Clean Hydrogen Production Incentives Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1017 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. IN THE SENATE OF THE UNITED STATES MARCH 25, 2021 Mr. HEINRICH introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to establish a tax credit for the production of hydrogen using elec- tricity produced from renewable energy resources. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Clean Hydrogen Pro- 4 duction Incentives Act of 2021’’. 5 SEC. 2. CLEAN HYDROGEN PRODUCTION CREDIT. 6 (a) IN GENERAL.—Subpart D of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 VerDate Sep 11 2014 18:17 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1017.IS S1017 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 1017 IS 1986 is amended by adding at the end the following new 1 section: 2 ‘‘SEC. 45U. CLEAN HYDROGEN PRODUCTION CREDIT. 3 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section 4 38, the clean hydrogen production credit for any taxable 5 year is an amount equal to the product of— 6 ‘‘(1) the applicable amount, multiplied by 7 ‘‘(2) the kilograms of clean hydrogen— 8 ‘‘(A) produced by the taxpayer at a quali- 9 fied facility during the 10-year period beginning 10 on the date the facility was originally placed in 11 service, and 12 ‘‘(B) sold by the taxpayer to an unrelated 13 person during the taxable year. 14 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub- 15 section (a)(1), the applicable amount shall be an amount 16 equal to— 17 ‘‘(1) in the case of any facility the construction 18 of which begins before January 1, 2025, $3.00, 19 ‘‘(2) in the case of any facility the construction 20 of which begins after December 31, 2024, and be- 21 fore January 1, 2026, $2.40, 22 ‘‘(3) in the case of any facility the construction 23 of which begins after December 31, 2025, and be- 24 fore January 1, 2027, $1.60, and 25 VerDate Sep 11 2014 18:17 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1017.IS S1017 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 1017 IS ‘‘(4) in the case of any facility the construction 1 of which begins after December 31, 2026, $0. 2 ‘‘(c) CLEAN HYDROGEN.— 3 ‘‘(1) IN GENERAL.—For purposes of this sec- 4 tion, the term ‘clean hydrogen’ means hydrogen pro- 5 duced— 6 ‘‘(A) using an electrolyzer for which the 7 electricity used is produced from qualified re- 8 newable energy resources, or 9 ‘‘(B) by any other process which has been 10 determined by the Secretary (in consultation 11 with the Secretary of Energy) to have a rate of 12 carbon dioxide emissions per kilogram of hydro- 13 gen produced which is equal to or lower than 14 such rate for such production from the process 15 described in subparagraph (A). 16 ‘‘(2) QUALIFIED RENEWABLE ENERGY RE- 17 SOURCES.—For purposes of this subsection, the 18 term ‘qualified renewable energy resources’ means— 19 ‘‘(A) wind, 20 ‘‘(B) solar energy, 21 ‘‘(C) geothermal energy (as defined in sec- 22 tion 45(c)(4)), 23 ‘‘(D) marine and hydrokinetic renewable 24 energy (as defined in section 45(c)(10)), 25 VerDate Sep 11 2014 18:17 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1017.IS S1017 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 1017 IS ‘‘(E) hydropower, 1 ‘‘(F) nuclear energy, and 2 ‘‘(G) any other renewable energy resource 3 that produces electricity without the use of fos- 4 sil fuels (as determined by the Secretary, in 5 consultation with the Secretary of Energy). 6 ‘‘(d) QUALIFIED FACILITY.—For purposes of this 7 section, the term ‘qualified facility’ means a facility owned 8 by the taxpayer which is used for the production of clean 9 hydrogen. 10 ‘‘(e) SPECIAL RULES.—Rules similar to the rules of 11 paragraphs (1), (3), (4), and (5) of section 45(e) shall 12 apply for purposes of this section.’’. 13 (b) CONFORMING AMENDMENTS.— 14 (1) Section 38(b) of the Internal Revenue Code 15 of 1986 is amended— 16 (A) in paragraph (32), by striking ‘‘plus’’ 17 at the end, 18 (B) in paragraph (33), by striking the pe- 19 riod at the end and inserting ‘‘, plus’’, and 20 (C) by adding at the end the following new 21 paragraph: 22 ‘‘(34) the clean hydrogen production credit de- 23 termined under section 45U(a).’’. 24 VerDate Sep 11 2014 18:17 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1017.IS S1017 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 1017 IS (2) The table of sections for subpart D of part 1 IV of subchapter A of chapter 1 of such Code is 2 amended by adding at the end the following new 3 item: 4 ‘‘Sec. 45U. Clean hydrogen production credit.’’. (c) EFFECTIVE DATE.—The amendments made by 5 this section shall apply to facilities originally placed in 6 service after December 31, 2020. 7 Æ VerDate Sep 11 2014 18:17 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S1017.IS S1017 pamtmann on DSKBC07HB2PROD with BILLS