RMI: Treasury releases strong Hydrogen tax credit guidance that will fuel low-carbon economic growth in communities nationwide.

December 22, 2023

WASHINGTON, D.C. — On Friday, December 22, the US Treasury Department released proposed guidance for the Inflation Reduction Act’s (IRA) clean hydrogen tax credit. The guidance conditions eligibility for this tax credit, an incentive of up to $3/kilogram, on the hydrogen produced using clean power sources. Notably, the guidance enables grid-connected hydrogen projects to qualify for the credit while setting evidence-based guardrails to ensure that public dollars are achieving the emissions reductions required by law.

In Response, Senior RMI experts released the following statements:

RMI U.S. Program Managing Director Leia Guccione:

“Thanks to the guardrails proposed by the Treasury Department, the clean hydrogen tax credit will fuel massive industrial growth across America and protect communities from planet-heating pollution — all while creating low-carbon, long-lasting projects. Aligning these rules with international standards encourages global trade and U.S. competitiveness in the clean energy economy. That’s why these standards have strong support from key industry players.”

“We applaud the US Treasury for leading a rigorous process that was inclusive of input from a wide array of stakeholders and comprehensive in its considerations of industry and community needs. They have developed guidance that strikes a thoughtful balance between administrative practicality, intentional market-shaping, and environmental integrity while being responsive to the current needs of the American hydrogen industry.”

RMI Climate-Aligned Industries Managing Director Bryan Fisher:

“The industries that clean hydrogen can transform — steel, shipping, aviation, and fertilizer to name a few— touch nearly every aspect of our lives: where we live, how we move, what we eat. Clean hydrogen is critical in delivering the solutions that will reduce carbon pollution from these sectors. The scale of the technology-neutral hydrogen tax credit and the rules proposed today will provide early movers with the capital and credibility needed to swiftly scale their operations and jumpstart a low-emissions hydrogen economy.  With these incentives, the United States is poised to be a leader in low-emissions hydrogen.”

Additional Context:

• Today’s hydrogen is largely produced using carbon-intensive natural gas for fertilizer and chemicals manufacturing. Clean hydrogen can decarbonize not only those industries, but also steelmaking, aviation, and shipping. Hydrogen is a key option for decarbonizing these sectors, which together represent roughly 30% of global emissions.
• Many Industry groups support the guardrails to ensure long-term credibility of the clean hydrogen industry. Letters from companies and others in the sector can be found here (Just released on 12/20/2023), here, here, here, and here.
• The hydrogen hubs program operated by the Department of Energy can benefit from these tax credits, expanding public investment in these major projects.
• The Treasury Department’s release of this guidance kickstarts a 60-day public comment period, which will allow additional input from developers, emissions accounting experts, and the public.

Media Contact:

Adam Beitman, Abeitman@rmi.org

About RMI

RMI is an independent nonprofit founded in 1982 that transforms global energy systems through market-driven solutions to align with a 1.5°C future and secure a clean, prosperous, zero-carbon future for all. We work in the world’s most critical geographies and engage businesses, policymakers, communities, and NGOs to identify and scale energy system interventions that will cut greenhouse gas emissions at least 50 percent by 2030. RMI has offices in Basalt and Boulder, Colorado; New York City; Oakland, California; Washington, D.C.; and Beijing.