U.S. Treasury Clean Hydrogen Tax Credit Guidance: Annual vs Hourly Matching Requirements
A recent analysis by the American Council on Renewable Energy (ACORE) and Energy and Environmental Economics, Inc. (E3) has compared the carbon emissions and production costs associated with two primary accounting approaches for the 45V clean hydrogen Production Tax Credit (PTC) under the Inflation Reduction Act (IRA). The analysis studied “hourly match” and “annual match” requirements across 40 scenarios in four energy markets.
The report, Analysis of Hourly & Annual GHG Emissions: Accounting for Hydrogen Production, discovered that the annual matching approach led to lower carbon emissions in 25 out of the 40 scenarios. In 34 of these scenarios, the emissions under the annual matching approach were below the minimum threshold required to receive the full PTC credit.
Additionally, the study found that hydrogen production costs were significantly higher under an hourly matching requirement compared to an annual matching requirement with similar net CO₂ emissions in all scenarios, regardless of the energy market or renewable combination.
ACORE President and CEO Gregory Wetstone highlighted that an annual match accounting approach could boost the emerging clean hydrogen industry in the U.S. while continuing to reduce greenhouse gas emissions. The report concludes that an hourly matching requirement does not guarantee lower GHG emissions compared to an annual matching requirement, and in many cases, is less effective at reducing emissions.
The full report, which includes details on the methodology used for the analysis, can be read here.
SOURCE: American Council on Renewable Energy
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