content.govdelivery.com Open in urlscan Pro
23.36.85.58  Public Scan

Form analysis
1 forms found in the DOM

GET https://public.govdelivery.com/accounts/USTREAS/subscriber/qualify

<form role="form" method="get" action="https://public.govdelivery.com/accounts/USTREAS/subscriber/qualify" id="sub_form">
  <div><label for="email">Email Address</label><input type="text" aria-describedby="email-input-content-description" class="sr-field stacked-text-field" id="email" name="email"><small id="email-input-content-description">e.g. name@example.com</small>
  </div>
  <div id="subscribe-button-wrapper"><input type="submit" class="sr-button reverse small stacked-submit-button" value="Subscribe"></div>
</form>

Text Content

We only use cookies that are necessary for this site to function to provide you
with the best experience. The controller of this site may choose to place
supplementary cookies to support additional functionality such as support
analytics, and has an obligation to disclose these cookies. Learn more in our
Cookie Statement.


U.S. DEPARTMENT OF THE TREASURY RELEASES FINAL RULES FOR CLEAN HYDROGEN
PRODUCTION TAX CREDIT

U.S. Department of the Treasury sent this bulletin at 01/03/2025 08:55 AM EST


U.S. Department of the Treasury

Office of Public Affairs

 

Press Release:             FOR IMMEDIATE RELEASE

January 3, 2025

 

Contact:                      Treasury Public Affairs; Press@Treasury.gov       
     

U.S. Department of the Treasury Releases Final Rules for Clean Hydrogen
Production Tax Credit 


Final rules include significant changes and flexibilities to provide investment
certainty and drive deployment of clean hydrogen

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) and Internal
Revenue Service (IRS) released final rules for the section 45V Clean Hydrogen
Production Tax Credit established by the Inflation Reduction Act. The final
rules include significant changes and flexibilities that address several key
issues to help grow the industry and move projects forward, while adhering to
the law’s emissions requirements for qualifying clean hydrogen. With the
inclusion of these changes, the final rules provide clarity, investment
certainty, and flexibility, including for participants in projects planned as
part of the Department of Energy’s Regional Clean Hydrogen Hubs program.

The final rules announced today clarify how producers of hydrogen, including
those using electricity from various sources, natural gas with carbon capture,
renewable natural gas (RNG), and coal mine methane can determine eligibility for
the credit. To qualify for the full credit, projects must also meet prevailing
wage and apprenticeship standards, continuing the Biden-Harris Administration’s
commitment to put workers at the center of the clean energy economy and ensure
clean energy jobs are good-paying jobs.

“These rules incorporate helpful feedback from companies planning investments
which will drive significant deployment of clean hydrogen to power heavy
industry and help create good-paying jobs,” said U.S. Deputy Secretary of the
Treasury Wally Adeyemo. “The Inflation Reduction Act and Bipartisan
Infrastructure Law represent the world’s most ambitious policy support of the
clean hydrogen industry. Scaling the production of low-carbon fuels like
hydrogen will be a big boost to difficult-to-transition sectors of our economy
like heavy industry.”

“Clean hydrogen can play a critical role decarbonizing multiple sectors across
our economy, from industry to transportation, from energy storage to much more,”
said U.S. Deputy Energy Secretary David M. Turk. “The final rules announced
today set us on a path to accelerate deployment of clean hydrogen, including at
the Department of Energy’s clean Hydrogen Hubs, leading to new economic
opportunities all across the country.”

"Over the past two years, our administration has listened to stakeholders across
the hydrogen industry, states, advocates, and others,” said John Podesta, Senior
Advisor to the President for International Climate Policy. “The extensive
revisions we've made in this final rule provide the certainty that hydrogen
producers need to keep their projects moving forward and make the United States
a global leader in truly green hydrogen."

Treasury and IRS developed the final rules after consideration of roughly 30,000
public comments and many months of intensive collaboration between Treasury,
IRS, and expert agencies including the Department of Energy and the
Environmental Protection Agency. In the coming weeks, the Department of Energy
will release an updated version of the 45VH2-GREET model that producers will use
to calculate the section 45V tax credit.

The rules enable pathways for hydrogen produced using both electricity and
methane, providing investment certainty while ensuring that clean hydrogen
production meets the law’s lifecycle emissions standards. By law, the tax
credit’s value is based on the lifecycle greenhouse gas (GHG) emissions of
hydrogen production. To qualify as clean hydrogen under the statute, the
lifecycle GHG emissions of the hydrogen production process must be no greater
than 4 kilograms of carbon dioxide equivalents (CO2e) per kilogram of hydrogen
produced. Qualifying clean hydrogen falls into four credit tiers, with hydrogen
produced with the lowest GHG emissions receiving the largest credit. Calculation
of the lifecycle GHG analysis for the tax credit requires consideration of
direct and significant indirect emissions.

Electrolytic hydrogen

For hydrogen production using electricity (e.g. “green” hydrogen using
renewables and “pink” hydrogen using nuclear), the final rules incorporate
crucial safeguards proposed in December 2023, but with additional clarity and
flexibility that will help facilitate clean hydrogen investment. Specifically,
the final rules require that taxpayers seeking to use Energy Attribute
Certificates (EACs) to attribute electricity use to a specific generator meet
certain criteria for temporal matching, deliverability, and incrementality.
These safeguards help ensure that electricity consumption for hydrogen meets the
statutory lifecycle GHG emissions standards, including that the lifecycle
assessment take into account both direct and significant indirect emissions from
hydrogen production. As the final regulations explain, without those safeguards,
that additional load on the grid from hydrogen production will result in induced
emissions.

However, the final rules differ from the proposed rules in several respects:

 * New clean power (incrementality): As in the proposed rules, the final rules
   define electricity generation as incremental if the generator begins
   commercial operations within 36 months of the hydrogen facility being placed
   in service, or to the extent a plant increases its capacity within that
   period. The final rules provide additional pathways for demonstrating
   incrementality, including:
   * Nuclear retirement risk. Electricity produced by nuclear plants meeting
     certain bright-line indications of being at risk of retirement and certain
     indications of co-dependence on hydrogen investment will be considered
     incremental, up to 200 MW per qualifying reactor. This reflects the fact
     that certain nuclear reactors are at greater risk of retirement based on
     certain economic factors, and if a nuclear retirement is averted then the
     additional demand from hydrogen production will not have induced emissions.
   * State policies. Electricity generated in states with robust GHG emissions
     caps paired with clean electricity standards or renewable portfolio
     standards meeting the criteria set forth in the final rules will be
     considered incremental, given that, together, those policies can prevent
     significant induced emissions from hydrogen production. In consultation
     with expert agencies, Treasury has determined that Washington and
     California’s policies currently meet these criteria. Additional states
     could meet the criteria in the future if they adopt robust policies that
     meet the criteria.
   * New Carbon Capture and Sequestration (CCS). Electricity from a generator
     that has added CCS within a 36-month window before the hydrogen facility is
     placed in service will be considered incremental.
 * New, deliverable clean power generated annually, with a phase-in to hourly
   generation (time-matching): The final rules maintain the proposed requirement
   that EACs meet the temporal matching requirement if the electricity
   represented by the EAC is generated in the same hour as a hydrogen facility
   uses electricity to produce hydrogen. The final rules extend the transition
   allowing annual matching rule two additional years relative to the proposed
   rules, with hourly matching required starting in 2030 for all facilities.
 * Deliverability: The final rules confirm that electricity generated by a
   facility in the same grid region as the hydrogen facility meets the
   deliverability requirement, with certain clarifications, including providing
   a pathway to demonstrate electricity transfers between regions. Grid regions
   are based on the Department of Energy National Transmission Needs Study.
 * Hourly accounting option: Once hourly matching is required, the final rules
   allow hydrogen producers to determine electricity-related lifecycle emissions
   on an hour-by-hour basis as long as the annual emissions of the hydrogen
   production process are under section 45V’s limit of 4 kg of CO2e per kg of
   hydrogen produced. This option will provide additional investment certainty
   because it helps producers avoid losing much of the credit value if they
   cannot procure EACs for a limited number of hours during the year.

Methane-based Hydrogen

The final regulations provide rules for determining eligibility of hydrogen
produced using methane reforming technologies, including with carbon capture and
sequestration (so-called “blue” hydrogen), as well as with the use of natural
gas alternatives such as renewable natural gas (RNG) or coal mine methane.

The final rules aim to enhance the accuracy of upstream methane leakage rates
used in determining the credit value. Upstream methane leakage rates will be
based on default national values in a forthcoming version of 45VH2-GREET.
However, as described in the final regulations, future releases of 45VH2-GREET
will incorporate project-specific upstream methane leakage rates, conditional on
the availability of appropriate and verified data from the EPA Greenhouse Gas
Reporting Program (GHGRP), including under the recently finalized updates to the
EPA’s Subpart W rules and rules under Section 111 of the Clean Air Act,
regarding oil and gas sector regulations.

For hydrogen production using natural gas alternatives, the final regulations
provide rules on how to calculate lifecycle GHG emissions and claim the credit
for alternatives sourced from a wider range of biogas and fugitive methane than
the proposed rules allowed – including wastewater, animal manure, and landfill
gas – and for coal mine methane.

In consideration of comments and with extensive consultation with expert
agencies, the final rules provide clarity on the 45V lifecycle GHG emissions
determination for those sources, including taking into account emissions in
counterfactual scenarios. The final rules take a sound and administrable
approach to determining appropriate alternative fates which are used to
determine lifecycle emissions according to parameters in 45VH2-GREET.

Further, as the 45V credit requires a lifecycle analysis of each process used to
produce hydrogen, the emissions intensities of hydrogen produced using these
feedstocks are measured separately (i.e. not blended).

The final rules do not include the “first productive use” requirement that was
included in the proposed rules, in part because Treasury and IRS determined that
such a rule would have administrative and compliance challenges. Rather, the
likelihood that a source would otherwise be productively used is taken into
account in assessing the alternative fate of that source.

The final rules aim to enhance development of “book-and-claim” systems for
natural gas alternatives such as RNG or coal mine methane by detailing the
information that such systems will need to provide. Because these systems will
take time to develop, taxpayers will be able to begin using book and claim
systems in 2027, upon determination of the Secretary of the Treasury that a
system meets the requirements set out in these regulations.

The final rules will enable investment certainty by allowing all types of
hydrogen producers the option of using the version of the 45VH2-GREET model that
was the most recent when the facility began construction for the duration of the
credit. This is in consideration of comments that the prospect of potential
changes to the model over time reduces investment certainty.

###

--------------------------------------------------------------------------------

Questions? Contact Us

 

STAY CONNECTED:  

 

SUBSCRIBER SERVICES: Manage Preferences  |  Help    


SUBSCRIBE TO UPDATES FROM U.S. DEPARTMENT OF THE TREASURY

Email Addresse.g. name@example.com



SHARE BULLETIN



Powered by


Privacy Policy | Cookie Statement | Help