The Treasury Department and IRS have issued proposed regulations outlining a tax credit for producing clean hydrogen under the Inflation Reduction Act (IRA) of 2022. This credit is based on the quantity of qualified clean hydrogen generated at eligible facilities. The amount of credit varies with the emissions intensity of the production process and the taxpayer’s adherence to wage and apprenticeship standards during facility construction, alteration, and repair.
The proposed rules establish definitions and procedures for administering and claiming the credit. They include guidelines for calculating the lifecycle greenhouse gas emissions associated with hydrogen production. Additionally, the guidance outlines steps for requesting a provisional emissions rate from the IRS, requirements for verifying hydrogen production, sales, or usage, and protocols for modifying existing facilities to adjust the original placed in service date for credit purposes.
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