WASHINGTON (December 22, 2023) — Today the U.S. Treasury Department released new guidance on the 45V Hydrogen Production Tax Credit, enabling clean hydrogen producers to secure production incentives and accelerate the U.S. clean energy transition, as supported by the Inflation Reduction Act.

Hydrogen is widely considered to be an important solution for decarbonization, with the potential to slash emissions from energy-intensive sectors, such as heavy industry and commercial transport. Increasing production of “clean hydrogen” (hydrogen made with low or no carbon emissions) and deploying it at scale can help the U.S. meet its goal of reaching net-zero emissions by 2050 and contribute to the global goal of keeping temperature rise to 1.5 degrees C (2.7 degrees F). 

The final guidance requires that new, additional renewable energy be generated in the same region that produces the hydrogen to qualify for the $3 per kilogram production credit. From 2028, it phases in requirements to operate the hydrogen facility during the same time its renewable power is on the grid. Hydrogen made from more emissions-intensive processes such as through non-renewable sources may qualify for smaller tax credits, ranging from $.60-$1.00. The guidance includes a 60-day public comment period on issues related to nuclear power sources and specific pathways for hydrogen production.

Following is a statement from Angela Anderson, Director of Industrial Innovation and Carbon Removal, U.S. Climate, World Resources Institute:

“Today’s hydrogen tax credit guidance is a significant piece of the Inflation Reduction Act puzzle and will help drive a robust, low carbon economy. These rules will help scale up clean hydrogen that can reduce emissions from our most polluting industries, like steel, chemicals and refining. The proposed rules would ensure that only hydrogen projects produced from zero-carbon energy will qualify for the most generous tax incentives. Hydrogen’s ability to maximize emission reductions in carbon intensive industries is dependent on how it is produced, and this rule will incentivize companies to choose cleaner methods of production.

“The Treasury Department rules signal to early industry leaders and investors that the time is now to launch changemaking hydrogen projects that tackle stubborn GHG emissions and provide impactful climate solutions.”