Summary:

The Clean Hydrogen Production Tax Credit is a tax credit to support hydrogen power. The hydrogen tax credit offers a credit for every kilogram of clean hydrogen energy used to power vehicles, machines, etc. There are restrictions around how much greenhouse gas emissions may be produced which can impact the tax credit. The value of the credit available is calculated using a Carbon Intensity (CI) score and GREET Model Analysis. The percentage of credit is calculated by considering the lifecycle greenhouse gas production of the facility and multiplying it by the appropriate percent of base rate. Prevailing wage and apprenticeship restrictions apply and impact the credit value. This transferable tax credit is designed to push development into clean hydrogen production.

Date in Effect:

January 1, 2023 – December 31, 2032 for facilities placed in service during this time

Facilities then have 10 years to claim the credit once placed in service

Calculation Details:

The calculation is derived from an analysis that determines the impact of “Well-to-Gate.” This is an examination of the lifecycle impacts of the hydrogen solutions and determines the estimated impact of emissions. The calculation is determined based on these analyses and studies. The output is a score in kg CO2e/kg H2 (kilogram CO2 emissions / kilogram hydrogen).

IRS Section 45V offers a base credit ranging from $0.12/kg - $0.60/kg and receives a 5x multiplier for a range of $0.60/kg - $3.00/kg if proper prevailing wage and apprenticeship requirements are met.

Base Credit

Carbon Intensity Score (kg CO2e/kg H2) - Max Hydrogen PTC Credit

• 0.0 - 0.45 (kg CO2e/kg H2) = $0.20/kg H2

• 0.46 - 1.50 (kg CO2e/kg H2) = $1.00/kg H2

• 1.51 - 2.50 (kg CO2e/kg H2) = $0.75/kg H2

• 2.51 – 4.0 (kg CO2e/kg H2) = $0.60/kg H2

  
  INDEX(kg CO2e/kg H2 = Range), THEN (Range Output x kg H2), ELSE ($0.20/kg x kg H2)
  

  Prevailing Wage and Apprenticeship Multiplier Credit

  Carbon Intensity Score (kg CO2e/kg H2) - Max Hydrogen PTC Credit

• 0.0 - 0.45 (kg CO2e/kg H2) = $0.60/kg H2

• 0.46 - 1.50 (kg CO2e/kg H2) = $0.75/kg H2

• 1.51 - 2.50 (kg CO2e/kg H2) = $1.00/kg H2

• 2.51 – 4.0 (kg CO2e/kg H2) = $3.00/kg H2

  
  INDEX(kg CO2e/kg H2 = Range), THEN (Range Output x kg H2), ELSE ($0.60/kg x kg H2)

  
  *Credits shown include maximum incentives (five times) available by using prevailing wage and apprenticeship bonuses. Base amounts may vary dependent on circumstances.*

Prevailing Wage and Apprenticeship Multiplier Credit

Carbon Intensity Score (kg CO2e/kg H2) - Max Hydrogen PTC Credit

• 0.0 - 0.45 (kg CO2e/kg H2) = $0.60/kg H2

• 0.46 - 1.50 (kg CO2e/kg H2) = $0.75/kg H2

• 1.51 - 2.50 (kg CO2e/kg H2) = $1.00/kg H2

• 2.51 – 4.0 (kg CO2e/kg H2) = $3.00/kg H2

  INDEX(kg CO2e/kg H2 = Range), THEN (Range Output x kg H2), ELSE ($0.60/kg x kg H2)
  
  *Credits shown include maximum incentives (five times) available by using prevailing wage and apprenticeship bonuses. Base amounts may vary dependent on circumstances.*
  

Filing Requirements:

1. Complete GREET Model Analysis
2. Carbon Intensity Score
3. Register and obtain unique identifier number from the Internal Revenue Service
4. File tax return for self, or if transferring the credit for cash, then reflect the sale of both buyer and seller’s tax return

Direct pay

Direct Pay is an election that allows the taxpayer to sell directly to the Internal Revenue Service. Section 45V transferable tax credits allow the following entities to make this election:

• All individuals and entities – but restrictions apply and should consult a tax professional

• Tax-exempt organizations

• States

• Political subdivisions

• The Tennessee Valley Authority

• Indian Tribal governments

• Alaska Native Corporations

• Rural electricity co-ops.

Miscellaneous

• Must complete GREET Model to determine Carbon Intensity (CI) score and set base tax credit