What is a 45V Credit?
The Inflation Reduction Act (IRA) of 2022 included a newly implemented tax credit scheme for the production of clean hydrogen (26 U.S. Code § 45V). This credit aims to encourage the production of clean hydrogen by offering tax incentives based on the carbon intensity of the hydrogen produced. The cleaner the production process (i.e., the lower the greenhouse gas emissions), the higher the tax credit. The credit can be as high as $3.00 per kilogram for hydrogen that is produced with the lowest levels of CO₂ emissions.
What applicants need to know: The Three Attestations
To qualify for the Section 45V Credit, hydrogen producers (i.e., the applicants) must submit three key attestations to ensure accurate reporting and verification of production data:
Production Attestation
To satisfy this requirement, the producer must attest that all production inputs into the most current version of the Department of Energy’s Argonne National Laboratory 45VH2-GREET model[1] are accurately reported, with particular attention given to accurately reporting the quantity of hydrogen.
This includes having robust and defensible data for each of the inputs into the 45VH2-GREET model. The applicant should consider reproducibility of data when designing their laboratory sampling process for feedstocks and production rates.
Additionally, all production methods and assumptions should be well reasoned and explained in the attestation documentation.
Sales Attestation
For this attestation, the producer must attest that the clean hydrogen production, as reported, was sold or used in a manner that is not wasteful or abusive.
Wasteful and abusive arrangements include using the produced hydrogen to generating electricity for more hydrogen production, or simply venting the hydrogen.
Conflict Attestation
For the final attestation, a third-party independent verification of the producer's claims about both production levels and emissions is required.
This third-party verifier must be a qualified entity with expertise in lifecycle emissions analysis and must be recognized as either a verification body from the American National Standards Institute National Accreditation Board (ANSI), or as a Low Carbon Fuel Standard (LCFS) verifier from the California Air Resources Board (CARB).
This independent verifier will confirm the accuracy of the data provided by the hydrogen producer and that the data meets the standards required for obtaining 45V tax credits.
The independent verifier will then issue a qualified verifier statement and a verification report, both of which must be submitted along with the attestations.
If you are looking for help navigating the regulatory requirements to obtain 45V credits for your clean hydrogen production, or are looking for an independent third-party verification body, please contact:
Bart Leininger, P.E. Principal
(805) 764-6012 bleininger@algcorp.com
Irra Core, Ph.D. Principal
(805) 764-6006 icore@algcorp.com
Elliott Ripley Principal
(805) 764-6004 eripley@algcorp.com
[1] https://www.energy.gov/eere/greet. Accessed September 13th, 2024.