The US Treasury’s much-awaited response on the implementation of 45 hydrogen tax credits sees greater timeline flexibility and provisions for nuclear operators.
Under the initial proposal, released in December 2023, producers would have had to match their clean hydrogen plant’s operations with renewable electricity production within the same hour from 2028. However, the hourly matching requirement has now been pushed back until 2030.
A new pathway has been added to allow for existing nuclear reactors, up to 200MW, as a viable electricity source for hydrogen producers, reflecting that certain nuclear reactors are at greater risk of retirement based on certain economic factors, and if nuclear retirement is averted then the additional demand from hydrogen production will not have induced emissions.
The rules cover hydrogen produced using both electricity and methane, providing investment certainty while ensuring that clean hydrogen production meets the law’s lifecycle emissions standards.
They define electricity generation as incremental if the generator begins commercial operations within 36 months of the hydrogen facility being placed in service, or to the extent a plant increases its capacity within that period.
Electricity from a generator that has added CCS within a 36-month window before the hydrogen facility is placed in service will be considered incremental.
To qualify as clean hydrogen under the statute, the lifecycle GHG emissions of the hydrogen production process must be no greater than 4 kilogrammes of carbon dioxide equivalents (CO2e) per kilogramme of hydrogen produced.
Qualifying clean hydrogen falls into four credit tiers, with hydrogen produced with the lowest GHG emissions receiving the largest credit. To qualify for the full credit, projects must also meet prevailing wage and apprenticeship standards.
US Deputy Energy Secretary David M. Turk said the final rules will allow accelerated deployment of clean hydrogen, including the Hydrogen Hubs, leading to new economic opportunities.
