Fossil-Fuel and Green Groups Unite to Defend US Clean Hydrogen Tax Credit
- Madina Turaeva
- Feb 24
- 3 min read
Updated: Mar 4
In an unprecedented move, fossil-fuel and green energy groups have joined forces to urge Republican Congressional leaders to maintain the 45V clean hydrogen production tax credit. The initiative comes amid a series of spending cuts from the Trump administration, as well as a pause on disbursements for key hydrogen-related programs.
The coalition, consisting of 26 trade bodies—including the American Petroleum Institute, the US Chamber of Commerce, and the American Council on Renewable Energy—along with 88 companies and three US hydrogen hubs, sent a joint letter advocating for the retention of the tax credit. Among the major signatories are General Motors, Siemens, Hyundai, and Toyota, alongside various green hydrogen developers and equipment manufacturers.
The letter, addressed to House Speaker Mike Johnson, Senate Majority Leader John Thune, Senate Finance Committee Chairman Mike Crapo, and House Ways and Means Committee Chairman Jason Smith, underscores the critical role of the 45V tax credit in fostering the growth of the US hydrogen industry.
“On behalf of the below-signed businesses and organizations, representing the full diversity of the American hydrogen industry, we stand ready to work with you to implement President Trump’s bold energy dominance agenda,” the letter states.
The tax credit, which provides up to $3 per kilogram of clean hydrogen depending on lifecycle greenhouse gas emissions, was finalized in January under the Biden administration following a two-year delay. The industry is now poised to invest billions in deployment and manufacturing across the country, yet uncertainty surrounding the credit threatens to stifle growth.
“There are hundreds of companies and thousands of jobs at stake for this sector, and without this tax incentive, many of these deployments, jobs, and opportunities will shift from the United States to countries around the world,” the letter warns.
A Global Race for Hydrogen Leadership
The coalition highlights the strategic importance of clean hydrogen in securing US energy independence and global competitiveness. It points to China’s rapid expansion in hydrogen production, where the country has grown from less than 10% of global manufacturing capacity in 2020 to over 60% today. The letter warns that without clear and effective incentives like 45V, the US risks ceding its position as a leader in this emerging energy sector.
Details of the 45V Tax Credit
The $433 billion Inflation Reduction Act of 2022 introduced the 45V tax credit to incentivize clean hydrogen production based on lifecycle greenhouse gas emissions:
Hydrogen produced with less than 0.45 kg CO2e per kg H2 qualifies for the full $3/kg credit.
Projects emitting between 0.45-1.5 kg CO2e/kg H2 receive 33.4% of the credit.
Emissions of 1.5-2.5 kg CO2e/kg H2 qualify for 25%.
Projects emitting 2.5-4 kg CO2e/kg H2 are eligible for 20% of the maximum credit.
Due to high upstream methane emissions, blue hydrogen producers may struggle to qualify for the full credit. However, a separate 45Q tax credit, which offers up to $85 per ton of CO2 captured and sequestered, remains available to them. Companies can only claim one of these credits at a time.
To qualify for 45V, projects must be verified by an independent third party and begin construction before 2033.
Hydrogen as a Strategic Asset
The letter also emphasizes the national security benefits of hydrogen production, arguing that it strengthens American energy abundance by utilizing domestic resources such as natural gas, biogas, biomethane, and nuclear energy. Additionally, the ability to produce hydrogen within the US reduces reliance on foreign energy imports and creates export opportunities.
With hydrogen poised to play a key role in the future energy landscape, industry leaders are urging Congressional Republicans to uphold the 45V tax credit and ensure that the US remains at the forefront of this critical sector.
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