n-22-58.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

Request for Comments on Credits for Clean Hydrogen and Clean Fuel Production

Notice 2022-58

SECTION 1. PURPOSE
The Department of the Treasury (Treasury Department) and the Internal
Revenue Service (IRS) plan to issue guidance under new § 45V and new § 45Z of the
Internal Revenue Code (Code), as added to the Code by §§ 13204 and 13704,
respectively, of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), commonly
known as the Inflation Reduction Act of 2022 (IRA). This notice requests general
comments on the clean hydrogen production credit under § 45V of the Code (§ 45V
credit) and the clean fuel production credit under § 45Z (§ 45Z credit), as well as
specific comments described in section 3 of this notice. Comments received in
response to this notice will help to inform the development of guidance implementing
§ 45V (and associated incentives for clean hydrogen production in §§ 45 and 48) and
§ 45Z.
SECTION 2. BACKGROUND
.01 Credits for Clean Hydrogen
.
The § 45V credit is allowable for qualified clean hydrogen produced after 2022 at
a qualified clean hydrogen production facility during the 10-year period beginning on the
date the facility is originally placed in service. The § 45V credit is calculated by
multiplying the applicable amount by the kilograms of qualified clean hydrogen
produced based on the lifecycle greenhouse gas emissions rate that results from the

2
production of qualified clean hydrogen. For facilities that do not meet certain prevailing
wage and apprenticeship requirements, the applicable amount is determined by
multiplying $0.60 per kilogram by an applicable percentage that ranges from 20 percent
to 100 percent depending on the lifecycle greenhouse gas emissions rate that results
from the production of the qualified clean hydrogen. Therefore, for these facilities the
applicable amount ranges from $0.12 to $0.60 per kilogram of qualified clean hydrogen
produced. If the qualified clean hydrogen facility meets the prevailing wage and
apprenticeship requirements, the credit amount is multiplied by five, resulting in an
applicable amount that ranges from $0.60 to $3.00 per kilogram of clean hydrogen
produced.
1
The applicable amount is adjusted annually for inflation.
If a lifecycle greenhouse gas emissions rate has not been determined for
purposes of § 45V for hydrogen produced by a taxpayer, then the taxpayer may file a
petition for the Secretary of the Treasury or her delegate (Secretary) to determine the
emissions rate of the hydrogen.
Qualified clean hydrogen is defined in § 45V to include hydrogen that is produced
through a process that results in a lifecycle greenhouse gas emissions rate of not
greater than 4 kilograms of carbon dioxide equivalent (CO
2-
e) per kilogram of hydrogen.
To be eligible for the § 45V credit, the qualified clean hydrogen must be produced in the
United States within the meaning of § 638(1) of the Code (or a U.S. possession within

1
The higher credit amount also applies if the construction of the facility begins prior to the date that is 60
days after the Secretary publishes guidance with respect to the prevailing wage and apprenticeships
requirements of § 45V(e)(3)(A) and (4), unless the facility is altered or repaired after that date. The IRA
also provides an election for a taxpayer to receive a direct payment or to transfer the credit. Similar
provisions were added by the IRA to several other Code provisions. See Notice 2022-51 requesting
comments on prevailing wage and apprenticeship requirements and Notice 2022-50 requesting
comments on direct payment and transferability issues for general applicability to these several Code
sections.

3
the meaning of § 638(2)) in the ordinary course of the taxpayer’s trade or business for
sale or use. Additionally, the production and sale or use by the taxpayer must be
verified by an unrelated party. A taxpayer may not claim a § 45V credit for qualified
clean hydrogen produced at any facility that includes carbon capture equipment for
which a credit is allowed to any taxpayer under § 45Q for the taxable year or any prior
taxable year.
Section 13204(b) of the IRA amended § 45(e) relating to the credit for producing
electricity from certain renewable sources (§ 45 credit) to provide a special exception to
the requirement that electricity be sold to an unrelated party to be eligible for the § 45
credit. Electricity produced by a taxpayer after 2022 may be treated as sold by the
taxpayer to an unrelated person during the taxable year if the electricity is used during
the taxable year by the taxpayer or a related person at a qualified clean hydrogen
production facility to produce qualified clean hydrogen. This production and use must
be verified by an unrelated third party. Section 13204(c) of the IRA also amended § 48
relating to the energy investment tax credit (§ 48 credit) to allow a taxpayer that owns a
qualified clean hydrogen production facility placed in service after December 31, 2022,
to make an election to claim the § 48 credit in lieu of the § 45 credit.
.02 Section 45Z, Clean Fuel Production Credit
.
The § 45Z credit is equal to the product of (1) the applicable amount per gallon
(or gallon equivalent) with respect to any transportation fuel that is (a) produced by the
taxpayer at a qualified facility, and (b) sold by the taxpayer in a manner described in
§ 45Z(a)(4) during the taxable year, and (2) the emissions factor for such fuel (as
determined under § 45Z(b)).

4
Section 45Z(a)(2) defines the “applicable amount” for any transportation fuel
produced at a qualified facility as (A) 20 cents in the case of a qualified facility which
does not satisfy certain prevailing wage and apprenticeship requirements, or (B) $1.00
in the case of a qualified facility that satisfies such requirements.
2
Section 45Z(a)(3)
provides that the amounts listed in § 45Z(a)(2) are increased to 35 cents and $1.75,
respectively in the case of a transportation fuel that is sustainable aviation fuel. The
applicable amounts will be adjusted annually for inflation. Section 45Z applies to
transportation fuel produced and sold after December 31, 2024, and before January 1,
2028.
SECTION 3. REQUEST FOR COMMENTS
The Treasury Department and the IRS request comments on questions arising
under § 45V (and the associated clean hydrogen production incentives in §§ 45 and 48)
and under § 45Z that should be addressed in guidance. Commenters are encouraged
to specify the issues on which guidance is needed most quickly as well as the most
important issues on which guidance is needed. In addition to general comments, the
Treasury Department and the IRS request comments that address the following specific
questions:
.01 Credit for Production of Clean Hydrogen
.
(1) Clean Hydrogen. Section 45V provides a definition of the term “qualified
clean hydrogen.” What, if any, guidance is needed to clarify the definition of qualified
clean hydrogen?

2
These prevailing wage and apprenticeship requirements are provided in § 45Z(f)(6) and (f)(7). Similar
provisions were added by the IRA to several other Code sections. See Notice 2022-51 requesting
comments on prevailing wage and apprenticeship requirements. General comments pertaining to the
prevailing wage and apprenticeship requirements should be submitted in response to Notice 2022-51.

5
(a) Section 45V defines "lifecycle greenhouse gas emissions" to "only include
emissions through the point of production (well-to-gate)."
3
Which specific steps and
emissions should be included within the well-to-gate system boundary for clean
hydrogen production from various resources?
(b)(i) How should lifecycle greenhouse gas emissions be allocated to co-products
from the clean hydrogen production process? For example, a clean hydrogen producer
may valorize steam, electricity, elemental carbon, or oxygen produced alongside clean
hydrogen.
(ii) How should emissions be allocated to the co-products (for example, system
expansion, energy-based approach, mass-based approach)?
(iii) What considerations support the recommended approaches to these issues?
(c)(i) How should lifecycle greenhouse gas emissions be allocated to clean
hydrogen that is a by-product of industrial processes, such as in chlor-alkali production
or petrochemical cracking?
(ii) How is byproduct hydrogen from these processes typically handled (for
example, venting, flaring, burning onsite for heat and power)?
(d) If a facility is producing qualified clean hydrogen during part of the taxable
year, and also produces hydrogen that is not qualified clean hydrogen during other parts
of the taxable year (for example, due to an emissions rate of greater than 4 kilograms of
CO
2
-e per kilogram of hydrogen), should the facility be eligible to claim the § 45V credit

3
The well-to-gate system boundary for hydrogen production includes emissions associated with
feedstock growth, gathering, and/or extraction; feedstock delivery to a hydrogen production facility;
conversion of feedstock to hydrogen at a production facility; generation of electricity consumed by a
hydrogen production facility (including feedstock extraction for electricity generation, feedstock delivery,
and the electricity generation process itself); and sequestration of carbon dioxide generated by a
hydrogen production facility.

6
only for the qualified clean hydrogen it produces, or should it be restricted from claiming
the § 45V credit entirely for that taxable year?
(e) How should qualified clean hydrogen production processes be required to
verify the delivery of energy inputs that would be required to meet the estimated
lifecycle greenhouse gas emissions rate as determined using the GREET model or
other tools if used to supplement GREET?
(i) How might clean hydrogen production facilities verify the production of
qualified clean hydrogen using other specific energy sources?
(ii) What granularity of time matching (that is, annual, hourly, or other) of energy
inputs used in the qualified clean hydrogen production process should be required?
(2) Alignment with the Clean Hydrogen Production Standard
. On September 22,
2022, the Department of Energy (DOE) released draft guidance for a Clean Hydrogen
Production Standard (CHPS) developed to meet the requirements of § 40315 of the
Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 429
(November 15, 2021).
4
The CHPS draft guidance establishes a target lifecycle
greenhouse gas emissions rate for clean hydrogen of no greater than 4.0 kilograms
CO
2
-e per kilogram of hydrogen, which is the same lifecycle greenhouse gas emissions
limit required by the § 45V credit. For purposes of the § 45V credit, what should be the
definition or specific boundaries of the well-to-gate analysis?
(3) Provisional Emissions Rate
. For hydrogen production processes for which a
lifecycle greenhouse gas emissions rate has not been determined for purposes of
§ 45V, a taxpayer may file a petition with the Secretary for determination of the lifecycle

4
https://www.hydrogen.energy.gov/pdfs/clean-hydrogen-production-standard.pdf

7
greenhouse gas emissions rate of the hydrogen the taxpayer produces.
(a) At what stage in the production process should a taxpayer be able to file such
a petition for a provisional emissions rate?
(b) What criteria should be considered by the Secretary in making a
determination regarding the provisional emissions rate?
(4) Recordkeeping and Reporting
.
(a) What documentation or substantiation do taxpayers maintain or could they
create to demonstrate the lifecycle greenhouse gas emissions rate resulting from a
clean hydrogen production process?
(b) What technologies or methodologies should be required for monitoring the
lifecycle greenhouse gas emissions rate resulting from the clean hydrogen production
process?
(c) What technologies or accounting systems should be required for taxpayers to
demonstrate sources of electricity supply?
(d) What procedures or standards should be required to verify the production
(including lifecycle greenhouse gas emissions), sale and/or use of clean hydrogen for
the § 45V credit, § 45 credit, and § 48 credit?
(e) If a taxpayer serves as both the clean hydrogen producer and the clean
hydrogen user, rather than selling to an intermediary third party, what verification
process should be put in place (for example, amount of clean hydrogen utilized and
guarantee of emissions or use of clean electricity) to demonstrate that the production of
clean hydrogen meets the requirements for the § 45V credit?
(f) Should indirect book accounting factors that reduce a taxpayer’s effective

8
greenhouse gas emissions (also known as a book and claim system), including, but not
limited to, renewable energy credits, power purchase agreements, renewable thermal
credits, or biogas credits be considered when calculating the § 45V credit?
(g) If indirect book accounting factors that reduce a taxpayer’s effective
greenhouse gas emissions, such as zero-emission credits or power purchase
agreements for clean energy, are considered in calculating the § 45V credit, what
considerations (such as time, location, and vintage) should be included in determining
the greenhouse gas emissions rate of these book accounting factors?
(5) Unrelated Parties
.
(a) What certifications, professional licenses, or other qualifications, if any,
should be required for an unrelated party to verify the production and sale or use of
clean hydrogen for the § 45V credit, § 45 credit, and § 48 credit?
(b) What criteria or procedures, if any, should the Treasury Department and the
IRS establish to avoid conflicts of interest and ensure the independence and rigor of
verification by unrelated parties?
(c) What existing industry standards, if any, should the Treasury Department and
the IRS consider for the verification of production and sale or use of clean hydrogen for
the § 45V credit, § 45 credit, and § 48 credit?
(6) Coordinating Rules.
(a) Application of certain § 45 rules.
(i) Section 45V(d)(3) includes a reduction for the § 45V credit when tax-exempt
bonds are used in the financing of the facility using rules similar to the rule under
§ 45(b)(3)). What, if any, additional guidance would be helpful in determining how to

9
calculate this reduction?
(ii) Section 45V(d)(1) states that the rules for facilities owned by more than one
taxpayer are similar to the rules of § 45(e)(3). How should production from a qualified
facility with more than one person holding an ownership interest be allocated?
(b) Coordination with § 48
.
(i) What factors should the Treasury Department and the IRS consider when
providing guidance on the key definitions and procedures that will be used to administer
the election to treat clean hydrogen production facilities as energy property for purposes
of the § 48 credit?
(ii) What factors should the Treasury Department and the IRS consider when
providing guidance on whether a facility is "designed and reasonably expected to
produce qualified clean hydrogen?”
(c) Coordination with § 45Q
. Are there any circumstances in which a single
facility with multiple unrelated process trains could qualify for both the § 45V credit and
the § 45Q credit notwithstanding the prohibition in § 45V(d)(2) preventing any § 45V
credit with respect to any qualified clean hydrogen produced at a facility that includes
carbon capture equipment for which a § 45Q credit has been allowed to any taxpayer?
(7) Please provide comments on any other topics related to § 45V credit that may
require guidance.
.02 Clean Fuel Production Credit (§ 45Z)
.
(1) Sale Definition.
(a) What factors should the Treasury Department and the IRS consider in
determining whether an unrelated person purchases transportation fuel for use in a

10
trade or business for purposes of § 45Z(a)(4)(B)?
(b) What factors should the Treasury Department and the IRS consider in
determining whether fuel is sold at retail for purposes of § 45Z(a)(4)(C)?
(2) Establishment of Emissions Rate for Sustainable Aviation Fuel. Section
45Z(b)(1)(B)(iii) provides that the lifecycle greenhouse gas emissions of sustainable
aviation fuel shall be determined in accordance with the Carbon Offsetting and
Reduction Scheme for International Aviation or “any similar methodology which satisfies
the criteria under § 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in
effect on the date of enactment of this section.” What methodologies should the
Treasury Department and IRS consider for the lifecycle greenhouse gas emissions of
sustainable aviation fuel for the purposes of § 45Z(b)(1)(B)(iii)(II)?
(3) Provisional Emissions Rates. Section 45Z(b)(1)(D) allows the taxpayer to file
a petition with the Secretary for determination of the emissions rate for a transportation
fuel which has not been established.
(a) At what stage in the production process should a taxpayer be able to file a
petition for a provisional emissions rate?
(b) What criteria should be considered by the Secretary to determine the
provisional emissions rate?
(4) Special Rules
. Section 45Z(f)(1) provides several requirements for a
taxpayer to claim the § 45Z credit, including for sustainable aviation fuel a certification
from an unrelated party demonstrating compliance with the general requirements of the
Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) or in the
case of any similar methodology, as defined in § 45Z(b)(1)(B)(iii)(II), requirements that

11
are similar to CORSIA’s requirements. With respect to this certification requirement for
sustainable aviation fuel, what certification options and parties should be considered to
support supply chain traceability and information transmission requirements?
(5) Coordinating Rules. Section 45Z(f)(4) states that under regulations
prescribed by the Secretary, rules similar to the rules of § 52(d) apply in the case of
estates and trusts. Section 45Z(f)(5) states that rules similar to § 45Y(g)(6) apply to
patrons of agricultural cooperatives. Section 45Z(f)(6)(A) states that rules similar to the
rules of § 45(b)(7) apply for the prevailing wage requirement. Section 45Z(f)(7) states
that rules similar to the rules of § 45(b)(8) apply for the apprenticeship requirement. Is
the application of the cross-referenced rules for purposes of the § 45Z credit adequately
clear? What aspects of the cross-referenced rules should apply to the § 45Z credit
without modification and what aspects should be modified?
(6) Multiple Owners. How should production from a qualifying facility with more
than one person having an ownership interest in such facility be allocated to such
persons for purposes of § 45Z(f)(2)? Should rules similar to the rules under § 45(e)(3)
apply for this purpose? If so, which aspects of § 45(e)(3) should apply without
modification for this purpose and which aspects should be modified?
(7) Please provide comments on any other topics related to § 45Z credit that may
require guidance.
SECTION 4: SUBMISSION OF COMMENTS
.01 Written comments should be submitted by December 3, 2022. Consideration
will be given, however, to any written comment submitted after December 3, 2022, if
such consideration will not delay the issuance of guidance. The subject line for the
comments should include a reference to Notice 2022-58. Comments may be submitted

12
in one of two ways:
(1) Electronically via the Federal eRulemaking Portal at www.regulations.gov
(type IRS-2022-58 in the search field on the regulations.gov homepage to find this
notice and submit comments).
(2) Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice
2022-58), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
.02 All commenters are strongly encouraged to submit comments electronically.
The Treasury Department and the IRS will publish for public availability any comment
submitted electronically or on paper to its public docket on www.regulations.gov
.
SECTION 5. 60-DAY RULE NOT EFFECTUATED FOR THE PREVAILING WAGE
AND APPRENTICESHIP REQUIREMENT

For purposes of §§ 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E, and
179D of the Code, the publication of this notice requesting comments is not the
publication of guidance with respect to the prevailing wage and apprenticeship
requirements, and it is not relevant in determining whether the prevailing wage and
apprenticeship requirements are satisfied under such sections. The Treasury
Department and the IRS will explicitly identify when guidance with respect to the
prevailing wage and apprenticeship requirements that is relevant for determining
whether such requirements have been satisfied for purposes of §§ 30C, 45, 45L, 45Q,
45U, 45V, 45Y, 45Z, 48, 48C, 48E, and 179D is published.
SECTION 6. DRAFTING INFORMATION
The principal author of this notice is the Office of Associate Chief Counsel
(Passthroughs & Special Industries). However, other personnel from the Treasury
Department and the IRS participated in its development. For further information

13
regarding this notice, call the energy security guidance contact number at (202) 317-
5254 (not a toll-free call).