The US Treasury Department's updated requirements for hydrogen production tax credits amends the way upstream emissions are calculated, potentially making it easier for natural gas producers to qualify for the lucrative subsidy.
Previous guidelines used fixed assumptions about the rate of methane leaked from wells and pipelines rather than accepting data from individual projects. The industry argued that using uniform figures under the existing GREET model to calculate emissions would unfairly penalize companies that had taken steps to reduce methane leakage.
In final rules released Friday, the Treasury Department creates a pathway for companies to submit project-specific emissions data, an amendment that had been advocated for by ExxonMobil and the American Petroleum Institute, among others.
Without this change, some companies considering ammonia export projects along the US Gulf Coast said they would instead consider applying for 45Q tax credits for carbon sequestration, which cannot be used in conjunction with 45V.
Previous guidance only provided a pathway for renewable natural gas (RNG) produced from landfills to qualify for lucrative tax credits. The new rules include wastewater treatment, animal manure and coal mine methane.
