As part of Trump's tax cuts package, a bill repealing key incentives for low-carbon hydrogen production in the US could dramatically reduce the country's large export potential in the medium-to-long term, jeopardizing many of the planned projects originally expected to benefit from IRA 45V credits.

Analysis

United States

Analyst, Clean Energy & Transport

Sveva Bertini

Aviation 

Heavy Industries 

Road Transportation 

Hydrogen

Aviation ,Heavy Industries ,Road Transportation ,Hydrogen

After being approved by the House of Representatives on 22 May 2025, Trump's proposed tax cuts on key IRA provisions supporting the development of a low-carbon hydrogen industry in the US face an uncertain future, subject to the final vote by the Senate. While tax credits for blue hydrogen and low-carbon transportation fuels remain largely unchanged, 45V credits for low-carbon hydrogen would be automatically scrapped by the end of 2025, jeopardizing the large number of projects announced since the introduction of IRA. If the bill is enacted, Stratas Advisors expects a dramatic reduction of US green hydrogen supply, limiting the country's export potential...
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<h3><a href="~/services/services?ContentID=155" title="" target="_blank" rel="noopener">Global Hydrogen Outlook</a></h3>

Imminent IRA Section 45V Repeal to Dampen US Green Hydrogen Export Potential

In May 2025, the Ways and Means Committee of the US House of Representatives introduced a series of measures aimed at implementing some of President Trump&rsquo;s previously anticipated tax cuts. These norms, which are intended to converge into a single comprehensive legislative package, referred as the &ldquo;<a href="https://budget.house.gov/download/one-big-beautiful-bill-act_-full-bill-text">One Big, Beautiful Bill</a>&rdquo; by the Trump administration, include the abrupt repeal of Section 45V of the Inflation Reduction Act (IRA), as well as the amendment of Sections 45Q and 45Z&mdash;which so far have remained key in spurring investment into the US low-carbon hydrogen industry. However, while amendments to 45Q and 45Z for carbon capture and storage (CCS) and low-carbon fuels, respectively, remain minimal, the future of IRA 45V credits for low-carbon hydrogen faces significant uncertainty. Approved by the Ways and Means Committee on 14 May 2025 and by the House of Representatives on 22 May 2025, if passed by the Senate, the bill would drastically anticipate the 45V funds allocation closing date to 31 December 2025 instead of the previous fund termination date of 31 December 2034. If translated into law, the current proposal will virtually threaten the finalization of 49 green hydrogen production projects expected to come online from 2026 onwards, accounting for about 40% of the total low-carbon hydrogen facilities planned in the US between 2022 and 2035. With ten large-scale green hydrogen projects having been put on hold, two have been officially postponed and could face cancellation.&nbsp;<a style="mso-comment-reference: SB_2; mso-comment-date: 20250522T1016; mso-comment-parent: 1; mso-comment-done: yes;"></a><a style="mso-comment-reference: JR_1; mso-comment-date: 20250521T1529; mso-comment-done: yes;"></a>
In turn, the bill's impact on blue hydrogen projects remains limited as it maintains IRA timelines for fund allocation while proposing modifications related to foreign-influenced and -controlled entities only. As a result, the eventual entry into force of 45Q amendments for CCS projects would have a limited impact on Stratas Advisors' base-case projections for blue hydrogen supply in the US. Conversely, the repeal of 45V credits for low-carbon hydrogen could almost halve domestic green hydrogen supply in the medium-to-long term. With fossil hydrogen supply equipped with and without CCS satisfying virtually all domestic demand over the forecast, the significant downsizing of US green hydrogen production would result in a dramatic drop in exports, missing a key opportunity to serve rapidly-growing demand in Europe and Asia.

 
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