[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5192 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 5192
To amend the Internal Revenue Code of 1986 to establish a credit for
production of clean hydrogen, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 7, 2021
Mr. Larson of Connecticut (for himself, Ms. DelBene, and Mr. Beyer)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish a credit for
production of clean hydrogen, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clean Hydrogen Production and
Investment Tax Credit Act of 2021''.
SEC. 2. CLEAN HYDROGEN.
(a) Credit for Production of Clean Hydrogen.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 is amended by adding at the end the following new
section:
``SEC. 45U. CREDIT FOR PRODUCTION OF CLEAN HYDROGEN.
``(a) Amount of Credit.--For purposes of section 38, the clean
hydrogen production credit for any taxable year is an amount equal to
the product of--
``(1) the applicable amount, multiplied by
``(2) the kilograms of qualified clean hydrogen produced by
the taxpayer during such taxable year at a qualified clean
hydrogen production facility during the 10-year period
beginning on the date such facility was originally placed in
service.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a)(1), the
applicable amount shall be an amount equal to the applicable
percentage of $3.00. If any amount as determined under the
preceding sentence is not a multiple of 0.1 cent, such amount
shall be rounded to the nearest multiple of 0.1 cent.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) in the case of any qualified clean hydrogen
which is produced through a process that, as compared
to hydrogen produced by steam-methane reforming,
achieves a percentage reduction in lifecycle greenhouse
gas emissions which is less than 75 percent, 20
percent,
``(B) in the case of any qualified clean hydrogen
which is produced through a process that, as compared
to hydrogen produced by steam-methane reforming,
achieves a percentage reduction in lifecycle greenhouse
gas emissions which is not less than 75 percent and
less than 85 percent, 25 percent,
``(C) in the case of any qualified clean hydrogen
which is produced through a process that, as compared
to hydrogen produced by steam-methane reforming,
achieves a percentage reduction in lifecycle greenhouse
gas emissions which is not less than 85 percent and
less than 95 percent, 34 percent, and
``(D) in the case of any qualified clean hydrogen
which is produced through a process that, as compared
to hydrogen produced by steam-methane reforming,
achieves a percentage reduction in lifecycle greenhouse
gas emissions which is not less than 95 percent, 100
percent.
``(3) Inflation adjustment.--The $3.00 amount in paragraph
(1) shall be adjusted by multiplying such amount by the
inflation adjustment factor (as determined under section
45(e)(2), determined by substituting `2020' for `1992' in
subparagraph (B) thereof) for the calendar year in which the
qualified clean hydrogen is produced. If any amount as
increased under the preceding sentence is not a multiple of 0.1
cent, such amount shall be rounded to the nearest multiple of
0.1 cent.
``(c) Definitions.--For purposes of this section--
``(1) Lifecycle greenhouse gas emissions.--For purposes of
this section, the term `lifecycle greenhouse gas emissions' has
the same meaning given such term under subparagraph (H) of
section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)),
as in effect on the date of enactment of this section, as
related to the full fuel lifecycle through the point of
hydrogen production.
``(2) Qualified clean hydrogen.--
``(A) In general.--The term `qualified clean
hydrogen' means hydrogen which is produced through a
process that, as compared to hydrogen produced by
steam-methane reforming, achieves a percentage
reduction in lifecycle greenhouse gas emissions which
is not less than 40 percent.
``(B) Additional requirements.--Such term shall not
include any hydrogen unless such hydrogen is produced--
``(i) in the United States (as defined in
section 638(1) or a possession of the United
States (as defined in section 638(2)),
``(ii) in the ordinary course of a trade or
business of the taxpayer, and
``(iii) for sale or use.
``(3) Qualified clean hydrogen production facility.--
``(A) In general.--The term `qualified clean
hydrogen production facility' means a facility owned by
the taxpayer which produces qualified clean hydrogen
and which meets the requirements of subparagraph (B).
``(B) Termination.--The term `qualified clean
hydrogen production facility' shall not include any
facility the construction of which begins after
December 31, 2028.
``(4) Steam-methane reforming.--The term `steam-methane
reforming' means a hydrogen production process in which high-
temperature steam is used to produce hydrogen from natural gas
(other than natural gas derived from biomass (as defined in
section 45K(c)(3)), without carbon capture and sequestration.
``(d) Special Rules.--
``(1) Treatment of facilities owned by more than 1
taxpayer.--Rules similar to the rules section 45(e)(3) shall
apply for purposes of this section.
``(2) Coordination with credit for carbon oxide
sequestration.--No credit shall be allowed under this section
with respect to any qualified clean hydrogen produced at a
facility which includes property for which a credit is allowed
under section 45Q.
``(e) Regulations.--Not later than 1 year after the date of
enactment of this section, the Secretary, after consultation with the
Secretary of Energy and the Administrator of the Environmental
Protection Agency, shall issue regulations or other guidance to carry
out the purposes of this section, including regulations or other
guidance--
``(1) for determining lifecycle greenhouse gas emissions,
and
``(2) which require verification by unrelated third parties
of the production and sale or use of qualified clean hydrogen
with respect to which credit is otherwise allowed under this
section.''.
(2) Conforming amendments.--
(A) Section 38(b) is amended--
(i) in paragraph (32), by striking ``plus''
at the end,
(ii) in paragraph (33), by striking the
period at the end and inserting ``, plus'', and
(iii) by adding at the end the following
new paragraph:
``(34) the clean hydrogen production credit determined
under section 45U(a).''.
(B) The table of sections for subpart D of part IV
of subchapter A of chapter 1 amended by adding at the
end the following new item:
``Sec. 45U. Credit for production of clean hydrogen.''.
(3) Effective date.--The amendments made by this subsection
shall apply to hydrogen produced after December 31, 2021, at
facilities placed in service before such date.
(b) Credit for Electricity Produced From Renewable Resources
Allowed if Electricity Is Used To Produce Clean Hydrogen.--
(1) In general.--Section 45(e) is amended by adding at the
end the following new paragraph:
``(12) Special rule for electricity used at a qualified
clean hydrogen production facility.--Electricity produced by
the taxpayer shall be treated as sold by such taxpayer to an
unrelated person during the taxable year if such electricity is
used during such taxable year by the taxpayer or a person
related to the taxpayer at a qualified clean hydrogen
production facility (as defined in section 45U(d)(3)) to
produce qualified clean hydrogen (as defined in section
45U(d)(2)) during the 10-year period after such facility is
placed in service. The Secretary shall issue such regulations
or other guidance as the Secretary determines appropriate to
carry out the purposes of this paragraph, including regulations
or other guidance to require verification by unrelated third
parties of the production and use of electricity to which this
paragraph applies.''.
(2) Effective date.--The amendment made by this subsection
shall apply to electricity produced after December 31, 2021.
(c) Election To Treat Clean Hydrogen Production Facilities as
Energy Property.--
(1) In general.--Section 48(a) is amended by adding at the
end the following new paragraph:
``(8) Election to treat clean hydrogen production
facilities as energy property.--
``(A) In general.--In the case of any qualified
property (as defined in paragraph (5)(D)) which is part
of a specified clean hydrogen production facility--
``(i) such property shall be treated as
energy property for purposes of this section,
and
``(ii) the energy percentage with respect
to such property is--
``(I) in the case of a facility
which is designed and reasonably
expected to produce qualified clean
hydrogen which is described in a
subparagraph (A) of section 45U(b)(2),
6 percent,
``(II) in the case of a facility
which is designed and reasonably
expected to produce qualified clean
hydrogen which is described in a
subparagraph (B) of such section, 7.5
percent,
``(III) in the case of a facility
which is designed and reasonably
expected to produce qualified clean
hydrogen which is described in a
subparagraph (C) of such section, 10.2
percent, and
``(IV) in the case of a facility
which is designed and reasonably
expected to produce qualified clean
hydrogen which is described in a
subparagraph (D) of such section, 30
percent.
``(B) Denial of production credit.--No credit shall
be allowed under section 45U for any taxable year with
respect to any specified clean hydrogen production
facility.
``(C) Specified clean hydrogen production
facility.--For purposes of this paragraph, the term
`specified clean hydrogen production facility' means
any qualified clean hydrogen production facility (as
defined in section 45U(d)(3)) or any portion of such
facility--
``(i) which is placed in service after
December 31, 2021, and
``(ii) with respect to which--
``(I) no credit has been allowed
under section 45U or 45Q, and
``(II) the taxpayer make an
irrevocable election to have this
paragraph apply.
``(D) Qualified clean hydrogen.--For purposes of
this paragraph, the term `qualified clean hydrogen' has
the meaning given such term by section 45U(d)(2).
``(E) Regulations.--The Secretary shall issue such
regulations or other guidance as the Secretary
determines necessary or appropriate to carry out the
purposes of this section, including regulations or
other guidance which--
``(i) requires verification by unrelated
third parties that the facility produces
hydrogen which is consistent with the hydrogen
that such facility was designed and expected to
produce under subparagraph (A)(ii), and
``(ii) recaptures so much of any credit
allowed under this section as exceeds the
amount of the credit which would have been
allowed if the expected production were
consistent with the actual verified production
(or all of the credit so allowed in the absence
of such verification).''.
(2) Effective date.--The amendments made by this section
shall apply to periods after December 31, 2021, under rules
similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990).
(d) Termination of Excise Tax Credit for Hydrogen.--
(1) In general.--Section 6426(d)(2) is amended by striking
subparagraph (D) and by redesignating subparagraphs (E), (F),
and (G) as subparagraphs (D), (E), and (F), respectively.
(2) Conforming amendment.--Section 6426(e)(2) is amended by
striking ``(F)'' and inserting ``(E)''.
(3) Effective date.--The amendments made by this subsection
shall apply to fuel sold or used after December 31, 2021.
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