The U.S. Department of the Treasury finally released on Friday the long-awaited proposed tax credits for clean hydrogen production under the Inflation Reduction Act (IRA), in a move welcomed by environmentalists but criticized by others as too narrow and unclear on whether nuclear power generators could benefit.
"The Inflation Reduction Act's hydrogen tax credit will help build a clean hydrogen industry that will be critical in reducing emissions from harder-to-decarbonize sectors like heavy industry and heavy transportation," said John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation.
The proposal, which will now be subject to a 60-day comment period, is not final and could change after input from industry.
But for now, it leaves existing nuclear power plants out of the pool of beneficiaries. The Administration will need more information on how nuclear could end up getting the tax credit and there are potential pathways for nuclear power producers to be included, for example by upgrading or relicensing nuclear power plants, a senior U.S. official told Reuters.
The biggest U.S. nuclear power operator, Constellation, criticized the proposal, saying in a statement carried by Reuters,
"If finalized, America will surrender hydrogen and deep decarbonization leadership to China and Europe, both of which have policies that smartly utilize their existing nuclear plants to make hydrogen and speed decarbonization."
Marty Durbin, President of the U.S. Chamber's Global Energy Institute, also criticized the proposed tax rules.
"The proposed regulations released today by the Treasury Department on the clean hydrogen production credit will stunt the growth of a critical industry before it has even begun," Durbin said.
"Unfortunately, the restrictions in the proposed regulations-which didn't come from Congress-threaten to steer investment elsewhere, harming efforts to reduce emissions in hard-to-decarbonize industrial sectors," Durbin added.
"Ceding American leadership in this area would be a grave mistake."
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More