The Inflation Reduction Act (IRA) contains a number of provisions related to climate change, including several to encourage private-sector investment in clean energy. Among these are incentives for several types of low-carbon fuels, including hydrogen. On December 22, 2023, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released proposed guidance about how to determine eligibility for two such incentives, the Clean Hydrogen Production Tax Credit under Section 45V of the Internal Revenue Code and the Energy Credit under Section 48.
This brief “Understanding the proposed guidance for the Inflation Reduction Act’s Section 45V Clean Hydrogen Production Tax Credit” by ICCT reviews key aspects of the 2023 proposed guidance. After explaining the IRA’s requirements for the hydrogen production tax credit, it summarises how the guidance would address such issues as determining life-cycle greenhouse gas (GHG) emissions during the hydrogen production process, accounting for the GHG emissions of electricity use, and rules about renewable natural gas (RNG), among other topics. It explains how eligibility for the energy credit is determined under the proposal. The guidance for both credits is still provisional and subject to further revision; the ICCT submitted comments in February 2024.
Access the complete report here
