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Rules Proposed for 45V Tax Credits Under IRA


A set of guidelines for availing of the 45 V Clean Hydrogen Production Tax Credits under the Biden administration’s Inflation Reduction Act was formally proposed by officials of the US Department of the Treasury on Friday, December 22nd. The proposal lays down guidance regarding how greenhouse gas emissions for certain projects may be measured by those engaged in the field of green hydrogen production.

Each of these credits delivers up to $3 per kilogram of clean hydrogen to initiatives whose greenhouse gas emissions are at environmentally acceptable levels. These credits are also seen as a complementary program to those initiated by the Department of Energy (DoE), including the $7-billion Regional Clean Hydrogen Hubs program which seeks to catalyze up to $50 billion in investments among seven key production sites.

It is hoped that programs taking advantage of the 45V credits will help drive the decarbonization of the US heavy industry sector.

Guidelines for Electrolysis

Apart from the tax credits for those in the green hydrogen sector, the proposed guidance also aims to regulate hydrogen production done through electrolysis as a means of ensuring that any electricity used falls below the maximum intensity for emissions.

It is also expected that, once these rules are implemented, hydrogen companies will use energy attribute certificates (EACs) which document their eligibility for tax credits. Such eligibility is determined by whether or not the project is time-matched to the specific period when an electrolyzer is operating; deliverability to the electrolyzer by being within the same location or grid region; and proof that energy generation is incremental to that of any existing facility currently in operation. 

The three above-mentioned factors are aligned with the IRA’s lifecycle emissions accounting process. According to some officials in Washington, failure to comply with these requirements would lead to the hydrogen production sector contributing more harmful grid emissions over time.

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