September 22, 2022
IRA’s tech-neutral, advanced nuclear, hydrogen incentives drive “all-of-the-above” approach to help meet U.S. decarbonization targets
Edison Energy recently sat down with Richard Mroz, former NARUC Chairman and current DOE advisor on the IRA’s nuclear PTC, whose areas of expertise focus on energy and utility regulation, energy markets, the evolving grid, cybersecurity, water and wastewater policy, as well as infrastructure development and financing for various industries. Mroz is the immediate Past President of the New Jersey Board of Public Utilities (NJBPU), serving as Chairman and Chief Administrative Officer of the Agency. He also served as the Chief Energy Officer for the State of New Jersey.
Mroz was appointed by former New Jersey Gov. Christie Whitman as Chief Counsel after serving in various positions in her administration. Notably, Mroz was also appointed by former President George W. Bush to the Commission on White House Fellows and later by former New Jersey Gov. Chris Christie as a Commissioner of the Delaware River & Bay Authority.
Mroz has held various national and regional leadership positions, including serving as Chairman of the Critical Infrastructure Committee for the National Association of Regulatory Utility Commissioners (NARUC). He also served as Chairman of the Organization of PJM States, Inc. (OPSI) and as a member of the Electric Power Research Institute (EPRI) Advisory Council.
Mroz is a member of the USDOE Electric Advisory Committee, the Smart Grid Subcommittee, and the Subcommittee for Defense Critical Facilities. He is a member of the New Mexico State University Center for Public Utilities Advisory Council, and a Distinguished Corporate Fellow to the Global Resilience Institute at Northeastern University.
If there’s anything the Inflation Reduction Act (IRA) tells us about the climate crisis, it’s that it will take an “all-of-the-above” approach to tackle it. Economy-wide decarbonization will require a whole host of technologies to reach net-zero greenhouse gas emissions by 2050.
Beyond the modification and extension of the investment tax credit (ITC) and production tax credit (PTC) for wind and solar, the IRA includes a technology-neutral tax credit for the production of clean energy for facilities with zero or net-negative carbon emissions, an extension of the carbon-capture sequestration credit, a clean hydrogen production credit, and a nuclear power production credit.
“A lot of what is in the energy portfolio – both from the infrastructure bill as well as the IRA – are very positive because of the focus that they’ve turned to some of the really promising emerging technologies,” said Mroz, who is a subject matter expert with Idaho National Labs, serving as an advisor to the Department of Energy (DOE) on the commercial nuclear credit program included in the infrastructure bill, as well as on the nuclear PTC that was ultimately included in the IRA. “These are technologies that we know could work and we know could be commercially deployed, and that’s storage, advanced nuclear, hydrogen, carbon sequestration, even direct air capture.”
Mroz also supports the IRA’s provisions in the form of tax incentives versus direct appropriations.
“That’s a better policy directive than direct appropriations,” he said. “A lot of these technologies would not come to development and commercial deployment unless that was the case. Almost half of the entire funding stream that comes out of the $1.2 billion infrastructure bill went to the DOE for technologies and pilot projects. Just the sheer weight and size of that says something, and more particularly the IRA, which includes those tax credits.”
According to Mroz, the tech-neutral tax credit will open up the energy sector to a much needed all-of-the- above strategy.
“That’s what these measures are doing,” he said. “They’re providing some pilot funding for research while also providing a viable financial pathway as an incentive. I think it’s promising to foster that all-of-the-above perspective and approach of energy resources.”
Advanced nuclear
The focus on advanced nuclear has been one of the most interesting aspects of the IRA, says Mroz.
According to a recent report published by The Breakthrough Institute, advanced nuclear reactors offer reliable, land and resource-efficient, scalable clean energy – with policy support. The report notes that nuclear can efficiently complement other clean energy technologies like wind and solar power, balancing out variations in generation over time to reliably meet U.S. electricity demand.
The sector has been looking to advanced nuclear as a potential mechanism to deploy heat and steam in hard to decarbonize sectors, as well as the repowering of fossil-fuel power plants using readily available infrastructure.
“Over the last six months, a recognition has emerged around how advanced nuclear can be used in the power sector to repower fossil fuel generation,” Mroz said.
Mroz is referring to a shift from coal to nuclear – something that big coal states have been increasingly adopting. Earlier this year, West Virginia passed legislation eliminating a longstanding ban on nuclear power plant construction, while Indiana passed a bill incentivizing the siting of advanced small modular reactors (SMRs) at existing fossil plant sites.
In Maryland, too, a comprehensive climate package was recently adopted that awards a grant to study the benefits of repurposing a coal plant with an SMR, while legislation calling for nuclear reactor feasibility studies have been passed in Nebraska, Virginia, and New Hampshire. Similar legislation is being considered in Minnesota, Oklahoma, Colorado, and Kentucky, with ongoing discussions playing out in Ohio, Michigan, and New Jersey.
“Over the last six months, regulators and state energy officials have gotten the message,” Mroz said. “There’s a good recognition by state officials that this could really happen. We could have low or zero emissions, 24/7 reliable and resilient energy baseload production, and it could be advanced nuclear, and we could repower these existing facilities. So that has really caught on.”
Made in America
One of the cornerstones of the IRA is the focus on revitalizing American manufacturing via building U.S. clean energy supply chains; incentivizing domestic production in clean energy technologies like solar, wind, carbon capture, and clean hydrogen; and targeted tax incentives aimed at manufacturing U.S.- sourced products such as batteries, solar, and offshore wind components.
An example of promoting domestic sourcing and American jobs within the IRA is an increase in clean energy tax credits if the amount of American steel used in wind projects meets the domestic content threshold. In addition, bonus credits are applied to employers who use prevailing wages and apprenticeships.
While Mroz lauds this focus on domestic sourcing of both supplies and workers, he cautions that it may be easier said than done.
“People are very interested in it,” he said. “But they are concerned that even with the support to do it, it might be very difficult because of where the minerals and components come from, or whether we can really build the infrastructure and the workforce to do some of this stuff.”
While a lot of goods can be produced in the U.S., Mroz notes that many of the components needed for the clean energy sector will still be made overseas and then shipped and reproduced domestically.
“I think that Build Back Better was reinforced by Ukraine and the vulnerabilities of relying on overseas markets for materials and the like,” he said. “There’s still a lot of concern that it’s going to be a struggle to do this from a supply chain and workforce standpoint, and whether we really have the people to do it. There are also a lot of people in the workforce that aren’t trained in certain aspects of this, and we don’t have the capability to train people. We have struggles with the fuel supply chain, and problems with workforce for mining. Even with the money and support for it, this is not going to be as easy as people think.”
