Signing the Inflation Reduction Act into US law marks a remarkable achievement, and not just for the Biden administration. It’s also a significant leap forward in the vital battle against global climate change. The wide-ranging bill establishes an overall budget of some US$739bn, but a whopping $369bn of that total will be used to address carbon emissions. Indeed, the bill is expected to cut national carbon emissions by around 40% by 2030, according to Democrat senators.
Within the measures enshrined in the Act there are multiple tax credits that support the uptake of electric vehicles, rooftop solar and greater investment in wind power. Crucially though, the bill also sets out measures that support the increased use of both existing and new- build nuclear power.
Tax credits on electricity production will be technology agnostic providing it is carbon free, putting nuclear on the same page as wind and solar. The basic Nuclear Production Credit is worth US$0.03/kWh to existing nuclear capacity although it declines as power prices rise above $25/MWh. The 10-year production credit scheme will start on 1 January 2024 and run through to 31 December 2032. Analysis from Bloomberg suggests this may equate to a $30bn lifeline for the existing reactor fleet and could save around a third of US reactors from closure over that period. While the bill is the first production tax credit for existing nuclear and thus supports continued operations of many reactors that might otherwise be decommissioned, perhaps most importantly the bill is expected to encourage investment in a new generation of reactors both big and small. Alongside financial incentives for existing reactors, the bill includes further provisions to support advanced reactors with a $0.03/kWh production credit starting in 2025. The bill also delivers some $700m for research on HALEU fuel for use in advanced reactors.
“The energy provisions in the Inflation Reduction Act send a clear signal that nuclear is essential to the transition toward a carbon-free economy,” explained Maria Korsnick, President and CEO at the US Nuclear Energy Institute. “The investment and tax incentives for both large, existing nuclear plants and newer, advanced reactors, as well as HALEU and hydrogen production, set nuclear energy on a level playing field, ensuring that nuclear can form the backbone of a stable electric grid that also includes large shares of wind and solar,” she added, emphasising a key point. The bill implicitly recognises the low-carbon contribution of nuclear power. And, ultimately, carbon and the climate change it produces is a truly existential crisis for America and the wider world.
Collectively, the Act is expected to achieve carbon equivalent reductions of some 1 billion metric tonnes. Such a substantial contribution is estimated by the White House to deliver around 10 times more climate impact than any other single piece of legislation ever enacted in the US. Nuclear power new and old will form a key part of this outcome. As the US Secretary of Energy, Jennifer Granholm, explained: “The future is bright – and it will be clean”. Now it will be nuclear too.
By David Appleyard, Editor, Nuclear Engineering International