Treasury and IRS Finalize Clean Hydrogen Tax Credit

Washington, DC - Today, the Department of Treasury and the Internal Revenue Service released the final rule that will determine tax credits for clean hydrogen production. Section 45V, the Clean Hydrogen Production Tax Credit, was created by the Inflation Reduction Act in order to support the Department of Energy’s Regional Clean Hydrogen Hubs program and create investment certainty within the nascent industry that has the potential to reduce emissions in several hard-to-decarbonize sectors. 

Sierra Club and partners advocated for the 45V tax credit to include important safeguards on methane leakage and blending and for the “three pillars” of electrolytic hydrogen to ensure clean hydrogen production is truly clean by drawing from newly built, emission-free sources that are matched hourly to the project’s power consumption. The final rule took into account industry feedback in the public comment period, but largely relies on the foundation of the three pillars. 

In response, Sierra Club Director of Climate Policy Patrick Drupp released the following statement: 

“The 45V rule provides much needed clarity for the growing clean hydrogen industry and creates important guardrails to protect against dirty hydrogen production. While the final rule includes several potentially concerning exemptions, it still broadly relies on the three pillars. Sierra Club will continue working to ensure that clean hydrogen projects actually reduce emissions, rather than benefiting the fossil fuel industry and leading to increased pollution, higher rates on consumers, or exacerbated environmental injustices.”

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