Author: PPD Team Date: 07/01/2025
The U.S. Department of the Treasury and Internal Revenue Service (IRS) have issued final regulations for the section 45V Clean Hydrogen Production Tax Credit.
Established by the Inflation Reduction Act, the credit is designed to promote clean hydrogen production while meeting strict lifecycle greenhouse gas (GHG) emissions standards.
The rules provide flexibility and clarity to hydrogen producers, including those using electricity (renewable, nuclear), methane reforming with carbon capture (blue hydrogen), and alternatives like renewable natural gas (RNG) and coal mine methane.
Key updates include:
Electricity-based hydrogen: Safeguards ensure compliance with lifecycle GHG limits. Producers must match energy use with hourly renewable generation starting in 2030, with an extended annual matching phase-in period.
Methane-based hydrogen: New rules refine upstream methane leakage rates and broaden eligible RNG and coal mine methane sources. Book-and-claim systems for RNG will launch in 2027.
Hydrogen production must emit no more than 4 kg of CO2 equivalents per kg of hydrogen to qualify. Credits are tiered, with lower emissions earning higher incentives.
Deputy Treasury Secretary Wally Adeyemo stated that the rules incorporate industry feedback to ensure investment certainty and support hydrogen’s role in decarbonizing heavy industry. Deputy Energy Secretary David Turk highlighted hydrogen’s potential in sectors like energy storage and transportation.
The Department of Energy will release an updated 45VH2-GREET model for emissions calculations. The final rules are expected to drive investment and accelerate the U.S.’s position as a leader in clean hydrogen production.