THP-E278: Will The Nuclear Industry Get To Take Advantage Of The 45V Credits?

Paul Rodden • Season: 2024 • Episode: 278

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Welcome to The Hydrogen Podcast!

In episode 278, Constellation Energy along with the rest of the nuclear industry has big issues with the three pillars, and rightfully so. I’ll address their pain points and give my thoughts on today’s hydrogen podcast.

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Paul Rodden



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Constellation Energy along with the rest of the nuclear industry has big issues with the three pillars, and rightfully so. I’ll address their pain points and give my thoughts on today’s hydrogen podcast. So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where’s capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast we’ll give you the answers. My name is Paul Rodden and welcome to the hydrogen podcast. An article in the Baltimore Sun Lorraine Mirabella writes constellation energies hydrogen production could be derailed by shift in federal policy. Lorraine writes plans by Baltimore based Constellation Energy to mass produce carbon free hydrogen could be jeopardized under proposed federal guidelines that exclude existing nuclear plants from tax subsidies designed to boost a budding clean hydrogen industry. The newly released rules outlined qualifications for clean hydrogen production credits offered through the Biden administration’s inflation Reduction Act, which in part aims to cut greenhouse gas emissions 40% by 2030/ Constellation which produces electricity at power plants, including the nation’s largest fleet of nuclear power plants had been counting on the credits to help make clean hydrogen production cost effective. Constellation said in October it plan to invest $900 million to build the world’s largest nuclear powered clean hydrogen production facility and it’s LaSalle Clean Energy Center in Illinois. The project expected to produce an estimated 33,450 tons of clean hydrogen each year, much of it to be used to decarbonize heavy industries would be part of the Midwest Alliance for Clean hydrogen. The US Department of Energy had selected the Alliance among a number of us hydrogen hubs for up to a billion dollars in funding. Now, it appears the constellations piece of the project may be derailed, though the company has not announced any updates. Guidelines released in December by the US Department of the Treasury and the IRS say tax credits for hydrogen produced using electricity are available only to new sources of clean power. The rules define those sources as clean power generators that have begun operating within three years of the opening of hydrogen facilities that would exclude constellations, nuclear plants and most others as well. No new nuclear plants are under construction and a statement constellation said the nation won’t be able to meet its carbon neutrality targets. Under the proposed rules. Nuclear plant owners would face insurmountable barriers of entry to the new clean hydrogen market without the tax credits this according to the company, and they said in a statement, the proposed rule flies in the face of Congress’s clear intent to use America’s nuclear energy to produce hydrogen. If finalized, America will surrender hydrogen and deep decarbonisation leadership to China and Europe, both of which have policies that smartly utilize their existing nuclear plants to make hydrogen and speed decarbonisation. The amount of the credit ranges from 60 cents per kilogram of hydrogen produced to $3 per kilogram. Proponents of limiting tax credits to new sources of clean power, say they want to prevent the diversion of existing clean energy to make hydrogen, which they argue would encourage coal and gas producers to remain on the grid longer to make up the difference and announcing the proposed rules. December 22. The Treasury Department appeared to echo a similar view saying safeguards in the rule will prevent the credit from subsidizing hydrogen production. With higher greenhouse gas emissions than allowed by the statute. The credit as proposed will, quote help build a clean hydrogen industry that will be critical in reducing emissions from harder to decarbonize sectors, like heavy industry and heavy transportation. This according to John Podesta, who’s a senior adviser to the President for clean energy innovation, and implementation. The Treasury Department and the IRS said they will consider additional public comments for 60 days before issuing final rules. While clean hydrogen can help reduce emissions conventional hydrogen production typically contributes to climate pollution. The tax credits aims to make clean hydrogen production more economically competitive and accelerate the nation’s hydrogen industry constellation which has positioned itself among an emerging group of players aiming to fill demand for carbon free hydrogen has argued tax credits are necessary for nuclear operators to scale up business, drive down clean hydrogen costs for customers and produce the volumes needed to sustain business otherwise constellation has said upfront costs of investing in and building infrastructure would be too high. The promise of hydrogen is that once it’s produced it can be used to generate power in a fuel cell while releasing only water vapor and heat. The challenge is producing the hydrogen as well as storing, transporting and using it safely. Hydrogen, a common raw material and making other products is most commonly and cheaply made by an emissions intensive process, in which methane from natural gas is heated with steam to make a mixture of carbon monoxide and hydrogen, but varying degrees of low carbon hydrogen can be produced from clean energy sources, including green hydrogen made from water via electrolysis using renewable or nuclear energy. According to the Energy Department estimates if nuclear plants are excluded from hydrogen production, the amount of clean hydrogen needed by 2030 to meet climate goals for transitioning industry to clean energy would require a doubling of the nation’s current renewable solar and wind sources on the grid. A number of stakeholders had raised concerns about the way the rules were shaping up in the months before the proposal was announced asking the Biden administration officials to avoid adopting rules that would alter the intent of the legislation. In a quote from Sean McGarvey president of North America’s building trades unions talk of the potential of a hydrogen network in this country has gone on for decades. And now is not the time to deny this dream from becoming a reality. Okay, so a more in depth look into the negative consequences of the Treasury regulations for the 45 V tax credit focusing on pink or nuclear hydrogen. And the point the industry is making regarding the sighted intent and goal from Congress to leverage hydrogen for America’s low carbon future. To quote Ryan Sweezy, the head of America’s power longterm research at Wood Mac, as he questions whether or not these rules will increase the pressure on gas generation. He writes, last May EPA proposed requiring large existing and new gas generators to blend at least 30% low greenhouse gas hydrogen, that being a kilogram of hydrogen with less than point four five kilograms of co2 associated with that hydrogen by 2032 and 96%. By 2038. There’s also a CCS compliance option by 2035. This was already a very aggressive timeline on its face, with the need for a substantial and scaled green hydrogen economy within 10 years, even in a scenario with a generous definition of green hydrogen or annual matching the challenges of developing the required hydrogen supply and more importantly, transport infrastructure made this timeline supremely challenging. With Treasury defining green hydrogen in a strict manner, the timeline just got even harder. He says if both rules emerge from the comment process fundamentally unchanged, and survive legal challenges. We may be looking at the risk of substantial gas retirements in the 2030s just as projected electrification from transport and buildings is really kicking into gear. Okay, now, these are great points made by Ryan. And it makes me wonder if whether or not these goals were considered when outlining the 45 V regulations. Now, the IRA does have a 45 U provision that can help keep plants online longer potentially allowing for new developments to roll out and consume both the 45 U and the 45 V. I also know there are modular nuclear options and development, when that will be available at scale is anyone’s guess. Until then the proponents of nuclear and geothermal hydrogen will need to press the Treasury into modifying the rules. Now, I’ve said several times I understand the need to regulate hydrogen development. And ultimately, I’m not opposed to the three pillars end goal, but to handcuff nuclear and similarly geothermal from taking part in the 45 V is ludicrous. These are vastly different energy sources than wind and solar and should be treated differently. Now, I know there will be several groups headed up to DC this week to talk on the Hill about the three pillars and try to find more common ground of which I know there is and I’m sure the Nuclear Energy Institute is also actively pursuing this. Now, I know the proponents of the three pillars praise their intended purpose to curb any growing greenhouse gas emission processes, and that’s fine, but that’s really just going to affect wind and solar hydrogen production. Non intermittent energy sources aren’t going to be as finicky and can produce hydrogen at all times of the day. Meaning no need for hourly matching or additionality? And that’s my point, judge each energy source on its own merit and don’t apply regulations arbitrarily to industries where more harm is caused than good. Alright, that’s it for me, everyone. If you have a second, I would really appreciate it. If you leave a good review on whatever platform it is that you listen to Apple podcast, Spotify, Google, YouTube, whatever it is, there’ll be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at Thanks for listening. I very much appreciate it. Have a great day.