KPMG report: Final regulations on clean hydrogen production credit and related energy credit

The U.S. Treasury Department and IRS on January 3, 2025, issued the highly anticipated final regulations (T.D. 10023) regarding the credit for the production of clean hydrogen under section 45V, and the associated energy credit under section 48(a)(15). 

The final regulations apply to tax years beginning after December 26, 2023, which is the date the proposed regulations were published in the Federal Register. For tax years beginning after December 31, 2022, and on or before December 26, 2023, taxpayers may choose to apply the final regulations so long as they are applied entirely and in a consistent manner. As provided in the initial report (read TaxNewsFlash) the final regulations provide rules for:

• Determining lifecycle greenhouse gas emissions (GHG) rates resulting from the hydrogen production processes
• Petitioning the IRS for a provisional emissions rate
• Verifying production and sale or use of qualified clean hydrogen
• Modifying or retrofitting existing hydrogen production facilities to obtain a new placed in-service date for purposes of the credit
• Using electricity from certain renewable zero-emissions sources to produce qualified clean hydrogen
• Irrevocably electing to treat part of a specified clean hydrogen production facility instead as property eligible for the energy credit

Read a February 2025 report prepared by KPMG LLP that provides initial observations and analysis on the final regulations.