Guide to Saving Energy in the Hydrogen Industry: 45V Reduction Strategy
The hydrogen industry is gearing up for a significant push to extend the 45V tax credit for another five years, with optimism running high that the final version of the bill will extend the credit to December 31, 2029.
The industry has been actively working to reinforce the merits of the tax credit to key senators, including Louisiana Sen. Bill Cassidy, West Virginia Sen. Shelly Capito, West Virginia's Jim Justice, Louisiana's John Kennedy, Texas' John Cornyn, Utah's John Curtis, Kansas' Jerry Moran, Pennsylvania's Dave McCormick, and others.
Pennsylvania Senator Dave McCormick, who was elected to the Senate last year and has focused on "unleashing" oil and gas production in the state, has recently realised he can be supportive of the hydrogen industry. Pennsylvania is set to house portions of two federally funded hydrogen hubs - the Mid-Atlantic Hub and the Appalachian Hub.
The industry's strategy is a "surgical" approach, prioritising states with hydrogen work already underway, such as Louisiana, West Virginia, Texas, and Utah, which are part of federally funded hydrogen hubs.
Senator Bill Cassidy from Louisiana has recently built a coalition supporting the extension of the 45V hydrogen investment tax credit, expected to facilitate approximately $43 billion in investments in hydrogen projects. Notable hydrogen projects underway in the United States include the Roadrunner project using American-made electrolysis technology to produce sustainable aviation fuel (SAF) in partnership with American Airlines and British Airways.
The hydrogen sector is arguing that maintaining the 45V tax credit can help the U.S. get ahead of China in the hydrogen sector. If the tax credit is extended, it will allow enough projects to matriculate that the beginnings of a strong U.S. hydrogen industry will emerge.
However, the fate of federal funding for hydrogen hubs will be determined by the Department of Energy, and is not part of the industry's ask for extending the 45V tax credit. The version of the "Big Beautiful Bill Act" passed by the House proposed ending the credit at the end of 2025, but the Senate finance committee's markup suggested a phase-out, also starting this year.
Despite these challenges, the domestic hydrogen sector remains optimistic about its future, with the outcome of the bill set to determine what happens next for the industry. If the tax credit is not extended, the domestic hydrogen market will rapidly become stagnant, and companies will have to look for opportunities overseas.
