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Biden Administration Finalizes $3/kg Hydrogen Tax Credit Rules, Easing Nuclear Power Eligibility

Jan 3, 2025, 06:38 PM

The Biden administration has finalized rules for a tax credit aimed at boosting the production of cleaner hydrogen, which is expected to distribute billions of dollars to producers. The finalized rules, part of the Inflation Reduction Act, have been adjusted to include a carve-out for existing nuclear power plants, responding to industry lobbying. This adjustment allows hydrogen produced using electricity from nuclear facilities to qualify for the credit, alongside hydrogen produced from natural gas with carbon capture, renewable natural gas, and coal mine methane. The tax credit, valued at up to $3 per kilogram of hydrogen, is designed to encourage the production of hydrogen with lower lifecycle greenhouse gas emissions. The rules have drawn cautious praise from environmental groups, who see potential for reduced emissions but express concerns over loopholes that might benefit producers of less clean hydrogen.