Stakeholders from all seven Regional Clean Hydrogen Hubs wrote to the Senate last week in an eleventh-hour plea for lawmakers to preserve the 45V tax credit for projects that start construction through the end of 2029.
The Senate Finance Committee’s draft reconciliation bill, released last week, proposed terminating 45V at the end of 2025 — without extensions or a phase-down period. It’s a proposal that’s in alignment on hydrogen with the version passed by the House, which also sought to eliminate the credit much earlier than the original 2033 timeline.
Created by the Inflation Reduction Act, 45V provided up to $3 per kilogram of clean hydrogen produced, based on the carbon intensity of production. The goal was to reduce the cost gap between fossil-based hydrogen and clean hydrogen, thereby catalyzing a domestic clean hydrogen industry.
However, in part because of the long delay in finalizing the 45V tax credit rules, very few projects are on track to break ground by the end of this year. None of the regional hydrogen hubs — which have only received the first phase of promised federal funding, for planning, development, and community engagement activities — are expected to do so.
“The 45V credit is essential to the success of our Hubs and to securing America’s energy future,” the project leaders wrote in the letter, addressed to House majority leader John Thune (R) and finance committee chairman Mike Crapo (R). “Our projects are positioned to deliver on America’s forecast of energy independence by producing clean hydrogen at scale, creating tens of thousands of high-quality jobs, revitalizing domestic manufacturing, and leveraging America’s vast energy resources.”
The Department of Energy rolled out $7 billion in bipartisan infrastructure law funding for the hydrogen hubs in 2023, as part of the Biden administration’s effort to build a domestic clean hydrogen industry from the ground up. The seven projects span 16 states, from the Pacific Northwest and California to Houston and Appalachia. And the size of the projects also varies, from $750 million up to $1.2 billion.
While all of the hubs were expected to use at least some renewable energy, three also planned to use nuclear power; and others planned to use a combination of fossil fuels and carbon capture and storage. If successful, the Biden administration said the projects had the potential to produce at least a third of the U.S.’ 2030 hydrogen production goals.
But while each of the projects has already lined up billions of dollars in private capital, all seven hubs are now at risk of failure without 45V, the letter said. Those private dollars, they added, hinge on the availability of the credit.
“With clear, stable policy, the Senate can unlock significant private investment, support the growth of a modern energy workforce, and strengthen the long-term competitiveness of American industries,” the letter concluded.
Broader challenges
The domestic hydrogen industry has been navigating turbulence for the better part of two years, in large part due to the extended uncertainty over which projects would qualify for 45V. But the challenges facing the sector — and the seven regional hubs in particular — in the Trump 2.0 era extend beyond the tax credit.
All seven hubs appeared on an initial draft of the “hit list” of projects funded by the Inflation Reduction Act that the Trump administration ordered DOE to compile in the weeks following inauguration. In the wake of that letter, Republican state legislators in Washington wrote to Chris Wright directly, urging him to continue funding for the Pacific Northwest Hydrogen Hub. That project, the Republicans told Wright, was expecting to receive around $1 billion from the federal government, and was projected to create more than 10,000 jobs in the region.
“We encourage you to support the continuation of all the H2 Hubs, but especially the PNWH2 hub, to help America retain its energy dominance,” that letter, written in the spring, said.
The fate of the already-promised funding for the hubs remains in limbo. The administration has said it plans to claw back funding to certain DOE projects, but has to date largely targeted smaller projects, including those targeting heavy industry.
But even if the grants remain in place, the projects now face a personnel and support problem: The Office of Clean Energy Demonstrations, which managed more than $20 billion in large-scale, first-of-a-kind projects, was gutted when Elon Musk and his Department of Government Efficiency rampaged through DOE.
As one former OCED employee, who took DOGE’s “deferred resignation program” offer put it to Latitude Media: “These projects, even if we try to save them, they’re going to falter, because so much of the office…is gone.”
