26 USC 45 - Credit for production of clean hydrogen

View all text of Subpart D [§ 38 - § 45AA]

§ 45V. Credit for production of clean hydrogen

(a) Amount of creditFor purposes of section 38, the clean hydrogen production credit for any taxable year is an amount equal to the product of—

(1) the kilograms of qualified clean hydrogen produced by the taxpayer during such taxable year at a qualified clean hydrogen production facility during the 10-year period beginning on the date such facility was originally placed in service, multiplied by

(2) the applicable amount (as determined under subsection (b)) with respect to such hydrogen.

(b) Applicable amount

(1) In general

(2) Applicable percentageFor purposes of paragraph (1), the applicable percentage shall be determined as follows:

(A) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of—

(i) not greater than 4 kilograms of CO2e per kilogram of hydrogen, and

(ii) not less than 2.5 kilograms of CO2e per kilogram of hydrogen,

the applicable percentage shall be 20 percent.

(B) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of—

(i) less than 2.5 kilograms of CO2e per kilogram of hydrogen, and

(ii) not less than 1.5 kilograms of CO2e per kilogram of hydrogen,

the applicable percentage shall be 25 percent.

(C) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of—

(i) less than 1.5 kilograms of CO2e per kilogram of hydrogen, and

(ii) not less than 0.45 kilograms of CO2e per kilogram of hydrogen,

the applicable percentage shall be 33.4 percent.

(D) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 100 percent.

(3) Inflation adjustment

(1) Lifecycle greenhouse gas emissions

(A) In general

(B) GREET model

(2) Qualified clean hydrogen

(A) In general

(B) Additional requirementsSuch term shall not include any hydrogen unless—

(i) such hydrogen is produced—(I) in the United States (as defined in section 638(1)) or a possession of the United States (as defined in section 638(2)),(II) in the ordinary course of a trade or business of the taxpayer, and(III) for sale or use, and

(ii) the production and sale or use of such hydrogen is verified by an unrelated party.

(3) Qualified clean hydrogen production facilityThe term “qualified clean hydrogen production facility” means a facility—

(A) owned by the taxpayer,

(B) which produces qualified clean hydrogen, and

(d) Special rules

(1) Treatment of facilities owned by more than 1 taxpayer

(2) Coordination with credit for carbon oxide sequestration

(3) Credit reduced for tax-exempt bonds

(4) Modification of existing facilities

(A) was originally placed in service before January 1, 2023, and, prior to the modification described in subparagraph (B), did not produce qualified clean hydrogen, and

(B) after the date such facility was originally placed in service—

(i) is modified to produce qualified clean hydrogen, and

(ii) amounts paid or incurred with respect to such modification are properly chargeable to capital account of the taxpayer,

such facility shall be deemed to have been originally placed in service as of the date that the property required to complete the modification described in subparagraph (B) is placed in service.

(e) Increased credit amount for qualified clean hydrogen production facilities

(1) In general

(2) RequirementsA facility meets the requirements of this paragraph if it is one of the following:

(A) A facility—

(i) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3)(A) and (4), and

(ii) which meets the requirements of paragraph (3)(A) with respect to alteration or repair of such facility which occurs after such date.

(B) A facility which satisfies the requirements of paragraphs (3)(A) and (4).

(3) Prevailing wage requirements

(A) In generalThe requirements described in this subparagraph with respect to any qualified clean hydrogen production facility are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in—

(i) the construction of such facility, and

(ii) with respect to any taxable year, for any portion of such taxable year which is within the period described in subsection (a)(2), the alteration or repair of such facility,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. For purposes of determining an increased credit amount under paragraph (1) for a taxable year, the requirement under clause (ii) of this subparagraph is applied to such taxable year in which the alteration or repair of qualified facility occurs.

(B) Correction and penalty related to failure to satisfy wage requirements

(4) Apprenticeship requirements

(5) Regulations and guidance

(f) Regulations

(Added and amended Pub. L. 117–169, title I, § 13204(a)(1)–(3), Aug. 16, 2022, 136 Stat. 1936, 1938, 1939.)