The unexpected inflation reduction legislation announced by Sen. Joe Manchin (D-W.V.) and Majority Leader Chuck Schumer has lawmakers and clean advocates scrambling to read the 725-page bill.

The sweeping bill includes nearly $370 million on energy and climate change initiatives. Congressional Democrats, who have pushed an ambitious climate and clean energy package, claimed it would reduce carbon emissions roughly 40% by 2030.

It’s broken down to include $60 billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar, seen as ways to boost and support the industries that can help curb the country’s dependence on fossil fuels.

“The Inflation Reduction Act of 2022” also includes incentives for hydrogen, nuclear and energy storage.

Credit for clean hydrogen producers

The legislation includes a tax credit for qualified clean hydrogen producing facilities.

According to bill language, the credit is equal to a percentage of $0.60 multiplied by the kg of clean hydrogen produced during a taxable year. That percentage would be based on the amount of greenhouse gas emissions released through the hydrogen producing process.

Nuclear incentives

The bill includes a nuclear power production credit based on plant revenue and scalable if certain labor requirements are met. According to the bill, the credit is equal to 0.3 cents multiplied by the KWh of electricity produced by a qualified nuclear power facility in that given year; and in excess of what the bill calls the “reduction amount.”

Bill language defines the reduction as equal to the lesser of the last calculation, or the amount equal to 80 percent of the excess of gross receipts from electricity produced by the facility, over the amount equal to 2.5 cents multiplied by the KWh of energy produced by the facility. Depending on the year, the numbers used in these equations could be adjusted for inflation, according to the bill.

“Qualified nuclear power facilities” would have to have been placed into service before the bill is enacted and does not include advanced nuclear facilities.

Other appropriations

Other energy appropriations in the bill include:

Other items in the bill include tax credits for drivers who buy new or used electric vehicles, $30 billion in grants and loans for utilities and states to convert to clean energy and $27 billion to reduce emissions.

More on this portion of the bill can be found at our partner publication Renewable Energy World.

The full text of the bill is here.

Manchin had been a year-long holdout over Democrats’ plans to use the once-in-a-decade reconciliation process to push through what had been billed as most ambitious climate and clean energy package in history. Even recently he had publicly expressed reservations over a budget package, citing inflation concerns plaguing the U.S. economy.

The Senate plans to hold a vote on the reconciliation bill next week.

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