The Trump Administration Seulated a Solar Farm

The US tax credit for low-carbon energy, specifically the hydrogen subsidy, is one of the most generous, paying up to $3 per kilogram of hydrogen produced, depending on the emissions intensity of the process. The credit was created by the 2022 Inflation Reduction Act, and the total cost is estimated to be $49 billion over 10 years. However, the industry is still in its infancy and the total cost is dependent on the growth of the industry. The Trump administration’s letter argues that nixing the tax credit will allow China to dominate the hydrogen technology market, as China currently produces over 60% of the global supply of electrolyzers, equipment that splits water into hydrogen and oxygen using electricity. The letter also argues that hydrogen fuel cells are already being used by tech companies to power data centers. However, the letter ignores the distinction between “clean” and “non-clean” hydrogen production, implying that the hydrogen industry is an extension of the US fossil fuel industry, with oil and gas companies having the infrastructure, workforce, and supply chains to lead the global hydrogen economy. The industry was on hold for over two years, waiting for the Biden administration to finalize eligibility rules, and while the rules were published in January, the Trump administration’s views on the program remained uncertain. The letter calls for the tax credit to be maintained, as the private sector is poised to invest billions of dollars in deployments and manufacturing facilities across the country, and the industry is at risk due to the uncertainty surrounding the incentive.