gas sources.
  • These changes aim to facilitate the transition to cleaner hydrogen production, incorporating feedback from 30,000 comment letters submitted to the Treasury, while maintaining core methodology and verification standards.
The US Internal Revenue Service (IRS) and the Department of the Treasury have finalized regulations for clean hydrogen production tax credits under the Internal Revenue Code. These regulations address the determination of 'clean hydrogen' and additional requirements to mitigate negative emissions impacts from increased hydrogen production. Despite receiving around 30,000 comment letters on the proposed regulations, the final rules largely retain the methodology, verification requirements, and introduce three key pillars of incrementality, temporal matching, and deliverability. However, there have been significant changes and clarifications to ease the transition into the new regime. One significant change is the expansion of eligibility for Energy Attribute Certificates (EACs), allowing inclusion from facilities with carbon capture technology, certain restarted facilities, and those in qualifying states or nuclear reactors meeting specific criteria. The regulations also extend the deadline for transitioning to hourly matching to 2030 and introduce provisions for interregional delivery to meet deliverability standards. Moreover, the regulations introduce guidelines for using methane from biogas, renewable natural gas, and fugitive sources by implementing Gas Energy Attribute Certificates (gas EACs). These gas EACs allow taxpayers to specify the source of gas used for hydrogen production, enhancing transparency and incentivizing cleaner production methods. Overall, these changes aim to support the growth of clean hydrogen production by incorporating feedback from stakeholders while maintaining essential standards. The regulations provide a framework for incentivizing and regulating the shift towards cleaner energy sources, reflecting a positive step towards a more sustainable future.
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