The Biden administration finalized guidelines meant to spice up home manufacturing of hydrogen gasoline by a brand new tax credit score, a transfer which may additionally preserve struggling nuclear energy crops on line for longer.
The extremely anticipated tips stipulate what sorts of hydrogen tasks can qualify for the tax credit score. Hydrogen combustion releases water vapor as a substitute of greenhouse gasoline emissions, which is why the Biden administration sees it as a extra sustainable various to fossil fuels. However it takes power to provide hydrogen, and the place that power ought to come back from has been contentious.
After loads of political wrangling, the Biden administration finally loosened the foundations to incorporate hydrogen made with the assistance of some present nuclear energy crops. Particularly, nuclear reactors prone to shuttering due to monetary causes would possibly have the ability to profit from the tax credit score.
The place that power ought to come back from has been contentious
“The ultimate rule is a vital step in the precise course,” Joe Dominguez, president and CEO of the biggest nuclear energy plant operator within the US, Constellation, stated in a press statement. “The ultimate rule permits a good portion of the prevailing service provider nuclear fleet to earn credit for hydrogen manufacturing.”
The tax credit score, known as 45V, was established by the Inflation Discount Act and is value as much as $3 per kilogram of hydrogen manufacturing. To qualify, corporations have to fulfill strict necessities to restrict air pollution.
That’s as a result of whether or not hydrogen could be thought-about a clear gasoline depends upon the way it’s made. At the moment, 95 percent of hydrogen produced in the US is made using gas in a course of known as steam-methane reforming. Methane is a fair more potent greenhouse gas than carbon dioxide. And steam-methane reforming additionally produces carbon emissions.
The extra climate-friendly various is to create hydrogen by electrolysis, splitting water into oxygen and hydrogen utilizing electrical energy. The electrical energy must come from carbon pollution-free sources like photo voltaic and wind farms — or nuclear reactors, in fact.
However all of the current hype over hydrogen has sparked issues that the burgeoning business would possibly dissipate an excessive amount of of America’s still-limited carbon-free electrical energy provide. The concern is that energy grids would possibly attempt to meet rising electrical energy demand utilizing gasoline and coal-fired crops, resulting in larger greenhouse gasoline emissions.
To ease these issues, the Biden administration proposed rules for the hydrogen tax credit score greater than a yr in the past that require corporations to get electrical energy from new sources of unpolluted power. The hope was that, by doing so, the hydrogen business would possibly assist add extra renewable power to the facility grid quite than siphoning off restricted sources.
It’s rather a lot more durable to construct new nuclear energy crops than new photo voltaic and wind farms, nonetheless. The proposal subsequently faced backlash from the nuclear energy companies saying they wouldn’t have the ability to profit from the hydrogen tax credit score because of this.
After receiving greater than 30,000 feedback on the proposal, the Biden administration loosened its tips. The Division of the Treasury and Inside Income Service launched the ultimate rules on Friday. They carve out eventualities during which an present nuclear energy plant prone to retirement can profit from the tax credit score if it’s used to provide hydrogen and meets sure monetary assessments.
Constellation opposed any necessities that hydrogen manufacturing use electrical energy from newly constructed sources in an effort to qualify for the tax credit score. The corporate is concerned in plans to build a major hub for hydrogen production in Illinois, a project awarded funding from the Bipartisan Infrastructure Law.
The ultimate guidelines additionally ease necessities for renewable power and make it simpler for builders to qualify for the tax credit score in states that have already got powerful clear electrical energy requirements. There are additionally new carveouts for hydrogen produced with methane that wafts out of landfills, farms, wastewater amenities, or coal mines which may in any other case escape into the environment. As well as, corporations can make the most of the tax credit score if hydrogen is made with electrical energy from a fossil gasoline energy plant that installs expertise to seize its carbon dioxide emissions.
“The in depth revisions we’ve made on this last rule present the knowledge that hydrogen producers have to preserve their tasks shifting ahead and make the US a worldwide chief in really inexperienced hydrogen,” John Podesta, senior adviser to the president for worldwide local weather coverage, said in a press release.
Most of America’s nuclear energy crops have been constructed within the Seventies or ’80s, and the average age of a nuclear reactor within the US is 42 years previous. Development of the first all-new nuclear reactor within the US in a long time finished in 2023 — seven years previous its unique deadline and $17 billion over price range. Subsequent-generation nuclear reactors are smaller and modular, which is meant to make them simpler and extra inexpensive to construct. However these designs aren’t anticipated to turn into commercially viable till the 2030s.
The nuclear power business has additionally seen a increase of curiosity over the previous yr from tech companies in want of more carbon-free energy for AI data centers. Microsoft inked a take care of Constellation to assist restart a retired reactor at Three Mile Island, whereas Google and Amazon introduced plans to help the event of superior small modular reactors.
