US Treasury reveals proposed rules on 45V hydrogen credit
The US Treasury Department unveiled on Friday its long-awaited proposed regulations for the so-called 45V clean hydrogen production credit, Kallanish reports.
The IRA credit aims to accelerate clean hydrogen development in the US, making its production more economically competitive. For H2 production facilities which meet prevailing wage and registered apprenticeship requirements, the credit can range from $0.60/kilogram of hydrogen produced to $3/kg, depending on the lifecycle emissions of the hydrogen production.
Under the proposed regulations, credit eligibility will be determined using the Clean Air Act’s definition of lifecycle greenhouse gas (GHG) emissions, which includes “emissions only through the point of production (well-to-gate).”
These emissions will be determined under the most recent “GREET” model, termed 45VH2-GREET. According to the US Department of Energy, this model – developed by Argonne National Laboratory – can calculate the total energy consumption and GHG emissions for any given energy and vehicle system.
Eight hydrogen production pathways are included in the GREET model, including steam methane reforming of natural gas with potential carbon capture and sequestration (CCS). The model also includes coal gasification with potential CCS and low-temperature water electrolysis using electricity.
However, the Treasury says that taxpayers unable to use that model – perhaps because their H2 production technology or feedstock is not included – can petition the Secretary of the Treasury for a “provisional” emissions rate.
The government says the credit is available for 10 years from the date that a hydrogen production facility is “placed into service for projects that begin construction before 2033.” As such, the incentive may remain available for some facilities into the mid-2040s.
The guidance also defines “qualified clean hydrogen” as H2 which is produced through a process that results in a lifecycle GHG emissions rate of 4 kg/carbon dioxide emissions per kg/H2. Furthermore, the hydrogen must be produced in the US or a US territory during the taxpayer’s “ordinary course of trade or business.”
Additionally, the Treasury has defined a qualified clean hydrogen production facility as one that is owned by the taxpayer, produces qualified clean H2 and was constructed before 1 January 2033.
In a statement seen by Kallanish, the Treasury says these safeguards are “critical to preventing the credit from subsidising hydrogen production with higher lifecycle greenhouse gas emissions than allowed by the statute.”
Once the Treasury’s notice of proposed rulemaking is published in the Federal Register, it will be open to public comment for 60 days. Final rules will be issued once comments are considered.
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