Treasury and IRS propose guidance for claiming 45V Clean Hydrogen Production Tax Credit

In Washington, with its December 22 Notice of Public Rulemaking (NPRM), Treasury and IRS have proposed guidance for claiming the 45V Clean Hydrogen Production Tax Credit established under last year’s Inflation Reduction Act. The move is part of the administration’s broader efforts to support hydrogen and other technologies that will enable the U.S. to cut emissions from so-called hardest-to-abate sectors of the economy, including heavy industry and long-haul transportation. 

The Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) feature the world’s most ambitious policies to support the growth of our nation’s clean hydrogen industry and have already created a robust pipeline of planned clean hydrogen projects. The § 45V tax credit provides a tax credit of up to $3 per kilogram of hydrogen to projects with low lifecycle greenhouse gas emissions, and accompanies other hydrogen programs such as the Department of Energy’s Regional Clean Hydrogen Hubs Program, which is investing $7 billion to catalyze nearly $50 billion in hydrogen investments across 7 selected Hubs.

By proposing a comprehensive set of rules for taxpayers to claim the § 45V credit, today’s guidance provides much-needed certainty to existing and aspiring hydrogen producers, including by proposing definitions of key terms and describing how these producers should calculate a project’s lifecycle greenhouse gas emissions using 45VH2-GREET, a version of the Department of Energy’s well-established R&D GREET model, that is specifically tailored for hydrogen producers seeking this tax credit. It also proposes procedures for producers to petition for a provisional emission rate (PER) if their production processes are not already included in the 45VH2-GREET model.