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The US Treasury has published its final rules on clean hydrogen production, providing clarity for producers seeking to qualify for the clean hydrogen production tax credit of up to $3 per kilogram (kg).
This development has prompted a notable increase in nuclear energy stocks, as many companies were hesitant to invest in hydrogen production projects until the guidelines were established, reported Investor’s Business Daily.
The hydrogen tax credit ranges from $0.60 to $3/kg based on carbon emissions levels. It is part of the Inflation Reduction Act signed by President Joe Biden in 2022.
The new regulations allow nuclear power and natural gas producers to qualify for significant credits aimed at hydrogen production, potentially unlocking billions of dollars in funding.
Historically, clean hydrogen produced via renewable energy sources has been more costly than traditional hydrogen production methods.
The introduction of this tax credit aims to reduce production costs and encourage companies to enhance clean hydrogen infrastructure, the report said.
The final rules include major changes and flexibilities that address various important issues to help grow the industry and move projects forward, while adhering to the law’s emissions requirements for qualifying clean hydrogen.
The final rules offer clarity, investment certainty and flexibility, including for participants in projects planned as part of the Department of Energy’s (DOE) Regional Clean Hydrogen Hubs programme.
Hydrogen fuel cell systems developer Plug Power experienced a nearly 20% surge to $3.15 during Monday afternoon trading, following a 13% increase on Friday.
The stock, which peaked at $75.49 in January 2021, has since seen a decline of approximately 100%. Currently, it trades more than 62m shares daily on average.
Based in Latham, New York, Plug Power has shifted its focus towards the green hydrogen supply chain, producing fuel cells and electrolysers while providing storage and transportation solutions.
In May 2024, the company secured a commitment of $1.6bn in loans from the US DOE for clean hydrogen development.
Last year, Plug Power’s green hydrogen production facility fulfilled its first customer order, delivering liquid hydrogen to Amazon, Walmart and Home Depot.
However, the company has faced challenges in meeting hydrogen supply despite securing customer contracts.
In addition, Bloom Energy advanced 4.8% to $25.48 early on Monday, following a 4% gain to $24.32 on Friday, marking its first weekly increase after four consecutive declines.
The government’s decision to include nuclear power providers in the hydrogen tax credit eligibility has positively impacted various nuclear stocks.