© Department of Energy

The U.S. Department of Energy (DOE) has revised its emissions model to ease access to the blue hydrogen 45V tax credit by allowing project-specific methane leakage data. This change could help developers qualify for higher credit levels—if the incentive survives ongoing political efforts to eliminate it.

Until now, the 45VH2-GREET model used a national average for upstream methane emissions. This approach often penalized producers sourcing low-leak natural gas, making it difficult to meet the thresholds for more generous tax credits under the Inflation Reduction Act (IRA). With the revised model, developers can now use supply-chain-specific data.

“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.

Producers Push for Higher 45V Tiers

The 45V tax credit provides up to $3/kg for hydrogen with lifecycle emissions below 0.45 kgCO2e/kgH2. But even with 95% carbon capture, many producers have been limited to $0.75/kg or less due to high assumed methane leakage.

Oil majors like ExxonMobil and BP had lobbied for the change, arguing the national averages misrepresented real emissions. Now, with the ability to input accurate methane data, more projects may qualify for higher credit tiers.

Still, the credit’s future is uncertain. The U.S. House of Representatives recently passed a bill backed by Trump allies that would terminate the 45V credit by the end of 2025. If the Senate does not amend the bill, developers will need to begin construction this year to lock in the ten-year incentive.

Shift to 45Q Carries Risks

Some developers, including Air Products and CF Industries, have opted to rely on the 45Q carbon capture credit instead. While less lucrative—offering $85 per ton of CO2 stored—it remains available beyond 2025.

However, 45Q does not consider upstream methane emissions. Environmental groups have warned this could erode the climate value of blue hydrogen projects that switch credits.

With the revised GREET model in place, blue hydrogen developers now face a narrow window to qualify for 45V. The opportunity is clearer, but time and political uncertainty may ultimately decide who benefits.