Calibrating US Tax Credits for Grid-Connected Hydrogen Production: A Recommendation, a Flexibility, and a Red Line

RMI argues that the US Department of the Treasury must carefully calibrate the 45V production tax credit (PTC) for grid-connected hydrogen to avoid increasing emissions from a fossil-fuel-dominated grid. The organization proposes a two-stage regulatory framework: providing flexibility for 'first movers' to reduce initial costs and complexity, followed by a transition on January 1, 2028, to strict, emissions-accurate, and forward-looking standards to ensure the hydrogen economy aligns with national climate objectives.

• The 45V production tax credit (PTC) created by the Inflation Reduction Act is intended to incentivize the lowest-emissions hydrogen production to support industrial decarbonization and a decarbonized grid.
• Grid-connected hydrogen production currently risks high emissions because the US electricity grid is primarily powered by fossil fuel-intensive generators.
• To qualify for the highest tax credit tier, green hydrogen projects using electrolyzers must utilize between 90% and 97.5% zero-carbon power.
• RMI proposes that the US Treasury implement flexible rules for early projects to lower costs and complexity, but mandates a phase-out of this flexibility on January 1, 2028, in favor of granular, emissions-accurate standards.

APA

RMI (2023). Calibrating US Tax Credits for Grid-Connected Hydrogen Production: A Recommendation, a Flexibility, and a Red Line. https://rmi.org/resources/calibrating-us-tax-credits-for-grid-connected-hydrogen-production/

Chicago

RMI. Calibrating US Tax Credits for Grid-Connected Hydrogen Production: A Recommendation, a Flexibility, and a Red Line. 2023. https://rmi.org/resources/calibrating-us-tax-credits-for-grid-connected-hydrogen-production/.

Wikipedia

{{cite press release |author=RMI |title=Calibrating US Tax Credits for Grid-Connected Hydrogen Production: A Recommendation, a Flexibility, and a Red Line |date=26 July 2023 |url=https://rmi.org/resources/calibrating-us-tax-credits-for-grid-connected-hydrogen-production/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{rmi2023calibrating, author = {{RMI}}, title = {{Calibrating US Tax Credits for Grid-Connected Hydrogen Production: A Recommendation, a Flexibility, and a Red Line}}, publisher = {RMI}, year = {2023}, month = jul, url = {https://rmi.org/resources/calibrating-us-tax-credits-for-grid-connected-hydrogen-production/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }