Illustration: Tiffany Herring/Axios
Hydrogen, a priority for industries' decarbonization efforts, could get tied up in President-elect Trump's promised cuts to energy incentives and funding.
Why it matters: The hydrogen industry has been clamoring for the IRA's 45V production tax credit — worth $100 billion by some estimates — and the IIJA's $8 billion for hydrogen hub networks of regional producers, consumers and infrastructure.
Zoom in: Under Trump, incentives would likely skew toward natural gas–derived "blue" hydrogen production as opposed to the renewables-produced "green" hydrogen that Democrats favor, industry watchers told Daniel.
- "There is some uncertainty" about whether or how hydrogen hub funding will continue, said Mona Dajani, a partner at Baker Botts who represents hydrogen clients.
- Trump officials "could modify their funding allocation to prioritize blue over green," she said.
Between the lines: Trump and congressional Republicans have said IRA tax credits and any unallocated Biden-era funding are on the chopping block as they pursue a reconciliation bill to extend Trump tax cuts.
- The hub program falls within DOE's Office of Clean Energy Demonstrations, which House Republican appropriators proposed cutting nearly in half this year.
- Project 2025 calls for eliminating OCED altogether, arguing the "government should not be picking winners and losers and should not be subsidizing the private sector to bring resources to market."
Yes, but: Hydrogen has won bipartisan Hill support — though Democrats have been split on 45V rules.
- The Treasury Department largely sided with environmentalists in proposing electricity-sourcing rules in credit guidance a year ago.
- Trump could help the industry by loosening the Biden administration's proposed environmental guardrails for the tax incentive.
- Several dozen Democrats in both chambers called on President Biden to finalize the stricter environmental standards before he leaves office.
The big picture: Industry advocates see hydrogen playing a crucial role in lowering emissions from heavy-duty trucking, steel, chemicals, shipping and other industries heavily dependent on fossil fuels.
- Critics worry about the environmental footprint of hydrogen sourced from natural gas and from electricity derived from fossil fuels.
State of play: The industry has been facing headwinds from underwhelming demand and the cost difference between low-carbon hydrogen and traditionally produced hydrogen.
- Five hydrogen hub funding awards have been finalized, while two others in the Upper Midwest and Mid-Atlantic regions remain unfinished.
- An additional $1 billion to seed demand for hydrogen — a significant challenge for the industry — is still being set up.
- "The real driver is going to end up being 45V and where that ends up," said Adam Peters, CEO of Air Liquide North America, which is involved in six of seven hubs.
Context: Hubs center on red states like Louisiana, Texas, West Virginia and North Dakota — home of Doug Burgum, Trump's nominee to lead the Interior Department and National Energy Council.
- "There's still reason to be hopeful that hydrogen developers in Republican-led states, who have benefited greatly from the federal investment and support, would continue," Dajani said.
Our thought bubble: We expect, at the very least, a pause on funding while the new administration decides priorities and reorganizes DOE offices.
- Any environmental guardrails in the Biden administration's final 45V guidance will almost certainly be removed to include the widest definition of hydrogen production.
