USA (Washington Insider Magazine)— On Friday, The U.S. administration proposed rules regarding energy companies. It includes “how energy companies can access billions of dollars in tax credits for making low-carbon hydrogen utilising new clean energy sources but left thorny problems, such as how nuclear power could benefit, uncertain”. The recognition will be based on the life-cycle greenhouse gas emissions from the power source used in hydrogen production. It would range from 60 cents to $3 per kilogram, the Treasury Department stated in the 128-page proposal.
“The 45V clean energy hydrogen production tax credit is an important part of our strategy to unlock private investment across sectors to build a clean energy economy and tackle the climate crisis,” John Podesta, a White House climate adviser, briefed reporters in a call.
To acquire the credit, hydrogen producers must demonstrate they have used clean electricity produced within three years of a hydrogen plant going into operation. The Biden administration is, however, pursuing feedback over the next two months from the nuclear industry and other low-carbon power producers on how their current plants could benefit.
The delay has affected nuclear power producers looking to produce hydrogen, operating their virtually emissions-free electricity. Current nuclear power is featured in three of the seven hydrogen hubs the Energy Department subsidises with billions of dollars in public allocation. However, constructing new nuclear power is costly and requires more time.
“For an administration that wants to reduce emissions and fight climate change, it makes no sense to kneecap the hydrogen market before it can even begin,” said Senator Joe Manchin, a Democrat who opposes the restrictions
Business companies, including the Chamber of Commerce, have also criticised new clean energy conditions, expressing it will slow down the development of a hydrogen economy.
However, renewable energy supporters and many environmental bodies say the rigid limits are essential to ensure hydrogen production is energy-intensive. It doesn’t accidentally lead to an expansion in the use of carbon-emitting fossil fuels altogether.
“Today’s proposed rules are a win for the climate, U.S. consumers, and the budding U.S. hydrogen industry,” said Rachel Fakhry, policy director for emerging technologies at the Natural Resources Defense Council.
The Biden administration considers that low-carbon hydrogen can combat climate change by supporting heavy industries such as aluminium, cement, steel, and long-haul transportation.
President Joe Biden’s signature climate law drafted the credits last year. It includes the Inflation Reduction Act and is part of the administration’s strategy to place the country on the way to generating 50 million metric tons of fuel by 2050. Streams of clean hydrogen can be made with electrolysers supported by wind and solar power, nuclear, or natural gas with carbon capture. This method separates water into hydrogen and oxygen.
Today, the bulk of hydrogen is made with fossil fuels with unstoppable emissions at a fraction of the cost of clean hydrogen. The proposal also states, “The clean power must also have been sourced from the same region as the hydrogen producer and generated about the same time the hydrogen was produced.”
On the other hand, owners of operators of nuclear power say the credit is necessary to produce hydrogen and help support the opening of their factories.
A senior U.S. official said, “There are potential pathways for nuclear power to get the credit, including upgrading or relicensing plants, or showing how producing hydrogen would help them avoid shutting plants.”
The proposal also includes a possible carve-out for nuclear that authorises a percentage of a company’s power production to go into clean hydrogen. However, the administration requires more information from the industry, a senior official briefed reporters on the call.
