Nuclear plants could see their bottom lines improve thanks to a new tax credit in the massive climate, health care and deficit reduction package passed by the Senate this weekend—a potential lifesaver for an industry that has appeared stagnant in recent decades.
The Inflation Reduction Act contains a tax credit that will subsidize existing nuclear power plants with an estimated $30 billion over the next 10 years, according to the Congressional Budget Office.
Democrats’ goal is to give a boost to nuclear power, a carbon-free source of electricity, helping the U.S. reduce reliance on fossil fuels and bring down greenhouse gas emissions.
If the bill is signed into law, nuclear plants would automatically be eligible for a credit of 0.3 cents per kilowatt-hour, a measure of electricity production, the Congressional Research Service reports, but plants that pay wages similar to or higher than the surrounding area could get 1.5 cents per kWh, five times more.
The provision is just one part of the over $250 billion the bill would funnel to fighting climate change, reducing U.S. greenhouse gas emissions by an estimated 40% below 2005 levels by 2030, according to an analysis by the Rhodium Group, a research firm.
What To Watch For
The bill—which passed the Senate in a 51-50 vote on Sunday—must pass the House of Representatives before going to President Joe Biden, who is expected to sign it. House Speaker Nancy Pelosi (D) says lawmakers will vote on the bill after returning from their August recess on Friday.
20%. That’s the share of U.S. electricity provided by nuclear plants in 2021, according to the U.S. Energy Information Administration.
The one-two punch of sky-high oil prices and worsening climate change is leading some places that were turning away from nuclear power to reconsider. Japan is restarting four reactors ahead of winter, South Korea is resuming construction on two and Germany is considering extending operations for three plants after initially planning to phase out nuclear power. Even California Gov. Gavin Newsom (D) is walking back a pledge to shutter the state’s last nuclear plant, which provides 9% of the state’s electricity, the Associated Press reported Monday.
What We Don’t Know
Whether the bill will be enough to rejuvenate the struggling domestic nuclear industry. Cost and safety concerns remain major hurdles to overcome: An MIT study found that “repeated failures of construction management practices” drive projects in the U.S. and Europe over budget, and public fears of another accident—like the 2011 earthquake and tsunami that damaged the Fukushima nuclear plant in Japan—make progress more difficult. However, the industry is optimistic. Maria Korsnick, president of the Nuclear Energy Institute, an advocacy group, hailed the bill in a statement, saying that it will help “address economic hurdles and provide confidence to invest in today’s nuclear plants.”
Inflation Reduction Act Passes: Senate Approves $430 Billion Climate And Healthcare Bill (Forbes)
Historic climate bill to supercharge clean energy industry (Politico)
Not so fast: California’s last nuke plant might run longer (Associated Press)
The controversial future of nuclear power in the U.S. (National Geographic, 2021)