It could have been worse for the sector, but the clock is now ticking for H2 project developers, write Stefan Krumpelmann and Jasmina Kelemen
US hydrogen advocates have breathed a sigh of relief after the 45V production tax credits narrowly escaped an end-of-2025 deadline that would have derailed many project plans. But developers will still need to move fast to meet the revised end-of-2027 cut-off — presenting opportunities and challenges alike.
President Donald Trump signed his "big, beautiful bill" into law on 4 July, after the House of Representatives had passed it a day earlier. Hydrogen projects now have to start construction before the end of 2027 to be eligible for the 45V tax credits that provide up to $3/kg over 10 years for the cleanest supply.
This is five years earlier than the end-of-2032 expiry set out in the previous administration's Inflation Reduction Act (IRA), so fewer projects will be able to benefit from the tax credits than under the Democrats' plans.
But it could have been much worse for the hydrogen sector. For a while, it appeared that Congress would require projects to start construction at the end of this year — a deadline hardly any would have met.
Early responses to the final bill were characterised by relief and optimism, not least because developers at last have clear rules to work with.
This is "the first time we have had real clarity since IRA passed nearly three years ago", NovoHydrogen's chief executive, Matt McMonagle, said. "Regardless of how you feel about the bill, we now know what the rules are."
Former president Joe Biden's administration took well over two years to finalise the exact eligibility criteria for the tax credits. Then, just a few weeks later, Trump took office with the pledge to dismantle the IRA's clean energy subsidies.
Nearly all the US' 140 or so planned renewable or low-carbon projects that Argus is tracking aim to start operations by 2030, meaning most of them would in any case have to begin construction before 2028. The 45V deadline is set to give developers an extra incentive to stick to their timelines — which could be helpful in an industry where few projects have proceeded on time. The bill "gives the industry an opportunity to advance a significant round of projects that will jump-start the US hydrogen market," Fuel Cell and Hydrogen Energy Association president and chief executive Frank Wolak said.
But the early deadline also presents major challenges. Developers will face additional pressure to conclude offtake deals soon, and for many the $3/kg tax credit will not be enough to bring their costs down to what buyers are willing to pay. A rush to move projects ahead is bound to intensify competition for engineering, procurement and construction services and for key equipment — at a time when the booming data centre industry needs similar skills and kit and Trump's tariffs could make it harder to source technology from abroad.
This in turn could provide opportunities for domestic manufacturers of electrolysers and fuel cells, which can continue to receive support from investment tax credits (ITCs). "By maintaining full ITC eligibility for fuel cell technologies, the bill ensures that companies… can continue to deploy US-built platforms at scale," Connecticut-based FuelCell Energy's chief executive, Jason Few, said.
For developers, it does not help that the newly-gained clarity only goes so far. Other government plans are still shrouded in uncertainty, especially regarding $8bn in funds for seven hydrogen hubs, which is under review by the Department of Energy. Even so, US hydrogen might finally gain some traction.
