Biden team offers nuclear pathway to hydrogen tax credit
Biden's administration announced on Friday that portions of nuclear power plant will be eligible for tax credits in order to produce clean hydrogen, if these credits prevent the reactors from being retired.
The new rules deal with one of the most controversial issues in the Inflation Reduction Act. This law, which is set to be implemented by 2022 and aims to combat climate change through subsidizing technologies to reduce greenhouse gas emissions, was enacted to help fight the effects of global warming.
Some environmental groups claim that nuclear reactors are not eligible for the IRA’s Clean Hydrogen Program and that the use of nuclear plants to generate hydrogen takes clean energy off the grid, which could have been used elsewhere.
Analysts say that clean hydrogen, which is hydrogen produced using non-fossil fuel sources, will be needed to decarbonize the heavy industry as well as some vehicles.
The Treasury Department has dismissed concerns over using nuclear energy to produce hydrogen.
In a press release, it stated that "if a nuclear retirement can be avoided, then the increased demand for hydrogen production won't have caused emissions (elsewhere)."
Treasury revised a draft plan for 2023 so that nuclear power, and other industries such as natural gases using carbon capture technology to prevent emissions, could qualify for credits worth billions of dollars to produce hydrogen.
The credit is based on a technology-neutral production of hydrogen at $3 per kilogram. However, it wasn't immediately clear who would be eligible for the full benefit.
John Podesta is the senior advisor to Biden on international climate policy. He said that the rules "provide certainty that hydrogen producers require to keep their projects progressing and make the United States a leader in truly green hydrogen."
The majority of hydrogen produced today is made using fossil fuels at a fraction the price of hydrogen produced with emissions-free energy.
CONSTELLATION EVALUATES HYDROGEN HYDROGEN PROJECT
According to the rules, a maximum 200 megawatts can be considered as new clean energy eligible for credits when a reactor was otherwise in danger of being closed down due poor economics. The U.S. nuclear reactors range in size from 300 MW up to 1,000 MW.
Reactors that are restarted after they have been shut down can also be credited.
Constellation Energy is the largest nuclear generator in the United States. The company said that the new rules are a victory for the industry.
The rules restrict the use of nuclear energy to produce hydrogen.
Constellation will need to assess the feasibility of a $900 million proposed hydrogen project for its LaSalle nuclear facility in Illinois and its role as a Midwest hydrogen hub.
The incoming administration under President-elect Donald Trump is not sure how it will handle hydrogen.
Frank Wolak said that the Fuel Cell and Hydrogen Energy Association CEO, Frank Wolak "looks forward to discussions with the new Congress and the new Administration about how federal energy and tax policy can best advance the development hydrogen."
Some natural-gas-fired plants that produce hydrogen can access credits if the install equipment to capture their carbon dioxide emissions and bury them. (Reporting and editing by Rod Nickel, Barbara Lewis, and Timothy Gardner)
(source: Reuters)