Policy update
Final regulations for the Inflation Reduction Act’s Section 45V Clean Hydrogen Production Tax Credit
The U.S. Department of the Treasury and the Internal Revenue Service released final regulations in January 2025 for the Clean Hydrogen Production Tax Credit under Section 45V of the Internal Revenue Code. This policy update outlines changes in the final regulation compared with the original proposal, focusing on changes to the calculation and accounting of hydrogen life-cycle emissions.
The key changes between the proposed rule and the final rule include:
- New rules for the use of the 45VH2-GREET model for determining life-cycle emissions and a discussion of future model updates,
- Updated rules for the use of energy attribute certificates (EACs), including hourly accounting of electrolysis-hydrogen life cycle emissions beginning in 2030,
- Final rules for the life-cycle accounting of methane-derived hydrogen pathways.
The inclusion of the three-pillar framework for EACs—incrementality, time matching, and deliverability—remains the same as in the proposed rules. These pillars aim to ensure that hydrogen is produced with clean electricity, and that existing sources of clean electricity are not being diverted from other uses to make hydrogen.