US Treasury And IRS Release New Guidance On Hydrogen Tax Credit

US Treasury And IRS Release New Guidance On Hydrogen Tax Credit - Carbon Herald

The U.S. Department of the Treasury and Internal Revenue Service (IRS) released proposed regulations on the clean hydrogen production tax credit established by the Inflation Reduction Act (IRA).

“The Biden-Harris Administration is driving American innovation in emerging industries to create good-paying jobs, strengthen U.S. energy security, and help the U.S. clear hurdles in our clean energy transition,” said U.S. Secretary of the Treasury Janet L. Yellen. “Incentives in the Inflation Reduction Act are helping to scale production of low-carbon fuels like hydrogen and cut emissions from heavy industry, a difficult-to-transition sector of our economy.”

“Today’s announcement will further unprecedented investments in a new, American-led industry as we aim to lead and propel the global clean energy transition,” said U.S. Secretary of Energy Jennifer M. Granholm. “Hydrogen has the potential to clean up America’s manufacturing industry, power the transportation sector and shore up our energy security all while delivering good-paying jobs and new economic opportunity to communities in every pocket of America.”

Relevant: PIPES Act Of 2023 Fails To Clarify Rules For CO2 And Hydrogen Pipeline Safety – Pipeline Safety Trust

“The Inflation Reduction Act’s hydrogen tax credit will help build a clean hydrogen industry that will be critical in reducing emissions from harder-to-decarbonize sectors like heavy industry and heavy transportation,” said John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation.

While clean hydrogen holds considerable potential to reduce emissions across a range of sectors and applications, conventional hydrogen production typically results in significant climate pollution. The Clean Hydrogen Production Credit aims to make production of clean hydrogen with minimal climate pollution more economically competitive and accelerate development of the U.S. clean hydrogen industry. Today’s proposed regulations advance those goals and will support the development of a robust U.S. clean hydrogen industry that creates good-paying jobs, while also reducing carbon emissions.

The Treasury Department’s Notice of Proposed Rulemaking (NPRM) provides definitions of key terms in the statute, including lifecycle greenhouse gas emissions, qualified clean hydrogen, and qualified clean hydrogen production facility.

Relevant: EU Parliament Announces Reform Of Gas, Hydrogen Market Governance

The safeguards outlined in the proposed rules are critical to preventing the credit from subsidizing hydrogen production with higher lifecycle greenhouse gas emissions than allowed by the statute.

The NPRM was developed after extensive consultations with experts across the federal government, particularly the Department of Energy (DOE), which oversees Argonne National Lab’s administration of the GREET model, and the Environmental Protection Agency (EPA), which administers the Clean Air Act. The proposed regulations provide guidance based on the statute’s references to the Clean Air Act and the GREET model.

The NPRM also takes comment on important issues where Treasury anticipates providing further clarity and certainty in the final rules. The NPRM will be open for public comment for 60 days once it is published in the Federal Register, and Treasury and the IRS will carefully consider comments before issuing final rules.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts
Translate »
Total
0
Share