Congress passes climate bill with tax credits and more for nuclear

August 15, 2022, 9:30AMNuclear News

After hours of debate alternating between Democratic praise for the Inflation Reduction Act (IRA) and Republican denunciation of it, the House of Representatives late Friday passed the sweeping energy, tax, and health care package in a straight party-line vote, 220–207. Its passage represents a significant win for President Biden, who is expected to sign the bill into law this week.

The boldly named $430 billion measure includes $369 billion in energy security and climate spending, with nuclear energy included among the beneficiaries.

The legislation—described by its lead sponsor, House Budget Committee chairman Rep. John Yarmuth (D., Ky.), as “the biggest investment the U.S. government has ever made to combat climate change”— squeaked through the Senate on August 7, 51–50, again strictly along party lines. The upper chamber’s two Independents, Sens. Bernie Sanders (I., Vt.) and Angus King (I., Maine), joined 48 Democrats in voting for the bill, with Vice President Kamala Harris providing the tie breaker.

More than anyone else, a pair of moderate Democrats—Sens. Joe Manchin (D., W.Va.) and Kyrsten Sinema (D., Ariz.)—can be credited with Capitol Hill’s ultimate approval of the IRA. An opponent of last year’s massive Build Back Better bill in all its incarnations, Manchin had declared as recently as the middle of last month that he could not support a legislative package that contained higher taxes and hundreds of billions of dollars for the energy sector, citing fears over inflation. On July 27, however, in a reversal of position, Manchin announced that he had reached a compromise with Senate majority leader Chuck Schumer (D., N.Y.) and would support the IRA—a much pared-down version of Build Back Better.

All eyes then shifted to Sinema, who on August 4 endorsed the bill, but only after Democratic leaders agreed to tweak some of its tax provisions and provide drought money for Arizona.

Key elements: Below are the IRA climate provisions of particular interest to the nuclear community:

■ A production tax credit (PTC) worth up to $15 per megawatt-hour for operating nuclear power plants. The credit is gradually reduced as power prices increase above $25 per MWh.

According to the bill, in order to qualify for the full $15 per MWh credit, “any laborers and mechanics employed . . . in the alteration or repair of such [a] facility shall be paid wages at rates not less than the prevailing rates for alteration or repair of a similar character in the locality in which such facility is located.” If this condition is not met, the credit drops to $3 per MWh.

The PTC program for existing plants starts January 1, 2024, and runs through December 2032.

■ A PTC for advanced reactors (and other clean technologies) placed into service in 2025 or later. The credit, worth at least $25 per MWh for the first decade of operation, phases out by 2032, or once CO2 emissions from electricity production fall 25 percent below the 2022 level.

■ An investment tax credit (ITC) for advanced reactors (and other clean technologies) placed into service in 2025 or later. (Facilities that qualify for both production and investment credits can only take advantage of one.) The ITC ranges from 6 percent for most generators to 30 percent for units that produce less than 1MWe. This credit also phases out in 2032, or once CO2 emissions from electricity production fall 25 percent below the 2022 level.

Both the advanced reactor PTC and ITC include a bonus of 10 percentage points for facilities sited in certain energy communities, including those with retiring coal plants.

■ $700 million for domestic high-assay low-enriched uranium fuel. More specifically, according to a review by law firm Bowles Rice, the IRA includes “$100 million to make HALEU fuel available for research, development, demonstration, and commercial use; $500 million to make HALEU available for the first advanced reactors from the U.S.’s uranium stockpile that is currently being formed, determine HALEU amounts needed for commercial HALEU markets in the U.S., and create a group to support the availability of HALEU for commercial use; and $100 million to assist commercial entities in the licensing and regulation of special nuclear material fuel (such as HALEU) fabrication, enrichment facilities, and transportation packages.”

What we’re saying: In a statement issued following the House vote, American Nuclear Society President Steven Arndt and Executive Director/CEO Craig Piercy applauded the passage of the IRA’s nuclear-specific clean energy provisions, noting that they would “boost production of zero-carbon nuclear energy in the U.S. through the preservation of our existing nuclear fleet and the scale-up of new and advanced reactors.”

Further, said Arndt and Piercy, “these provisions will accelerate the transition to a net-zero power grid without jeopardizing our energy independence or resilience. A robust U.S. nuclear energy program also creates tens of thousands of American jobs. U.S. nuclear plants pay workers 20 percent more than other energy facilities, employ more workers per megawatt, and provide robust, stable tax bases for local communities.”

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