New regulations for clean hydrogen cause market movements

The recently published final guidelines from the U.S. Department of the Treasury have provided clarity for clean hydrogen manufacturers. This clarity is crucial for qualifying for the tax credit, which is up to $3 per kilogram. This event has sparked remarkable interest in nuclear energy stocks, as many companies had previously hesitated to invest in hydrogen projects while guidelines were still unclear, as reported by Investor's Business Daily. The hydrogen tax credit ranges from $0.60 to $3 per kilogram, depending on carbon dioxide emissions. It is part of the Inflation Reduction Act signed by President Joe Biden in 2022. The new regulations allow both nuclear and natural gas producers to obtain significant credits for hydrogen production, potentially unlocking billions in investments. Traditionally, producing clean hydrogen through renewable energy sources has been more costly than conventional methods. The tax incentive now aims to reduce production costs and encourage companies to expand infrastructure for clean hydrogen. The final rules include substantial changes and flexibilities to provide growth opportunities for the industry and advance projects while complying with emission requirements for qualifying clean hydrogen. The rules offer clarity, investment security, and flexibility, including for participants in planned projects under the Department of Energy's (DOE) Regional Clean Hydrogen Hubs program. Hydrogen fuel cell system developer Plug Power saw an almost 20% increase to $3.15 during Monday afternoon trading, after the stock had already risen 13% on Friday. The stock, which peaked at $75.49 in January 2021, has since experienced a decline of about 100%. Currently, more than 62 million shares are traded daily on average. Plug Power, based in Latham, New York, has shifted its focus to the supply chain for green hydrogen, producing fuel cells and electrolyzers while offering storage and transportation solutions. In May 2024, the company secured a $1.6 billion loan commitment from the U.S. DOE for clean hydrogen development. Last year, Plug's green hydrogen production site fulfilled its first customer order, delivering liquid hydrogen to Amazon, Walmart, and Home Depot. However, the company faces challenges in fulfilling hydrogen deliveries despite secured customer contracts. Additionally, Bloom Energy rose 4.8% to $25.48 early Monday, after already reporting a 4% increase to $24.32 on Friday, marking the first weekly growth after four consecutive declines. The government's decision to qualify nuclear energy providers for the hydrogen tax credit has positively impacted various nuclear energy stocks.