The blue hydrogen tax credits 45V policy landscape remains uncertain as the U.S. Department of Energy (DOE) pushes for more flexible eligibility standards and clearer lifecycle assessment methods.

The US DOE has revised its hydrogen lifecycle emissions model, enabling blue hydrogen producers to use supply chain-specific methane data, a key shift that could improve their access to federal tax credits that are currently under threat.

The DOE’s Hydrogen and Fuel Cell Office said changes to the modelling will allow a “more flexible method” for calculating methane loss, “allowing a wider range of deserving companies to access resources supporting hydrogen production.”

The update will allow users to input company-specific methane loss data.

Previously, the 45VH2-GREET model viewed upstream methane emissions as “background data” and applied a national average to calculations, which would inform the level of tax credit a company could claim.

This meant that the lifecycle calculation would use a higher average, even if a producer used natural gas from low-leak supply chains.

Various trade bodies had warned that the methodology could jeopardise blue hydrogen projects by making it difficult for them to claim even the lowest $0.60/kg credit from Section 45V of the Inflation Reduction Act (IRA).

“This update to the GREET model reflects the DOE’s commitment to unleashing American energy dominance by removing bureaucratic burdens on industry,” said Lou Hrkman, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy.

However, the changes came amid efforts from the Trump administration to axe the 45V tax credit altogether.

Last week, the House of Representatives passed a Trump-backed tax and spending bill that would roll back the credit’s closing date to 31 December 2025, effectively gutting its long-term value.

While the bill could end support for various projects, blue hydrogen project developers are beginning to look at the 45Q carbon capture credit, which, while less lucrative, remains in place.

However, 45Q does not account for upstream methane emissions. Various NGOs have warned that its use could increase overall emissions.

As developers weigh shifting to 45Q, concerns grow that cutting methane out of the equation could undermine the very climate benefits these credits aim to support.

Learn more:

• FortisBC Hydrogen Production Process
• Pacific Northwest Hydrogen Consortium
• Technip FEED Contract for SAF

Blueprinting Hydrogen Futures with Klean: Navigate 45V Uncertainty with Confidence

With the U.S. DOE advocating flexible approaches to blue hydrogen tax credits, the race is on to capitalize on 45V incentives while navigating regulatory shifts.

Klean Industries delivers ready-to-deploy hydrogen solutions, integrating:

• Modular reforming units for decentralized hydrogen
• End-of-life waste conversion into hydrogen-rich syngas
• Carbon capture strategies that meet lifecycle emission criteria

Speak with our hydrogen strategy team to secure your project’s compliance and maximize tax credit eligibility in this evolving landscape » GO.