The Biden administration is pursuing “clean hydrogen” as one potential climate solution for heavy industry. It funded the creation of several “hydrogen hubs,” including two in Pennsylvania. But what happens to these plans if Donald Trump regains the White House?
Hydrogen is part of President Joe Biden’s plan to lower the U.S. carbon footprint. But Donald Trump has previously said he thought climate change was a “hoax.” And he has labeled Biden’s attempts to deal with it, such as through the Inflation Reduction Act, as a “scam.”
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Why hydrogen?
Hydrogen is being promoted as a way to build American industry while lowering carbon emissions because when it’s burned or used to make electricity, it produces no carbon dioxide – the main cause of the earth’s warming. But it’s very hard to produce without creating CO2.
Last year, Biden announced the funding of $7 billion for seven clean hydrogen hubs around the country, which he said would spur billions more in private investment.
“It’s a 50 billion dollar investment to make a stronger, more energy secure economy, while combating the threat of climate change,” Biden said.
Scientists say carbon pollution, mainly from fossil fuel use, is warming the planet, supercharging storms like Hurricane Helene and Milton. The earth record-breaking temperatures in 15 consecutive months until September, and this year is on track to be the hottest year on record, according to the National Oceanic and Atmospheric Administration.
A majority of Americans want politicians to do more to address climate change.
But some industrial processes are hard to do without using fossil fuels, which are dense in energy and relatively easy to transport. That’s where hydrogen comes in. Scientists say it can be used to lower the carbon footprint for heavy industries where electricity or batteries might not be adequate – such as steel, cement and aviation.
Most hydrogen is currently produced from fossil fuels in a process that creates large amounts of carbon dioxide.
The hydrogen hubs include projects that would produce clean hydrogen, either by using zero-carbon electricity from renewable sources or nuclear or by producing hydrogen with natural gas and carbon capture technologies.
Last October, Biden announced the hydrogen hub funding in Philadelphia, the site of one of the hydrogen hubs. Another – the Appalachian Regional Clean Hydrogen Hub, or ARCH2, would be built in West Virginia, Pennsylvania and Ohio.
In a statement, Shawn Bennett, energy and resilience division manager at Battelle, the organization that is steering the ARCH2 project, said he “firmly believes that the benefits of hydrogen energy are widely understood and supported on a bipartisan basis.”
“Hydrogen plays a crucial role in driving energy independence, creating jobs, and reducing emissions,” Bennett said. “These priorities resonate across the political spectrum, and we remain focused on advancing our mission to build a clean, economically viable and socially equitable hydrogen ecosystem in Appalachia regardless of political shifts.”
Tax incentives for hydrogen
The hubs were only the start of the administration’s investment. In Biden’s landmark climate law, the Inflation Reduction Act, Congress created tax incentives for companies to create clean hydrogen. A recent estimate found those tax credits could be worth $34 billion over the next decade.
Donald Trump has said he would rescind unspent money from the IRA, which he has called “The Green New Deal” or “The Green New Scam.”
“All of the trillions of dollars that are sitting there not yet spent we will redirect that money for important projects like roads, bridges, dams, and we will not allow it to be spent on meaningless green new scam ideas,” Trump told a crowd of supporters recently, misstating the amount of funding in the IRA. The initial tab for the climate investments in the bill was $390 billion over 10 years, but recent estimates put the number at closer to $790 billion.
Republicans say they want to repeal the Inflation Reduction Act. But even if Trump wins and Republicans win both the House and Senate, repealing it won’t be easy, says Ann Carlson, environmental law professor at UCLA and a former transportation official in the Biden-Harris administration.
“I don’t think Congress will roll it back,” Carlson said in a recent online forum on climate policy and the presidential election. “I think there are too many interest groups that care. There’s too much money that’s pouring into, you know, tech and all the rest of it.”
That’s because Republican districts around the country have benefited from IRA-related clean energy projects. According to one analysis, about 60 percent of all IRA-related clean energy projects have gone into Republican congressional districts.
But that doesn’t mean the law and all those subsidies are safe. Next year, Congress will decide whether to extend the Trump tax cuts of 2017, said Heather Hawkins, a partner and tax law specialist at the accounting firm KPMG.
Right now, extending the tax cuts would add over $4 trillion to the deficit, according to one analysis. That means Congress may be looking at ways to save money, Hawkins said.
“Whatever the Congress’ makeup is and whatever the administration’s going to be, there’s still going to be these tax cuts that need to be paid for–the extension of the tax cuts,” Hawkins said.
A Trump-friendly hydrogen ally: Oil and gas
Renewable energy and electric vehicle subsidies could be on the chopping block, Hawkins says.
“If you look at what House Republicans have proposed thus far in terms of IRA repeals, it’s been things like tweaking the electric vehicle credits,” she said.
Republican voters are much less likely to support subsidizing renewables or EVs than Democrats.
But there’s one industry set to receive subsidies under the IRA’s hydrogen tax credits that they do like: oil and gas.
“Big Oil-type companies have interest” in the hydrogen tax credits, says David Burton, partner with the law firm Norton Rose Fulbright. Some of his clients are interested in IRA tax incentives, including those for hydrogen.
“A lot of them have backed Republican candidates,” he said. “Hydrogen does not appear to be a particular Republican target.”
The oil and gas industry has donated $20 million toward re-electing Donald Trump, according to the campaign donations watchdog OpenSecrets.org, compared to $1.4 million to Kamala Harris. That’s still less than Trump reportedly asked from oil executives earlier this year, when he pledged to slash regulations in exchange for $1 billion in campaign donations.
The American Petroleum Institute, which represents major oil and gas companies, said in a statement the U.S. had a “unique opportunity” to lower its carbon emissions with “low-carbon hydrogen technologies.”
“Ensuring the ability to produce hydrogen using all methods — including utilizing the U.S.’s abundant natural gas resources — should be a nonpartisan national priority, and our industry will continue to work with policymakers to preserve incentives that advance innovation and gain from support on both sides of the aisle,” the statement said.
Vice President Kamala Harris, the Democratic nominee for president, has called climate change “an existential threat,” and Hawkins expects her to continue to support policies like those in the Inflation Reduction Act. But thus far, the campaign has said little about specific policies like hydrogen.
Final rules on tax credits could determine how ‘clean’ hydrogen becomes
Burton says many hydrogen projects are awaiting final regulations from the IRS on how carbon-free hydrogen projects need to be to earn the credits. Specifically, the IRS must decide how much electricity used to extract hydrogen from water needs to come from renewable energy and whether companies could use electricity generated from coal or natural gas.
Oil and gas companies and some renewable developers want more leeway in using fossil fuels to power this process, otherwise, they say, hydrogen projects won’t be built at all.
But making the regulations too lax would mean some carbon-polluting projects would get the “clean hydrogen” tax credits, says Matt Lifson, an attorney at the Institute for Policy Integrity at NYU School of Law.
“From an emissions, climate change perspective, it would not be a good thing,” he said.
Lifson said Trump could make these companies happy by rewriting the hydrogen tax credit rules to reward more projects that use fossil fuel power. This would erode any climate benefit from making the hydrogen in the first place.
“If you start making hydrogen by taking the electricity from fossil fuels,” he said, “in most cases, you’d be better off skipping the hydrogen step and just burning the fossil fuel.”
Support for this reporting came from the MIT Environmental Solutions Initiative’s Journalism Fellowship.
