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21 January 2025 | Article

Trump takes subsidies away from US hydrogen industry

The new US President Donald Trump signed an executive order right out of the gate, calling on all government agencies to immediately suspend subsidies to industries such as the zero-emission hydrogen industry.

Visa Noronen
Visa Noronen
BotH2nia, Communications
Trump takes subsidies away from US hydrogen industry

Trump ordered federal agencies to suspend all subsidies under the Inflation Reduction Act (IRA), a comprehensive climate and energy bill that Joe Biden signed into law in 2022.

Trump is also putting the purse strings on other laws and regulations. This means, for now, no more funding can be allocated to, for example, any of the seven hydrogen industry clusters that the Biden administration awarded billions of dollars under the 2021 Bipartisan Infrastructure Law. These hydrogen hubs had all received tens of millions of dollars in seed funding.

Lots of noise - less impact

The practical impacts are still much less dramatic. Officials have already finalised contracts for nearly $100 billion in grants in recent months. In other words, 84% of the subsidies have already been awarded and are unlikely to be easily reclaimed. This includes $9 billion for programs to help consumers buy energy-efficient appliances, $3 billion to reduce air pollution at US ports and $9 billion to help power companies switch from fossil fuels to wind, solar and nuclear power. In January, officials also gave loan guarantees such as $1.7 billion for developing six US hydrogen projects to Plug Power, known for its plans to build hydrogen plants in Kokkola, Kristiinankaupunk and Porvoo.

After these money-grubbing raids, the limits of the president's powers are beginning to be felt. Potentially hundreds of billions of IRA dollars will be distributed as tax credits that companies can claim if they use or manufacture carbon capture technology, wind, solar, batteries, hydrogen, nuclear and geothermal energy, among others. The President's Executive Order does not affect these credits, but would require Congressional action to repeal them. Congress is full of Republicans who welcome subsidy cuts, but only if the cuts don't affect businesses in their districts - and IRA credits are raining down on Republican districts. So, there is no point in expecting a massive revolution on this issue now.

The whole Green New Deal in Trump’s teeth

Trump has the whole Green New Deal in his teeth. In his election speeches, Trump promised to halve grocery and energy prices within 18 months of taking office by liberalising oil and gas production.

Things don't change that easily. In the US, environmental groups and a coalition of mayors and governors said on Trump's inauguration day that many states, cities and businesses would continue to reduce global warming emissions independently. They just warned that Trump could slow progress significantly.

Emissions have been falling for a long time

The long-term trend also suggests that Trump's policies may not have a long-term, lasting impact. US greenhouse gas emissions have fallen by a fifth since 20 years ago. This reduction is mainly due to a sharp drop in emissions from electricity generation. Last year, solar and wind power together already overtook coal as the most significant contributor to the US power grid.

In 20 years, the price of solar panels, for example, has fallen dramatically, and in many cases, coal-fired electricity can no longer compete with solar power. Even if, for example, data centres and more air conditioning in hot summers will significantly increase electricity consumption in the coming years, there is no point in expecting new coal-fired power stations even in Trump's empire. The debate is only about how long old coal-fired power plants can be maintained and what to do with natural gas.

US competitiveness under threat

The Trump administration is reversing energy policy to improve the country's competitiveness. But clinging to some old technology could have the opposite effect. For example, the US is now reducing its investment in electric vehicles. This means that the green technology playing field is increasingly in China's hands.

China's cheap electric cars have already started to make a big splash in new markets, which has significantly boosted the electric car transition in major countries such as Indonesia and Brazil in the past year. This growth is particularly benefiting the Chinese. In 2015, the major incumbent car manufacturers accounted for 55% of global electric vehicle sales. By 2023, their share had fallen to 30%, while Chinese carmakers dominated with over 50%.

The US fossil-fuel boom threatens to reinforce Chinese global power in other areas of green technology, such as hydrogen.

A bright future for methane-splitting hydrogen

While Trump's fossil-fuel-loving Drill, baby, drill policy is now making headlines, less noticed is the fact that, in the same package, the US is equally keen to increase not only oil and gas but also its own production of critical minerals.

Hydrogen is traditionally produced from natural gas because methane contains hydrogen and carbon. Traditional hydrogen production eventually releases that carbon as carbon dioxide into the atmosphere to warm the climate. However, with advanced technologies now being introduced on an industrial scale, this carbon can be recovered from natural gas as a solid and suitable feedstock for industrial use. There are several technologies and their names, such as hydrogen pyrolysis. Solid carbon can also be recovered in various forms, but for example, Hycamite, based in Kokola, has announced that it will obtain carbon for use as graphite. It is a critical raw material that Trump's America also desperately wants. That is why these hydrogen technologies using methane still have a strong future on the other side of the Atlantic.