Trump’s Tax Bill Could Kill U.S. Hydrogen – Reuters Sounds the Alarm

In this special episode of The Hydrogen Podcast, we break down the June 17 Reuters article, “Trump Tax Bill Risks Exodus of Clean Hydrogen Investment.”

📉 What’s happening? The “One Big, Beautiful Bill Act” (H.R.1), passed by the House, slashes the 45V tax credit timeline—forcing clean hydrogen projects to break ground by January 1, 2026, not 2033. That’s a seven-year cliff that could derail billions in investment.

🧩 Inside This Episode:

• The economic stakes for U.S. hydrogen developers, from HIF Global to Plug Power
• How the loss of the 45V credit could shift hydrogen dominance to China and the EU
• The role of 45Q in propping up SMR with CCS—but at what cost to electrolysis?
• The politics behind the bill and how 250+ companies are fighting back
• What this means for jobs in Texas, Georgia, and other GOP-led hydrogen hubs
• Global contrast: Europe’s Hydrogen Bank and China’s massive hydrogen scale-up
• What happens next—and what U.S. hydrogen needs to stay competitive

💡 With hydrogen projects requiring 4–6 years just to start construction, this bill’s rushed timeline threatens to strand sunk costs and kill thousands of jobs. Can the Senate fix it in time?

🎧 Stay informed. Stay strategic. Listen now.

Transcript

Today, our focus is a single article from Reuters, published June 17, 2025, titled “Trump tax bill risks exodus of clean hydrogen investment” (Reuters). This piece sounds the alarm on how President Trump’s “One Big, Beautiful Bill Act” (H.R.1), passed by the House on May 22, 2025, could derail clean hydrogen projects by slashing critical tax credits. We’ll unpack the article’s core claims, explore its ripple effects on investment, and consider how the industry might respond, all while keeping an eye on global competitors. All of this on today’s hydrogen podcast

Let’s kick things off with a deep dive into the Reuters article, which paints a stark picture of the U.S. hydrogen sector teetering on the edge. The piece, penned on June 17, 2025, warns that Trump’s tax bill, part of the sprawling “One Big, Beautiful Bill Act,” could trigger an “exodus” of clean hydrogen investment by gutting the 45V tax credit, a lifeline for projects using electrolysis with renewable energy or steam methane reforming (SMR) with carbon capture and sequestration (CCS). The bill, which cleared the House and is now under Senate debate, slashes the 45V credit’s timeline, requiring projects to start construction by January 1, 2026, down from the Biden-era deadline of January 1, 2033. A Senate Finance Committee draft, released June 16, 2025, retained this aggressive cutoff, despite industry outcry.

The article quotes Lee Beck, Senior Vice President at HIF Global, who argues that the new deadline is “unrealistic” for large infrastructure projects, which take four to six years to develop. HIF’s $7 billion green hydrogen plant in Matagorda County, Texas, for example, needs until 2027 to begin construction and has already sunk $200 million into development. This facility aims to produce 1.4 million tons of e-methanol annually, combining hydrogen with captured CO2 for automotive, shipping, and aviation markets. Beck’s point is echoed by Frank Wolak, President of the Fuel Cell and Hydrogen Energy Association (FCHEA), who warns that early withdrawal of 45V credits would “strand investment” and cede U.S. competitiveness to China and Europe, where hydrogen support is robust. 

Economically, the article underscores the 45V credit’s role in bridging the cost gap between clean hydrogen and traditional hydrocarbon-derived hydrogen. Electrolysis-based hydrogen costs $4–$6 per kilogram, while SMR with CCS runs $1–$2 per kilogram, compared to $1–$1.50 for hydrocarbon-based hydrogen without CCS, per DOE and BloombergNEF estimates. The 45V credit, offering up to $3 per kilogram for the cleanest projects, was designed to scale commercial facilities and drive costs down. However, the article notes that final Treasury guidance, issued January 2025, is complex, requiring clean power from at-risk nuclear or new renewables, adding hurdles. The bill preserves 45Q credits for carbon sequestration ($60–$180 per ton), supporting SMR with CCS, but developers must choose between 45V and 45Q, and weak demand-side incentives limit offtake for clean hydrogen over cheaper alternatives.

The article also flags a lack of U.S.-wide consumer incentives, with only states like California offering low-carbon fuel standards. This demand-side gap, combined with the rushed timeline, threatens to halt projects before they break ground, potentially wiping out billions in investment and thousands of jobs, particularly in Republican-leaning states like Texas and Georgia, where clean energy has boomed since the 2022 Inflation Reduction Act (IRA).

Now, let’s zoom out to grapple with the article’s central warning: an “exodus” of clean hydrogen investment. What does this mean for the U.S. hydrogen economy, and why should investors, developers, and policymakers care? The implications are profound, touching economics, jobs, and global competitiveness, with a clock ticking toward January 1, 2026.

First, let’s talk dollars and cents. The 45V credit was a cornerstone of the IRA, fueling over $372 billion in clean energy investment and 334,000 jobs since 2022, per Energy Innovation. Hydrogen projects, like HIF Global’s Texas plant or Plug Power’s electrolyzer deployments, rely on these credits to offset high capital costs—$1,000–$2,000 per kilowatt for electrolyzers and $7 billion for large-scale facilities, per DOE. The new deadline forces developers to rush financial close and construction within months, a near-impossible feat. Lee Beck’s example of HIF’s four-to-six-year timeline is telling: a $7 billion project can’t pivot overnight. If projects miss the 2026 cutoff, billions in sunk costs—like HIF’s $200 million—could be stranded, deterring future investment. A Reuters Events report cites $8 billion in canceled clean energy projects in Q1 2025 alone, signaling a chilling effect.

Jobs are another casualty. The article notes that hydrogen hubs, like those in Texas and Georgia, create thousands of construction, manufacturing, and tech jobs, many in Republican districts. E2’s analysis shows 75% of IRA-backed investments targeted GOP-held areas, creating 13,000 jobs in Texas and 12,500 in Georgia. Slashing 45V risks killing these jobs, as projects like Matagorda’s e-methanol plant, which could employ hundreds, stall. This could spark political backlash, even among Trump’s base, as rural communities lose economic lifelines.

Globally, the U.S. risks falling behind. The article’s warning from Wolak—that China and Europe will seize the hydrogen edge—is no exaggeration. Europe’s Hydrogen Bank has committed €992 million to projects like Lubmin, while China’s Sinopec scales 1 GW of electrolyzer capacity annually. The U.S.’s $7 billion for hydrogen hubs, frozen pending Trump’s review, faces uncertainty. If 45V credits vanish, developers may shift capital to jurisdictions with stable incentives, like the EU’s 10 million-ton hydrogen target by 2030 or China’s state-backed projects. This exodus could cede U.S. leadership in a market projected to hit $1 trillion globally by 2050, per BloombergNEF.

Demand-side weakness compounds the problem. The article highlights a lack of nationwide incentives for hydrogen consumers, unlike California’s low-carbon fuel standards. Without offtake agreements, developers struggle to justify investments, especially for electrolysis-based hydrogen at $4–$6 per kilogram versus $1–$1.50 for hydrocarbon-derived hydrogen, per IEA. The preserved 45Q credit supports SMR with CCS, but choosing it over 45V limits electrolysis projects, skewing the market toward hydrocarbon-based solutions. This could slow the transition to cleaner hydrogen, undermining decarbonization goals for heavy industry and transport, which emit 30% of U.S. CO2 (about 2 billion tons annually).

The investment implications are clear: Trump’s bill creates a policy cliff, threatening to derail projects, jobs, and U.S. competitiveness. But the industry isn’t sitting idle. Let’s explore how it might fight back.

So, how can the hydrogen industry respond to this policy earthquake, and what can we learn from global peers? This segment explores potential strategies—lobbying, pivoting to 45Q, or looking abroad—while comparing the U.S. to Europe and China, where hydrogen thrives under stable policies.

First, the industry is rallying to influence the Senate. The article notes a coalition of 250 companies, including the American Petroleum Institute and DuPont, urging Senators John Thune and Mike Crapo to extend the 45V deadline to 2029. This push, backed by labor groups like the International Brotherhood of Electrical Workers, emphasizes job creation and competitiveness. Republican senators like John Curtis and Lisa Murkowski are advocating for softer provisions, citing economic benefits in their states. If successful, an extended deadline could save projects like HIF’s, preserving $10–$20 billion in near-term investment, per industry estimates. However, the Senate’s narrow 53-47 GOP majority means just four “no” votes could stall the bill, offering hope for moderation.

Another response is pivoting to 45Q credits. The article notes that 45Q, offering $60–$180 per ton of sequestered carbon, remains intact, supporting SMR with CCS projects. Developers like ExxonMobil, with its Baytown facility set to produce 250,000 tons of low-carbon ammonia annually, are leaning into this. SMR with CCS, at $1–$2 per kilogram, is cost-competitive, but scaling requires pipeline infrastructure and storage caverns, concentrated in Gulf Coast states like Texas. However, choosing 45Q over 45V sidelines electrolysis projects, limiting innovation in renewable-powered hydrogen, which is critical for decarbonizing sectors like shipping, per DOE’s 2023 National Clean Hydrogen Strategy.

Some developers may look abroad. The article’s warning of an investment “exodus” is already materializing, with firms like BP redirecting funds to Europe after UK policy delays. Europe’s €112 million grant for Deutsche ReGas’s Lubmin project shows how subsidies attract capital. China’s state-driven model, producing 3.5 million tons of hydrogen annually, offers another contrast, with low-cost electrolyzers ($500 per kilowatt) driving scale. U.S. developers facing a 2026 deadline may follow suit, shifting projects to jurisdictions with predictable incentives, potentially costing the U.S. $50–$100 billion in hydrogen investment by 2030, per BloombergNEF projections.

Innovative financing is another lifeline. Plug Power’s CEO, Andy Marsh, told Reuters Events that Trump’s deregulatory stance could favor hydrogen by easing permitting, even if credits wane. Private capital, like venture funds backing Koloma’s natural hydrogen pilots, could fill gaps, though at higher risk. Public-private partnerships, modeled on Japan’s $1 billion hydrogen fund, could also stabilize projects.

Globally, the U.S. lags in policy stability. Europe’s Hydrogen Bank and China’s subsidies contrast with Trump’s cuts, which could slash clean energy’s share of U.S. electricity from 70% to 54% by 2035, per REPEAT Project estimates. The U.S. must balance its 45Q focus with support for electrolysis to stay competitive, or risk becoming a niche player in a global hydrogen boom.

The Reuters article lays bare a critical threat: Trump’s tax bill, by slashing the 45V credit’s timeline, risks derailing U.S. clean hydrogen investment, stranding billions, killing jobs, and ceding ground to China and Europe. Yet, the industry’s fighting back, with lobbying, 45Q pivots, and global strategies offering hope. H.R.1’s 45Q preservation could drive SMR with CCS, but without 45V, the U.S. may miss the full hydrogen revolution. By learning from Europe’s subsidies and China’s scale, the U.S. can still carve a path to a lean, clean hydrogen future—if it acts fast.

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