US Hydrogen Credit Ruling Allows Developers to Move Forward

On January 3, the administration of former President Joe Biden introduced a tiered system for production tax credits (PTCs) for clean hydrogen producers, regardless of whether they use renewable energy, nuclear, or natural gas with carbon capture.

"Green" hydrogen is produced using renewable energy and electrolyzers through electrolysis. Most hydrogen supplied to date has been "grey" hydrogen from gas-based steam methane reforming, while "blue" hydrogen is produced from gas with carbon capture technologies.

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The cost of green hydrogen is currently higher than grey hydrogen, and the PTCs aim to accelerate clean hydrogen deployment and reduce costs. The Biden administration aimed to reduce the cost of clean hydrogen to $1/kg by 2031, down from about $5/kg in 2022.

The 45V rules grant a full tax credit of $3.00 per kilogram of hydrogen for green hydrogen projects using clean power from plants built within 36 months of the hydrogen facility's start.

Hydrogen plants can source power from nuclear plants at risk of retirement (up to 200 MW per reactor) or from existing renewable energy generation in states with strict clean electricity standards, currently only met by Washington and California.

The hydrogen sector welcomed the Treasury’s final 45V guidance, with many developers resuming paused projects. Sachin Nijhawan, CEO of thyssenkrupp nucera, an electrolyzer manufacturer, said, “The Treasury’s final guidance on 45V is a step forward for the hydrogen industry.”

HIF Global expects its planned green hydrogen plant in Matagorda County, Texas to qualify for the full credit. The $6 billion facility would produce 1.4 million tons of e-methanol annually by combining CO2 from the atmosphere with green hydrogen from wind power.

The final 45V rules, which are technology agnostic, allocate tax credits based on emissions levels. Blue hydrogen producers using natural gas and carbon capture can qualify if emissions remain under 4 kg CO2e/kg hydrogen.

The guidance drew mixed reactions: The American Clean Power Association criticized stringent requirements, while the American Petroleum Institute called it a “clear step forward.”

The Clean Air Task Force (CATF) warned that Trump’s freeze on $7 billion in federal hydrogen hub funds could stall projects. Andy Marsh, CEO of Plug Power, said, “Trump’s energy dominance policy, including green and blue fuels, is good for the industry.”