45V Offers a Pathway for Green Hydrogen to Cut Climate Pollution; But Blue Hydrogen Risks Still Need to Be Addressed

(WASHINGTON – January 3, 2024) Today, the Department of Treasury finalized guidance for the 45V Tax Credit for the Production of Clean Hydrogen. The tax credit, authorized by the Inflation Reduction Act, creates a new 10-year incentive for clean hydrogen up to $3.00/kg. 

“45V offers a pathway to cut climate pollution through renewable-based hydrogen, while building a new market for U.S.-made low-emission fuels and electrolyzer equipment.  

“Proper implementation of the production tax credit could help catalyze private investment, lower costs and drive global demand for American-made hydrogen. 

“But risks remain that public incentives for clean hydrogen could go toward fossil fuel-based projects that offer no real climate benefit and undermine the integrity of the U.S. hydrogen market. 

“Clean hydrogen can help clean up parts of the economy that are hard to decarbonize any other way, but only if we do it right. 

“At a minimum, any fossil fuel-based hydrogen projects must: (1) accurately measure and report their upstream methane emissions, (2) verify that carbon emissions are captured and securely stored, and (3) rigorously disclose all pollution and avoid accounting tricks that mask impacts. 

“In addition, blue hydrogen projects can pose health risks to nearby communities that must be carefully evaluated and addressed. 

“Finally, a strong and stable federal methane policy is essential to begin to address the harmful upstream methane pollution associated with fossil-based hydrogen projects.” 

• Beth Trask, VP, Global Energy Transition, Environmental Defense Fund