U.S. hydrogen sector anticipates less stringent emission criteria for subsidies under Trump's administration
In a significant shift, the Trump administration's One Big Beautiful Bill (OBBB) Act, signed by President Trump in July 2025, has amended the hydrogen tax credits and emissions rules originally established in the Inflation Reduction Act (IRA) of 2022.
The OBBB accelerates the phaseout of the Section 45V clean hydrogen production tax credit (PTC), requiring hydrogen production facilities to begin construction by December 31, 2027, instead of the original IRA deadline of January 1, 2033. This effectively terminates the credit earlier than initially planned.
Regarding emissions rules related to clean fuels, the OBBB imposes stricter requirements. Credit-eligible transportation fuel feedstocks must be produced in the United States, Mexico, or Canada. It also prohibits using net-negative emissions rates to compute credits after 2025, with some exceptions like fuels from animal manure. Indirect land use changes are excluded from lifecycle greenhouse gas emissions calculations, and the Treasury Secretary is tasked with establishing emissions rates for manure feedstocks.
The act also modifies credit claiming rules, such as prohibiting credits on fuels that already received credits, and reduces credits for sustainable aviation fuel (SAF).
Elon Musk, CEO of Tesla Inc., has been a skeptic of hydrogen fuel cell vehicles, and his influence on hydrogen policy is unclear. Some industry members, such as Andy Marsh, CEO of Plug Power Inc., believe securing hydrogen production tax credits may get easier under the Trump administration. However, hydrogen stakeholders remain uncertain about the possibility of a repeal of clean energy subsidies under the Trump administration.
The European Union has set similar standards to prevent hydrogen plants from overloading the power grid. The Biden administration intended to finalize the rules with "appropriate adjustments" by the end of 2021, but it is unclear if they will meet their deadline.
Industry members and some senators argue that the Treasury's proposal was never called for in the IRA. Climate groups argue the rules, dubbed the three pillars, are needed to keep hydrogen from defeating its purpose as a clean energy source.
The proposed 45V guidelines are expected to be watered down under the Trump administration, potentially easing the burden on hydrogen producers. However, it's important to note that the "three pillars" do not exist in the law but are interpretations resulting from it.
The Trump administration's OBBB Act represents a marked rollback and tightening of the IRA’s clean hydrogen tax incentives and emissions-related credit rules, speeding up phaseouts and imposing geographic feedstock restrictions to promote domestic production and limit foreign involvement.
- The Trump administration's OBBB Act has tightened the clean hydrogen tax incentives and emissions-related credit rules established in the IRA of 2022, hastening the phaseouts and imposing geographic feedstock restrictions to support domestic production.
- The OBBB Act's amendments to the Section 45V PTC require hydrogen production facilities to begin construction earlier than initially planned, potentially limiting the credit for those facilities.
- The European Union and the Biden administration have set similar standards to prevent hydrogen plants from overloading the power grid, aiming to maintain the clean energy status of hydrogen production.
- Industry members and senators have criticized the Treasury's proposed guidelines for not being explicitly called for in the IRA, while climate groups argue these guidelines are essential to ensure hydrogen remains a clean energy source.
