Fixed upstream emission rates undermine the climate benefits of section 45V hydrogen production tax credit

The policy brief contends that fixed upstream emission rates for methane and CO2 in the 45VH2-GREET model create economic distortions by penalizing low-emission hydrogen producers and rewarding those with higher-emission supply chains. It proposes replacing these fixed rates with project-specific data from the EPA's Greenhouse Gas Reporting Program (GHGRP) to ensure tax credits align with actual lifecycle emissions.

• The current 45VH2-GREET model uses fixed nationwide average rates for upstream methane (0.9%) and CO2 emissions, which the author claims are both over- and under-inclusive of actual emissions.
• Fixed emission rates can make low-emissions projects economically unviable by preventing operators with cleaner supply chains from proving their lower impact to achieve higher tax credits.
• Operators with higher-emission supply chains can unfairly benefit from fixed rates by claiming an artificially low emissions intensity, removing the incentive to reduce lifecycle emissions.
• A scenario analysis shows that a producer using gas from the Northeast Pennsylvania basin (0.4% methane leak rate) would lose over $30 million per year in tax benefits under fixed rates compared to verified rates, while a producer using gas from the Permian Basin (6.13% methane leak rate) would unfairly qualify for a $0.60/kg H2 credit despite not meeting emissions thresholds.
• The proposed solution is to remove fixed rates and require the use of verifiable, project-specific data submitted to subparts W and C of the EPA's Greenhouse Gas Reporting Program (GHGRP).

APA

Hunt, K. (2024). Fixed upstream emission rates undermine the climate benefits of section 45V hydrogen production tax credit. Clean Air Task Force. https://www.catf.us/2024/04/fixed-upstream-emission-rates-undermine-climate-benefits-section-45v-hydrogen-production-tax-credit/

Chicago

Hunt, Kara. Fixed upstream emission rates undermine the climate benefits of section 45V hydrogen production tax credit. Clean Air Task Force, 2024. https://www.catf.us/2024/04/fixed-upstream-emission-rates-undermine-climate-benefits-section-45v-hydrogen-production-tax-credit/.

Wikipedia

{{cite report |last1=Hunt |first1=Kara |title=Fixed upstream emission rates undermine the climate benefits of section 45V hydrogen production tax credit |publisher=Clean Air Task Force |date=5 April 2024 |url=https://www.catf.us/2024/04/fixed-upstream-emission-rates-undermine-climate-benefits-section-45v-hydrogen-production-tax-credit/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hunt2024fixed, author = {Hunt, Kara}, title = {{Fixed upstream emission rates undermine the climate benefits of section 45V hydrogen production tax credit}}, institution = {Clean Air Task Force}, year = {2024}, month = apr, url = {https://www.catf.us/2024/04/fixed-upstream-emission-rates-undermine-climate-benefits-section-45v-hydrogen-production-tax-credit/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }