Whiplash Warning: What Trump’s Tax Bill Means for Hydrogen and Carbon Capture in America

A new policy shift could put billions in clean tech investments at risk

The U.S. hydrogen and carbon capture sectors have seen unprecedented momentum since the passage of the Inflation Reduction Act (IRA) in 2022. That may soon change. President Trump’s newly proposed tax bill includes provisions that could dramatically accelerate timelines, and disrupt funding, for some of the most promising clean energy projects in North America.

At the heart of the concern are changes to the 45V hydrogen tax credit and 45Q carbon capture incentive, though it's important to clarify that the 60-day and 2028 deadlines primarily affect clean electricity credits (45Y and 48E). The 45V credit may face earlier termination under the proposed bill, while 45Q appears to be largely preserved without accelerated deadlines in its current form, two pillars of the IRA that catalyzed a wave of innovation in clean hydrogen, direct air capture, and large-scale CCS hubs. Under the new bill, developers would have just 60 days after enactment to break ground and must bring projects online by 2028 to qualify for credits. The IRA had previously locked these benefits in through 2032.

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The hydrogen gold rush just got a deadline

Many of the largest hydrogen projects in the U.S. are multi-year undertakings. The Department of Energy’s Regional Clean Hydrogen Hubs program (H2Hubs), for instance, is set to distribute $7 billion across seven selected hubs, including major initiatives in Texas, California, and the Appalachian region.

Occidental Petroleum's massive STRATOS direct air capture project in Texas, one of the world’s largest DAC facilities, also relies on the stability of 45Q tax credits. A sudden change in timeline could impact construction scheduling, labor availability, and equipment procurement, all while forcing developers to commit to unreasonably fast start dates.

"Requiring a range of advanced energy projects to commence construction within 60 days of enactment, along with moving up the 'placed in service' deadline to 2028, will pull the rug out from a host of projects in active development," Advanced Energy United said in a statement.

Why this hits carbon capture especially hard

Projects focused on carbon removal, like CCS and DAC, face more complex engineering, permitting, and siting challenges than traditional renewable energy builds. These aren't quick-turn solar farms; they often require multi-year planning and permitting phases.

The proposed tax changes could disproportionately penalize long-term infrastructure. Carbon management hubs such as the Bayou Bend CCS project, backed by Chevron, Talos Energy, and Carbonvert, involve coordination across industrial partners, geological assessments, and regulatory agencies. With shortened timelines, some of these projects may no longer pencil out.

Clean hydrogen and CCS are not fringe science; they are commercializing now, and tax policy will either accelerate or stall their progress.

The global supply chain squeeze

Another layer of disruption in the bill is the foreign entity of concern (FEOC) clause. This would block tax credits for projects that source components—like electrolyzers or carbon capture membranes, from countries deemed adversarial, including China.

This matters. Most of the world’s hydrogen electrolyzers and a significant portion of carbon capture equipment are still manufactured abroad. The U.S. is ramping up local production, but not fast enough to meet demand without imports.

"We need to make sure that there aren't provisions in the bill that inadvertently disrupt that goal," said Jeannie Salo, Chief Policy Officer at Schneider Electric, when discussing how tax law could undermine clean energy manufacturing in the U.S.

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Clean energy developers speak out

Clean power developers like RWE, which operates over 10 GW of clean energy in the U.S., are sounding the alarm. In a statement to Reuters, a spokesperson said the company is raising its threshold for future investments due to policy instability.

"In addition to a stable incentive framework, all necessary federal permits must be in place, all relevant tariff risks mitigated and projects must have secured offtake at the time of the investment decision," a spokesperson for RWE told Reuters Events in a June 10 article.

That’s a high bar, and one that developers say may be impossible to meet under the new tax proposal. Hydrogen and CCS projects need years of prep work before shovels hit the ground. Forcing a 60-day start window will likely favor only the most capital-rich players or cancel mid-stage developments entirely.

A tale of two technologies: nuclear wins, climate tech waits

Interestingly, the bill offers more generous treatment for nuclear power projects. Developers have until the end of 2028 to break ground and still qualify for tax incentives. Trump has made nuclear expansion a key part of his energy platform, ordering the U.S. Nuclear Regulatory Commission to streamline licensing and approving a $900 million funding push for next-gen reactors.

While nuclear certainly has a role to play, the imbalance raises eyebrows. Hydrogen, SAF, CCS, and DAC technologies are just reaching commercial scale, and now risk losing ground due to compressed policy windows.

Meanwhile, international investors are already feeling jittery. For global funds looking to finance U.S.-based blue hydrogen or DAC projects, tax whiplash is a real deterrent. Stability, more than subsidies, is often what drives capital decisions.

What’s next for North America’s climate tech momentum

The Senate is still reviewing the bill, and many believe it will revise or soften some of its provisions. Several Republican senators represent states with major clean energy investments, and bipartisan support for the IRA remains strong in regions benefiting from clean tech jobs.

Still, the uncertainty has created a ripple effect. Manufacturers are pausing expansion plans. Developers are rewriting financing models. And advocates are calling on lawmakers to preserve a predictable framework for hydrogen and carbon tech to thrive.

If there's one thing the clean energy industry has proven, it's resilience. From electrolyzers in Alberta to DAC plants in Texas, momentum is still strong. But industry leaders agree: the U.S. must avoid policy whiplash if it wants to lead in the global race for decarbonization technologies.