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What the climate bill would do for the nuclear industry


Augustine Beach, Delaware 7-14-2014 Salem Nuclear Power Plant located at Hope Creek Generating Station in New Jersey viewed from across Delaware Bay at Augustine Beach. Credit: Mark Reinstein (Photo by Mark Reinstein/Corbis via Getty Images)

Mark Reinstein | Corbis History | beautiful pictures

To scan President Joe Biden’s Inflation Reduction Act signed last week includes $369 billion in grants to help fight climate change. As part of that, the law includes substantial help for the nuclear energy industry.

In general, the provisions in the law can reduce greenhouse gas emissions from 37 to 41 percent below 2005 levels by 2030, according to an analysis of Renewal energy, a policy modeling company. Some of the most widely advertised provisions in IRAs include electric vehicle tax credits and rebates for indoor heat pump installations and rooftop solar panel installations.

It also includes significant benefits for the nuclear industry, as the energy generated from nuclear reactors does not produce greenhouse gases. Nuclear advocates are celebrating the law as a victory.

“For years, the nuclear industry and its advocates have pushed for a more level playing field and more equal treatment of other clean energy sources on a tax and federal subsidy basis.” Brett Rampal, a nuclear energy expert told CNBC. “The IRA creates a new future for clean energy technologies, including nuclear power, that is a more level playing field and allows technologies to compete on a more equal and based basis.” their unique characteristics. This is definitely a victory for nuclear power.”

Here’s an overview of how the climate bill would impact the nuclear sector.

Production tax credit for existing nuclear power plants

Starting in 2024 and running through 2032, utilities will be able to receive a $15 per megawatt-hour credit for electricity produced by existing nuclear plants. If electricity prices rise above $25 per megawatt-hour, the credit will gradually decrease, but it is not completely eliminated until energy prices reach about $44 per megawatt-hour, explains Matthew Crozatstrategic and policy executive at Institute of Nuclear Energya trade group based in Washington DC.

“Every factory is different, and some have different revenue models, but we can say this credit will help make up for the low revenue that has forced more than a dozen furnaces,” Crozat told CNBC. response must be closed”.

To qualify for the $15-per-megawatt-hour base tax credit, a nuclear power plant operator must pay power plant operators and maintenance workers “common wage claim,” follow Institute of Nuclear Energy.

Production tax credit for advanced nuclear power plants

Several companies in the United States are working to commercialize new nuclear power plant designs that are safer and have a smaller capacity, making them ideally cheaper to build and maintain.

For example, Bill Gates‘nuclear innovation company, TerraPoweris developing several advanced reactor designs, one of which will be built at a retired coal facility in Wyoming such as part of a demonstration program in cooperation with the US government.

Advanced nuclear reactors can benefit from an IRA by Clean electricity production tax credit, a technology-agnostic production credit that can be applied to zero-emissions electricity generation, going online after 2025. Clean energy production credits cost at least $25 per megawatt-hour during the plant’s first ten years of operation, adjusted for inflation. According to the Nuclear Energy Institute, the credit will end in 2032 or when carbon emissions from electricity have fallen 75% below 2022 levels. The tax credit is increased by 10% for the identification of the source of electricity. zero emissions, where there was a coal plant in the past.

Notably, there is another Advanced Nuclear Production Tax Credit already in the books. That tax credit was established in the Energy Policy Act of 2005 and costs $18 per megawatt-hour for the first eight years of the nuclear power plant operating, provided the nuclear power plant has not started. built when the 2005 bill was signed into law. , Crozat told CNBC. According to Crozat, the third reactor unit of the Vogtle Power plant under construction in Georgia will be the first to receive the 2005 Advanced Nuclear Production Tax Credit.

A company cannot take advantage of both tax credits – it must choose. Going forward, tax credits in IRAs that have just been signed into law will be more attractive. “Since the new production tax credit is already calculated for inflation and extended for another two years, it will be worth significantly more than the old version,” Crozat told CNBC.

An aerial view of Diablo Canyon, the only remaining working nuclear plant in California, seen in these aerial photos taken on December 1, 2021, near Avila Beach, California . Located on 1,000 acres of scenic coastal land just north and west of Avila Beach, the controversial power plant operated by Pacific Gas & Electric (PG&E) was delivered in 1985.

George Rose | Getty Images News | beautiful pictures

Investment tax credit for new nuclear power plants

Money to drive innovation

Law includes $700 million will be for research and development highly valued low-enriched uranium (HALEU) fuel sources in the United States through 2026, according to Bipartisan Policy Center, a consulting organization based in Washington DC. That’s important because advanced, next-generation reactors are currently being developed developed by 20 companies in the United StatesAccording to the US Department of Energy, depends on HALEU fuel to operate.

The existing fleet of nuclear power reactors in the United States operate on uranium enriched up to 5%. HALEU fuel has been enriched from 5% to 20%. Many advanced reactor designs are built to be smaller than conventional nuclear reactors and therefore, to make a nuclear reactor smaller, they need to get more energy from the amount of fuel. is it smaller, The Department of Energy said.

“Currently, the only commercially available source of HALEU is from the Russian Federation and support for HALEU in the IRA signals an understanding that the federal government is needed to launch domestic enrichment capabilities to support new wave of nuclear technology is coming,” Rampal told CNBC.

It’s also just the first step, Rampal said. He told CNBC the nuclear industry needs many billions of dollars to invest in HALEU production over the next 10 years.

The IRA also includes $150 million for the Office of Nuclear Energy through 2027, according to Bipartisan Policy Center. That money is for the Department of Energy to invest in nuclear innovation research at its network of National Laboratories.

Production tax credit for clean hydrogen production

The IRA includes a tax credit for clean hydrogen production worth up to $3 per kilogram of hydrogen produced in a manner that does not emit any greenhouse gases. The tax credit will be available for 10 years, according to Institute of Nuclear Energy.

Hydrogen Does not produce carbon dioxide when burned, and can therefore be useful in areas that are difficult to decarbonise, such as trucking, shipping and air travel. However, creating hydrogen and turning it into a form that can be used as fuel requires a lot of energy. If the energy used to generate hydrogen emits greenhouse gases, its benefits will be negated.

Crozat told CNBC that nuclear power can be used to produce hydrogen without emitting carbon.

“The current way of making it from natural gas leads to a lot of carbon emissions,” Crozat told CNBC. “The Department of Energy is funding two demonstration projects to produce hydrogen from currently operating nuclear plants. We could see the first kilograms produced by the end of this year or early next year.”

To qualify for the maximum tax credit, the facility must be built before 2033 and generate no more than 0.45 kg of carbon dioxide equivalent per kg of hydrogen produced, and that must be measured and followed. followed by a life cycle assessment, the Nuclear Energy Institute said. The tax credit will be eliminated if a hydrogen production facility generates more than 6 kg of carbon dioxide equivalent per kg of hydrogen.

In addition, to qualify for the maximum value of the tax credit, a facility must meet the “current wage requirement” or the maximum credit of $0.60 per kilogram of hydrogen received. production, according to the Nuclear Energy Institute.

Tax credits for making component parts

The IRA includes a manufacturing provision that allows tax deductions for components manufactured and sold after 2022, under summary of the benefits of IRAs to the nuclear industry from the law firm Morgan Lewis.

The credit isn’t just for the nuclear industry, it could be applied, according to Morgan Lewis’ analysis of the new law. The specific credit depends on the type of component that is manufactured and sold. Morgan Lewis writes: “For some departments, there is a gradual phase out of credit between 2030 and 2033.

Similarly, the IRA law includes an extension of Advanced Energy Project Credit According to Morgan Lewis, the tax credit program is not specific to the nuclear industry but can also be applied to the nuclear industry. Under the program, US Treasure can license up to $10 billion in these tax credits, and they can go towards a wide range of clean energy facilities and production.



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