Treasury and IRS Issue Final Regulations Implementing Section 45V Clean Hydrogen Production Tax Credit (Copy)
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King & Spalding
Partner, Corporate, Finance and Investments
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King & Spalding
Partner, Trial and Global Disputes
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King & Spalding
Associate, Corporate, Finance and Investments
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King & Spalding
Partner, Corporate, Finance and Investments
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King & Spalding
Senior Associate, Corporate, Finance and Investments
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King & Spalding
On January 3, 2025, the IRS and Treasury issued long-awaited final regulations (the “45V Final Regulations”) implementing the clean hydrogen production tax credit (the “45V Credit”) under Section 45V of the Internal Revenue Code of 1986, as amended (the “Code”).
The 45V Final Regulations follow proposed regulations issued on December 22, 2023, on which more than 30,000 comments were submitted during a comment period that closed on February 26, 2024. As discussed in our Client Alert Field Guide to Clean Hydrogen, Section 45V was by far the most intensely debated energy tax credit provision of the Inflation Reduction Act of 2022 (the “IRA”) because the trajectory of the hydrogen sector in the United States hinges on a critical question: what criteria will be used to define the term “clean hydrogen” for tax purposes?
This Client Alert summarizes the key elements of the 45V Final Regulations and will be followed by further Client Alerts, including in-depth analysis and summary of the final rules relating to methane-, renewable natural gas (“RNG”)- and differentiated natural gas (“DNG”)-based hydrogen. In order to provide such an in-depth overview it will be necessary to have reviewed an updated version of the so-called 45VH2-GREET model, which will detail how greenhouse gas emissions calculations must be made – but this is not expected to be available until later in January 2025.
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