{"id":33465,"date":"2025-07-10T11:00:28","date_gmt":"2025-07-10T11:00:28","guid":{"rendered":"https:\/\/financialrush.com\/?p=33465"},"modified":"2025-07-10T11:00:28","modified_gmt":"2025-07-10T11:00:28","slug":"the-us-throws-a-lifeline-to-the-green-hydrogen-industry-will-it-be-enough","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=33465","title":{"rendered":"The US throws a lifeline to the green hydrogen industry \u2014 will it be enough?"},"content":{"rendered":"

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This article is an on-site version of our Energy Source newsletter. Premium subscribers can sign up here<\/a>\u00a0to get the newsletter delivered every Tuesday and Thursday. Standard subscribers can upgrade to Premium here<\/a>, or explore<\/a> all FT newsletters<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Welcome to Energy Source, coming to you from New York. <\/p>\n

Donald Trump has continued to wage his trade war against the US\u2019s trading partners and sent letters to eight more countries on Wednesday, including threatening Brazil with a 50 per cent tariff. The latest announcements followed earlier statements in which the president said he would impose 50 per cent duties on copper \u2014 a metal that is essential for the renewable energy industry. <\/p>\n

Some sectors of the industry have faced setbacks after Trump\u2019s \u201cbig, beautiful bill\u201d was signed into law last week. Many solar and wind projects will lose access<\/a> to investment and production tax credits. The latest cuts to the Biden administration\u2019s Inflation Reduction Act will cede more ground to China, which leads the energy transition. <\/p>\n

My colleague Rachel Millard reported<\/a> China is building 74 per cent of all current solar and wind projects globally, with clean energy driving a quarter of the country\u2019s economic growth last year. <\/p>\n

In today\u2019s Energy Source, we look at one renewable industry \u2014 green hydrogen \u2014 that was spared by Trump\u2019s bill after the termination of a vital tax credit was pushed to the end of 2027. But two years may not be enough time for this nascent industry \u2014 which produces crucial fuel to decarbonise heavy industries \u2014 to scale. <\/p>\n

Thanks for reading \u2014 Alexandra<\/p>\n

US green hydrogen wins a reprieve<\/h2>\n

US President Donald Trump celebrated the nation\u2019s independence day by signing his landmark tax and spending bill into law. The green hydrogen industry, which was poised to lose a crucial tax credit by the end of the year, also had reason to celebrate.<\/p>\n

The House of Representatives\u2019 version of the \u201cbig, beautiful bill\u201d would have terminated the 45V tax credit by the end of the year. That plan provides a $3 a kilogramme tax credit for clean hydrogen (a fuel that is produced using renewable energy) for a 10-year period. Most green hydrogen projects are not financially viable without government incentives. <\/p>\n

But the green energy lobby aligned<\/a> with the American oil industry to successfully push the deadline to January 1 2028 in the version of the bill signed into law.<\/p>\n

\u201cI\u2019m thrilled that we\u2019ve been given until the end of 2027 to begin construction,\u201d said Andy Marsh, chief executive of Plug Power, one of the largest US hydrogen fuel and equipment manufacturers. \u201cThere was a lot of uncertainty at the beginning of 2025. Now I know the rules of the game.\u201d<\/p>\n

Marsh said Plug Power aims to start construction on three new green hydrogen projects by the end of 2027 \u2014 a plan that would not have been possible if the tax credits expired at the end of the year. The company, which produces 40 tonnes of hydrogen a day, expects to produce between 100 to 120 tonnes of the fuel a day by the end of the decade.<\/p>\n

But as the industry celebrates the win, some experts worry the two-and-a-half-year runway may not be enough time for the sector to scale. Some developers will miss out on the tax credit, slowing the decarbonisation process for steel and other heavy industries that rely on green hydrogen to cut emissions.<\/p>\n

Wood Mackenzie estimated 75 per cent of announced green hydrogen projects would be unlikely to qualify for the 45V tax credit by 2027, putting 2.3mn tonnes of announced capacity at risk.<\/p>\n

Hector Arreola, principal analyst for hydrogen and emerging technologies at Wood Mackenzie, said: \u201cHydrogen is still very, very new so giving subsidies for just two years is just not enough to bring costs down to where it needs to be competitive.\u201d<\/p>\n

\u201cHydrogen is not cost competitive right now without subsidies and even with subsidies.\u201d<\/p>\n

BloombergNEF estimated the average levelised cost of green hydrogen ranges between $3.74 to $11.70 a kilogramme, compared with grey hydrogen \u2014 produced from natural gas \u2014 that costs between $1.11 to $2.35 a kilogramme.<\/p>\n

Oleksiy Tatarenko, senior principal at the Rocky Mountain Institute, said the industry needs to reach a certain scale in order to bring costs down. If only 25 per cent of announced green hydrogen projects are able to start construction before the end of 2027, that will challenge the sector\u2019s ability to lower costs. The industry will probably need government incentives after the termination date, he added.<\/p>\n

Aaron Berman, a fellow at Resources for the Future, agreed. \u201cIf you look at the wind and solar industry it took decades for the cost to come down. The hydrogen industry has not had that time,\u201d he said.<\/p>\n

Wood Mackenzie\u2019s Arreola warned the US may fail to catch up with China\u2019s green hydrogen industry, which is leading the space. S&P Global<\/a> in April reported the Asian country accounted for 50 per cent of the global total production capacity of the fuel in 2024.<\/p>\n

The US industry has struggled with weak demand because of the high costs of the fuel, but the sector is optimistic on its future and is focused on bringing costs down quickly.<\/p>\n

Lee Beck is senior vice-president of global policy and commercial strategy at HIF Global, an e-fuels company that is developing an e-methanol plant in Matagorda County, Texas, and aims to utilise the 45V tax credit. <\/p>\n

She said: \u201cOur goal is to bring down the cost of producing e-fuels [synthetic fuels derived from renewable energy] as soon as possible and build facilities in the future that will not necessarily be dependent on support from governments.\u201d<\/p>\n

\u201cThis is a window of opportunity to build first-of-a-kind facilities to generate further learnings and cost reductions for technologies created in the US,\u201d she added.<\/p>\n

Frank Wolak, president and chief executive of Fuel Cell and Hydrogen Energy Association \u2014 which led industry efforts on delaying the termination date for the 45V tax credit \u2014 said developers will need to start plans to avoid a time crunch.<\/p>\n

\u201cTime is of the essence,\u201d Wolak said, adding the new timeline favours well-prepared projects. \u201c[The industry] has two years of timeframe to get moving and show it can achieve progress and make the investments.\u201d<\/p>\n

Jeremy Harrell, chief executive of ClearPath \u2014 a conservative clean energy organisation that was involved in lobbying Congress over Trump\u2019s bill \u2014 said the industry is in a \u201crace to see what type of capacity the US can build out for the next couple of years and show that we can be a leader in the global low-carbon hydrogen market\u201d.<\/p>\n

Beth Deane, chief legal officer at Electric Hydrogen \u2014 a company that manufacturers electrolyser equipment that produces green hydrogen \u2014 said she expected the tighter tax credit deadline would create \u201curgency\u201d that would facilitate more development in the US.<\/p>\n

\u201cWith any nascent industry you have to show what\u2019s possible,\u201d Deane said. \u201cIf further support is needed that will have to be evaluated in the future.\u201d (Alexandra White)<\/em><\/p>\n

Job moves<\/h2>\n