US Treasury Department Eases Guidelines for Hydrogen Production Tax Credits
Key Ideas
- The US Treasury Department has relaxed rules for the 45V hydrogen production tax credit to make it easier for producers to benefit from the subsidy.
- Changes in the final guidance include allowing hydrogen production using electricity from existing nuclear plants and fossil fuel-based plants with carbon capture capabilities to qualify for tax credits.
- The new guidelines also adjust the requirements for hourly matching of clean power, regional deliverability rules, and expand eligibility for tax credits to include power generated in Canada or Mexico.
- Industry participants have welcomed the updated guidance as significant improvements that will enable the industry to progress towards scaling clean hydrogen deployments.
The US Treasury Department has issued final guidance on the 45V hydrogen production tax credit, making significant tweaks to the rules to facilitate easier access to the subsidy for producers. The updates retain the core principles of additionality, temporal matching, and regional deliverability but introduce key changes to increase eligibility. Notably, hydrogen production facilities can now use electricity from existing nuclear plants and fossil fuel-based plants with carbon capture capabilities to qualify for the tax credits. The guidelines have also shifted the requirement for hourly matching of clean power to begin in 2030, aligning with EU rules. Additionally, rules on regional deliverability now allow for cross-region delivery of power for hydrogen production, potentially enabling US producers to use electricity from Canada or Mexico. Industry response to the updated guidance has been positive, with the Fuel Cell and Hydrogen Energy Association praising the changes as significant improvements that will pave the way for scaling clean hydrogen deployments. The adjustments aim to address concerns over strict regulations that were hindering the competitiveness and development of the hydrogen industry, providing clearer pathways for project developers in the US. The eased guidelines come after a period of uncertainty that led to paused or canceled projects, with the hope that the new rules will spur renewed interest and investment in hydrogen production in the country.