Sec. 13204. Clean hydrogen
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Subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new section: For purposes of section 38, the clean hydrogen production credit for any taxable year is an amount equal to the product of— the kilograms of qualified clean hydrogen produced by the taxpayer during such taxable year at a qualified clean hydrogen production facility during the 10-year period beginning on the date such facility was originally placed in service, multiplied by the applicable amount (as determined under subsection (b)) with respect to such hydrogen.
For purposes of subsection (a)(2), the applicable amount shall be an amount equal to the applicable percentage of $0.60. If any amount as determined under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent. For purposes of paragraph (1), the applicable percentage shall be determined as follows: In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of— not greater than 4 kilograms of CO2e per kilogram of hydrogen, and not less than 2.5 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 20 percent.
In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of— less than 2.5 kilograms of CO2e per kilogram of hydrogen, and not less than 1.5 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 25 percent. In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of— less than 1.5 kilograms of CO2e per kilogram of hydrogen, and not less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 33.4 percent.
In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 100 percent. The $0.60 amount in paragraph
(1)shall be adjusted by multiplying such amount by the inflation adjustment factor (as determined under section 45(e)(2), determined by substituting 2022 for 1992 in subparagraph
(B)thereof) for the calendar year in which the qualified clean hydrogen is produced. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent. For purposes of this section— Subject to subparagraph (B), the term ‘lifecycle greenhouse gas emissions’ has the same meaning given such term under subparagraph
(H)of section 211(o)(1) of the Clean Air Act ( 42 U.S.C. 7545(o)(1) ), as in effect on the date of enactment of this section. The term lifecycle greenhouse gas emissions shall only include emissions through the point of production (well-to-gate), as determined under the most recent Greenhouse gases, Regulated Emissions, and Energy use in Transportation model (commonly referred to as the GREET model ) developed by Argonne National Laboratory, or a successor model (as determined by the Secretary). The term qualified clean hydrogen means hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen. Such term shall not include any hydrogen unless— such hydrogen is produced— in the United States (as defined in section 638(1)) or a possession of the United States (as defined in section 638(2)), in the ordinary course of a trade or business of the taxpayer, and for sale or use, and the production and sale or use of such hydrogen is verified by an unrelated party. In the case of any hydrogen for which a lifecycle greenhouse gas emissions rate has not been determined for purposes of this section, a taxpayer producing such hydrogen may file a petition with the Secretary for determination of the lifecycle greenhouse gas emissions rate with respect to such hydrogen. The term qualified clean hydrogen production facility means a facility— owned by the taxpayer, which produces qualified clean hydrogen, and the construction of which begins before January 1, 2033. Rules similar to the rules section 45(e)(3) shall apply for purposes of this section. No credit shall be allowed under this section with respect to any qualified clean hydrogen produced at a facility which includes carbon capture equipment for which a credit is allowed to any taxpayer under section 45Q for the taxable year or any prior taxable year. In the case of any qualified clean hydrogen production facility which satisfies the requirements of paragraph (2), the amount of the credit determined under subsection
(a)with respect to qualified clean hydrogen described in subsection (b)(2) shall be equal to such amount (determined without regard to this sentence) multiplied by 5. A facility meets the requirements of this paragraph if it is one of the following: A facility— the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3)(A) and (4), and which meets the requirements of paragraph (3)(A) with respect to alteration or repair of such facility which occurs after such date. A facility which satisfies the requirements of paragraphs (3)(A) and (4). The requirements described in this subparagraph with respect to any qualified clean hydrogen production facility are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in— the construction of such facility, and with respect to any taxable year, for any portion of such taxable year which is within the period described in subsection (a)(2), the alteration or repair of such facility, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. For purposes of determining an increased credit amount under paragraph
(1)for a taxable year, the requirement under clause
(ii)of this subparagraph is applied to such taxable year in which the alteration or repair of qualified facility occurs. Rules similar to the rules of section 45(b)(7)(B) shall apply. Rules similar to the rules of section 45(b)(8) shall apply. The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection. Not later than 1 year after the date of enactment of this section, the Secretary shall issue regulations or other guidance to carry out the purposes of this section, including regulations or other guidance for determining lifecycle greenhouse gas emissions. . Section 45V(d), as added by this section, is amended by adding at the end the following new paragraph: Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section. . Section 45V(d), as added and amended by the preceding provisions of this section, is amended by adding at the end the following new paragraph: For purposes of subsection (a)(1), in the case of any facility which— was originally placed in service before January 1, 2023, and, prior to the modification described in subparagraph (B), did not produce qualified clean hydrogen, and after the date such facility was originally placed in service— is modified to produce qualified clean hydrogen, and amounts paid or incurred with respect to such modification are properly chargeable to capital account of the taxpayer, such facility shall be deemed to have been originally placed in service as of the date that the property required to complete the modification described in subparagraph
(B)is placed in service. . Section 38(b), as amended by the preceding provisions of this Act, is amended— in paragraph (34), by striking plus at the end, in paragraph (35), by striking the period at the end and inserting , plus , and by adding at the end the following new paragraph: the clean hydrogen production credit determined under section 45V(a). . The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new item: Sec. 45V. Credit for production of clean hydrogen. . The amendments made by paragraphs
(1)and
(4)of this subsection shall apply to hydrogen produced after December 31, 2022. The amendment made by paragraph
(2)shall apply to facilities the construction of which begins after the date of enactment of this Act. The amendment made by paragraph
(3)shall apply to modifications made after December 31, 2022. Section 45(e), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph: Electricity produced by the taxpayer shall be treated as sold by such taxpayer to an unrelated person during the taxable year if— such electricity is used during such taxable year by the taxpayer or a person related to the taxpayer at a qualified clean hydrogen production facility (as defined in section 45V(c)(3)) to produce qualified clean hydrogen (as defined in section 45V(c)(2)), and such use and production is verified (in such form or manner as the Secretary may prescribe) by an unrelated third party. . Subsection (c)(2) of section 45U , as added by section 13105 of this Act, is amended by striking and
(5)and inserting (5), and
(13). The amendments made by this subsection shall apply to electricity produced after December 31, 2022. Section 48(a), as amended by the preceding provisions of this Act, is amended— by redesignating paragraph
(15)as paragraph (16), and by inserting after paragraph
(14)the following new paragraph: In the case of any qualified property (as defined in paragraph (5)(D)) which is part of a specified clean hydrogen production facility— such property shall be treated as energy property for purposes of this section, and the energy percentage with respect to such property is— in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph
(A)of section 45V(b)(2), 1.2 percent, in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph
(B)of such section, 1.5 percent, in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph
(C)of such section, 2 percent, and in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in subparagraph
(D)of such section, 6 percent. No credit shall be allowed under section 45V or section 45Q for any taxable year with respect to any specified clean hydrogen production facility or any carbon capture equipment included at such facility. For purposes of this paragraph, the term specified clean hydrogen production facility means any qualified clean hydrogen production facility (as defined in section 45V(c)(3))— which is placed in service after December 31, 2022, with respect to which— no credit has been allowed under section 45V or 45Q, and the taxpayer makes an irrevocable election to have this paragraph apply, and for which an unrelated third party has verified (in such form or manner as the Secretary may prescribe) that such facility produces hydrogen through a process which results in lifecycle greenhouse gas emissions which are consistent with the hydrogen that such facility was designed and expected to produce under subparagraph (A)(ii). For purposes of this paragraph, the term qualified clean hydrogen has the meaning given such term by section 45V(c)(2). The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this section, including regulations or other guidance which recaptures so much of any credit allowed under this section as exceeds the amount of the credit which would have been allowed if the expected production were consistent with the actual verified production (or all of the credit so allowed in the absence of such verification). . Paragraph (9)(A)(i) of section 48(a), as added by section 13102, is amended by inserting and paragraph
(15)after paragraphs
(1)through
(8). The amendments made by this subsection shall apply to property placed in service after December 31, 2022, and, for any property the construction of which begins prior to January 1, 2023, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after December 31, 2022. Section 6426(d)(2) is amended by striking subparagraph
(D)and by redesignating subparagraphs (E), (F), and
(G)as subparagraphs (D), (E), and (F), respectively. Section 6426(e)(2) is amended by striking
(F)and inserting
(E). The amendments made by this subsection shall apply to fuel sold or used after December 31, 2022.
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