Section 2 of the bill defines clean hydrogen (clean hydrogen) as
hydrogen that is:
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Derived from a clean energy resource that uses water as the source of hydrogen; or
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Produced through a process that results in lifecycle greenhouse gas emissions rates that are less than 1.5 kilograms of carbon dioxide equivalent per kilogram of hydrogen, as set forth in applicable federal law. Section 2 also directs the public utilities commission (commission)
to establish a stand-alone application, review, and approval process for investor-owned utility projects that result in the production of clean hydrogen (clean hydrogen project). For a clean hydrogen project to be approved by the commission, an investor-owned utility must submit an application to the commission demonstrating that the clean hydrogen project involves collaboration between the investor-owned utility and a state or federal agency. Any application for a clean hydrogen project must include:
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Best practices utilized by the investor-owned utility to reduce air emissions and environmental impacts, conduct leak detection monitoring, and increase public safety;
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If the investor-owned utility's clean hydrogen production facilities are located in a disproportionately impacted community, a cumulative impact analysis that evaluates past, present, and future impacts; and
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An assessment of the annual volume of water used in electrolysis of water to produce clean hydrogen for the clean hydrogen project. Section 2 also requires the commission to allow an investor-owned
utility to sell clean hydrogen to third parties under a clean hydrogen tariff.
For income tax years commencing on or after January 1, 2024, but
before January 1, 2033, section 3 creates a state income tax credit in specified amounts per kilogram of clean hydrogen used for industrial operations, for operating a heavy-duty vehicle, or for aviation (tax credit). Any taxpayer seeking to claim the tax credit must first apply for and receive a tax credit certificate from the Colorado energy office.
