WASHINGTON (January 3, 2025)—The U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued final rules today governing implementation of the 45V Credit for the Production of Clean Hydrogen. These rules determine how the heat-trapping emissions associated with hydrogen production are calculated, and as a result, the level of incentive produced hydrogen is eligible to receive through the Inflation Reduction Act (IRA) credit. Rigorous emissions accounting is critical to ensure incentives reward truly low-carbon hydrogen projects, according to the Union of Concerned Scientists (UCS).
Below is a statement by Julie McNamara, senior analyst for the Climate and Energy Program at UCS.
“For hydrogen to have a constructive role in the clean energy transition, it must be cleanly produced. Differentiating between hydrogen that looks clean versus truly is clean requires accurately and transparently accounting for all the emissions associated with the hydrogen production process.
“With these rules, the Biden administration has laid a strong foundation for ensuring that near-term incentives are aligned with the buildout of a durable hydrogen industry capable of meeting the needs of the clean energy transition now and in the future.
“A select set of industry actors have spent years clamoring for loopholes in the electrolytic accounting framework to capture massive profits—with no benefit to the clean energy transition and at staggering cost to the American public. The final rules firmly reject the most egregious of these loopholes.
“Still, the final rules leave space for certain heavily polluting hydrogen projects to sidestep accountability, especially through the manipulation of carbon accounting. We remain committed to ensuring that any incentivized hydrogen projects really and truly are clean, as determined by rigorous evaluation of actual climate, health, and environmental impacts. For the near- and long-term viability of hydrogen as a clean energy solution, ‘clean’ must mean clean.”
Additional resources and analyses:
- A blogpost by McNamara detailing how biomethane could open polluter loopholes
- A blogpost by McNamara exposing industry’s motivations for weakened 45V rules
- A blogpost by McNamara summarizing the organization’s key comments and public testimony on the proposed 45V rules
- A blogpost by McNamara illustrating how additionality requirements defend against electrolytic hydrogen projects ramping up fossil fuel-fired power plants