The One Big, Beautiful Bill’s Fusion Exclusion

The House offered a last minute olive branch to the increasingly bipartisan nuclear industry when it passed its version of the budget reconciliation bill now working its way through the Senate, opting to preserve tax credit eligibility for so-called “advanced nuclear facilities” that start construction by 2029. That deadline will be difficult for many nuclear companies to meet, regardless of their technological approach or reactor size. But one much anticipated, potentially world-changing technology won’t even have a shot: nuclear fusion.

That’s not because fusion is so futuristic that the 2029 deadline would be categorically unworkable. As I keep hearing, the tech is finally, possibly, actually on the verge of commercialization, and some industry leaders such as Commonwealth Fusion Systems could probably break ground on a commercial reactor by then.

Fusion won’t have a shot simply because, as defined by Congress and the IRS, it does not fall within the category of an “advanced nuclear facility.” Instead, it’s defined and regulated as a separate class of zero-emission technology, thus excluding it from the nuclear carve out in the budget bill. That distinction was made clear in January, when the IRS released its final regulations for the Inflation Reduction Act, Julien Barber, an investor in multiple fusion technologies at Emerson Collective, told me. That separation happened because “we wanted to regulate them differently,” he said.

Fusion reactors can’t melt down and don’t produce the kind of highly radioactive nuclear waste that fission does, meaning that many of the safety constraints on conventional nuclear don’t apply to fusion. In 2023, the Nuclear Regulatory Commission decided to regulate fusion reactors more like particle accelerators, which are typically licensed at the state level, have fewer siting constraints, less stringent security requirements, and are often exempt from full environmental review. Last year, a bipartisan group of senators worked together to pass the Fusion Energy Act, which confirmed the NRC’s decision to separate the regulatory processes.

If the Senate approves the House’s version of the clean energy investment and production tax credits, fusion energy will be subject to the same tight restrictions as other clean energy solutions. The timeline for credit eligibility requires energy projects to begin construction a mere 60 days after the bill’s passage, and be placed in service by 2029. That, Barber said, is “essentially impossible for any of the fusion companies out there.” Brian Berzin, CEO of the fusion startup Thea Energy, agreed. “Most private fusion companies will be left unable to benefit from these financial incentives,” he wrote in an emailed statement.

There’s confusion, however, around whether this fusion exclusion was a deliberate decision from the House or simply an oversight. Barber is betting on the latter.

“This was happening quickly,” Barber told me. “There was some push by some of the companies in the [Fusion Industry Association] to review the language, but they just didn’t have time to review the language in time to write comments, and it just kind of got pushed through as is.”

The bill’s final language also took the CEO of the Fusion Industry Association, Andrew Holland, by surprise. “We had heard that fusion would be part of the carve out too, but then it wasn’t,” Holland told me.

A more pessimistic interpretation is also possible, Barber conceded. “There’s the idea that people don’t think fusion is ever going to be the case,” he told me. Certainly for some both in and out of government, fusion represents a dream perpetually deferred.

What Barber thinks many people fail to realize, though, is that some fusion industry leaders are operating on timelines similar to fission companies building small modular reactors. “If you talk to CFS, they’re going to say, We’re going to be putting our first power plant on the grid by the early 2030s, which is the same timeline as [small modular reactor company] X-energy, right?”

Until this moment, the distinction that top governing bodies such as the Nuclear Regulatory Commission have made between fusion and fission has been nothing but a positive for fusion companies and advocates alike. When the Fusion Energy Act passed, one of the bill’s co-sponsors, Republican John Cornyn of Texas, said that “fusion energy is a promising clean and safe power source that could help address America’s growing energy demands.” Another co-sponser, Republican Todd Young of Indiana, said that fusion “has the potential to usher in a new era of energy production in America.”

But whether generalized Republican support for fusion will extend beyond easing regulations to actively include subsidies for the technology remains to be seen. And for now, most of the companies themselves are staying quiet. As of publication time, CFS, Zap Energy, Type One Energy, and Xcimer Energy all either said they could not comment or else did not respond to my request for comment.

Editor’s note: This story has been updated to include comments from the Fusion Industry Association.