In the waning days of the Biden administration, the U.S. Treasury Department and the IRS have released the final rules for the Clean Hydrogen Production Tax Credit (internally called the 45V credit), established by 2022's Inflation Reduction Act (IRA), as to how hydrogen producers determine tax credit eligibility when using electricity from natural gas with carbon capture, renewable natural gas (RNG), and coal mine methane.
In commercial trucking, for context, we're currently witnessing the bankruptcy of Hyzon Motors and Nikola Motors ongoing financial struggles. A hydrogen-powered public bus recently experienced a minor explosion in South Korea with no reported injuries. That said, clean hydrogen production's future role in commercial trucking and transportation remains undetermined but is still relevant for the foreseeable future.
The government's final H2 production rules, which we can be read in full here, have undergone significant changes and flexibilities since they were introduced by addressing many key issues vital to industry growth while adhering to already established clean hydrogen production emission requirements.
[Related: DOE awards $2.2B to upgrade two critical hydrogen producers]
Green and pink hydrogen producers
Officially called electrolytic hydrogen but more commonly known as "green" and "pink" hydrogen, this form of hydrogen production uses renewables and nuclear energy, respectively, to split the elemental gas from water. The final rules incorporate crucial safeguards to help ensure that electricity consumption from electrolytic hydrogen meets lifecycle emissions standards that take into account direct and indirect hydrogen production emissions.
Green and pink hydrogen producers are being granted additional flexibility to use wind, solar, and hydroelectric systems as power sources instead of relying on totally new systems during production hours. Aging nuclear power plants originally scheduled for closure are also eligible for the credit if they remain open to produce carbon-free hydrogen.
Blue hydrogen producers
The final rules also set opportunities to utilize landfill methane as a source of hydrogen production but only if production works to prevent greenhouse gases from entering the atmosphere.
Commercial trucking is already taking advantage of blue hydrogen with hydrogen combustion.
Phinia, a major industry supplier, displayed a hydrogen combustion-powered test van at IAA 2024 last September. Under its hood is a 2.2-liter four-cylinder engine converted to hydrogen direct injection.
Industry executives, specifically Mahle CEO Arnd Franz, told Clean Trucking that hydrogen technology for vehicles will fail unless there's blue hydrogen production. Blue hydrogen is a faster way, he claims, to scale hydrogen use across the industry and will eventually lead to greater implementation.
This approach, however, does not sit well with some state-level bodies such as the California Air Resources Board (CARB) since it aims to completely eliminate the use of fossil fuels in any form.
[Related: Mahle CEO: 'We will fail if we don't use blue hydrogen']
The government agencies claim these updates have taken into account around 30,000 public comments. The Department of Energy will also soon release an updated version of the model hydrogen producers use to calculate the tax credit.
