Trump tax bill risks exodus of clean hydrogen investment
- Shorter tax credit deadlines proposed in Trump’s tax bill would derail swathes of green hydrogen projects and severely curb hydrogen investment in the United States, industry experts warn.
June 16 – Tax and spending plans in President Trump’s ‘One Big Beautiful” bill passed by the House of Representatives on May 22 would hobble the nascent U.S. green hydrogen industry in the United States by removing crucial tax credits earlier than previously planned.
Introduced in the Biden administration’s 2022 Inflation Reduction Act, base 45V production tax credits (PTCs) of up to $3/kg are offered depending on emissions. The credits are available for ‘green’ hydrogen projects, which use electrolyzers powered by renewable energy, and ‘blue’ hydrogen projects using steam methane reformation coupled with carbon capture utilisation and storage (CCUS).
Trump’s tax bill would bring forward the deadline for projects to qualify for the 45V credits, requiring them to begin construction by January 1, 2026 compared with the previous deadline of January 1, 2033 set out by the Biden administration. A revised bill released by the Senate Finance Committee on June 16 retained the changes.
Final guidance on how to qualify for the credits was only published by the U.S. Treasury Department in January 2025 and is complex, requiring projects to source clean power from either nuclear plants “at risk of retirement” or new renewable energy projects, to minimize the impact on wider electricity supply.
Many projects “will not be able to meet the end of 2025 deadline” set out in the proposed tax bill, Lee Beck, Senior Vice President for global policy and commercial strategy at green fuel developer HIF Global, told Reuters Events.
Beck, said:
It takes four to six years to develop large infrastructure projects,
“Having just a few months to make the required project changes, commence construction, and reach financial close is unrealistic in infrastructure timeframes.”
In one example, HIF Global requires until the end of 2027 to begin construction of a green hydrogen plant in Matagorda County, Texas, Beck said. The project will require $7 billion of investment and the company has already spent more than $200 million developing the plant, which would produce 1.4 million tons/year of e-methanol using hydrogen and captured CO2 to supply the automotive, shipping and aviation sectors.
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The shortened deadline for the 45V credits Beck, said:
would pull the rug out from under the whole industry,
Many investors would pivot to other regions. HIF Global has plans to develop projects around the world and “will allocate capital to the places that are most competitive,” Beck said.
Economic impact
Approved by a single vote majority in the House of Representatives, the tax bill is currently with the Senate and changes may yet be made. Many Republican states have benefited from the tax credits while some Republicans fear the bill will inflate the federal deficit.
Dozens of stakeholders including the American Petroleum Institute (API) and the FCHEA sent a joint letter to Senate majority leader John Thune and Chairman of the Senate Committee on Finance Mike Crapo on June 5, calling for the retention of the 45V credits for projects that start construction by December 31, 2029.
The early withdrawal of 45V tax credits would “send yet another destabilising signal to the market—stranding investment and halting project development,” FCHEA President and CEO Frank Wolak told Reuters Events.
Eliminating the credits early would impact American job creation and industrial competitiveness, Wolak said.
He, said:
Walking away from the 45V credit would cede our competitive edge to China and Europe, where governments are aggressively supporting their hydrogen industries,
Demand challenge
Current hydrogen production is mostly ‘grey’ hydrogen produced from gas using steam methane reformation processes.
The cost of green hydrogen is currently far higher than the cost of grey hydrogen and the 45V tax credits were introduced to help clean hydrogen developers move from pilot projects to larger commercial facilities and drive down costs. The Biden administration aimed to reduce the cost of clean hydrogen to $1/kg by 2031, compared with around $5/kg in 2022.
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Trump tax bill risks exodus of clean hydrogen investment, source
