The US Department of the Treasury and the Internal Revenue Service (IRS) have released final rules for the Section 45V Clean Hydrogen Production Tax Credit, established by the Inflation Reduction Act. The updated regulations include significant changes and flexibilities aimed at advancing the clean hydrogen industry while adhering to strict emissions requirements for qualifying hydrogen projects.
The final rules offer clarity and investment certainty, particularly for participants in the Department of Energy’s Regional Clean Hydrogen Hubs programme. They outline eligibility criteria for hydrogen producers using electricity, natural gas with carbon capture, renewable natural gas, and coal mine methane. To qualify for the full credit, projects must also meet prevailing wage and apprenticeship standards.
“These rules reflect feedback from industry leaders and are designed to drive clean hydrogen deployment while supporting good jobs,” said US Deputy Treasury Secretary Wally Adeyemo. “The Inflation Reduction Act and Bipartisan Infrastructure Law are the most ambitious global efforts to scale clean hydrogen, boosting hard-to-decarbonise sectors like heavy industry.”
Deputy Energy Secretary David M. Turk emphasised the broader impact of clean hydrogen. He said, “These rules accelerate clean hydrogen deployment, including in DOE’s Hydrogen Hubs, creating economic opportunities nationwide.”
Senior Advisor John Podesta noted the collaborative effort behind the revisions. He said, “We’ve listened to stakeholders, and these rules provide the certainty needed to position the US as a global leader in green hydrogen.”
The rules were shaped after reviewing nearly 30,000 public comments and extensive interagency collaboration, including input from the Department of Energy and the Environmental Protection Agency. They ensure compliance with lifecycle emissions standards, requiring qualifying clean hydrogen to produce no more than 4 kilograms of CO2 equivalents per kilogram of hydrogen. Producers will calculate credits using the forthcoming updated 45VH2-GREET model.
The tax credit includes four tiers, with hydrogen projects generating the lowest emissions qualifying for the highest credits. The framework promotes innovation in hydrogen production while maintaining rigorous environmental standards, solidifying the US as a leader in the global clean hydrogen economy.
