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US Treasury Department Releases Final Rules for the 45V Clean Hydrogen Production Tax Credit
10th January 2025
On January 3, 2025, the US Department of Treasury (Treasury) released the final rules for the section 45V Clean Hydrogen Production Tax Credit of the US tax code. The final rules will guide hydrogen producers, including those using natural gas with carbon capture and storage (CCS), in determining their eligibility for the tax credit.
The amount of tax credit producers can receive varies (US$0.60 - US$3.00) based on the qualifying hydrogen’s lifecycle greenhouse gas (GHG) emissions. To qualify for the credit, lifecycle GHG emissions must not exceed 4kg of CO2 equivalent (CO2e) per kg of hydrogen. The Treasury noted they will release an updated model (45VH2GREET) in the coming weeks, including updated default upstream methane leakage rates, for producers to use to calculate their tax credit.
Beyond its use in hydrogen production, carbon capture (CCS) can also contribute to meeting energy requirements for claiming the 45V credit. The final rules also adopt a “CCS retrofit” rule, which will allow power plants retrofitted with carbon capture equipment to meet incrementality requirements for energy attribute certificates (EACs), as long as the capture equipment has been placed in service within 36 months of the hydrogen production facility.
The 45V tax credit cannot be claimed (or “stacked”) with the 45Q tax credit for carbon sequestration.
Treasury’s press release on the final rules can be found here