The Biden administration announced new rules that will allow nuclear power plants to qualify for tax credits to produce cleane hydrogen. This move is part of a broader effort under the Infaltion Reduction Act (IRA).

Reuters reports that the new regulations aim to prevent nuclear reactors from shutting down while promoting clean hydrogen production.

Also read: Major Oil Firms Lobby to Protect IRA’s Carbon Capture Incentives 

The Debate Over Nuclear and Clean Hydrogen

Under the new rules, portions of nuclear power plants will be eligible for hydrogen production credits if it helps keep reactors in operation. However, some environmental groups argue that nuclear energy should not qualify for the IRA’s clean hydrogen program. They claim that using nuclear plants to produce hydrogen reduces the amount of clean energy available to other consumers on the grid.

Despite these concerns, industry analysts conclude that clean hydrogen is necessary in the decarbonisation of industries related to heavy manufacture and transportation. Hydrogen from non fossil sources is generally seen as a key element in reducing global emissions.

Treasury Department’s Stance

The Treasury Department defended its decision to include nuclear power in the clean hydrogen program. The department stated that if nuclear plant closures are prevented, the additional demand for hydrogen production would not result in increased emissions. This adjustment follows a draft plan from 2023. The plan allows nuclear power and other industries, such as natural gas plants with carbon capture technology, to qualify for billions in tax credits.

The rules provide $3 per kilogram for clean hydrogen production. But it remains unclear which producers will benefit fully from the credits. John Podesta, Senior Adviser to Biden on international climate policy, noted that the rules provide the certainty needed to advance hydrogen projects. This will help establish the US as a global leader in clean hydrogen technology.

Nuclear Power’s Role in Hydrogen Production

Currently, fossil fuels produce most hydrogen, making it much cheaper than hydrogen generated through emissions-free energy sources. The new rules, however, present a challenge for nuclear energy companies. They limit the amount of reactor capacity eligible for credits—no more than 200 megawatts—if the reactor was at risk of being shut down due to poor economics.

Constellation Energy, the largest nuclear power producer in the US, welcomed the new regulations. But also acknowledged that the restrictions complicate the path for nuclear-based hydrogen production. The company plans to evaluate the feasibility of its proposed $900 million hydrogen project at its LaSalle nuclear plant in Illinois.

Natural Gas and Hydrogen Production

The new rules also include provisions for natural gas plants that produce hydrogen. These plants can qualify for credits if they install technology to capture and bury carbon dioxide emissions. This expansion allows broader access to clean hydrogen credits. This will play a crucial role in the development of hydrogen hubs across the US.

These steps are seen as a win for the industry. But, challenges remain in balancing environmental concerns with the need for hydrogen to decarbonize key sectors.

The US Department of Energy (DOE) has announced the selection of nine organizations to join the groundbreaking Regional Energy Democracy Initiative (REDI) Consortium in Texas and Louisiana. This will directly benefit the communities with the technical assistance and support provided in DOE-funded clean energy projects.

Community Empowerment for a Fair Energy Transition

The REDI Consortium will create a collaborative framework to address the region’s energy challenges through community involvement in energy projects. The initiative will empower Texas and Louisiana communities, which will receive over $8 billion for carbon reduction and clean energy.

Jennifer M. Granholm, US Secretary of Energy  said, “Underscoring the Biden-Harris Administration’s commitment to equity and justice, REDI will empower communities at the forefront of our Nation’s energy transition.”

She added, “REDI’s pilot program will help ensure that communities in Texas and Louisiana – states that are poised to receive over $8 billion for carbon reduction and clean energy infrastructure projects – have the resources they need to help steer the historic clean energy investments in their backyards.”   

The REDI Consortium will adapt to every community’s context while fostering secure, resilient, and affordable energy. Local stakeholders participate in decision-making through energy democracy, giving them a voice in shaping their communities’ energy future.

Major Partners of the REDI Consortium

The DOE has selected nine organizations to play crucial roles in supporting REDI’s mission:

• Southern University and Agricultural Mechanical College will lead the consortium, track regional projects, and develop a benefits strategy with input from all partners.
• The Gulf States Renewable Industries Association and Louisiana Chamber of Commerce Foundation will support economic development and project resources.
• Texas Climate Jobs Project will lead workforce development, focusing on education, career opportunities, and a strategy tailored to local needs.
• Air Alliance Houston, Digital Workforce Academy, Micah Six Eight Mission, and Power Coalition will provide technical assistance and resources to nonprofits.
• The Integrated Minority Aids Network will offer legal support, reviewing agreements for DOE-funded projects to ensure fair community compensation.

Also read: US DOE Announces $2.2 Billion Investment in Clean Hydrogen to Accelerate Renewable Energy Transition

Building a More Resilient Energy Future

The REDI Consortium represents a significant step toward building a more resilient and inclusive energy future for Texas and Louisiana. The initiative empowers communities to shape energy decisions and ensures they share the benefits of clean energy projects.

ENERGYWERX manages the REDI Consortium in partnership with the DOE, creating an innovative collaboration through a Partnership Intermediary Agreement. Additionally, this agreement lets ENERGYWERX collaborate with diverse partners, speeding up the development and deployment of clean energy solutions regionwide.