What to Know About CNX’s Stake in Clean Hydrogen Development (45V Tax Credit)

February 28, 2024

By Positive Energy Hub Staff

This week closed the official public comment period for the Department of Treasury’s tax credits (45V Credit) to jumpstart clean hydrogen production in the United States. Viewed as one of the most consequential policies to scale hydrogen development, Treasury’s draft guidance released in December omitted components that are foundational to the original intent of the law as well as Appalachia’s competitive hydrogen advantage.

Here’s what you need to know:

Hydrogen can be produced using a variety of feedstocks and is the one of the most viable ways to quickly decarbonize key economic sectors, particularly heavy industry, processes, and other hard-to-abate sectors, such as transportation fuels.
The 45V Hydrogen Production Tax Credit, established in 2022 by the Inflation Reduction Act (IRA), aims to incentivize the wide-scale development of clean hydrogen nationally. As defined, clean hydrogen is based on the lifecycle carbon emissions to produce 1kg of hydrogen and is meant to be technology and feedstock neutral.
- Restrictive guidance could unintentionally kill an important clean hydrogen pathway unique to Appalachia.
Often overlooked, coal mine methane (CMM)-produced hydrogen carries a negative carbon intensity (CI) score, according to calculations from the Department of Energy’s Argonne National Lab.
- Using CMM for clean hydrogen would change the perception of the energy transition across Appalachia by turning fugitive CMM into a usable commodity. With a conducive policy environment and given CNX’s unique technical expertise, leading position, and pioneering legacy in the capture and processing of CMM, CNX holds the keys to this generational opportunity across the Appalachian region.
- CMM-produced hydrogen would help generate jobs and economic activity in disadvantaged energy communities, improve air quality, encourage partnerships with labor organizations, strengthen our existing regional supply chain, and generate new tax revenues in the energy communities most impacted by the new energy economy.

What is coal mine methane?

Coal mine methane emissions – or methane vented from operational and abandoned mines – account for about 10% of total U.S. methane emissions.
- For safety and regulatory reasons, mines must vent methane as they’re developed, with emissions continuing well after mining ceases.
- 80% of America’s CMM emissions are concentrated in the Appalachian region.
CNX’s operations team develops and operates methane capture systems to collect and utilize fugitive methane from sources, including active and abandoned mines.
- These capabilities, combined with our technologies to produce ultra-low carbon natural gas and derivative products, allow us to produce clean hydrogen that has the lowest carbon intensity.
- CNX’s New Technologies team demonstrates cutting-edge tech developments to better utilize all forms of methane (CMM, CBM, and unconventional shale methane from the Marcellus and Utica).
In short: CNX’s technology turns wasted product – methane – into an environmental and crucial economic commodity that contributes to energy security, creates jobs, and further reduces emissions.
- The 45V Credit could accelerate these benefits by driving the necessary innovation and investment in capturing fugitive CMM emissions.
- Specifically, the capture and the productive use of CMM to produce ultra-low carbon natural gas to be used in the production of clean hydrogen will significantly decrease the CI of hydrogen projects.
- Allegheny County Conference on Community Development (ACCD): “If properly enabled, CMM-based hydrogen production will be able to create over 735,000 jobs over the next two decades in the Pittsburgh region and infuse over $116B into the regional economy. We have identified over 30 unique projects, each with potential to create 20,000 direct jobs and support 14,000 additional jobs through indirect and induced impact.”

However, the ability to realize these opportunities rests in Treasury’s will to get the policy framework right. Otherwise, we’re putting America’s hydrogen hub aspirations in jeopardy.
Congressman Chris Deluzio (D, PA): “[CMM] Exclusion from the rule would be scientifically inconsistent with the administration’s own finding and would have the potential to derail hydrogen projects in a region that has already been designated as a valuable “hub” for this exact technology.”

Here’s what Treasury needs to get right to solidify hydrogen opportunities in Appalachia:

By creating a separate model to calculate lifecycle GHG emissions, the Credit deviates from Congress’ intent of the law. The updated guidance should align the final 45VH2-GREET Model regulations to include the feedstocks and technologies recognized by the R&D GREET Model, while also incorporating the methodology for measuring lifecycle GHG emissions, including methane emissions avoidance accounting into the 45VH2-GREET Model.
- Proposed regulations for the 45V Credit must be consistent with their “intent to provide a robust and flexible incentive that will catalyze and quickly scale a domestic hydrogen economy,” a group of Democrat members of the U.S. Senate wrote to Secretaries Yellen, Granholm and John Podesta in November.
- For example, any deviation in the scientifically validated carbon intensity score of CMM would result in the need to blend greater volumes of CMM to achieve target hydrogen carbon intensity on a project-by-project basis. In other words, lower carbon intensity score equals fewer hydrogen projects and fewer jobs in the disadvantaged communities within Appalachia.
- U.S. Senator Manchin (D, WV): “We have to make sure the GREET model follows the science, not politics.”
Eliminate the first productive use and incrementality requirements as related to the production of clean hydrogen with ultra-low carbon natural gas from CMM. This proposal would limit emissions associated with the diversion of CMM from other pre-existing productive uses.
- For example, any such requirements should account for incremental capital investment in new CMM capture points and not exclude an entire mining operation due to some level of capture already occurring on site.
- If first productive use and incrementality are mandated, this will prevent the overwhelming majority of active and abandoned mines from qualifying, leading to the continuation of harmful methane emissions.

What people are saying about the potential for CMM-produced hydrogen and 45V:

Pittsburgh International Airport (PIT): “Recognizing CMM as a qualifying feedstock under the 45V tax credit provides a viable solution by offering an environmentally beneficial and readily available resource for SAF production…Granting CMM status as a qualifying feedstock under Section 45V will markedly support the aviation industry’s shift towards sustainability, marking a pivotal move towards a cleaner, more thriving future.”
Allegheny County Conference on Community Development, Allegheny/Fayette Central Labor Council, Pittsburgh Regional Building & Construction Trades Council: “We strongly support recognizing the methane abatement benefits of low-carbon gasses such as fugitive CMM and renewable natural gas (RNG) and strongly urge Treasury to work with industry stakeholders toward impactful deployment of these hydrogen decarbonization solutions. We believe that overly restrictive implementation criteria would be a detriment to methane abatement and thus not only work against the spirit of the Administration’s commitment to a swift, robust and inclusive energy transition, but also actively limit the U.S. ability to achieve new levels of global competitiveness by severely stifling industrial decarbonization innovation.”
Congressman Chris Deluzio (D, PA): “If these feedstocks are included as required by the IRA, then CMM blending with natural gas to produce blue hydrogen could result in tens of billions of dollars in investment in the region, creating upwards of 100,000 jobs.”
Commonwealth of Pennsylvania: “The 45VH2-GREET model would exclude key low carbon intensity sources for H2 production which have already been vetted and assessed by rigorous scientific review. This application of 45VH2-GREET would disincentivize the productive use of emissions abatement technologies that capture and utilize various fugitive methane sources such as coal mine methane (CMM) and accelerate the deployment of Carbon Capture and Sequestration (CCS) technology. These emissions abatement technologies should not be artificially excluded. To do so runs counter to US Federal methane reduction pledges and would steepen the climb to develop a strong hydrogen sector.”
International Union of Operating Engineers (IUOE): “SW PA region has seeded, scaled, and successfully deployed a wide range of innovations and groundbreaking technologies that are pushing the possibilities of industrial decarbonization. One such unique innovation is turning fugitive CMM into a feedstock for clean hydrogen. This ability to turn a harmful emission into a productively used commodity not only creates an important solution for the enormous challenges coal regions face, but it also improves those regions’ attractiveness for new investments.”
AFL-CIO: “Union members in natural gas- and coal-rich states such as Ohio and Pennsylvania are looking to blue hydrogen projects as a source of family-sustaining, lower emissions jobs…the rule can make it clear that hydrogen producers may blend conventional natural gas with ultra-low carbon intensity coal mine methane, to bring down the life cycle emissions of blue hydrogen projects and allow access to a higher amount of tax credit.”
Appalachian Regional Clean Hydrogen Hub (ARCH2): “The section 45V credit has the potential to tip the economic scale to drive innovation and investment in capturing fugitive CMM emissions and utilizing this methane for clean hydrogen production. This outcome will be a true win-win for the Biden Administration’s goals of reducing greenhouse emissions, increasing clean hydrogen production, and creating jobs.”
North America’s Building Trades Unions (NABTU): “This technology neutral approach must be maintained regardless of the type of energy source used to produce hydrogen… This is applicable for natural gas producers and other forms of production including but not limited to coal mine methane and renewable natural gas.”
Waste Gas Capture Initiative (WGCI): “Fugitive methane, when captured and utilized as a feedstock, not only transforms a potential environmental hazard into a resource, but also plays a pivotal role in advancing and diversifying clean energy production and displacing consumption of conventional sources of fossil fuels.”
Democratic U.S. Senators Manchin (WV), Fetterman (PA), Casey (PA), Brown (OH), among others: “Overly prescriptive guidance could prevent the growth and certainty needed for clean hydrogen to provide meaningful alternatives for difficult to decarbonize sectors, reach competitive hydrogen market prices, and realize the more than 100,000 new jobs the Energy Department projects the clean hydrogen industry could create by 2030.”
Flandreau Santee Sioux Tribe of South Dakota: “Removing CMM emissions as quickly as possible – given it contributes such a large proportion of CO2e emissions today – must surely be an overarching priority.”
Crow Tribe: “Fugitive methane capture and potential hydrogen production applications will support job creation for the Crow people who have been impacted by historical barriers to economic development faced by Indian tribes.”

To read CNX’s full comment letter submitted to the U.S. Internal Revenue Service (IRS) and Department of Treasury, click here.

What to Know About CNX’s Stake in Clean Hydrogen Development (45V Tax Credit)

Here’s what you need to know:

What is coal mine methane?

Here’s what Treasury needs to get right to solidify hydrogen opportunities in Appalachia:

What people are saying about the potential for CMM-produced hydrogen and 45V:

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