Clean Hydrogen Production Incentives Act of 2021
Bill: S.1017 | Sponsor: Sen. Heinrich, Martin (D-NM)
Policy area: Taxation

Summary:
Clean Hydrogen Production Incentives Act of 2021
This bill allows a new tax credit for the production of clean hydrogen using electricity produced from renewable energy resources (e.g., wind, solar, geothermal, nuclear energy). The bill defines clean hydrogen as hydrogen produced using an electrolyzer for which the electricity used is produced from qualified renewable energy resources, or by any other process which has been determined to have a rate of carbon dioxide emissions per kilogram of hydrogen produced equal to or lower than such rate for such production using other specified processes.

To amend the Internal Revenue Code of 1986 to establish a tax credit 
    for the production of hydrogen using electricity produced from 
                      renewable energy resources.

    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 Incentives 
Act of 2021''.

SEC. 2. CLEAN HYDROGEN PRODUCTION CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. CLEAN HYDROGEN PRODUCTION CREDIT.

    ``(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 clean hydrogen--
                    ``(A) produced by the taxpayer at a qualified 
                facility during the 10-year period beginning on the 
                date the facility was originally placed in service, and
                    ``(B) sold by the taxpayer to an unrelated person 
                during the taxable year.
    ``(b) Applicable Amount.--For purposes of subsection (a)(1), the 
applicable amount shall be an amount equal to--
            ``(1) in the case of any facility the construction of which 
        begins before January 1, 2025, $3.00,
            ``(2) in the case of any facility the construction of which 
        begins after December 31, 2024, and before January 1, 2026, 
        $2.40,
            ``(3) in the case of any facility the construction of which 
        begins after December 31, 2025, and before January 1, 2027, 
        $1.60, and
            ``(4) in the case of any facility the construction of which 
        begins after December 31, 2026, $0.
    ``(c) Clean Hydrogen.--
            ``(1) In general.--For purposes of this section, the term 
        `clean hydrogen' means hydrogen produced--
                    ``(A) using an electrolyzer for which the 
                electricity used is produced from qualified renewable 
                energy resources, or
                    ``(B) by any other process which has been 
                determined by the Secretary (in consultation with the 
                Secretary of Energy) to have a rate of carbon dioxide 
                emissions per kilogram of hydrogen produced which is 
                equal to or lower than such rate for such production 
                from the process described in subparagraph (A).
            ``(2) Qualified renewable energy resources.--For purposes 
        of this subsection, the term `qualified renewable energy 
        resources' means--
                    ``(A) wind,
                    ``(B) solar energy,
                    ``(C) geothermal energy (as defined in section 
                45(c)(4)),
                    ``(D) marine and hydrokinetic renewable energy (as 
                defined in section 45(c)(10)),
                    ``(E) hydropower,
                    ``(F) nuclear energy, and
                    ``(G) any other renewable energy resource that 
                produces electricity without the use of fossil fuels 
                (as determined by the Secretary, in consultation with 
                the Secretary of Energy).
    ``(d) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means a facility owned by the taxpayer which is 
used for the production of clean hydrogen.
    ``(e) Special Rules.--Rules similar to the rules of paragraphs (1), 
(3), (4), and (5) of section 45(e) shall apply for purposes of this 
section.''.
    (b) Conforming Amendments.--
            (1) Section 38(b) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in paragraph (32), by striking ``plus'' at the 
                end,
                    (B) in paragraph (33), by striking the period at 
                the end and inserting ``, plus'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(34) the clean hydrogen production credit determined 
        under section 45U(a).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 45U. Clean hydrogen production credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to facilities originally placed in service after December 31, 
2020.
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