Paul Rodden • Season: 2025 • Episode: 380
Listen Now:
>Direct Link To The Hydrogen Podcast MP3<
Listen On Your Favorite App:
Welcome to The Hydrogen Podcast!
Episode 380, The US Treasury has finally published the final regulations concerning the clean hydrogen production tax credit known as the 45v along with related provisions under Section 48 what exactly does this policy aim to achieve? Why does it matter? And how might it change the trajectory of hydrogen adoption? I’ll answer all of these questions on today’s hydrogen podcast.
Thank you for listening and I hope you enjoy the podcast. Please feel free to email me at info@thehydrogenpodcast.com with any questions. Also, if you wouldn’t mind subscribing to my podcast using your preferred platform… I would greatly appreciate it.
Respectfully,
Paul Rodden
VISIT THE HYDROGEN PODCAST WEBSITE
https://thehydrogenpodcast.com
CHECK OUT OUR BLOG
https://thehydrogenpodcast.com/blog/
WANT TO SPONSOR THE PODCAST?
Send us an email to: info@thehydrogenpodcast.com
NEW TO HYDROGEN AND NEED A QUICK INTRODUCTION?
Start Here: The 6 Main Colors of Hydrogen
Transcript:
The US Treasury has finally published the final regulations concerning the clean hydrogen production tax credit known as the 45v along with related provisions under Section 48 what exactly does this policy aim to achieve? Why does it matter? And how might it change the trajectory of hydrogen adoption? I’ll answer all of these questions on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally, and where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
So briefly, what are section 45v? In Section 48 and why are they important? At the heart of this new regulatory framework is Section 40 5v A provision of the inflation Reduction Act of 2022 this tax credit is designed to encourage the production of clean hydrogen by offering financial incentives tied directly to the environmental performance of hydrogen production facilities. Unlike traditional tax credits that provide blanket support section 45v is targeted to qualify producers must meet specific criteria regarding life cycle greenhouse gas emissions.
These emissions are measured using a well to gate approach, which accounts for everything from upstream energy sourcing to the production of hydrogen itself. The credit offers up to $3 per kilogram of hydrogen for producers who achieve emissions rates of less than point four five kilograms of carbon dioxide equivalent per kilogram of hydrogen, this threshold represents a benchmark for what the Treasury considers clean hydrogen.
Producers with higher emissions can still qualify for lower credits, but the sliding scale incentivizes investments in advanced technologies and renewable energy. Section 48 meanwhile, supports clean energy infrastructure. More broadly, it allows hydrogen producers to designate part of their facilities as quote energy property, making them eligible for additional tax credits under the energy investment tax credit framework. This dual approach, tying credits to both production and infrastructure creates a more comprehensive incentive system.
These provisions signal the Treasury’s commitment to a future where hydrogen plays a key role in decarbonizing the economy. So then let’s take a deep dive into the final regulations the US Treasury’s final regulations for the clean hydrogen production tax credit under Section 40 5e are meticulous and designed to provide a clear framework for the industry. These guidelines address a range of technical, operational and environmental factors that aim to standardize clean hydrogen production across the nation.
At the core of these regulations is the reliance on life cycle greenhouse gas emissions calculations which measure the environmental impact of hydrogen production from start to finish life cycle. Emissions are evaluated using the Greek model, or the greenhouse gasses regulated emissions and energy use in transportation model, which has become the industry standard for assessing emissions in energy production systems, which is developed by Argonne National Laboratory, Greek considers every stage of hydrogen production, from the extraction and transportation of raw materials to the point of hydrogen output at the production facility, by requiring adherence to this model, the Treasury ensures consistency and scientific accuracy across all hydrogen production projects.
This level of precision is critical as it eliminates ambiguity and establishes a baseline for what qualifies as, quote, clean hydrogen for producers employing novel technologies or methods not yet incorporated into the Greek model, the regulations offer a pathway for innovation through the use of provisional emissions rates, producers can petition the Treasury for temporary benchmarks, enabling them to demonstrate the viability and environmental performance of their new processes. This is particularly important as the hydrogen sector is evolving rapidly, with emerging technologies like solid oxide electrolyzers, biomass gasification and methane pyrolysis gaining traction by allowing provisional rates the Treasury strikes a balance between fostering innovation and maintaining environmental integrity.
A standout requirement in the regulations is the integration of renewable or zero emission energy sources in hydrogen production. For hydrogen produced via electrolysis, electricity consumption is a major factor in life cycle emissions. The final rules mandate that producers must source this electricity from renewable energy, such as wind, solar or nuclear power, and match their electricity usage with renewable generation on an hourly basis. This hourly matching standard is one of the most stringent in the world, surpassing the annual or monthly matching requirements seen in other jurisdictions. It ensures that.
Hydrogen production aligns with real time renewable energy availability, reducing reliance on hydrocarbon based grid power. And while this approach maximizes environmental benefits, it introduces operational complexities. Producers in regions with variable renewable energy supply will need to invest in storage solutions such as batteries or hydrogen itself to balance their energy needs. However, this requirement also incentivizes broader investments in grid modernization and energy storage technologies, which benefit not only hydrogen producers but the entire clean energy ecosystem. Verification and compliance are critical components of the new regulations to qualify for tax credits, producers must undergo rigorous third party verification.
This involves detailed audits of production processes, emissions data and renewable energy sourcing claims. By introducing this level of scrutiny, the Treasury aims to prevent greenwashing and ensure that only genuinely clean hydrogen receives financial incentives. Producers must submit annual reports documenting their compliance, creating a transparent and accountable system. The final rules also address the retrofitting of existing hydrogen production facilities. Facilities that currently produce hydrogen using hydrocarbons, such as Steam methane reforming plants can upgrade their operations to meet clean hydrogen standards. This flexibility is a pragmatic move that allows established producers to transition to cleaner technologies without having to build entirely new facilities.
It also accelerates the adoption of clean hydrogen by leveraging existing infrastructure and the economic impact of the Treasury’s final regulations cannot be overstated by providing up to $3 per kilogram of clean hydrogen for projects with emission rates below point five kilograms of carbon dioxide equivalent per kilogram of hydrogen, the section 40 5e tax credit dramatically reduces the cost differential between clean hydrogen and hydrocarbon based hydrogen. For context, gray hydrogen, which is produced from natural gas without carbon capture, typically cost between one and $2 per kilogram. In contrast, green hydrogen, via electrolysis, powered by renewable energy, often exceeds $4 per kilogram. The tax credit narrows this gap significantly, making clean hydrogen economically competitive for the first time. This financial incentive is expected to unlock billions of dollars in private and public investments.
Industry analysts predict the tax credits could catalyze the development of over 100 new hydrogen production projects in the next decade. These projects will not only increase hydrogen supply, but also drive advancements in technologies such as electrolyzers, carbon capture systems and renewable energy integration. This resulting economies of scale could further reduce costs, creating a virtuous cycle of innovation and adoption. The regulations are also poised to create substantial job opportunities across multiple sectors. Building and operating hydrogen production facilities will require skilled workers, from engineers and technicians to construction crews, additionally, the need for renewable energy infrastructure to power these facilities will spur job growth in wind, solar and grid modernization projects.
A recent study estimates that the clean hydrogen industry could generate over 700,000 jobs in the US by 2030 contributing to economic revitalization in both urban and rural areas on the global stage, the Treasury regulations position the United States as a leader in the hydrogen economy.
Countries like Germany, Japan and South Korea are heavily investing in hydrogen, but the clarity and scale of the US incentives gives it a competitive edge by fostering domestic innovation and manufacturing, these regulations enable the US to capture a significant share of the global hydrogen market, which is projected to reach $300 billion annually by 2050 this leadership not only strengthens the US economy, but also enhances its geopolitical influence in the global energy transition. Another key economic benefit is the potential for export opportunities. As the US ramps up clean hydrogen production, it can supply hydrogen and hydrogen derived fuels such as ammonia, to international markets.
Countries with limited renewable energy resources, particularly in Asia and Europe, are expected to import significant quantities of hydrogen to meet their decarbonization goals by establishing itself as a reliable and sustainable hydrogen supplier, the US can generate billions of dollars in export revenue. However, the regulations also come with costs. Compliance with the stringent life cycle emissions and renewable energy requirements will require substantial investments in monitoring systems, energy storage and facility upgrades for smaller producers, these upfront costs could be prohibitive, potentially limiting their participation in the market.
Policy makers may need to consider additional support mechanisms such as grants or low interest loans to ensure equitable access to the tax credits. And from a technical perspective, the regulations set a high bar for compliance. Calculating the life cycle emissions using the group model requires precision.
Information and expertise and integrating renewable energy sources on an hourly basis presents logistical challenges. These requirements may pose hurdles for smaller producers or those operating in regions with limited renewable energy infrastructure. However, these challenges also create opportunities. The hourly matching requirement, for instance, could drive investments in energy storage technologies like batteries and hydrogen itself as a storage medium, this would not only benefit hydrogen producers, but also strengthen the broader renewable energy ecosystem.
Another challenge lies in the verification process. While third party audits ensure transparency and accountability, they add to the administrative burden for producers. Developing streamlined yet robust verification systems will be key to the program’s long term success. The requirement for provisional emission rates is another area to watch. While it encourages innovation, it also demands rigorous scientific validation to ensure that new methods meet the program’s environmental goals. This balance between flexibility and integrity will be critical as the hydrogen market evolves.
The Treasury’s final regulations on Section 45v and 48 mark a watershed moment for the hydrogen economy by providing clear and ambitious guidelines, these rules incentivize cleaner production methods, promote renewable energy integration and encourage innovation across the sector. The economic opportunities are immense, from job creation to global leadership and hydrogen technologies. However, the path forward is not without challenges. Producers will need to navigate complex technical requirements and invest in advanced systems to comply with regulations. Policy makers and industry leaders must work together to address these challenges while ensuring that the program delivers on its promise of meaningful emissions reductions.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
