The US government has finalised the long-awaited rules to qualify for a clean hydrogen production credit, part of the Inflation Reduction Act (IRA).

Treasury and Internal Revenue Service (IRS) have relaxed the rules first proposed in 2023, which attracted 30,000 comments in a public consultation, Kallanish reports.

Hydrogen produced using both electricity and methane will be considered “clean” as long as its lifecycle greenhouse gas emissions of the production process are lower than 4 kilograms of carbon dioxide equivalents per kilogram of hydrogen. This includes hydrogen produced with renewable energy, methane reforming technologies combined with carbon capture and sequestration, as well as natural gas alternatives such as renewable natural gas or coal mine methane.

Qualifying clean hydrogen falls into four credit tiers, with hydrogen produced with the lowest greenhouse gas (GHG) emissions receiving the largest credit under section 45V of the IRA. The lifecycle GHG footprint includes “direct and significant indirect emissions,” Treasury and IRS note.

For green hydrogen, the credit can be accessed if an electricity 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.

Pink hydrogen will also be eligible if the nuclear plants are at risk of retirement and if there are certain indications of co-dependence on hydrogen investment, up to 200 megawatts per qualifying reactor. “Certain nuclear reactors are at greater risk of retirement based on certain economic factors, and if a nuclear retirement is averted then the additional demand from hydrogen production will not have induced emissions,” says Washington.

The final rules maintain the proposed requirement for temporal matching, hourly accounting and deliverability. Yet, they extend the transition allowing the annual matching rule two more years, with hourly matching requirement now starting in 2030 for all facilities.

in several instances when crafting this final rule compared to the initial proposal,” comments Frank Wolak, president and ceo of the Fuel Cell and Hydrogen Energy Association. “However, this rule is still extremely complex and will require intense evaluation by project developers to understand all the nuances and how they will apply to their specific facilities. There are also multiple areas where implementation and timing will be up to the incoming Trump-Vance Administration.”

Julie McNamara, senior analyst at Union of Concerned Scientists, adds: “The final rules leave space for certain heavily polluting hydrogen projects to sidestep accountability, especially through the manipulation of carbon accounting. We remain committed to ensuring that any incentivised hydrogen projects really and truly are clean, as determined by rigorous evaluation of actual climate, health, and environmental impacts. For the near- and long-term viability of hydrogen as a clean energy solution, ‘clean’ must mean clean.”