On December 22, 2023, Treasury released a proposed rule to provide guidance on eligibility for the IRC section 45V clean hydrogen production tax credit, created by IRA section 13204. The guidance is intended to ensure that qualifying hydrogen production is economically competitive and produces minimal climate pollution. The proposed rule provides definitions of key statutory terms, including lifecycle greenhouse gas emissions, qualified clean hydrogen, and a qualified clean hydrogen production facility. The proposal includes procedures for determining lifecycle greenhouse gas emissions by using the 45VH2-GREET model.
Treasury proposes to use electricity attribute certificates (EACs) for hydrogen production facilities to demonstrate the purchase of clean electricity to power hydrogen production. Clean power from renewables or zero-emission sources must be sourced from the same region as the hydrogen producer and will generally need to be matched on an hourly basis to hydrogen production. However, the proposal includes the option to meet compliance through annual matching until 2028, when Treasury anticipates hourly tracking systems will be more widely available.
The proposal also details eligibility requirements for hydrogen to be produced by using renewable natural gas (RNG) and fugitive methane under particular circumstances, such as methane from a coal mine or landfill gas.
Treasury is taking comment on the proposal for 60 days once it is published in the Federal Register.