Biden Administration offers nuclear industry a path to hydrogen tax credits
The Biden administration announced on Friday that nuclear power plants would be eligible for lucrative tax credits if they produce what it calls "clean hydrogen" and if these credits prevent the reactors from being retired.
The new rules resolve one of the most controversial issues surrounding the Inflation Reduction Act. This law, which is set to be implemented in 2022 and is designed to combat climate change through subsidizing technologies to reduce greenhouse gas emissions.
Some environmental groups claim that nuclear reactors, as clean energy sources, should not be eligible for the IRA’s clean hydrogen program. This program is seen as crucial to decarbonizing heavy industries and certain vehicles. They say that using nuclear plants to make hydrogen diverts clean energy from the grid, which could have been used for other electricity consumers.
Treasury Department released a statement that said "If nuclear retirement is avoided, then the additional demand for hydrogen production won't have caused emissions" elsewhere on the grid.
The U.S. Treasury released the final rules for hydrogen on Friday. It adjusts a previous plan, issued at the end of 2023, to be more favorable to nuclear energy and other industries.
The incoming administration under President-elect Donald Trump is unsure of how it will approach the production of hydrogen.
Frank Wolak said that the Fuel Cell and Hydrogen Energy Association CEO, Frank Wolak has stated in a press release, the industry is now looking forward to "conversations with the new Congress and the new Administration about how federal energy and tax policy can best advance the development hydrogen."
According to the new rules, up to 200 Megawatts of a nuclear reactor's capacity to generate power can be considered as new clean energy and receive credits if it was otherwise in danger of being shut down due to bad economics.
John Podesta is the senior advisor to Biden on international climate policy. He said, "The extensive changes we made to this final rule will provide the certainty hydrogen producers need to move forward with their projects and make the United States a leader in green hydrogen."
At the moment, most of the hydrogen produced is made from fossil fuels. This produces it at a fractional cost compared to cleaner alternatives.
The new rules allow facilities that burn natural gas and produce hydrogen to receive credits, if they install the equipment necessary to capture their carbon dioxide emissions.
Treasury stated that the rules would determine the value for credits earned by these plants by taking into account leakage of powerful greenhouse gas methane when natural gas is produced. This will be done in a future climate model of hydrogen, known as GREET which covers lifecycle emission. (Reporting and editing by Rod Nickel; Timothy Gardner)
(source: Reuters)
