US to Issue Hydrogen Credit Rule This Week, With Path for Nuclear, Sources Say

WASHINGTON/NEW YORK, Dec 31 (Reuters) - The U.S. Treasury Department intends to release guidance on how to access tax credits for hydrogen production under the 2022 Inflation Reduction Act later this week, according to two sources familiar with the matter. The long-awaited guidance will provide a pathway for hydrogen produced using nuclear power to access the credits, the sources told Reuters, though the details of that plan were not immediately clear.

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The question of whether existing nuclear plants should be eligible for the hydrogen subsidy has been a major sticking point for the rule, with environmentalists saying that only hydrogen produced with new clean energy sources should be granted the perks. One of the sources said the guidance would likely be released on Friday.

A spokesperson said the Treasury Department was working to finalize the guidance and that the agency was considering various requests related to the rules.

"Finalizing rules that will help scale the clean hydrogen industry while implementing the environmental safeguards established in the law remains a top priority for Treasury," said Michael Martinez, spokesperson. "In that process, we are carefully considering the numerous comments we have received on the proposed regulations."

In December 2023, the Treasury Department unveiled its proposed rules governing how energy companies would qualify for the credits under the act. Wall Street lost ground on Tuesday as investors closed the book on a remarkable year for equities.

In its draft guidance, the agency said the credit would range from 60 cents to $3 per kilogram and be based on the life-cycle greenhouse gas emissions from the power-generating source used in hydrogen production. The country's producers of nuclear power, which is virtually carbon free, have since lobbied the Biden administration to include existing reactors in the program.

The level of any inclusion of nuclear power in the final rules will determine whether it's commercially viable to invest in hydrogen production, one source said. Some possible guidelines could include a limit on the number of credit-qualifying megawatts allowed from existing nuclear power plants used in hydrogen production, one source said.