The U.S. Treasury Department’s new regulations for the Clean Hydrogen Production Tax Credit (45V) broaden eligibility for hydrogen producers utilizing biomethane or renewable natural gas (RNG). Key provisions include:
- Expanded sources: Inclusion of a wider range of biogas and fugitive methane sources, like digesters processing animal waste.
- Lifecycle emissions: Tax credit value depends on lifecycle greenhouse gas emissions, favoring cleaner production methods.
- Credit tiers: Four tiers, with up to $3.00 per kilogram for the lowest emissions.
Digesters capturing methane from manure may now contribute to clean hydrogen, but restrictions like a 52% methane content requirement and a 2024 construction beginning deadline pose hurdles. (Projects must begin construction prior to the end of calendar year 2024 to claim the credit.)
Mixed industry reactions highlight both optimism and concerns over potential limitations on RNG’s role in the clean hydrogen economy. The U.S. Chamber of Commerce stated that while the rule provides some additional flexibility, it “still will leave billions of dollars of announced projects in limbo.” The RNG Coalition cautioned that “certain provisions in the rule may significantly limit the potential of RNG to contribute to a globally competitive clean hydrogen economy.”
