Hydrogen Insight: Hydrogen Producers Share Concerns Over Leaked U.S. Tax Credit Rules

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Article written by Polly Martin

The US Treasury’s guidance for clean hydrogen producers to claim the top $3/kg rate of the H2 production tax credit could be even stricter than EU regulations, based on details of a leaked draft reported in Politico and Bloomberg.

The 45V tax credit, which was originally unveiled as part of the Inflation Reduction Act, is split into four rates based on emissions intensity (see table), which were initially assumed to be technology-agnostic.

45V tax credits tiered by emissions intensity

Emissions intensity (kgCO2e/kgH2)Maximum tax credit ($/kgH2)
Source: US Department of Energy

But the guidelines for calculating lifecycle emissions in order to access the top rate, which have been delayed for months amid furious debate, are now set to include all three of the most controversial rules around the usage of zero-carbon electricity: additionality, geographical correlation, and hourly matching (see panel below).

Like in the EU’s Delegated Acts, hydrogen projects in the US will have to source power input from clean energy assets on the same regional grid, installed within three years of H2 production.

However, while the EU allows matching of renewable power to electrolyzer operation within a calendar month up to 2030, at which point the two must take place in a one-hour window, the Treasury has reportedly set annual matching up to…

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