New U.S. rules outline tax credits for low-carbon hydrogen production, sparking debate among energy sectors.
The U.S. has proposed rules for accessing billions in tax credits for low-carbon hydrogen production. The rules, however, leave key issues like nuclear power's role uncertain.
The Treasury Department's 128-page proposal sets the credit based on emissions from hydrogen production's power source. It ranges from 60 cents to $3 per kilogram.
White House climate adviser John Podesta highlighted the credit's significance. "It's crucial for private investment in a clean energy economy," he said.
Hydrogen producers must use clean electricity built within three years of a plant's service start to qualify. The Biden administration seeks feedback from the nuclear industry on existing plants' benefits.
Nuclear power producers, vital in hydrogen production, are concerned. They face challenges with costly new nuclear projects and potential delays.
Rachel Fakhry of the Natural Resources Defense Council praised the rules. "They're beneficial for the climate and U.S. hydrogen industry," she said.
The Biden administration views low-carbon hydrogen as key in reducing emissions in heavy industries and transportation. Outlined in the Inflation Reduction Act, these credits are part of Biden's goal for 50 million metric tons of hydrogen by 2050.
Hydrogen can be produced using electrolyzers powered by renewables, nuclear, or natural gas with carbon capture. However, most current hydrogen production uses fossil fuels, cheaper than clean methods.
The proposal stipulates that clean power must be regional and concurrent with hydrogen production.
Nuclear operators say the credit is vital for hydrogen production and maintaining nuclear plants. A U.S. official noted potential pathways for nuclear power to earn the credit. These include plant upgrades or showing hydrogen production's benefits for plant longevity.
The rule also suggests a carve-out for nuclear, allowing a percentage of power for hydrogen. Further industry input is needed, an official said.
The proposed rule will be open for comments and hearings for 60 days before finalization.
Constellation, the largest U.S. nuclear operator, criticized the proposal. They fear losing leadership in hydrogen and decarbonization to China and Europe. Constellation plans a $900 million hydrogen facility in Illinois.
The proposal also explores using renewable natural gas from landfills and drilling emissions for hydrogen production.
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