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The U.S. Treasury has finalized rules for hydrogen producers to qualify for tax credits under section 45V of the Inflation Reduction Act, providing much-needed clarity for hydrogen startups. These rules, which took over two years to develop, aim to promote cleaner hydrogen production methods and prevent additional greenhouse gas emissions.
Producers can earn tax credits up to $3 per kilogram based on their emissions throughout the hydrogen lifecycle. The new regulations allow existing nuclear power plants to contribute electricity to hydrogen production, and certain fossil fuel plants with carbon capture technology can also qualify. While the rules are welcomed by the industry, some stakeholders seek more flexibility regarding electricity sourcing and requirements. Overall, the legislation is seen as a significant step towards supporting hydrogen as a cleaner alternative in heavy industry and transportation.
