The Biden administration finalized rules meant to boost domestic production of hydrogen fuel through a new tax credit, a move that might also keep struggling nuclear power plants on line for longer. The highly anticipated guidelines stipulate what kinds of hydrogen projects can qualify for the tax credit. Hydrogen combustion releases water vapor instead of greenhouse gas emissions, which is why the Biden administration sees it as a more sustainable alternative to fossil fuels. But it takes energy to produce hydrogen, and where that energy ought to come from has been contentious. After a lot of political wrangling, the Biden administration ultimately loosened the rules to include hydrogen made with the help of some existing nuclear power plants. Specifically, nuclear reactors at risk of shuttering because of financial reasons might be able to benefit from the tax credit.
Where that energy ought to come from has been contentious “The final rule is an important step in the right direction,” Joe Dominguez, president and CEO of the largest nuclear power plant operator in the US, Constellation, said in a press statement . “The final rule allows a significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production.” The tax credit, called 45V, was established through the Inflation Reduction Act and is worth up to $3 per kilogram of hydrogen production. To qualify, companies have to meet strict requirements to limit pollution.
That’s because whether hydrogen can be considered a clean fuel depends on how it’s made. Today, 95 percent of hydrogen produced in the US is made using gas in a process called steam-methane reforming. Methane is an even more potent greenhouse gas than carbon dioxide. And steam-methane reforming also produces carbon emissions. The more climate-friendly alternative is to create hydrogen through electrolysis, splitting water into oxygen and hydrogen using electricity. The electricity would have to come from carbon pollution-free sources like solar and wind farms — or nuclear reactors, of course. But all the recent hype over hydrogen has sparked concerns that the burgeoning industry might use up too much of America’s still-limited carbon-free electricity supply. The worry is that power grids might try to meet rising electricity demand using gas and coal-fired plants, leading to higher greenhouse gas emissions.
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