26 U.S.C. § 45V — Credit for production of clean hydrogen

(a) Amount of credit. Your clean hydrogen production credit for the year equals the kilograms of "qualified clean hydrogen" you produce at a qualified facility, multiplied by the "applicable amount" explained in (b). This only counts hydrogen made during the 10-year period that starts when the facility was first placed in service. (b) Applicable amount. (1) In general: The applicable amount is the "applicable percentage" (from (2)) multiplied by $0.60. If the result isn't an exact multiple of 0.1 cent, round to the nearest 0.1 cent. (2) Applicable percentage: This depends on how many kilograms of CO2e (carbon-dioxide-equivalent) the production process emits per kilogram of hydrogen made: - 4 down to 2.5 kilograms of CO2e per kilogram of hydrogen: 20 percent. - Under 2.5 down to 1.5 kilograms of CO2e: 25 percent. - Under 1.5 down to 0.45 kilograms of CO2e: 33.4 percent. - Under 0.45 kilograms of CO2e: 100 percent. (3) Inflation adjustment: Each year, the $0.60 figure is multiplied by an inflation adjustment factor — calculated the same way as under section 45(e)(2), except using 2022 instead of 1992 as the base year — for the calendar year the hydrogen was produced. Round the result to the nearest 0.1 cent. (c) Definitions. (1) Lifecycle greenhouse gas emissions: (A) This term has the same meaning it has under the Clean Air Act (section 211(o)(1)(H)), as that law read when this section was enacted. (B) But for this section, it only counts emissions up through the point of production ("well-to-gate"), measured using the most recent GREET model (the Greenhouse gases, Regulated Emissions, and Energy use in Transportation model, from Argonne National Laboratory) or a successor model the Secretary chooses. (2) Qualified clean hydrogen: (A) Hydrogen made through a process with a lifecycle greenhouse gas emissions rate of no more than 4 kilograms of CO2e per kilogram of hydrogen. (B) It only counts if the hydrogen is (i) produced in the United States or a U.S. possession, in the ordinary course of the taxpayer's trade or business, and made for sale or use, and (ii) its production and sale or use is verified by someone unrelated to the taxpayer. (C) If a particular hydrogen production process doesn't yet have an official emissions rate, the producer can petition the Secretary to determine one. (3) Qualified clean hydrogen production facility: A facility that (A) the taxpayer owns, (B) produces qualified clean hydrogen, and (C) began construction before January 1, 2028. (d) Special rules. (1) Facilities with more than one owner: Rules like those under section 45(e)(3) apply. (2) Coordination with the carbon capture credit: No credit under this section for hydrogen made at a facility that includes carbon capture equipment already getting a section 45Q carbon-capture credit for that year or any earlier year. (3) Credit reduced for tax-exempt bonds: Rules like those under section 45(b)(3) apply. (4) Modification of existing facilities: If a facility was placed in service before January 1, 2023 and, before being modified, did not make qualified clean hydrogen — but is later modified so that it does, and the modification costs are capitalized (charged to the taxpayer's capital account) — the facility is treated as newly placed in service on the date the property needed to finish that modification is placed in service. (e) Increased credit amount (5x bonus). (1) In general: If a facility meets the requirements in (2), the credit determined under (a) is multiplied by 5. (2) Requirements — the facility must be one of: (A) a facility that began construction before the date 60 days after the Secretary publishes wage/apprenticeship guidance, and that meets the prevailing wage requirement in (3)(A) for any alteration or repair happening after that date; or (B) a facility that meets both the prevailing wage requirement (3)(A) and the apprenticeship requirement (4). (3) Prevailing wage requirements: (A) The taxpayer must make sure that laborers and mechanics it (or any contractor or subcontractor) employs to build, alter, or repair the facility are paid no less than the locally prevailing wage rates for similar construction work, as most recently set by the Secretary of Labor under the relevant federal wage law. For figuring the 5x bonus for a given tax year, this wage requirement for alteration or repair work applies to whatever tax year that work happens in. (B) If the wage requirement isn't met, rules like those under section 45(b)(7)(B) govern how to correct it and what penalty applies. (4) Apprenticeship requirements: Rules like those under section 45(b)(8) apply. (5) Regulations and guidance: The Secretary must issue whatever regulations or guidance are needed to carry out this subsection, including recordkeeping and reporting rules. (f) Regulations. Within 1 year after this section became law, the Secretary must issue regulations or guidance for carrying out this section, including how to determine lifecycle greenhouse gas emissions.