The Clean Hydrogen Production Tax Credit creates a new 10-year incentive for clean hydrogen of up to $3.00/kilogram. The level of the credit provided is based on carbon intensity, up to a maximum of four kilograms of CO2-equivalent per kilogram of H2. The credit provides a varying, four-tier incentive depending on the carbon intensity of the hydrogen production pathway, and whether the project meets prevailing wage and apprenticeship requirements. The credit measures emissions up to the point of production using the Argonne National Laboratory Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) Model and, more specifically, 45VH2-GREET.
For more information about the 45VH2-GREET model, visit the DOE GREET website.
45V White Paper
Clean hydrogen can play a role in decarbonizing up to 25% of global energy-related CO2 emissions. The U.S. Department of Energy (DOE) has published a number of reports that detail the important role of hydrogen in addressing climate change, enhancing energy security and resilience, and creating economic value. These include, among others, Pathways to Commercial Liftoff (DOE 2023a) and the U.S. National Clean Hydrogen Strategy and Roadmap (DOE 2023b). The DOE is accelerating the commercial liftoff of clean hydrogen through numerous grant, loan, and market facilitation programs.
This paper considers an important supply-side incentive in the larger policy framework, focused on the clean hydrogen production tax credit (PTC) created by the Inflation Reduction Act (§ 45V): specifically, the lifecycle GHG emissions impacts of electricity required for the process of producing hydrogen within a well-to-gate perspective. This well-to-gate lifecycle perspective is required by statute and focuses on production and not downstream emissions effects. Therefore, hydrogen’s potential to reduce emissions by displacing incumbent fuels in various end uses is outside the scope of both § 45V and of this paper. Greater deployment of technologies like electrolyzers could also drive down technology costs, increasing the long-term cost-effective potential of clean hydrogen and resulting in greater emissions reductions potential. Such considerations are also out of scope of this paper.
The paper finds that energy attribute certificates (EACs) are an established means for documenting and verifying the generation and purchase of electricity. EACs do not directly quantify emissions from specified sources or from induced generation when adding load to the grid. However, when EACs from low-GHG generators have attributes that meet three criteria (incremental generation, geographic matching, and temporal matching, as defined further in the body of the paper), they can serve as a reasonable proxy for calculating induced grid emissions. If hydrogen producers acquire and retire EACs whose attributes meet these criteria, it would be reasonable to treat induced grid emissions as zero and for hydrogen producers to deem their GHG emissions from electricity to be the lifecycle GHG emissions associated with the specific generators from which the EACs were purchased and retired. Use of such EACs is therefore an appropriate approach as part of assessing and documenting qualification for particular tiers of the § 45V production tax credit.