Important changes are coming to the clean energy world. As some of you may have heard, the U.S. Department of the Treasury and IRS have finalized rules for the Clean Hydrogen Production Tax Credit, a cornerstone of the Inflation Reduction Act (IRA) of 2022. These rules don’t just clarify how the tax credit works—they’re setting the stage for hourly renewable energy certificate (REC) tracking. Let’s dive into what this means and how TraceX helps its customers stay ahead of the curve.

 

What Are These Rules About?

At their core, the new rules focus on ensuring clean hydrogen production is actually clean by:

• Calculating lifecycle greenhouse gas (GHG) emissions for hydrogen production.
• Supporting the use of renewable energy to power hydrogen facilities.
• Encouraging upgrades to existing facilities to align with clean energy standards.
• Introducing hourly REC tracking to ensure renewable energy use matches real-time hydrogen production.

It’s a major shift aimed at boosting transparency, reducing emissions, and accelerating the growth of clean hydrogen markets.

 

Breaking Down the Three Key Pillars

The rules introduce a framework built on temporal matching, incrementality, and deliverability. Here’s what they mean:

Temporal Matching: Syncing RECs with Real-Time Hydrogen Production

Starting in 2030, hydrogen facilities will need to match their electricity use to renewable energy generation on an hourly basis. This eliminates the uncertainty and ensures every kilowatt used to produce hydrogen is backed by renewable energy produced at the same time. Think of it as adding a timestamp to green energy—enhancing transparency and credibility in the hydrogen market.

 

Incrementality: Adding New Clean Energy to the Grid

Hydrogen facilities can only claim RECs from new or expanded renewable energy sources. For example, electricity from wind farms built within 36 months of the hydrogen facility or nuclear plants retrofitted with carbon capture technology would qualify.

This ensures clean hydrogen actively contributes to expanding new renewable energy capacity instead of relying on existing resources.

 

Deliverability: Ensuring Renewable Energy Reaches Hydrogen Facilities

RECs must reflect energy produced and delivered within the same grid region or be transferred with proper documentation (tracked hourly with tools like NERC E-tags). This guarantees that renewable energy powering hydrogen production is physically delivered and avoids reliance on accounting measures.

Why Does This Matter?

These new standards reshape the way we think about clean hydrogen and renewable energy:

More Transparency: Hourly REC matching ensures renewable energy directly supports hydrogen production.

Greater Impact: Drives new clean energy projects while reducing lifecycle GHG emissions.

Economic Growth: Creates jobs and fosters innovation across clean energy and hydrogen sectors.

Future-Proofing: Aligns the industry with state and federal decarbonization goals.

 

How TraceX Helps

At TraceX, we’re already enabling renewable energy generators and buyers to navigate this evolving landscape:

Enhanced REC Tracking: Our platform simplifies REC data management, offering a clear, auditable trail for compliance. While our current system supports monthly and annual tracking, we’re evolving to meet the market’s needs by preparing for hourly REC tracking ahead of the 2030 deadline.

Seamless Compliance: TraceX integrates real-time data to ensure customers meet the Treasury’s requirements for temporal matching, deliverability, and incrementality.

Marketplace for Transparency: Our marketplace connects renewable energy generators with hydrogen producers, ensuring both parties can easily transact and track RECs that meet the new standards.

Future-Ready: By staying ahead of policy shifts, TraceX ensures our customers are ready to thrive in a market that demands precision and accountability.

 

The Bottom Line

The Clean Hydrogen Production Tax Credit isn’t just a regulatory update—it’s a roadmap to a greener, more transparent energy future. Whether you’re a generator or a buyer, TraceX is here to help you navigate the transition to hourly REC tracking, align with clean energy goals, and unlock new opportunities in the hydrogen market.

Ready to learn more? Book a meeting with our team and see how TraceX can help you lead the charge in clean hydrogen!