If you have been hanging around clean energy policy wonks of late, you might have noticed everyone atwitter about a set of final regulations issued by the IRS.  In the Fall there was a lot of speculation among industry insiders around the possible timing of the release of final regulations for section 45V (relating to the clean hydrogen production tax credit under section 45V of the Internal Revenue Code, created by the Inflation Reduction Act of 2022). Consensus was that they would be released between the Presidential election and inauguration, and sure enough, the IRS published them on January 3, 2025. (If you’d like to read the 379 page doc, you can find it here.)

The credit works on a sliding scale: the cleaner the production process (measured in greenhouse gas emission intensity), the bigger the reward. At its highest level, companies can earn $3.00 for every kilogram of hydrogen they produce if they do it in a very clean way (producing less than 0.45 kg of carbon dioxide emissions per kg of hydrogen). The rewards decrease as the production process gets less clean, and if it's too polluting (more than 4 kg of carbon dioxide per kg of hydrogen), they don't get any credit at all.

Why does this matter? Hydrogen could be a game-changer for fighting climate change (and it will certainly be a critical input to our process at Rebel Fuels) especially in areas where traditional batteries aren't practical - like powering heavy trucks, industrial processes, or serving as long-term energy storage. However, most hydrogen today is produced using natural gas in a process that generates significant carbon emissions (often called "gray hydrogen"). Section 45V aims to change this by making cleaner production methods more competitive.