# Bulletin No. 2024–14

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A063eda203cbedd57

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2024–14
April 1, 2024

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

EMPLOYEE PLANS
This notice sets forth updates on the corporate bond monthly
yield curve, the corresponding spot segment rates for February 2024 used under § 417(e)(3)(D), the 24-month average
segment rates applicable for March 2024, and the 30-year
Treasury rates, as reflected by the application of § 430(h)(2)
(C)(iv).

clean hydrogen that was added by the Inflation Reduction
Act of 2022. The proposed regulations provide guidance
on how to claim the section 45V credit, a production tax
credit, the amount of which is dependent on the quantity
and emissions intensity of the hydrogen produced. The
proposed regulations also provide guidance on the election to treat qualified property that is part of a specified
clean hydrogen production facility as energy property
under section 48, which is part of the investment tax
credit under section 46.

INCOME TAX

Rev. Rul. 2024-7, page 749.

Notice 2024-29, page 751.

REG-117631-23, page 754.

These proposed regulations would provide rules for the
new section 45V tax credit for the production of qualified

Finding Lists begin on page ii.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes of
sections 382, 1274, 1288, 7872 and other sections of the
Code, tables set forth the rates for April 2024.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.

Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

April 1, 2024 

Bulletin No. 2024–14

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)

Rev. Rul. 2024-07
This revenue ruling provides various
prescribed rates for federal income tax

Annual
AFR
110% AFR
120% AFR
130% AFR

4.89%
5.38%
5.88%
6.38%

AFR
110% AFR
120% AFR
130% AFR
150% AFR
175% AFR

4.30%
4.73%
5.17%
5.61%
6.48%
7.58%

AFR
110% AFR
120% AFR
130% AFR

4.45%
4.90%
5.35%
5.80%

Short-term adjusted AFR
Mid-term adjusted AFR
Long-term adjusted AFR

Bulletin No. 2024–14

purposes for April 2024 (the current
month). Table 1 contains the shortterm, mid-term, and long-term applicable federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted federal long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropri-

ate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.

REV. RUL. 2024-07 TABLE 1
Applicable Federal Rates (AFR) for April 2024
Period for Compounding
Semiannual
Quarterly
Short-term
4.83%
4.80%
5.31%
5.28%
5.80%
5.76%
6.28%
6.23%
Mid-term
4.25%
4.23%
4.68%
4.65%
5.10%
5.07%
5.53%
5.49%
6.38%
6.33%
7.44%
7.37%
Long-term
4.40%
4.38%
4.84%
4.81%
5.28%
5.25%
5.72%
5.68%

Annual
3.70%
3.26%
3.37%

REV. RUL. 2024-07 TABLE 2
Adjusted AFR for April 2024
Period for Compounding
Semiannual
3.67%
3.23%
3.34%

749

Quarterly
3.65%
3.22%
3.33%

Monthly
4.78%
5.25%
5.73%
6.20%
4.21%
4.64%
5.05%
5.47%
6.30%
7.33%
4.36%
4.79%
5.22%
5.65%

Monthly
3.64%
3.21%
3.32%

April 1, 2024

REV. RUL. 2024-07 TABLE 3
Rates Under Section 382 for April 2024
Adjusted federal long-term rate for the current month
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)

3.37%
3.37%

REV. RUL. 2024-07 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for April 2024
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit
8.02%
Appropriate percentage for the 30% present value low-income housing credit
3.44%

REV. RUL. 2024-07 TABLE 5
Rate Under Section 7520 for April 2024
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of April 2024. See Rev.
Rul. 2024-07, page 749.

Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of April 2024. See Rev. Rul.
2024-07, page 749.

Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

5.20%

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of April 2024. See Rev. Rul.
2024-07, page 749.

Section 7872.—Treatment
of Loans With BelowMarket Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
April 2024. See Rev. Rul. 2024-07, page 749.

April 1, 2024

750

Bulletin No. 2024–14

Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2024-29
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the interest rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to single-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section

Applicable Month
March 2024

430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during specified periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.1 However, an election may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Section 1.430(h)(2)-1(d) provides
rules for determining the monthly corporate bond yield curve,2 and § 1.430(h)
(2)-1(c) provides rules for determining
the 24-month average corporate bond
segment rates used to compute the target
normal cost and the funding target. Consistent with the methodology specified in
§ 1.430(h)(2)-1(d), the monthly corporate
bond yield curve derived from February
2024 data is in Table 2024-2 at the end

of this notice. The spot first, second, and
third segment rates for the month of February 2024 are, respectively, 4.97, 5.22,
and 5.37.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to §
430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages
of the corresponding 25-year average segment rates. For this purpose, any 25-year
average segment rate that is less than 5%
is deemed to be 5%. The 25-year average
segment rates for plan years beginning in
2023 and 2024 were published in Notice
2022-40, 2022-40 I.R.B. 266 and Notice
2023-66, 2023-40 I.R.B. 992, respectively. The applicable minimum and maximum percentages are 95% and 105% for
plan years beginning in 2023 and 2024.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for March
2024 without adjustment for the 25-year
average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment
First Segment
Second Segment
4.64
5.12

The adjusted 24-month average segment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code. The

24-month averages applicable for March
2024, adjusted to be within the applicable
minimum and maximum percentages of

Third Segment
5.10

the corresponding 25-year average segment rates in accordance with § 430(h)(2)
(C)(iv) of the Code, are as follows:

Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2023

March 2024

4.75

5.12

5.74

2024

March 2024

4.75

5.12

5.59

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
2
For earlier periods, the monthly corporate bond yield curve was determined in accordance with Notice 2007-81, 2007-44 I.R.B. 899. Section 1.430(h)(2)-1(d) generally adopts the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market. First, the
set of bonds taken into account has been expanded to include callable bonds for which the call feature is exercisable only during the last year before maturity. Second, a hump adjustment
variable that peaks at 20 years maturity has been added in order to capture the effects of the hump in yields that is often seen around 20 years maturity.
1

Bulletin No. 2024–14

751

April 1, 2024

30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in § 431(c)(6)(A), based on the
plan’s current liability. Section 431(c)
(6)(E)(ii)(I) provides that the interest
rate used to calculate current liability for

this purpose must be no more than 5 percent above and no more than 10 percent
below the weighted average of the rates
of interest on 30-year Treasury securities
during the four-year period ending on the
last day before the beginning of the plan
year. Notice 88-73, 1988-2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate
of interest on 30-year Treasury securities
for February 2024 is 4.38 percent. The
Service determined this rate as the aver-

age of the daily determinations of yield
on the 30-year Treasury bond maturing
in November 2053 determined each day
through February 7, 2024 and the yield
on the 30-year Treasury bond maturing in
February 2054 determined each day for
the balance of the month. For plan years
beginning in March 2024, the weighted
average of the rates of interest on 30-year
Treasury securities and the permissible
range of rates used to calculate current
liability are as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates
30-Year Treasury Weighted Average

Permissible Range 90% to 105%

March 2024

3.26

2.93 to 3.42

under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007-81 provides guidelines for determining the minimum pres-

ent value segment rates. Pursuant to that
notice, the minimum present value segment rates determined for February 2024
are as follows:

MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates

Month
February 2024

Minimum Present Value Segment Rates
First Segment
Second Segment
4.97
5.22

DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of Associ-

April 1, 2024

ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development

752

Third Segment
5.37

of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free numbers).

Bulletin No. 2024–14

Table 2024-2
Monthly Yield Curve for February 2024
Derived from February 2024 Data
Maturity
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0

Yield
5.40
5.24
5.10
4.98
4.90
4.84
4.81
4.80
4.80
4.81
4.83
4.85
4.89
4.92
4.96
5.00
5.04
5.07
5.11
5.14
5.17
5.20
5.23
5.25
5.27
5.30
5.31
5.33
5.35
5.36
5.37
5.39
5.39
5.40
5.41
5.41
5.42
5.42
5.42
5.42

Maturity
20.5
21.0
21.5
22.0
22.5
23.0
23.5
24.0
24.5
25.0
25.5
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
30.5
31.0
31.5
32.0
32.5
33.0
33.5
34.0
34.5
35.0
35.5
36.0
36.5
37.0
37.5
38.0
38.5
39.0
39.5
40.0

Bulletin No. 2024–14

Yield
5.42
5.42
5.42
5.41
5.41
5.40
5.39
5.39
5.38
5.37
5.37
5.36
5.36
5.35
5.35
5.34
5.34
5.34
5.34
5.34
5.34
5.34
5.34
5.34
5.34
5.35
5.35
5.35
5.35
5.35
5.35
5.35
5.35
5.35
5.35
5.35
5.36
5.36
5.36
5.36

Maturity
40.5
41.0
41.5
42.0
42.5
43.0
43.5
44.0
44.5
45.0
45.5
46.0
46.5
47.0
47.5
48.0
48.5
49.0
49.5
50.0
50.5
51.0
51.5
52.0
52.5
53.0
53.5
54.0
54.5
55.0
55.5
56.0
56.5
57.0
57.5
58.0
58.5
59.0
59.5
60.0

Yield
5.36
5.36
5.36
5.36
5.36
5.36
5.36
5.36
5.36
5.36
5.36
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.37
5.38
5.38
5.38
5.38
5.38
5.38

753

Maturity
60.5
61.0
61.5
62.0
62.5
63.0
63.5
64.0
64.5
65.0
65.5
66.0
66.5
67.0
67.5
68.0
68.5
69.0
69.5
70.0
70.5
71.0
71.5
72.0
72.5
73.0
73.5
74.0
74.5
75.0
75.5
76.0
76.5
77.0
77.5
78.0
78.5
79.0
79.5
80.0

Yield
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39

Maturity
80.5
81.0
81.5
82.0
82.5
83.0
83.5
84.0
84.5
85.0
85.5
86.0
86.5
87.0
87.5
88.0
88.5
89.0
89.5
90.0
90.5
91.0
91.5
92.0
92.5
93.0
93.5
94.0
94.5
95.0
95.5
96.0
96.5
97.0
97.5
98.0
98.5
99.0
99.5
100.0

Yield
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39
5.39

April 1, 2024

Part IV
Notice of Proposed
Rulemaking
Section 45V Credit for
Production of Clean
Hydrogen; Section 48(a)
(15) Election to Treat
Clean Hydrogen Production
Facilities as Energy
Property
REG-117631-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
SUMMARY: This document contains
proposed regulations relating to the credit
for production of clean hydrogen (clean
hydrogen production credit) and the
energy credit, as established and amended
by the Inflation Reduction Act of 2022,
respectively. The proposed regulations
would provide rules for: determining
lifecycle greenhouse gas emissions rates
resulting from hydrogen production processes; petitioning for provisional emissions rates; verifying production and sale
or use of clean hydrogen; modifying or
retrofitting existing qualified clean hydrogen production facilities; using electricity
from certain renewable or zero-emissions
sources to produce qualified clean hydrogen; and electing to treat part of a specified clean hydrogen production facility
instead as property eligible for the energy
credit. The proposed regulations would
affect all taxpayers who produce qualified
clean hydrogen and claim the clean hydrogen production credit, elect to treat part
of a specified clean hydrogen production
facility as property eligible for the energy
credit, or produce electricity from certain
renewable or zero-emissions sources used
by taxpayers or related persons to produce
qualified clean hydrogen. This document
also provides notice of a public hearing on
the proposed regulations.
DATES: Written or electronic comments
must be received by February 26, 2024.

April 1, 2024

The public hearing on these proposed
regulations is scheduled to be held on
March 25, 2024, at 10 a.m. (ET). Requests
to speak and outlines of topics to be discussed at the public hearing must be
received by March 4, 2024. If no outlines
are received by March 4, 2024, the public hearing will be cancelled. Requests to
attend the public hearing must be received
by March 18, 2024. The public hearing
will be made accessible to people with
disabilities. Requests for special assistance during the hearing must be received
by March 18, 2024.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemaking Portal at https://www.regulations.gov
(indicate IRS and REG-117631-23) by
following the online instructions for submitting comments. Requests for a public
hearing must be submitted as prescribed
in the “Comments and Requests for a
Public Hearing” section. Once submitted
to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comments submitted to the IRS’s public docket. Send paper
submissions to: CC:PA:LPD:PR (REG117631-23), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning these proposed
regulations, the Office of Chief Counsel
(Passthroughs and Special Industries) at
(202) 317-6853 (not a toll-free number);
concerning submissions of comments or
the public hearing, Vivian Hayes at (202)
317-6901 (not a toll-free number) or by
email to publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed regulations to amend the Income Tax Regulations (26 CFR part 1) under sections
45V and 48(a)(15) of the Internal Revenue Code (Code), as added to the Code by

754

section 13204 of Public Law 117-169, 136
Stat. 1818 (August 16, 2022), commonly
known as the Inflation Reduction Act of
2022 (IRA).
The IRA added several provisions to
the Code related to the production of, and
investment in, clean hydrogen, which,
along with the provisions of sections 45V
and 48(a)(15), are described in part I of
this Background section. Part II of this
Background section describes a previous
request for public comment on these provisions.
I. IRA Provisions for Clean Hydrogen
Production and Investment
This part I describes the credit for production of clean hydrogen as determined
under section 45V (section 45V credit)
and the irrevocable election to claim an
energy credit under section 48 (section 48
credit) in lieu of the section 45V credit.
Also described are statutory exceptions to
the requirement that electricity be sold to
an unrelated person to be eligible for the
renewable electricity production credit
determined under section 45 (section
45 credit) or the zero-emission nuclear
power production credit determined under
section 45U (section 45U credit). Under
these exceptions, electricity produced by
a taxpayer from a qualified facility under
section 45(d) or a qualified nuclear power
facility under section 45U(b)(1) may be
treated as sold by the taxpayer to an unrelated person during the taxable year if the
electricity is used by the taxpayer or a
related person at a qualified clean hydrogen production facility to produce qualified clean hydrogen.
A. Section 45V
1. Amount of Credit
Section 45V provides a tax credit for
the production of qualified clean hydrogen. For purposes of section 38 of the
Code, section 45V(a) provides that the
clean hydrogen production credit for any
taxable year is an amount equal to the
product of (i) the kilograms of qualified
clean hydrogen produced by the taxpayer

Bulletin No. 2024–14

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, and (ii) the applicable amount as
determined under section 45V(b) with
respect to such hydrogen.
Section 45V(b)(1) provides that, for
purposes of section 45V(a)(2), the applicable amount is an amount equal to the
applicable percentage of $0.60. If the
amount so determined is not a multiple of
0.1 cent, then such amount is rounded to
the nearest multiple of 0.1 cent.
Section 45V(b)(2) provides that, for
purposes of section 45V(b)(1), the applicable percentage is determined based on the
lifecycle greenhouse gas emissions (lifecycle GHG emissions) rate of the process
to produce any qualified clean hydrogen
as follows: (i) if the lifecycle GHG emissions rate is not greater than 4 kilograms
of carbon dioxide equivalent (CO2e) per
kilogram of hydrogen, and not less than
2.5 kilograms of CO2e per kilogram of
hydrogen, then the applicable percentage
is 20 percent; (ii) if the lifecycle GHG
emissions rate is less than 2.5 kilograms
of CO2e per kilogram of hydrogen, and
not less than 1.5 kilograms of CO2e per
kilogram of hydrogen, then the applicable
percentage is 25 percent; (iii) if the lifecycle GHG emissions rate is less than 1.5
kilograms of CO2e per kilogram of hydrogen, and not less than 0.45 kilograms of
CO2e per kilogram of hydrogen, then the
applicable percentage is 33.4 percent; and
(iv) if the lifecycle GHG emissions rate
is less than 0.45 kilograms of CO2e per
kilogram of hydrogen, then the applicable
percentage is 100 percent.
Section 45V(b)(3) provides that the
$0.60 amount in section 45V(a)(1) is
adjusted by multiplying such amount by
the inflation adjustment factor (as determined under section 45(e)(2), determined
by substituting “2022” for “1992” in sec-

tion 45(e)(2)(B)) for the calendar year in
which the qualified clean hydrogen is produced. If any amount as increased under
section 45V(b)(3) is not a multiple of 0.1
cent, such amount is rounded to the nearest multiple of 0.1 cent.1
Section 45V(e)(1) provides that, in the
case of any qualified clean hydrogen production facility that satisfies the requirements of section 45V(e)(2), the amount
of the section 45V credit with respect to
qualified clean hydrogen described in
section 45V(b)(2) is equal to the amount
determined under section 45V(a) (determined without regard to section 45V(e)
(1)) multiplied by five.
A qualified clean hydrogen production
facility meets the requirements of section
45V(e)(2) if: (i) the facility began construction before January 29, 2023, and
with respect to any taxable year, for any
period of such taxable year that is within
the 10-year period beginning on the date
the facility is originally placed in service,
the prevailing wage requirements of section 45V(e)(3)(A) are met for any alteration or repair of the facility that occurs
after January 29, 2023 (to the extent applicable);2 or (ii) the facility satisfies the prevailing wage and apprenticeship (PWA)
requirements of sections 45V(e)(3)(A)
and (4).3
Generally, the prevailing wage requirements under section 45V(e)(3)(A) with
respect to any qualified clean hydrogen
production facility require the taxpayer
to ensure that any laborers and mechanics employed by the taxpayer or by any
contractor or subcontractor in (i) the construction of such facility, and (ii) with
respect to any taxable year, for any portion of such taxable year that is within the
10-year period beginning on the date such
facility was originally placed in service,
the alteration or repair of such facility, are
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 of the United
States Code, commonly known as the
Davis-Bacon Act. Correction and penalty
rules similar to the rules of section 45(b)
(7)(B) also apply.
Section 45V(e)(4) provides that rules
similar to the apprenticeship requirements
of section 45(b)(8) apply for purposes of
section 45V(e)(2).4
For purposes of section 45V(a), in
the case of a qualified clean hydrogen
production facility that does not satisfy
the requirements of section 45(e)(2), the
amount of the clean hydrogen production
credit for any taxable year is $0.12, $0.15,
$0.20, or $0.60 per kilogram of qualified
clean hydrogen produced (before taking into account any inflation adjustment
under section 45V(b)(3)), depending on
the lifecycle GHG emissions rate associated with the facility’s hydrogen production process. For facilities meeting the
requirements of section 45V(e)(2), the
credit amount determined under section
45V(a) (as adjusted for inflation subject
to section 45V(b)(3)) is multiplied by five.
2. Definitions
a. Lifecycle Greenhouse Gas Emissions
Section 45V(c)(1)(A) provides that,
subject to section 45V(c)(1)(B), the term
“lifecycle greenhouse gas emissions” has
the same meaning given such term under
section 211(o)(1)(H) of the Clean Air Act
(42 U.S.C. 7545(o)(1)(H)), as in effect on
August 16, 2022. Under section 45V(c)
(1)(B), the term “lifecycle greenhouse
gas emissions” includes emissions only
through the point of production (well-togate), as determined under the most recent
Greenhouse gases, Regulated Emissions,

1
The IRS will publish the inflation-adjusted section 45V applicable amount annually. For the calendar year 2023, the section 45V(b)(3) inflation adjustment factor is equal to one, so the
inflation-adjusted applicable amount remains $0.60 for the calendar year 2023.
2
Section 45V(e)(3)(A)(ii) requires the payment of wages at prevailing rates “with respect to any taxable year, for any portion of such taxable year which is within the period described in
subsection (a)(2)”, with respect to the alteration or repair of the facility. There is no “period described in subsection (a)(2).” The Treasury Department and the IRS interpret the reference to
“subsection (a)(2)” as a reference to section 45V(a)(1) where the 10-year credit period is identified.
3
See proposed §§1.45-7, 1.45-8, 1.45-12, and 1.45V-3 as proposed in the notice of proposed rulemaking (REG-100908-23) published in the Federal Register (88 FR 60018) on August 30,
2023, and corrected at 88 FR 73807 on October 27, 2023.
4
Under proposed §1.45V-3, the PWA requirements for purposes of section 45V(e)(2) would be satisfied if a facility meets the prevailing wage requirements of section 45(b)(7) and proposed
§1.45-7, the apprenticeship requirements of section 45(b)(8) and proposed §1.45-8, and the recordkeeping and reporting requirements of proposed §1.45-12. Those proposed regulations
are outside the scope of this notice of proposed rulemaking and proposed §1.45V-3 is addressed only to the extent necessary for purposes of formatting the proposed regulations that are the
subject of this notice of proposed rulemaking in accordance with CFR standards.

Bulletin No. 2024–14

755

April 1, 2024

and Energy use in Transportation model,
referred to as the “GREET model” commonly and in this document, developed by
Argonne National Laboratory, or a successor model as determined by the Secretary
of the Treasury or her delegate (Secretary).
b. Qualified Clean Hydrogen
Section 45V(c)(2)(A) provides that
the term “qualified clean hydrogen”
means hydrogen that is produced through
a process that results in a lifecycle GHG
emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen.
Section 45V(c)(2)(B) further provides
that the term “qualified clean hydrogen”
does not include any hydrogen unless
(i) such hydrogen is produced (A) in
the United States (as defined in section
638(1) of the Code) or a U.S. territory
(having the meaning of the term “possession” as defined in section 638(2)), (B) in
the ordinary course of a trade or business
of the taxpayer, and (C) for sale or use;
and (ii) the production and sale or use of
such hydrogen is verified by an unrelated
party.
c. Provisional Emissions Rate
Section 45V(c)(2)(C) provides that,
in the case of any hydrogen for which a
lifecycle GHG emissions rate has not
been determined for purposes of section
45V, a taxpayer producing such hydrogen may file a petition with the Secretary
for a determination of the lifecycle GHG
emissions rate with respect to such hydrogen, which is referred to as a “provisional
emissions rate” or PER in the proposed
regulations.
d. Qualified Clean Hydrogen Production
Facility
Section 45V(c)(3) provides that the
term “qualified clean hydrogen production facility” means a facility (i) owned by
the taxpayer, (ii) that produces qualified
clean hydrogen, and (iii) the construction
of which begins before January 1, 2033.5

3. Special Rules
a. Treatment of Facilities Owned by More
than One Taxpayer
Section 45V(d)(1) provides that rules
similar to the rules of section 45(e)(3)
apply for purposes of section 45V. Section 45(e)(3) provides that, in the case of a
facility in which more than one person has
an ownership interest, except to the extent
provided in regulations prescribed by the
Secretary, production from the facility is
allocated among such persons in proportion to their respective ownership interests
in the gross sales from such facility.
b. Coordination with Section 45Q
Section 45V(d)(2) provides that no
section 45V credit is allowed with respect
to any qualified clean hydrogen produced
at a facility that includes carbon capture
equipment for which a credit is allowed to
any taxpayer as determined under section
45Q (section 45Q credit) for the taxable
year or any prior taxable year.
c. Credit Reduced for Tax-Exempt Bonds
Section 45V(d)(3) provides that rules
similar to the rules under section 45(b)
(3) (credit reduced for tax-exempt bonds)
apply for purposes of section 45V. Section 45V(d)(3) is effective for facilities
that begin construction after August 16,
2022. Section 13204(a)(5)(B) of the IRA.
Section 45(b)(3) provides that the amount
of the credit determined under section
45(a) with respect to any facility for any
taxable year (determined after the application of section 45(b)(1) and (2) regarding phaseout and inflation adjustment
rules) is reduced by the amount that is the
product of the amount so determined for
such year and the lesser of 15 percent or
a fraction (A) the numerator of which is
the sum, for the taxable year and all prior
taxable years, of proceeds of an issue of
any obligations the interest on which is
exempt from tax under section 103 and
that is used to provide financing for the

qualified facility, and (B) the denominator of which is the aggregate amount of
additions to the capital account for the
qualified facility for the taxable year and
all prior taxable years. Section 45(b)(3)
further provides that the amounts determined under section 45(b)(3) for any taxable year are determined as of the close
of the taxable year.
d. Modification of Existing Facilities
Section 45V(d)(4) provides that for
purposes of section 45V(a)(1), in the
case of any facility that (A) was originally placed in service before January
1, 2023, and, prior to the modification
described in section 45V(d)(4)(B), did
not produce qualified clean hydrogen, and (B) after the date such facility was originally placed in service (i)
is modified to produce qualified clean
hydrogen, and (ii) amounts paid or
incurred with respect to such modification are properly chargeable to the
capital account of the taxpayer, such
facility is deemed to have been originally placed in service as of the date the
property required to complete the modification described in section 45V(d)(4)
(B) is placed in service. Section 45V(d)
(4) is effective for modifications made
after December 31, 2022. See section
13204(a)(5)(C) of the IRA.
B. Electricity Used at a Qualified Clean
Hydrogen Production Facility
Section 45(e)(13) provides that electricity produced by the taxpayer is treated
as sold by such taxpayer to an unrelated
person during the taxable year if (i) 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 (ii) such use and production is
verified (in such form or manner as the
Secretary may prescribe) by an unrelated
party. Section 45(e)(13) is effective for

5
Section 45V does not specify an earliest date on which a qualified clean hydrogen production facility must begin construction or be placed in service to be eligible to claim the section 45V
credit. However, the section 45V credit is available for qualified clean hydrogen produced after December 31, 2022. Section 13204(a)(5)(A) of the IRA. Thus, the owner of a qualified clean
hydrogen production facility originally placed in service after December 31, 2012, could claim the section 45V credit for qualified clean hydrogen produced during at least some portion of
the 10-year period described in section 45V(a)(1), provided all other requirements are met.

April 1, 2024

756

Bulletin No. 2024–14

electricity produced after December 31,
2022. See section 13204(b)(3) of the IRA.
Section 45U(c)(2) provides that rules
similar to the rules of section 45(e)(13)
apply for purposes of section 45U. Generally, section 45U is effective for electricity produced at a qualified nuclear power
facility and sold after December 31, 2023,
in taxable years beginning after that date.
C. Election To Treat Clean Hydrogen
Production Facilities as Energy Property
Section 48(a)(15)(A)(i) provides that,
in the case of any qualified property (as
defined in section 48(a)(5)(D)) that is
part of a specified clean hydrogen production facility, such property is treated
as energy property. Section 48(a)(15)(A)
(ii) provides that the energy percentage of
the basis of any qualified property that is
treated as energy property is, for a facility
that is designed and reasonably expected
to produce qualified clean hydrogen with
a lifecycle GHG emissions rate that is:
(i) not greater than 4 kilograms of CO2e
per kilogram of hydrogen, and not less
than 2.5 kilograms of CO2e per kilogram
of hydrogen, 1.2 percent; (ii) less than
2.5 kilograms of CO2e per kilogram of
hydrogen, and not less than 1.5 kilograms
of CO2e per kilogram of hydrogen, 1.5
percent; (iii) less than 1.5 kilograms of
CO2e per kilogram of hydrogen, and not
less than 0.45 kilograms of CO2e per
kilogram of hydrogen, 2 percent; and
(iv) less than 0.45 kilograms of CO2e per
kilogram of hydrogen, 6 percent. Under
section 48(a)(9), the amount of the section 48 credit determined for a specified
clean hydrogen production facility under
section 48(a)(15) is multiplied by five if
the facility meets the requirements of section 48(a)(9)(B) (regarding application
of certain maximum net output levels of
electrical or thermal energy, beginning
of construction, or prevailing wage and
apprenticeship requirements). However,
the domestic content and energy communities bonuses under section 48(a)(12)
and (a)(14) do not apply to a specified
clean hydrogen production facility.
Section 48(a)(15) is effective for
property placed in service after December 31, 2022, and for any property the
construction of which began before January 1, 2023, only to the extent of the

Bulletin No. 2024–14

basis thereof attributable to construction,
reconstruction, or erection after December 31, 2022. See section 13204(c)(3) of
the IRA.
1. Denial of Production Credit
Section 48(a)(15)(B) provides that no
section 45V credit or section 45Q credit is
allowed for any taxable year with respect
to any specified clean hydrogen production facility or any carbon capture equipment included at such facility.
2. Specified Clean Hydrogen Production
Facility
Section 48(a)(15)(C) provides that the
term “specified clean hydrogen production facility” means any qualified clean
hydrogen production facility (as defined
in section 45V(c)(3)) (i) that is placed in
service after December 31, 2022, (ii) with
respect to which (I) no section 45V credit
or section 45Q credit has been allowed,
and (II) the taxpayer makes an irrevocable
election to have section 48(a)(15) apply,
and (iii) 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 that
results in lifecycle GHG emissions that
are consistent with the hydrogen that such
facility was designed and expected to produce under section 48(a)(15)(A)(ii).
3. Qualified Clean Hydrogen
Section 48(a)(15)(D) provides that, for
purposes of section 48(a)(15), the term
“qualified clean hydrogen” has the meaning given such term by section 45V(c)(2).
4. Regulations
Section 48(a)(15)(E) provides the
Secretary authority to issue regulations
or other guidance as she determines necessary to carry out the purposes of section 48, including regulations or other
guidance that recaptures so much of any
section 48 credit allowed as exceeds the
amount of the credit that 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 verification).

757

II. Previous Request for Comments
On November 3, 2022, the Treasury
Department and the IRS published Notice
2022-58, 2022-47 I.R.B. 483. The notice
requested general comments on issues
arising under section 45V and the associated clean hydrogen production and
investment incentives in sections 45 and
48. The notice also requested specific
comments concerning (i) definitions; (ii)
boundaries of the well-to-gate analysis for
determining the lifecycle GHG emissions
rate; (iii) the PER process; (iv) recordkeeping and reporting; (v) verification by
unrelated parties; and (vi) coordination
with sections 45, 48, and 45Q. The Treasury Department and the IRS received
over 200 comments from industry participants, environmental groups, individuals, and other stakeholders. The Treasury
Department and the IRS appreciate the
commenters’ interest and engagement on
these issues. These comments have been
carefully considered in the development
of these proposed regulations.
Explanation of Provisions
I. Overview
Proposed §1.45V-1 would provide
guidance, including definitions of key
terms used in proposed §§1.45V-1 through
1.45V-6 and 1.48-15, to determine the eligibility for, and the amount of, the section
45V credit for the production of qualified
clean hydrogen. The term “section 45V
credit” would be provided at §1.45V-1(a)
(12) and mean the credit for production of
clean hydrogen determined under section
45V, so much of sections 6417 and 6418
that relate to section 45V, and the section
45V regulations. The term “section 45V
regulations” would be provided at proposed §1.45V-1(a)(13) to mean the provisions of §§1.45V-1 through 1.45V-6 and
so much of the regulations under sections
6417 and 6418 that relate to the section
45V credit.
Proposed §1.45V-2 would provide special rules for purposes of the section 45V
credit. Proposed §1.45V-4 would provide
procedures for determining lifecycle GHG
emissions rates for qualified clean hydrogen. Proposed §1.45V-5 would provide
procedures for verification of qualified

April 1, 2024

clean hydrogen production and sale or use.
Proposed §1.45V-6 would provide rules for
determining the placed in service date for
an existing facility that is modified or retrofitted to produce qualified clean hydrogen.
Additionally, proposed §1.48-15 would
provide procedures for a taxpayer to elect
to treat any qualified property that is part
of a specified clean hydrogen production
facility as energy property for purposes of
the section 48 credit.
II. Definitions
Proposed §1.45V-1(a)(2) through (13)
would provide generally applicable definitions of terms for purposes of section 45V,
so much of sections 6417 and 6418 of the
Code that relate to the section 45V credit,
and the section 45V regulations. The definitions for applicable amount, applicable
percentage, and qualified clean hydrogen
production facility would generally reflect
the statutory definitions without additional
elaboration on the terms. See proposed
§1.45V-1(a)(2), (3), and (10). This part II
discusses those definitions in the proposed
regulations that provide additional clarity
beyond the statutory language.
A. Facility
Proposed §1.45V-1(a)(7)(i) would provide that, for purposes of the definition
of a qualified clean hydrogen production
facility provided at section 45V(c)(3), the
term “facility” means a single production
line that is used to produce qualified clean
hydrogen. A “single production line”
would include all components of property
that function interdependently to produce
qualified clean hydrogen. Components of
property are functionally interdependent if
the placing in service of each component
is dependent upon the placing in service
of each of the other components to produce qualified clean hydrogen. Proposed
§1.45V-1(a)(7)(ii) would provide that a
facility does not include equipment used
to condition or transport hydrogen beyond
the point of production. A facility would
also not include electricity production
equipment used to power the hydrogen

production process, including any carbon
capture equipment associated with the
electricity production process. Proposed
§1.45V-1(a)(7)(iii) would provide that
components that have a purpose in addition to the production of qualified clean
hydrogen may be part of a facility if such
components function interdependently
with other components to produce qualified clean hydrogen. Proposed §1.45V1(a)(7)(iv) would provide an example to
illustrate the definition of facility for purposes of section 45V.
B. Lifecycle greenhouse gas emissions
Proposed §1.45V-1(a)(8)(i) would
incorporate the statutory definition of the
term “lifecycle greenhouse gas emissions”
under section 45V(c)(1)(A) and (B), specifically providing that the term has the
same meaning as that in 42 U.S.C. 7545(o)
(1)(H) as in effect on August 16, 2022, and
includes emissions only through the point
of production (well-to-gate) as determined
under the most recent GREET model.
C. Most recent GREET Model
Proposed §1.45V-1(a)(8)(ii) would
provide that the term “most recent
GREET model” means the latest version
of 45VH2-GREET developed by Argonne
National Laboratory (ANL) that is publicly available on the first day of the taxpayer’s taxable year in which the qualified
clean hydrogen for which the taxpayer
is claiming the section 45V credit was
produced.6 After consultation with the
Department of Energy (DOE), the Treasury Department and the IRS believe that
the use of the latest version of 45VH2GREET would be appropriate because it
is tailored to the administration of the section 45V tax credit and includes features
that make it easy to use for taxpayers. Use
of the latest version of 45VH2-GREET
would also ensure that the pathways and
approaches provided for determining
well-to-gate emissions for various hydrogen production processes are of sufficient
methodological certainty to be appropriate
for determining eligibility of tax credits.

The latest version of 45VH2-GREET is
the only variant of GREET that is suitable for use and may be used to determine
emissions rates for purposes of the section
45V credit.
Further, proposed §1.45V-1(a)(8)
(ii) would provide that, if a version of
45VH2-GREET becomes publicly available after the first day of the taxable year
of production (but still within such taxable
year), then the taxpayer may, in its discretion, treat such version of 45VH2-GREET
as the most recent GREET model.
Instead of defining “most recent
GREET model” to be the latest version of
45VH2-GREET that is publicly available
on the first day of the taxpayer’s taxable
year, an alternative approach would be for
the Secretary to determine that the latest
version of 45VH2-GREET is an appropriate “successor model,” as provided by
section 45V(c)(1)(B), for the purpose of
administering the section 45V tax credit.
The Treasury Department and the IRS
request comment on these approaches.
D. Emissions through the point of
production (well-to-gate)
Proposed §1.45V-1(a)(8)(iii) would
provide that, for purposes of section
45V(c)(1)(B) and proposed §1.45V-1(a)
(8)(i), the term “emissions through the
point of production (well-to-gate)” means
the aggregate lifecycle GHG emissions
related to hydrogen produced at a hydrogen production facility during the taxable
year through the point of production.
It includes emissions associated with
feedstock growth, gathering, extraction,
processing, and delivery to a hydrogen
production facility. It also includes the
emissions associated with the hydrogen
production process, inclusive of the electricity used by the hydrogen production
facility and any capture and sequestration
of carbon dioxide generated by the hydrogen production facility.
E. Qualified clean hydrogen
Proposed §1.45V-1(a)(9)(i) would
incorporate the statutory definition of the

6
45VH2-GREET is a user interface designed to accept input related to a hydrogen production facility, execute GREET calculations in the background, and display the well-to-gate carbon
intensity of produced hydrogen in kg of CO2e/kg of H2. 45VH2-GREET is currently available at www.energy.gov/45vresources. Successor locations for 45VH2-GREET will be provided in
IRS forms and instructions.

April 1, 2024

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term “qualified clean hydrogen” provided
at section 45V(c)(2)(A) and (B), including
the requirement that the hydrogen be produced (i) in the United States or a U.S. territory (meaning possession as provided in
section 638(2)); (ii) in the ordinary course
of a trade or business of the taxpayer; and
(iii) for sale or use. Proposed §1.45V-1(a)
(9)(i) would provide that, to qualify as
qualified clean hydrogen, the production
and sale or use of such hydrogen must be
verified by an unrelated party (as required
by section 45V(c)(2)(B)(ii)). See also proposed §1.45V-5.
Proposed §1.45V-1(a)(9)(ii) would provide that for purposes of section 45V(c)
(2)(B)(i)(III) and proposed §1.45V-1(a)
(9)(i)(C) the term “for sale or use” means
for the primary purpose of making such
hydrogen ready and available for sale or
use. Storage of hydrogen before its sale or
use would not disqualify such hydrogen
from being considered produced for sale
or use.
III. Rules of General Applicability
Proposed §1.45V-1(b)(1) would provide the general rules for calculating the
amount of the section 45V credit.
Proposed §1.45V-1(b)(2) would provide that, for purposes of section 45V(a)
(1) and proposed §1.45V-1(b)(1), the term
“taxpayer” means the taxpayer that owns
the qualified clean hydrogen production
facility at the time of the facility’s production of qualified clean hydrogen with
respect to which the section 45V credit is
claimed, regardless of whether such taxpayer is treated as a producer under section 263A of the Code or under any other
provision of law with respect to such qualified clean hydrogen. This rule is intended
to avoid unintended consequences that
could arise with respect to contract manufacturing and tolling arrangements under
§1.263A-2(a)(1)(ii)(A) and (a)(1)(ii)(B)
(1) in the context of the section 45V credit,
as well as to simplify the administration of
the section 45V credit and provide clarity
for taxpayers.
Proposed §1.45V-1(c) would provide
that, subject to any applicable Code sections that may limit the section 45V credit
amount, the section 45V credit for any
taxable year is determined with respect
to the qualified clean hydrogen produced

Bulletin No. 2024–14

by the taxpayer during that taxable year
although the verification of the production and sale or use of such hydrogen
may occur in a later taxable year. However, the taxpayer would not be eligible
to claim the section 45V credit until all
relevant verification requirements, and
the verification itself, have been completed. Therefore, despite such verification occurring in a later taxable year,
the section 45V credit would be properly
claimed with respect to the taxable year
of hydrogen production and subject to
the general period of limitations for filing a claim for credit or refund. Thus, if
verification occurred after the extended
return filing deadline for the taxable year
in which the hydrogen was produced, the
taxpayer would need to file an amended
return or administrative adjustment
request (AAR) to claim the section 45V
credit for such hydrogen. The Treasury
Department and the IRS request comments on this proposed rule, specifically
whether taxpayers anticipate they will
be able to complete all the requirements
for claiming the section 45V credit,
including the proposed requirements
for verification specified below, by the
extended return filing deadline for the
taxable year of hydrogen production. If
taxpayers anticipate that they will not be
able to complete all the requirements by
such filing deadline, comments are also
requested on what specific alternatives to
the proposed rule, if any, should be considered and their rationale.
IV. Special Rules
Proposed §1.45V-2(a) would address
the coordination between the section 45V
credit and the section 45Q credit.
Proposed §1.45V-2(b)(1) would provide an anti-abuse rule that would make
the section 45V credit unavailable in
extraordinary circumstances in which,
based on a consideration of all the relevant facts and circumstances, the primary
purpose of the production and sale or use
of qualified clean hydrogen is to obtain
the benefit of the section 45V credit in a
manner that is wasteful, such as the production of qualified clean hydrogen that
the taxpayer knows or has reason to know
will be vented, flared, or used to produce
hydrogen.

759

If the cost of producing qualified
clean hydrogen were to be less than the
amount of the section 45V credit that
would be available with respect to such
hydrogen, the Treasury Department and
the IRS are concerned that taxpayers
may have an incentive to produce qualified clean hydrogen solely for the purpose of exploiting the section 45V credit
in a manner that is inconsistent with a
purpose of section 45V, which is to provide an incentive to produce qualified
clean hydrogen for a productive use.
Producing and selling or using qualified
clean hydrogen with the primary purpose
of obtaining the benefit of the section
45V credit in a wasteful manner would
not, in certain circumstances, satisfy the
requirement in section 45V(c)(2)(B)(i)
(II) for hydrogen to be produced in the
ordinary course of a trade or business of
the taxpayer. Proposed §1.45V-2(b)(2)
would provide an example illustrating
this anti-abuse rule.
V. Procedures for Determining Lifecycle
Greenhouse Gas Emissions Rates for
Qualified Clean Hydrogen
Proposed §1.45V-4(a) would provide
that the amount of the section 45V credit
is determined under section 45V(a) and
proposed §1.45V-1(b) based upon the
lifecycle GHG emissions rate (as defined
in proposed §1.45V-1(a)(8)(i)) of all
hydrogen produced at a qualified clean
hydrogen production facility (as defined
in proposed §1.45V-1(a)(10)) during the
taxable year. This determination is made
following the close of each such taxable
year and must include all hydrogen production from the year. Further, proposed
§1.45V-4(a) would provide that the lifecycle GHG emissions rate for purposes of
section 45V is determined under the most
recent GREET model (as defined in proposed §1.45V-1(a)(8)(ii)). Additionally,
proposed §1.45V-4(a) would provide that
in the case of any hydrogen for which a
lifecycle GHG emissions rate has not been
determined under the most recent GREET
model for purposes of section 45V, a taxpayer producing such hydrogen may file
a petition with the Secretary for a determination of the lifecycle GHG emissions
rate with respect to such hydrogen (a provisional emissions rate (PER)).

April 1, 2024

A. GREET model
Proposed §1.45V-4(b) would provide
procedures to calculate the lifecycle GHG
emissions rate of hydrogen produced at
a hydrogen production facility using the
most recent GREET model as defined in
proposed §1.45V-1(a)(8)(ii) (referring to
45VH2-GREET). Proposed §1.45V-4(b)
would provide that for each taxable year
during the period described in section
45V(a)(1), a taxpayer claiming the section
45V credit determines the lifecycle GHG
emissions rate of hydrogen produced
at a hydrogen production facility using
the most recent GREET model. Such a
determination is made separately for each
hydrogen production facility the taxpayer
owns and as of the close of each respective taxable year in which such production
occurs (that is, such a determination is
made for that taxable year’s total hydrogen production at a hydrogen production
facility). Proposed §1.45V-4(b) would
provide that in calculating the lifecycle
GHG emissions rate for purposes of determining the amount of the section 45V
credit, the taxpayer must accurately enter
all information about its qualified clean
hydrogen production facility requested
within the interface of 45VH2-GREET in
compliance with the most recent version
of the Guidelines to Determine Well-toGate Greenhouse Gas (GHG) Emissions
of Hydrogen Production Pathways Using
45VH2-GREET (GREET User Manual), which currently can be found at:
www.energy.gov/45vresources. Current
45VH2-GREET, previous versions of
45VH2-GREET, and subsequent updates
to 45VH2-GREET can be found at www.
energy.gov/45vresources.
Proposed
§1.45V-4(b) would provide that information for the location of 45VH2-GREET
and accompanying documentation will be
included in the instructions to the Form
7210, Clean Hydrogen Production Credit,
or any successor form(s).
45VH2-GREET includes various
hydrogen production pathways. As of the
publication date of these proposed regulations, 45VH2-GREET includes the following hydrogen production pathways—

(1) Steam methane reforming (SMR)
of natural gas, with potential carbon capture and sequestration (CCS);
(2) Autothermal reforming (ATR) of
natural gas, with potential CCS;
(3) SMR of landfill gas with potential
CCS;
(4) ATR of landfill gas with potential
CCS;
(5) Coal gasification with potential
CCS;
(6) Biomass gasification with corn stover and logging residue with no significant
market value with potential CCS;
(7) Low-temperature water electrolysis
using electricity; and
(8) High-temperature water electrolysis using electricity and potential heat
from nuclear power plants.
As described in Guidelines to Determine Well-to-Gate Greenhouse Gas
(GHG) Emissions of Hydrogen Production
Pathways Using 45VH2-GREET (GREET
User Manual), certain parameters in
45VH2-GREET are fixed assumptions,
referred to as “background data” in this
document. Users of 45VH2-GREET may
not change background data. Examples of
background data include upstream methane loss rates, emissions associated with
power generation from specific generator types, and emissions associated with
regional electricity grids. Background data
are parameters for which bespoke inputs
from hydrogen producers are unlikely
to be independently verifiable with high
fidelity, given the current status of verification mechanisms. The Treasury Department and the IRS seek comment on the
readiness of verification mechanisms that
could be utilized for certain background
data in 45VH2-GREET if it were reverted
to foreground data in future releases. For
example, the upstream methane loss rate
is background data in 45VH2-GREET,
and the Treasury Department and the IRS
seek comment on conditions, if any, under
which the methane loss rate may in future
releases become foreground data (such
as certificates that verifiably demonstrate
different methane loss rates for natural
gas feedstocks, sometimes described as
responsibly sourced natural gas).

45VH2-GREET allows users to input
the quantity of valorized co-products (that
is, co-products from the hydrogen production process that are productively utilized
or sold) and allocates emissions to those
co-products (rather than to the hydrogen
production) as described in Guidelines
to Determine Well-to-Gate Greenhouse
Gas (GHG) Emissions of Hydrogen Production Pathways Using 45VH2-GREET
2023. As described in that document,
45VH2-GREET utilizes the “system
expansion” approach for all co-products if
possible, but restricts the amount of steam
co-product that reformers can claim based
on the quantity of steam that an optimally
designed reformer is expected to be capable of producing based on modeling from
the National Energy Technology Laboratory.7 This restriction is included within
the model to avoid incentivizing generation or over-production of hydrogen
co-products like steam to enable access
to a higher tax credit value by artificially
reducing the calculated carbon intensity
of the hydrogen (for example, by combustion of fuel onsite that is unnecessary
for hydrogen production). The Treasury
Department and the IRS seek comments
on this approach, including whether alternative co-product accounting methods,
such as physical allocation (for example,
energy allocation or mass allocation) or
allocation based on other characteristics,
would better ensure well-to-gate carbon
intensity of hydrogen production is accurately represented.
B. Provisional emissions rate
Proposed §1.45V-4(c)(1) would provide that, for purposes of section 45V(c)
(2)(C) and proposed §1.45V-4(a), the term
“provisional emissions rate” or “PER”
means the lifecycle GHG emissions rate
of the process by which qualified clean
hydrogen is produced by the taxpayer at a
qualified clean hydrogen production facility as determined by the Secretary under
proposed §1.45V-4(c).
Proposed §1.45V-4(c)(2)(i) would provide that a taxpayer may not file a petition with the Secretary for a PER unless

National Energy Technology Laboratory, DOE, “Comparison of Commercial, State-of-the-Art, Fossil-Based Hydrogen Production Technologies,” April 12, 2022, available at https://www.
netl.doe.gov/energy-analysis/details?id=ed4825aa-8f04-4df7-abef-60e564f636c9.

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a lifecycle GHG emissions rate has not
been determined under the most recent
GREET model (as defined in proposed
§1.45V-1(a)(8)(ii) as 45VH2-GREET)
for hydrogen produced by the taxpayer at
a hydrogen production facility. Proposed
§1.45V-4(c)(2)(i) would further provide
that a lifecycle GHG emissions rate has
not been determined under the most recent
GREET model with respect to hydrogen
produced by the taxpayer at a hydrogen
production facility if it uses a hydrogen
production pathway that is not included in
the most recent GREET model—that is, if
either the feedstock used by such facility
or the facility’s hydrogen production technology is not included in the most recent
GREET model.
For example, the initial version of
45VH2-GREET does not model every
possible biomass fuel as a feedstock nor
does it represent all hydrogen production
technologies that are currently of commercial interest or that may be commercially viable in the future, including geologic hydrogen, trigeneration, or other
technologies if sufficient technical analysis had not been completed at the time
the model was published. A taxpayer
with one of these types of hydrogen production pathways may use the PER process to obtain carbon intensities because
such hydrogen production technologies or feedstocks are not currently in
45VH2-GREET. To use the PER process,
the hydrogen production pathway that
the taxpayer is utilizing must either be
consuming a feedstock that is not represented in 45VH2-GREET (for example, a
type of biomass that is not represented in
the model) or using a hydrogen production technology that is not represented in
45VH2-GREET (for example, technologies used to drill for geologic hydrogen
or trigeneration that can use a fuel cell to
co-produce hydrogen, heat, and power).
A taxpayer may not use the PER process
if its feedstock and hydrogen production
technology are represented in 45VH2GREET, even if the taxpayer disagrees
with the underlying assumptions (that is,
background data) or calculation approach
used by the most recent 45VH2-GREET.
Future versions of 45VH2-GREET may
include additional hydrogen production
pathways, such as geologic hydrogen, as
sufficient technical information becomes

Bulletin No. 2024–14

available to provide consistent treatment
in 45VH2-GREET.
Proposed §1.45V-4(c)(2)(i) would also
provide that, if a taxpayer’s request for an
emissions value from the DOE under proposed §1.45V-4(c)(5) with respect to the
hydrogen produced by the taxpayer at a
hydrogen production facility is pending at
the time such hydrogen production facility’s pathway is included in an updated
version of 45VH2-GREET, the taxpayer’s request for an emissions value will be
automatically denied.
Proposed §1.45V-4(c)(2)(ii) would
specify that, notwithstanding proposed
§1.45V-1(a)(8)(ii), for the taxable year in
which the hydrogen production pathway
the taxpayer uses to produce hydrogen at a
qualified clean hydrogen production facility is first included in an updated version
of 45VH2-GREET, the updated version
of 45VH2-GREET will be considered the
most recent GREET model with respect to
the hydrogen produced by the taxpayer at
the hydrogen production facility.
1. Process for Filing a Provisional
Emissions Rate Petition
Proposed §1.45V-4(c)(3) would provide that a taxpayer petitions the Secretary
for a PER by attaching a PER petition to its
Federal income tax return or information
return for the first taxable year of hydrogen production ending within the 10-year
period described in section 45V(a)(1) for
which the taxpayer claims the section 45V
credit for hydrogen to which the PER petition relates and for which a lifecycle GHG
emissions rate has not been determined, as
defined under proposed §1.45V-4(c)(2)(i).
Proposed §1.45V-4(c)(3) would provide
that a PER petition must contain (i) an
emissions value obtained from the DOE
setting forth the DOE’s analytical assessment of the lifecycle GHG emissions rate
associated with the facility’s hydrogen
production pathway, and (ii) a copy of
the taxpayer’s request to the DOE for an
emissions value, including any information that the taxpayer provided to the DOE
pursuant to the emissions value request
process specified in proposed §1.45V-4(c)
(5). Proposed §1.45V-4(c)(3) would further provide that, if the taxpayer obtained
more than one emissions value from the
DOE, then the PER petition must contain

761

the emissions value setting forth the lifecycle GHG emissions rate of the hydrogen
for which the section 45V credit is claimed
on the Form 7210, Clean Hydrogen Production Credit, or any successor form(s),
to which the PER petition is attached.
2. Provisional Emissions Rate
Determination
Proposed §1.45V-4(c)(4) would provide that upon the IRS’s acceptance of
the taxpayer’s Federal income tax return
or information return containing a PER
petition, the emissions value specified
on such PER petition will be deemed
accepted. Proposed §1.45V-4(c)(4) would
provide that a taxpayer would be able to
rely upon an emissions value provided by
the DOE for purposes of calculating and
claiming a section 45V credit, provided
that any information, representations, or
other data provided to the DOE in support
of the request for an emissions value are
accurate. Proposed §1.45V-4(c)(4) would
also state that the IRS’s deemed acceptance of such emissions value is the Secretary’s determination of the PER. Proposed
§1.45V-4(c)(4) would state, however, that
the production and sale or use of such
hydrogen must be verified by an unrelated
party under section 45V(c)(2)(B)(ii) and
in compliance with the procedures provided in proposed §1.45V-5. Proposed
§1.45V-4(c)(4) would state that such verification and any information, representations, or other data provided to the DOE
in support of the request for an emissions
value are subject to later examination by
the IRS.
3. Department of Energy Emissions Value
Request Process
Proposed §1.45V-4(c)(5) would provide that, in order to obtain an emissions
value, an applicant must submit a request
for an emissions value following procedures that will be specified by the DOE.
The emissions value request process will
open on April 1, 2024.
Proposed §1.45V-4(c)(5) would also
provide that emissions values will be evaluated using the same well-to-gate system
boundary that is employed in 45VH2GREET, as proposed in §1.45V-1(a)(8)
(iii). Additionally, proposed §1.45V-4(c)(5)

April 1, 2024

would also provide that if applicable, background data parameters in 45VH2-GREET
would also be treated as background data
(with fixed values that an applicant cannot
change) in the emissions value request process. The emissions value request process
would be subject to any guidance issued
under section 45V, including any guidance
related to the use of EACs.
Proposed §1.45V-4(c)(5) would also
provide that an applicant may request an
emissions value from the DOE only after a
front-end engineering and design (FEED)
study or similar indication of project
maturity, such as project specification
and cost estimation sufficient to inform a
final investment decision, has been completed for the hydrogen production facility. Forthcoming guidance from the DOE,
which will be published prior to the April
1, 2024, opening of the emissions value
request process, will specify criteria the
DOE intends to consider in evaluating
whether a FEED study has been completed or that a similar indicator of project
readiness has been achieved. The Treasury
Department and the IRS seek comments
on appropriate indicators of project readiness that should be in place before an
applicant requests an emissions value to
ensure that requests correspond to hydrogen production facilities with significant
commercial interest, and standards against
which these indicators could be measured.
Additionally, proposed §1.45V-4(c)(5)
would provide that the DOE may decline
to review applications that are not responsive, including those applications that use a
hydrogen production technology and feedstock already in GREET or applications that
are incomplete. Guidance and procedures for
applicants to request and obtain an emissions
value from the DOE will be published by the
DOE,8 including a process for, under limited
circumstances, a revision to the DOE’s initial
analytical assessment of an emissions value,
such as to address revised technical information or facility design and operation.
4. Effect of Provisional Emissions Rate
Proposed §1.45V-4(c)(6) would provide that a taxpayer may use a PER deter-

mined by the Secretary to calculate the
amount of the clean hydrogen production
credit under section 45V(a) and proposed
§1.45V-1(b) with respect to qualified clean
hydrogen produced by the taxpayer at a
qualified clean hydrogen production facility beginning with the first taxable year in
which a PER determined by the Secretary
has been obtained and for any subsequent
taxable year during the 10-year period
beginning on the date such facility was
originally placed in service, provided all
other requirements of section 45V are met,
and until the lifecycle GHG emissions rate
of such hydrogen has been determined
(for purposes of section 45V(c)(2)(C))
under the most recent GREET model (as
defined in proposed §1.45V-1(a)(8)(ii)).
Proposed §1.45V-4(c)(6) would provide that the Secretary’s PER determination is not an examination or an inspection of books of account for purposes of
section 7605(b) of the Code, and would
not preclude or impede the IRS (under
section 7605(b) or any administrative
provisions adopted by the IRS) from later
examining a return or inspecting books
or records with respect to any taxable
year for which the section 45V credit is
claimed. Proposed §1.45V-4(c)(6) would
provide that a verification report submitted under section 45V(c)(2)(B)(ii) and
§1.45V-5 and any information, representations, or other data provided to the DOE
in support of an emissions value request
would still be subject to IRS examination.
Further, proposed §1.45V-4(c)(6) would
state that a PER determination would not
mean that the IRS has determined that all
the requirements of section 45V have been
satisfied for any taxable year, nor would it
create an inference that such a presumption exists.
C. Use of energy attribute certificates
The Treasury Department and the IRS,
in consultation with the United States
Environmental Protection Agency (EPA)
and the DOE, have preliminarily determined that energy attribute certificates
(EACs) may be considered under certain
conditions in documenting purchased

electricity inputs and assessing emissions
impacts of electricity used in the production of hydrogen for purposes of the section 45V credit.9 For purposes of these
proposed regulations, the term “EACs”
refers solely to EACs that represent attributes of electricity generated by a specific
facility or source. The EPA has advised
that EACs are an established mechanism
for substantiating the purchase of electricity from zero GHG-emitting sources and
that the use of EACs with attributes that
meet certain criteria is an appropriate way
for the Treasury Department and the IRS
to document electricity inputs to electrolytic hydrogen production. Such EACs can
also serve as a reasonable methodological proxy for quantifying certain indirect
emissions associated with electricity for
purposes of the section 45V credit. Similarly, the EPA and the DOE have advised
that it would be appropriate for EACs with
attributes that meet certain criteria to be
included as part of the basis for assessing
emissions for purposes of the section 45V
credit. The Treasury Department and the
IRS have preliminarily determined that
the use of certain EACs, which satisfy the
qualifying EAC requirements (as specified
in proposed §1.45V-4(d)(3)), is consistent
with the references to subparagraph (H)
of section 211(o)(1) of the Clean Air Act
(42 U.S.C. 7545(o)(1)(H)) and the most
recent GREET model, as specified in section 45V(c)(1).
Proposed §1.45V-4(d)(1) would provide that for purposes of section 45V, if
a taxpayer determines a lifecycle GHG
emissions rate for hydrogen produced at
a hydrogen production facility using the
most recent GREET model (as defined in
proposed §1.45V-1(a)(8)(ii)) or a PER (as
defined in proposed §1.45V-4(c)(1)), then
the taxpayer may reflect in GREET or
include in a PER such hydrogen production facility’s use of electricity as being
from a specific electricity generating facility rather than from the regional electricity
grid (as represented in 45VH2-GREET)
only if the taxpayer acquires and retires
a qualifying EAC (as defined in proposed
§1.45V-4(d)(2)(iv)) for each unit of electricity that the taxpayer claims from such

DOE will provide guidance and procedures at www.energy.gov/45vresources.
EPA Letter, available at https://home.treasury.gov/system/files/136/45V-NPRM-EPA-letter.pdf; DOE, “Assessing Lifecycle Greenhouse Gas Emissions Associated with Electricity Use for the
Section 45V Clean Hydrogen Production Tax Credit,” Washington, DC (2023), available at www.energy.gov/45vresources.

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source. For example, one megawatt-hour
of electricity used to produce hydrogen
would need to be matched with one megawatt-hour of qualifying EACs. The Treasury Department and the IRS seek comments on whether a different treatment
would be more appropriate to account for
transmission and distribution line losses.
Further, proposed §1.45V-4(d)(1)
would provide that to satisfy this requirement, a taxpayer’s acquisition and retirement of qualifying EACs must also be
recorded in a qualified EAC registry or
accounting system (as defined in proposed
§1.45V-4(d)(2)(v)) so that the acquisition
and retirement of such EACs may be verified by a qualified verifier (as defined in
proposed §1.45V-5(h)).
The double counting of EACs and their
underlying attributes would undermine the
integrity of lifecycle GHG emissions rate
determinations that incorporate EACs. A
double counting occurs if two different
parties claim the same environmental benefits from the same generated energy.10
Uniformly requiring claims of using electricity generated from specific sources
to be evidenced by EACs that meet the
requirements of proposed §1.45V-4(d)(1)
would mitigate the risk of double counting. Thus, proposed §1.45V-4(d)(1) would
provide that certain requirements must be
met regardless of whether the electricity
generating facility giving rise to the qualifying EAC is grid connected, directly connected, or co-located with the hydrogen
production facility (that is, regardless of
whether the underlying source of the qualifying EAC physically supplies electricity
through a direct connection to the hydrogen production facility).
1. Definitions Related to Use of Energy
Attribute Certificates
Proposed §1.45V-4(d)(2)(i) would
define the term “commercial operations
date” or “COD” as the date on which a
facility that generates electricity begins
commercial operations. The COD, as
defined here, is the first date of the operation of the relevant electricity generating
facility. The general rules for determining

10
11

an electricity generating facility’s placed
in service date for Federal income tax purposes would not apply in determining its
COD.
Proposed §1.45V-4(d)(2)(ii) would
define the term “energy attribute certificate” or “EAC” to mean a tradeable contractual instrument, issued through a qualified EAC registry or accounting system
(as defined in proposed §1.45V-4(d)(2)
(v)), that represents the energy attributes
of a specific unit of energy produced. An
EAC may be acquired with or separately
from the underlying energy it represents.
An EAC can be retired by or on behalf
of its owner, which is the party that has
the right to claim the underlying attributes represented by an EAC. Renewable
energy certificates (RECs) and other similar energy certificates issued through a
registry or accounting system are forms of
EACs.
Proposed §1.45V-4(d)(2)(iii) would
define the term “eligible EAC” to mean
an EAC that, with respect to the electricity to which the EAC relates, provides, at
minimum, the following information: (i)
a description of the electricity generating facility, including the technology and
feedstock used to generate the electricity;
(ii) the amount and units of electricity;
(iii) the date on which the facility that generated the electricity first began commercial operations (referred to as the commercial operations date (COD)) (as defined
in proposed §1.45V-4(d)(2)(i)); (iv) for
electricity that is generated before January 1, 2028, the calendar year in which
such electricity was generated; (v) for
electricity that is generated after December 31, 2027, the date and hour in which
such electricity was generated; and (vi) a
unique project identification number or
assigned identifier for each EAC that can
be used to cross reference any additional
electricity generating facility information
that may be needed, such as location.
Proposed §1.45V-4(d)(2)(iv) would
define the term “qualifying EAC” to
mean an eligible EAC (as defined in
proposed §1.45V-4(d)(2)(iii)) that meets
the requirements of proposed §1.45V4(d)(3) and for which the satisfaction of

those requirements has been verified by a
qualified verifier (as defined in proposed
§1.45V-5(h)).
Proposed §1.45V-4(d)(2)(v) would
define the term “qualified EAC registry
or accounting system” to mean a tracking
system that (i) assigns a unique identification number to each EAC tracked by such
system, (ii) enables verification that only
one EAC is associated with each unit of
electricity, (iii) verifies that the underlying attributes of each EAC is claimed and
retired only once, (iv) identifies the owner
of each EAC, and (v) provides a publicly
accessible view (for example, through an
application programming interface) of all
currently registered electricity generators in the tracking system to prevent the
duplicative registration of such generators. Qualified EAC registries currently
include, but are not limited to, the following: Electric Reliability Council of Texas
(ERCOT); Michigan Renewable Energy
Certification System (MIRECS); Midwest Renewable Energy Tracking System,
Inc. (M-RETS); North American Registry
(NAR); New England Power Pool Generation Information System (NEPOOLGIS); New York Generation Attribute
Tracking System (NYGATS); North Carolina Renewable Energy Tracking System
(NC-RETS); PJM Generation Attribute
Tracking System (PJM-GATS); and Western Renewable Energy Generation Information System (WREGIS).
Proposed §1.45V-4(d)(2)(vi) would
define the term “region” to mean a United
States region derived from the National
Transmission Needs Study (DOE Needs
Study) that was released by the DOE on
October 30, 2023.11 The DOE has mapped
the DOE Needs Study regions to actual balancing authorities. The data file and map of
the resulting United States regions can be
found in Guidelines to Determine Well-toGate Greenhouse Gas (GHG) Emissions
of Hydrogen Production Pathways Using
45VH2-GREET (GREET User Manual)
as of December 26, 2023. The location of
an electricity generation source and the
location of a hydrogen production facility
will be based on the balancing authority to
which it is electrically interconnected (not

EPA, “Double Counting,” last updated Feb. 5, 2023, available at https://www.epa.gov/green-power-markets/double-counting.
DOE, National Transmission Needs Study, Oct. 2023, available at https://www.energy.gov/sites/default/files/2023-10/National_Transmission_Needs_Study_2023.pdf.

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April 1, 2024

its geographic location), with each balancing authority linked to a single region. The
Midcontinent Independent System Operator, Inc. (MISO) balancing authority is an
exception because it is split into two U.S.
regions as shown in the map located in the
GREET User Manual as of December 26,
2023. Alaska, Hawaii, and each U.S. territory will be treated as separate regions.
2. Qualifying Energy Attribute Certificate
Requirements
Proposed §1.45V-4(d)(3) would provide that an EAC meets the requirements
to be a qualifying EAC if it meets the
requirements for incrementality, temporal
matching, and deliverability. The incrementality requirement in proposed §1.45V4(d)(3)(i) would require qualifying EACs
to represent incremental source electricity,
such as electricity from an electricity generating facility that has a recent COD. As
discussed in more detail later in this section, the Treasury Department and the IRS
are requesting comments on whether and
under what circumstances electricity generated by an existing electricity generating
facility (that is, with a less recent COD)
that is dedicated to hydrogen production
may be treated as satisfying the incrementality requirement. The temporal matching
requirement in proposed §1.45V-4(d)(3)
(ii) would require that qualifying EACs
represent electricity produced in the same
time period in which the hydrogen production facility consumes electricity in the
production of hydrogen. The deliverability requirement in proposed §1.45V-4(d)
(3)(iii) would require qualifying EACs to
represent electricity that was produced by
an electricity generating facility that is in
the same region as the relevant hydrogen
production facility.
The Treasury Department and the IRS,
in consultation with the EPA and the DOE,
have preliminarily determined that these
qualifying EAC requirements are consistent with the requirements of section
45V(c)(1)(A) and (B) of the Code.12 The
EPA has advised that, based on its prior
implementation of section 211(o)(1)(H)
of the Clean Air Act in other contexts, it

would be reasonable and consistent with
the EPA’s precedent for the Treasury
Department and the IRS to determine that
induced grid emissions are an anticipated
real-world result of electrolytic hydrogen production that must be considered
in lifecycle GHG analyses for purposes
of the section 45V credit. Such interpretation would be consistent with the EPA’s
long-standing interpretation and application of section 211(o)(1)(H) of the Clean
Air Act in the context of the Renewable
Fuel Standard (RFS) program. The EPA
has also noted that EACs are an established means for documentation and verification of the electricity generation and
purchase of zero-GHG electricity. Moreover, the EPA has advised that it believes
it would be reasonable for the Treasury
Department and the IRS to use EACs that
possess specific attributes that meet certain criteria as a means of reducing the risk
of induced grid emissions resulting from
new load from electrolytic hydrogen production being added to an existing grid.
Such requirements would mitigate the
risk of inappropriately crediting hydrogen
production that does not meet the lifecycle
GHG levels required by section 45V.
DOE has published a technical paper,
Assessing Lifecycle Greenhouse Gas
Emissions Associated with Electricity Use
for the Section 45V Clean Hydrogen Production Tax Credit, which the Treasury
Department and the IRS have reviewed,
and which has informed the development
of the proposed regulations. As discussed
therein, incrementality, temporal matching, and deliverability requirements are
important guardrails to ensure that hydrogen producers’ electricity use can be reasonably deemed to reflect the emissions
associated with the specific generators
from which the EACs were purchased
and retired. If hydrogen producers rely on
EACs without attributes that meet these
three criteria there is a significant risk that
hydrogen production would significantly
increase induced grid GHG emissions
beyond the allowable levels required to
qualify for the section 45V credit.
Electricity from a specific generator
will have a GHG emissions profile that

results from both its direct and indirect
emissions. EACs with attributes that meet
the three criteria are intended to address
indirect GHG emissions resulting from
the dynamics of the electricity market and
the electric grid. If a hydrogen producer
purchases zero GHG-emitting electricity
that is represented by such EACs it is relatively straightforward to verify both the
direct and indirect emissions resulting
from such purchase and use. However, for
minimal-emitting sources of electricity,
additional considerations may be necessary to verify the full range of direct and
indirect emissions. The Treasury Department and the IRS request comment on
what information is needed to document
and verify GHG emissions related to minimal-emitting electricity generation that is
purchased and used for hydrogen production for purposes of claiming the section
45V credit.
While the Treasury Department and the
IRS are soliciting comment on the type of
information that hydrogen producers must
provide in order to document and verify
the direct and indirect GHG emissions
associated with purchased electricity generally, we are also seeking input on two
specific types of electricity generation
for which GHG emissions can be highly
variable or uncertain: fossil fuel-powered
electricity generation with CCS and biomass-powered electricity generation. With
regard to non-minimally emitting electricity generation, and fossil fuel-powered
generation and biomass powered generation with or without CCS in particular, the
Treasury Department and the IRS request
comment on mechanisms to verify accurately real-world emissions related to
hydrogen production. This includes mechanisms for, among other things, verification of the origin of the feedstock, rate of
carbon capture, and other parameters that
are relevant to accurate lifecycle analysis,
as well as the ability of EAC instruments
to represent accurately such attributes.
The Treasury Department and the IRS
also request comment on specific lifecycle
GHG emissions considerations, including
the use of counterfactual scenarios, that
should be considered in evaluating direct

EPA Letter, available at https://home.treasury.gov/system/files/136/45V-NPRM-EPA-letter.pdf; DOE, “Assessing Lifecycle Greenhouse Gas Emissions Associated with Electricity Use for
the Section 45V Clean Hydrogen Production Tax Credit,” Washington, DC (2023), available at www.energy.gov/45vresources.

12

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and indirect emissions associated with
specific types of biomass and its consumption. The Treasury Department and the
IRS also request comment on the extent
and manner in which incrementality, temporal matching, and deliverability should
be applied in accounting for existing or
new electricity generation from biomass
or fossil feedstock. These comments may
inform future versions of 45VH2-GREET.
a. Incrementality
Proposed §1.45V-4(d)(3)(i)(A) would
provide that an EAC meets the incrementality requirement if the electricity generating facility that produced the unit of
electricity to which the EAC relates has
a COD (as defined in proposed §1.45V4(d)(2)(i)) that is no more than 36 months
before the hydrogen production facility
for which the EAC is retired was placed
in service.
The Treasury Department and the IRS
understand that EAC tracking systems
capture the COD of each electricity generating facility during the registration
process (often using data also reported to
the Energy Information Administration),
inclusive of month and year, which can
be cross-referenced based on project identification codes included on those EACs.
That COD should represent the initial date
of operation for the relevant electricity
generating facility. Third-party verifiers
should use this data to confirm the eligibility of purchased and retired EACs.
The Treasury Department and the IRS
note that there are circumstances in which
an existing higher-emitting electricity
generating facility may make upgrades
to subsequently deliver minimal-emitting
electricity. For example, an existing fossil-fuel electricity generating facility may
add CCS capability, thereby reducing its
lifecycle GHG emissions rate as determined in 45VH2-GREET. The Treasury
Department and the IRS request comments on whether the electricity generated
by such a facility should be considered
incremental under circumstances such as
if an existing fossil fuel electricity-generating facility after the addition of CCS

(after upgrade), had a COD that is no more
than 36 months before the relevant hydrogen production facility was placed in service. Comment is also requested on the
related question of whether, depending on
its carbon dioxide capture rate, it would be
appropriate to treat such a facility as a new
source of minimal-emitting generation
on the grid that would not be associated
with induced grid emissions. Relevant
to these questions, the Treasury Department and the IRS additionally request
comment on what information would
be needed to allow for qualifying EACs
representing existing fossil fuel-powered
electricity from facilities that have added
CCS. In particular, comment is requested
on whether there are safeguards that can
ensure that a hydrogen producer’s purchase and use of electricity from an existing fossil fuel-fired electricity generating
facility that installs CCS does not result
in indirect GHG emissions due to the
dynamics of the electricity market and
electric grid. The Treasury Department
and the IRS request comment on the direct
and induced emissions impacts of making
such a facility eligible, and whether and
under what circumstances it would be
appropriate to do so.
Proposed §1.45V-4(d)(3)(i)(B) would
provide an alternative test for establishing
incrementality for electricity generating
facilities that undergo an uprate. Proposed
§1.45V-4(d)(3)(i)(B) would provide that
an EAC satisfies this alternative test if the
electricity represented by the EAC is produced by an electricity generating facility
that had an uprate no more than 36 months
before the hydrogen production facility
with respect to which the EAC is retired
was placed in service and such electricity
is part of such electricity generating facility’s uprated production.
Proposed §1.45V-4(d)(3)(i)(B) would
provide rules for determining uprated production. Specifically, proposed
§1.45V-4(d)(3)(i)(B) would provide that
an uprated electricity generating facility’s production must be prorated to each
hour or year, consistent with the requirements in proposed §1.45V-4(d)(3)(ii), of
such facility’s generation by multiplying

each hour’s production by the uprated
production rate to determine the electricity to which the uprate relates. Proposed §1.45V-4(d)(3)(i)(B) would define
key terms, including: (i) “uprate,” which
means an increase in an electricity generating facility’s rated nameplate capacity
(in nameplate megawatts); (ii) “pre-uprate capacity,” which means the nameplate capacity of an electricity generating
facility immediately before an uprate; (iii)
“post-uprate capacity,” which means the
nameplate capacity of an electricity generating facility immediately after an uprate;
(iv) “incremental generation capacity,”
which means the increase in an electricity generating facility’s rated nameplate
capacity from the pre-uprate capacity to
the post-uprate capacity; (v) “uprated
production rate,” which means the incremental generation capacity (in nameplate
megawatts) divided by the post-uprate
capacity (in nameplate megawatts); and
(vi) “uprated production,” which means
the uprated production rate of an electricity generating facility multiplied by its
total generation output in a given hour (in
megawatt hours). Proposed §1.45V-4(d)
(3)(i)(C) would provide an example to
illustrate the application of the alternative
test for establishing incrementality due to
uprates.
The DOE has advised that there are
circumstances during which diversion of
existing minimal (that is, zero or nearzero) emissions power generation to
hydrogen production is unlikely to result
in significant induced GHG emissions.13
Such circumstances may include generation from minimal-emitting power plants
(i) that would retire absent the ability to
sell electricity for qualified clean hydrogen production, (ii) during periods in
which minimal-emitting generation would
have otherwise been curtailed, if marginal
emissions rates are minimal, or (iii) in
locations where grid-electricity is 100
percent generated by minimal-emitting
generators or where increases in load do
not increase grid emissions, for example,
due to State policy capping total GHG
emissions such that new load must be met
with minimal-emitting generators. The

13
DOE, “Assessing Lifecycle Greenhouse Gas Emissions Associated with Electricity Use for the Section 45V Clean Hydrogen Production Tax Credit,” Washington, DC (2023), available at
www.energy.gov/45vresources.

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April 1, 2024

Treasury Department and the IRS seek
comments on whether and how to provide alternative approaches to identifying
circumstances in which there is minimal
risk of significant induced grid emissions
for certain existing electricity generating
facilities.
The Treasury Department and the IRS
are considering providing, in the final regulations, alternative circumstances under
which an EAC may be deemed to satisfy the incrementality requirement. The
Treasury Department and the IRS request
comments on these specific circumstances
as described in part V.C.2.a.i through iii of
this Explanation of Provisions.
i. Avoided Retirements Approach
The Treasury Department and the IRS
seek comments on whether to recognize
an avoided retirements approach that
would treat EACs from an existing electricity generating facility as satisfying the
incrementality requirement if the facility
is likely to avoid retirement because of
its relationship with a hydrogen production facility. With respect to this potential
approach, the Treasury Department and
the IRS request comments on the following: (i) the appropriate criteria that should
be considered to assess retirement risk;
(ii) the extent to which demonstration of
financial loss, projected or actual local
electricity market conditions, presence
of out-of-market financial support (which
could potentially include financial support
driven by Federal or State policy, bilateral contracts for EACs or above-market
electricity sales, or revenue provided by
cost-of-service regulation), or upcoming
relicensing decisions, in combination,
are appropriate criteria to assess risk;
(iii) industry best practices for estimating
financial loss and the documentation necessary to support those estimates; (iv) the
appropriate criteria that should be taken
into account to assess the likelihood that
an electricity generator’s relationship with
a hydrogen production facility avoids
retirement of the generator (for example,
size of electrolyzer, co-location, contract

length, or otherwise); (v) the appropriate
criteria that should be taken into account
to ensure that only electricity generation
supplying the minimum hydrogen production necessary to avoid retirement is
counted as incremental, and, in particular, whether there should be a cap on the
amount of generation from a given facility
that qualifies as incremental and how such
a cap should be determined; (vi) the period
during which any determination of incrementality of existing electricity generators
would be maintained before a new showing would be required; (vii) the process by
which eligibility for this approach should
be determined and any related administrability considerations; and (viii) what role,
if any, EAC tracking systems should play
in the verification or tracking of eligible
EACs from such electricity generators.
With respect to processes that may
be used to implement this approach, the
Treasury Department and the IRS request
comments on whether such approach
should allow existing minimal-emitting
generators that wish to provide EACs to
hydrogen producers to demonstrate incrementality through submission to the IRS
or another Federal agency, such as the
DOE, specific information that supports a
conclusion that the electricity generator is
at risk of retirement that may be mitigated
by sales to hydrogen producers, and, if so,
what information and information submission process should be required.
The available data on retirement risk
indicates this approach may be warranted.
Some clean power plants, primarily
nuclear plants, have retired in recent years.
Based on data from the Energy Information Administration (EIA), from 2013
through 2022, 10,800 megawatts (MW) of
nuclear, 1,700 MW of wind, 950 MW of
hydropower, and 360 MW of solar have
retired.14 Studies have shown that there is
risk of continued retirement in the years
ahead.15 The EIA, for example, estimates
that an additional 4,600 MW of existing
nuclear plants may retire through 2032,
equivalent to five percent of the existing nuclear fleet (1,900 gigawatts (GW)
of renewable power plants may retire as

well).16 Some of these plant owners (primarily owners of nuclear plants) may
decide whether to retire the plants based
on the finances of continuing to operate
the plants. It is likely that for some plants,
additional revenue from selling EACs and
electricity to hydrogen producers may
improve the financial outlook of the plant
and help avert retirement, thereby keeping the minimal-emitting power plant in
operation and not resulting in induced
grid emissions compared to a scenario in
which the plant retires.
ii. Zero or Minimal Induced Grid
Emissions Through Modeling or Other
Evidence
The Treasury Department and the IRS
seek comments on whether to provide
an opportunity to demonstrate zero or
minimal induced grid emissions through
modeling or other evidence under specific
circumstances. A demonstrated or modeled minimal-emission approach could
treat electricity produced by certain existing electricity generating facilities under
certain circumstances as satisfying the
incrementality requirement if it is demonstrated that such sources and circumstances would not give rise to significant
induced grid emissions. Such a showing
could be based on modeling or potentially
be deemed to be made in certain circumstances based on regional grid characteristics, State policy, or facility history.
The Treasury Department and the IRS
request comments on this demonstrated
or modeled minimal-emission approach,
including: (i) the circumstances in which
it should be available and the criteria that
are appropriate to evaluate and determine
whether those circumstances occur; (ii)
who should apply under this approach, the
electricity generation facility, the hydrogen producer, or both; (iii) what data or
modeling should be submitted; (iv) best
practices for making such demonstrations,
including for ensuring the impartiality and
replicability of calculation approaches; (v)
how an administrator of such a program
would validate the accuracy of applicant

Monthly Generator Report Based on Form 860 available at https://www.eia.gov/electricity/data/eia860m/.
See John Bistline et al, “Emissions and energy impacts of the Inflation Reduction Act”, 380Science, 1324-27, June 29, 2023, available at https://www.science.org/doi/10.1126/science.
adg3781; U.S. Energy Information Administration, Annual Energy Outlook 2023, March 16, 2023, available at https://www.eia.gov/outlooks/aeo/tables_ref.php.
16
U.S. Energy Information Administration, Annual Energy Outlook 2023, March 16, 2023, available at https://www.eia.gov/outlooks/aeo/tables_ref.php.
14
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submissions; (vi) under what circumstances, if any, it would be appropriate
to deem generation to satisfy the incrementality requirement without modeling,
and what documentation should be provided in these cases; (vii) the process by
which eligibility for this approach should
be determined and any related administrability considerations; (viii) the period
during which any determination of incrementality would be maintained before a
new showing would be required; and (ix)
the circumstances and capability of EACs
and tracking systems to track and verify
energy attributes from such sources.
There are several circumstances that
may be covered under this pathway. Periods of curtailment or zero or negative
pricing is one such circumstance. Hydropower plants sometimes “spill” water, a
form of curtailment. Curtailment of minimal-emitting electricity generation tends
to occur during times when wholesale
electricity prices are zero or negative on
a system-wide basis. Purchasing EACs
from existing minimal-emitting electricity
generators under these conditions would
have limited or no induced grid emissions
as these are times during which increased
load would tend to be met by the otherwise
curtailed minimal-emitting electricity
generators rather than inducing increased
generation from emitting electricity generators, and so is unlikely to significantly
increase induced grid emissions.
Similarly, if in a particular region, all
generation—including imported generation—comes from minimal-emitting electricity generators, then increased load is
unlikely to significantly increase induced
grid emissions. The same may be true if
a region is subject to a State or local policy that ensures that new load is met with
minimal-emitting electricity generation.
There may be limited risk of significant
induced GHG emissions for islanded generation systems. Diversion of generation
from a minimal-emitting electricity generator that has never been connected to
the grid generally may not have the same
induced GHG emissions effects as diversion from an electricity generator that is

connected to the grid. Induced GHG emissions could occur, however, if the energy
demand that the existing minimal-emitting electricity generator previously met
is instead met by a different, emitting,
energy source. For example, an onsite
minimal-emitting electricity generator
that powers an industrial facility could
be diverted for hydrogen production, in
which case the induced GHG emissions
would depend on what happens at the
site to meet the power needs of the industrial facility (unless the industrial facility
ceases operation).
iii. Formulaic approaches to addressing
incrementality from existing clean
generators
The Treasury Department and the
IRS recognize the difficulty in reliably
identifying the specific electricity generators and specific times and places in
which the circumstances described in
part V.C.2.a.i and ii of this Explanation
of Provisions might occur. Therefore,
the Treasury Department and the IRS are
also considering alternative approaches
that would serve as proxy for all the pathways described in part V.C.2.a.i and part
V.C.2.a.ii of this Explanation of Provisions. EACs that satisfy the incrementality requirement through this pathway
would still be required to meet temporal
matching and deliverability requirements.
One such approach would deem five
percent of the hourly generation from
minimal-emitting electricity generators
(for example, wind, solar, nuclear, and
hydropower facilities) placed in service
before January 1, 2023, as satisfying the
incrementality requirement. This pathway may be appropriate because some
circumstances (including periods of curtailment or times when generation from
minimal-emitting electricity generation
is on the margin) may make the resulting
incremental generation difficult to anticipate or identify, or because the process
for identifying the circumstances (such
as avoided retirement risk or modeling of
minimal-emissions) may be overly bur-

densome to evaluate for specific electricity generators or require data that is not
available. In some instances, for example,
in determining whether EACs come from
electricity generation that would otherwise have been curtailed, these circumstances require understanding of counterfactual “what if” scenarios that depend
on numerous assumptions. In other circumstances, for example, in determining
whether EACs come from minimal-emitting electricity generators that otherwise
would have retired or if policy regimes
restrict increases in grid emissions in the
face of growing electricity demand, they
may require detailed assessment and
pre-qualification based on applicant-submitted information and forecasts with
related concerns about information accuracy. In still other cases, they may require
complex geographically and temporally
granular modeling and data (such as for
marginal emission rates that consider
operational and structural effects17) in
concert with hourly EAC tracking infrastructure that is not yet widely available.
The Treasury Department and the IRS
are mindful of the risk that an allowance
without further temporal, spatial, and circumstantial precision results in hydrogen
production facilities receiving credits for
which they should not be eligible given
their induced emissions rates. Given the
risks of induced GHG emissions, the Treasury Department and the IRS believe that
a broadly available allowance that is not
tailored to specific geographic or other
conditions should not be greater than the
national average rate of the occurrence
of the above circumstances and instead
should be a conservative lower bound of
the national average. The DOE reports
that wind curtailment in 2022 averaged 5.3
percent of total wind generation nationwide (data are only available for Independent System Operator (ISO) regions),18
and Lawrence Berkeley National Laboratory reports curtailment rates for solar
photovoltaics at over 10 percent of solar
generation in ERCOT and over 3 percent
in California Independent System Operator (CAISO).

17
DOE, “Assessing Lifecycle Greenhouse Gas Emissions Associated with Electricity Use for the Section 45V Clean Hydrogen Production Tax Credit,” Washington, DC (2023), available at
www.energy.gov/45vresources.
18
Office of Energy Efficiency & Renewable Energy, DOE, “Land-Based Wind Market Report: 2023 Edition,” Aug. 24, 2023, available at https://www.energy.gov/eere/wind/articles/landbased-wind-market-report-2023-edition.

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Purchasing EACs from existing minimal-emission electricity generators,
whether or not from the electricity generators that would otherwise curtail their
output, under these conditions would have
limited risk of induced grid emissions. As
noted earlier, curtailment is most likely
to occur in the face of negative wholesale electricity prices if the marginal grid
emissions rate is minimal or zero. Based
on a data tool developed by Lawrence
Berkeley National Laboratory that considers over 50,000 wholesale pricing nodes
across the nation, negative wholesale
prices occurred during roughly five percent of hours over the last several years
(6.3 percent of hours in 2022, 5.8 percent
in 2021, 4.8 percent in 2020, 3.3 percent
in 2019, and 2.3 percent in 2018).19 These
are times during which increased load is
unlikely to increase significantly induced
grid emissions.20 Modeled data from the
National Renewable Energy Laboratory
(NREL) is broadly consistent with these
trends. Specifically, NREL’s Cambium
data set for 2024 shows that long-run marginal emissions rates on a national basis
are projected to be at or near zero for about
five percent of hours, times during which
minimal-emitting electricity generators
are on the margin and often curtailed.21
In addition, some minimal-emitting
electricity generators are at risk of retirement, including about five percent of the
nuclear fleet according to EIA estimates.
A percentage allowance can also serve as
proxy for avoided retirements.
The Treasury Department and the IRS
seek comments on this five percent-allowance approach, including the merits of this
approach compared to the targeted pathways described, particularly with respect
to balancing administrative feasibility and
burden with accuracy of identifying circumstances with a low risk of induced grid
emissions. The Treasury Department and
the IRS also seek comments on whether
five percent is the appropriate magnitude for an allowance. In particular, as
noted earlier, data show that curtailment
rates have increased in recent years, and

NREL’s Cambium model predicts additional increases going forward. In light of
these data and projections, the Treasury
Department and the IRS seek comments
on whether a higher amount, such as up
to 10 percent, would be appropriate, either
in general or in certain cases or circumstances. The Treasury Department and
the IRS also seek comments on: (i) how a
five-percent allowance should be tracked,
allocated, and administered and how feasible it is for EAC tracking systems to
incorporate data on such an allowance;
(ii) whether the five percent should apply
to all existing minimal-emitting electricity generators in all locations or a subset
and for what reasons; (iii) whether such
an allowance should be assessed at the
individual plant level or across an operator’s fleet within the same deliverability
region; and (iv) any other administrability
considerations. The Treasury Department
and the IRS seek comments specifically
on whether and how the “averaging”
approach of a proxy appropriately captures the circumstances in which generation is incremental or does not generate
induced grid emissions. The Treasury
Department and the IRS also seek comments on how and whether the targeted
alternative approaches or the other proxy
approaches described subsequently in
this part V.C.2.a.iii of this Explanation of
Provisions might replace the five-percent
allowance or might be coordinated with
the allowance.
The Treasury Department and the IRS
invite comments on alternative formulaic,
proxy approaches that might better capture conditions under which using existing
minimal-emitting electricity generation to
produce hydrogen does not significantly
impact induced grid emissions. The Treasury Department and the IRS request
comments on whether there would be an
appropriate, more formulaic approach to
capturing retirement risk, instead of the
application-based process or the five-percent allowance. Comments are specifically
requested on whether such an alternative
approach should be limited to facilities

with specific technical, market, or geographic characteristics corresponding with
a greater risk of retirement (for example,
participation in a wholesale market, lack of
State support for a facility, nuclear plants
with a single reactor) and higher likelihood
that using a subset of electricity generation
and related EACs for hydrogen production
would minimize the risk.
In particular, the Treasury Department
and the IRS seek comments on whether
existing nuclear and hydroelectric facilities that need to undertake a relicensing
process are generally at higher risk of
retirement without additional financial
assistance and, if so, what considerations
should be integrated into a potential formulaic approach. Comments are further
requested on whether there are particular
characteristics of hydrogen production
facilities associated with existing generators at risk of retirement that should
be considered (i) to demonstrate that the
hydrogen production reduces retirement
risk, such as co-location of hydrogen
production with an existing generator
and (ii) to assess the minimum hydrogen
production necessary to reduce retirement
risk, such as limitations on project size,
electrolyzer capacity, or percent of generation used by the hydrogen production.
Comments are further requested on how
to determine the portion of such electricity generation and related EACs, which is
generally likely to be sufficient to minimize that risk. Similarly, with respect to
the modeled or demonstrated approach
described in part V.C.2.a.ii of this Explanation of Provisions, the Treasury Department and the IRS request comments on
whether there are formulaic approaches
that might be used instead of an application-based pre-qualification process and
the broad five-percent allowance.
For each of these possible alternative
approaches to establish incrementality,
the Treasury Department and the IRS
request comments on how eligibility for
the approach may be reliably verified by
an unrelated party and administered by the
IRS.

19
Berkeley Lab, Electricity Markets & Policy, The Renewables and Wholesale Electricity Prices (ReWEP) Tool, available at https://emp.lbl.gov/renewables-and-wholesale-electricity-prices-rewep.
20
For example, see New York State Energy Research and Development Authority (NYSERDA), “Projected Emission Factors for New York State Grid Electricity,” NYSERDA Report Number
22-18 (2022), available at https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Publications/Energy-Analysis/22-18-Projected-Emission-Factors-for-New-York-Grid-Electricity.pdf.
21
See National Renewable Energy Laboratory, Energy Analysis, Cambium, available at https://www.nrel.gov/analysis/cambium.html. Long-run marginal emissions rates at or near zero are
defined as under 25 kg CO2e/MWh.

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b. Temporal Matching
Proposed §1.45V-4(d)(3)(ii)(A) would
provide the general rule that an EAC satisfies the temporal matching requirement
if the electricity represented by the EAC
is generated in the same hour that the taxpayer’s hydrogen production facility uses
electricity to produce hydrogen. Proposed
§1.45V-4(d)(3)(ii)(B) would provide a
transition rule to allow an EAC that represents electricity generated before January 1, 2028 to fall within the general rule
provided in proposed §1.45V-4(d)(3)(ii)
(A) if the electricity represented by the
EAC is generated in the same calendar
year that the taxpayer’s hydrogen production facility uses electricity to produce hydrogen. The DOE has advised that
hourly matching is necessary to properly
address significant indirect emissions
from electricity use and that the tracking
systems and related contractual structures for hourly matching will take some
time to develop to an appropriate level of
maturity.22 This transition rule is intended
to provide time for the EAC market to
develop the hourly tracking capability
necessary to verify compliance with this
requirement.
Hourly tracking systems for EACs are
not yet broadly available across the country and will take some time to develop.23
In a recent survey of nine existing tracking systems,24 two of the tracking systems
indicated that they are already tracking on
an hourly basis, although software functionality in these two systems remains
limited. Fully developing the functionality of these systems will take time, as will
creating and developing the functionality
of hourly tracking infrastructure in other
regions of the country. Of the other tracking systems, assuming that challenges are
overcome, four gave a timeline of less
than one year to two years, and one gave a
timeline of three to five years; in the latter
case, the respondent noted that the time-

line could be closer to three years if there
is full State agency buy-in, clear instructions are received from Federal or State
agencies, and funding for stakeholder
participation is made available. Two
tracking systems declined to give a timeline to develop this functionality. In the
same survey, tracking systems identified
a number of challenges to hourly tracking
that will need to be overcome, including
cost, regulatory approval, interactions
with State policy, sufficient stakeholder
engagement, data availability and management, and user confusion. Moreover,
once the tracking software infrastructure
is in place nationally, it may take additional time for transactional structures and
efficient hourly EAC markets to develop.
Among the issues that require resolution
as EAC tracking systems move to hourly
resolution is the treatment of electricity
storage.25
Given the state of tracking systems,
the expected responses to this proposed
rule, and the impact of demand to drive
development of the tracking systems, the
Treasury Department and the IRS anticipate that the proposed duration of the
transition rule would allow sufficient time
for systems to develop hourly tracking
mechanisms and for the associated trading markets to develop. The Treasury
Department and the IRS acknowledge
uncertainty in the timing of implementing
an hourly matching requirement, however, and request comments on the appropriate duration of this transition rule to
hourly matching, including specific data
regarding current industry practices, the
predicted timelines for development of
hourly tracking mechanisms, and the predicted timeline for market development
for hourly EACs.
c. Deliverability
Proposed §1.45V-4(d)(3)(iii) would
provide that an EAC meets the deliv-

erability requirements if the electricity
represented by the EAC is generated by
a source that is in the same region (as
defined in proposed §1.45V-4(d)(2)(vi))
as the relevant hydrogen production facility. This approach provides reasonable
assurances of deliverability of electricity
because the regions, as defined earlier,
were developed by the DOE in consideration of transmission constraints and
congestion and, in many cases, match
power-sys

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A063eda203cbedd57. Public record. Not legal advice.