Abstract Prominent clean energy tax credits in the United States (U.S.) could drive large expenditures that materially increase greenhouse gas (GHG) emissions if their implementing regulations assign negative values to avoided GHG emissions and allow projects to offset other supply chain emissions on this basis. Most notably, we find that assigning negative GHG intensities to biogenic- and fossil-origin methane feedstocks and allowing such feedstocks to be blended with natural gas could support about 35 million metric tonnes of gray hydrogen production per year under the Section 45V tax credit. These practices would come at a taxpayer cost of ∼$1 trillion over 10 years of tax credit eligibility and cause excess emissions of ∼3 billion tonnes carbon dioxide-equivalent (CO2e) above scenarios that impose strict methane controls. Both the clean hydrogen (Section 45V) and clean electricity (Section 45Y) production tax credits use life cycle emissions criteria to direct potentially trillions of dollars in federal tax expenditures. Life cycle analysis is a decision support tool that is increasingly prominent in energy and environmental policies, but it is not an objective, quantitative calculator. Seemingly minor choices about life cycle system boundaries and baseline assumptions, such as whether unabated methane emissions are assumed to continue indefinitely, have gigatonne-scale effects on expected GHG outcomes. We find that risks are more significant for hydrogen than clean electricity due both to the scale of feedstock availability relative to market size and tax credit value relative to commodity prices. Methane feedstocks that are inappropriately assigned negative emissions intensity could dominate U.S. hydrogen production via conventional steam methane reformation, preventing the innovation-oriented 45V tax credit from encouraging development of higher-cost electrolysis technology. For both tax credits, if eligibility rules qualify emitting technologies based on offsets, long-lived facilities would have no incentive to continue offsetting once tax credit incentives end, risking lock-in of methane-based infrastructure.
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