How Policy Shifts Are Redrawing the Map for America's Hydrogen Future

Major Clean Energy Players Navigate New Terrain

In a surprising turn for the U.S. hydrogen industry, the Trump administration has officially revoked $3.7 billion in clean energy funding, directly impacting more than 20 large-scale projects. These included high-profile initiatives by energy giants like ExxonMobil, Air Products, CF Industries, and Plug Power. While critics are calling it a setback, many companies remain optimistic - leaning into private investments, commercial offtake agreements, and long-term global partnerships to push forward.

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ExxonMobil's Baytown Project Moves Forward

One of the biggest names affected by the canceled awards is ExxonMobil. Its Baytown hydrogen facility in Texas - slated to be the largest of its kind globally - lost access to $332 million in DOE funds. Yet, this hasn’t stopped momentum.

ExxonMobil has already inked major offtake agreements, including one with Japan's Marubeni Corporation for 250,000 tonnes of hydrogen-based ammonia annually, starting in 2029. Another deal with Trammo aims to export up to 500,000 tonnes of blue ammonia.

Despite the funding loss, the Baytown project is still on track for a final investment decision this year. The commercial traction and global interest around this facility suggest that investors and industry stakeholders still see strong long-term potential.

Hydrogen and Ammonia Projects at Risk - but Not Without Options

At the heart of this disruption is the rollback of the Section 45V tax credit, introduced by the Inflation Reduction Act (IRA). This subsidy has been pivotal for clean hydrogen and ammonia projects. Companies like Clean Hydrogen Works and Bia Energy, both central to Louisiana’s hydrogen corridor, were depending on this support.

With 46 qualifying projects in Louisiana alone, the stakes are high. CF Industries, one of the world’s largest ammonia producers, has already secured renewable energy certificates qualifying their pilot electrolyzer for 45V benefits. But the future now hinges on whether Congress preserves or scraps these credits entirely.

Ryan Stiles, head of ammonia production at CF, said, "Some customers are likely to be less tolerant of paying more for low-carbon ammonia without the 45V subsidies."

Plug Power and Air Products Warn of Economic Fallout

Plug Power, a key player in the hydrogen fuel cell market, recently expanded operations in Louisiana. Their leadership has flagged the rollback of 45V credits as a serious threat to their near-term hydrogen production.

Air Products, which secured $19.7 million in tax credits in 2024 alone, also stands to lose significantly if the bill moves forward. According to company filings, their federal credit claims rose by nearly 40% since 2020, thanks in part to the IRA’s financial framework. These benefits were factored into massive projects like their $4.5 billion blue hydrogen plant in Louisiana.

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Trump’s “Big, Beautiful Bill” Shifts Priorities

Passed in the House, Trump’s budget bill slashes funding for green hydrogen while preserving the 45Q carbon capture credits. The 45Q program allows companies to receive up to $85 per metric tonne of CO2 captured and stored, which continues to incentivize CCS development.

Some argue this signals a pivot: supporting decarbonization through carbon capture rather than green hydrogen. ExxonMobil and Shell are already positioned to benefit, with ongoing CCS ventures capable of storing millions of tonnes annually.

Tom Willis, CEO of Conestoga Energy, emphasized the need for credit transferability in this environment: “In a perfect world we would have [transferability] . . . We would have to find a tax equity partner to invest in us.”

Carbon Capture Stays in Favor - For Now

While clean hydrogen faces headwinds, carbon capture and storage (CCS) projects are seeing a different story. ExxonMobil is advancing its CCS blueprint designed to power U.S. data centers while capturing over 90% of CO2 emissions. Shell, Equinor, and TotalEnergies have likewise expanded their Northern Lights CCS project, now set to store 5 million tonnes annually.

But the road isn't smooth. Permit approvals for CCS wells have dropped significantly. According to Enverus Intelligence Research, carbon well applications plunged by 50% in Q1 2025, and not a single permit was approved. Some blame this on regulatory bottlenecks, with EPA approval times now averaging 30 months.

Industry Seeks New Paths Amid Uncertainty

Despite policy shifts, the private sector is adapting fast. States like Texas and Louisiana are exploring ways to issue well permits independently, bypassing federal delays. Meanwhile, industry leaders continue to stress the need for predictable policies to attract investment.

Chris Wright, U.S. Energy Secretary, stated, “Today, we are acting in the best interest of the American people by cancelling these 24 awards.” Yet many in the sector see the move as short-sighted.

Brenna Casey, a carbon capture analyst at BloombergNEF, warned, "Transferability is really important to the market... [its loss] would kill a lot of projects and distil the market down into the oil majors with huge tax liabilities."

What’s Next for Hydrogen and CCS in the U.S.?

Looking ahead, analysts forecast that North America's share in the global low-carbon hydrogen market could drop from 46% to just 28% by 2030 if these trends continue. While CCS may cushion some of that blow, hydrogen producers will need to rethink financing strategies, fast-track private deals, and lean into state-level partnerships.

Even without federal backing, projects like ExxonMobil’s Baytown facility are a signal that clean hydrogen remains viable. Commercial interest, technological readiness, and rising international demand all point toward an industry that’s adjusting, but far from retreating.

For stakeholders, the message is clear: hydrogen and carbon capture are still essential to a low-carbon future. But their success now hinges on resilience, innovation, and strategic adaptation to a changing policy landscape.