On May 28, 2021, President Biden submitted a proposed federal budget for Fiscal Year 2022  (FY22) that included a significant funding increase for clean energy initiatives. The budget proposal, which complements the President’s American Jobs Plan, among other things affirms support for nuclear energy as an option to combat climate change by allocating $1.85 billion to the Department of Energy (DOE’s) Office of Nuclear Energy, prioritizes the development of new, clean energy innovation offices, and takes advantage of tax credits to support clean energy innovation.

The increased funding to the Office of Nuclear Energy–a 23 percent increase from the prior Fiscal Year–demonstrates support to deploying advanced reactors. It is part of a proposed $1.9 billion increase designated for the DOE generally.  Specifically, $1 billion is dedicated to nuclear energy research, development, and demonstration programs, with $245 million to support the demonstration of two advanced reactor technologies within the next six years. The proposed budget also includes $11 million to launch the consent-based siting process to support consolidated interim storage for the nation’s used nuclear fuel and high-level radioactive waste.

Additionally, the FY22 budget seeks to grow technology-neutral approaches to clean energy innovation. For instance, and possibly most noteworthy, the budget allocates $400 million for a new entity within DOE, named the Office of Clean Energy Demonstrations, to bring innovative technologies–without a clear technology preference–to market through multiyear projects and private-sector partnerships.  In addition, the President earmarked $200 million for the new Advanced Research Projects Agency-Climate (ARPA-C) to further the goal of producing 100 percent carbon-free electricity by 2035, and set $500 million, a 17 percent increase from the prior Fiscal Year, for Advanced Research Projects Agency-Energy (ARPA-E) to help develop and commercialize clean energy technologies. ARPA-E aims to advance carbon-neutral fuels such as hydrogen, grid modernization technologies, and carbon management, while ARPA-C will be critical in advancing climate technology solutions for resilience and emissions mitigation. This type of unified government R&D approach will integrate program development across the spectrum of DOE’s science and applied energy offices.

The budget and related Treasury Green Book on revenue proposals also take a deep dive into the use of tax credits to help spur clean energy innovation, including the creation of technology-neutral clean energy generation tax credits, tax credits for operating nuclear power plants that are under financial distress, and reactivation of a tax credit for clean energy manufacturing (although that credit may have to be further modified to include nuclear).  We are following tax credit issues closely, as they have a significant impact on not just technology advancement for advanced nuclear or fusion technologies, but eventual customer adoption of those technologies and first-of-a-kind demonstration facilities.

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