Hydrogen Hubs in Limbo With Developer Funding Hurdles (Correct)

Developers for the Biden-era $7 billion Hydrogen Hub program are still seeking clarity over the future of its projects as they cope with uncertainty around their funding streams under the second Trump administration.

Former President Joe Biden spent nearly half his term developing the Hydrogen Hub program to “accelerate the domestic market for low-cost, clean hydrogen.” The administration supported the hubs as a way to eliminate 25 million metric tons of carbon emissions while catalyzing millions of jobs and billions in private investment, the administration said.

But the program’s potential was flipped on its head once the Trump administration issued its Unleashing American Energy executive order, which froze all grants and loans disbursed under the Bipartisan Infrastructure Law and Inflation Reduction Act.

The Department of Energy under Biden used grants established by the IRA to fund clean energy technology development and its 45V tax credit subsidizes hydrogen production.

Uncertainty around federal funding policy could slow down the clean energy industry as Trump administration policies faces court challenges, said University of California San Diego professor David Victor.

In the meantime, Congress could help dictate whether Biden-era funding initiatives like the IRA will survive as it drafts budget and spending plans ahead of a March 14 government funding deadline.

Focus on Funding

The concerns around future subsidies for the projects was evident Tuesday, when three Hydrogen Hubs and dozens of corporations and trade associations signed a letter urging the House speaker to protect the 45V credit.

“With the final rulemaking just being issued this January, our industry is now poised to invest billions of dollars in deployments and manufacturing facilities across the country. However, that private sector investment is at risk due to the uncertainty around this crucial incentive,” the groups wrote.

Many of the companies that are part of the Fuel Cell and Hydrogen Energy Association—one of the nearly 110 groups that signed the letter—have projects connected to the hub program, FCHEA President Frank Wolak said in an interview on Feb. 12.

The signatories follow nearly 20 conservative House members who sent a letter to Speaker Mike Johnson (R-La.) in August recommending that he “prioritize business and market certainty” as the House considers whether to repeal or reform the IRA.

Victor, who researches how regulation influences the energy market, said hub projects are likely to “go into hibernation” and may eventually die if policy supporting its funding doesn’t get passed.

Projects in Planning

But 45V tax deals are thriving and still being pursued since the executive orders don’t directly target the credits, said Carl Fleming, a partner at McDermott Will & Emery LLP and former White House energy adviser.

Only three of seven hubs—the California, Gulf Coast, and Pacific Northwest hubs—replied to Bloomberg Law’s requests for comment. They could not provide answers to questions regarding whether the Energy Department has attempted to claw back program funding or whether they are considering other sponsors. The Energy Department didn’t respond to requests for comment.

A spokesperson for GTI Energy, a partner involved in the Gulf Coast, Appalachian, and Midwest hubs, said in an email Feb. 13 that hub teams across the country are collaborating with each other and working with federal partners to align on next steps for the funding process. But on behalf of the Gulf Coast Hub, which is intended to be the largest project in the program, the spokesperson said the team is excited to help America lead the world in hydrogen production and create “lasting value” for the coast’s economy.

Hydrogen Hub projects are still in the planning stage of development, otherwise known as Phase 1, said Elina Teplinsky, a partner at Pillsbury Winthrop Shaw Pittman LLP and co-chair of the Nuclear Hydrogen Initiative. The hubs finalized their contract agreements starting the summer of 2024 and will follow the Office of Clean Energy Demonstrations’ project timeline.

The hubs have received around $170 million so far, Teplinsky said, based on calculations conducted from funding announcements. But press releases she used are no longer accessible on the DOE’s website.

“Programmatic reviews are a standard part of administration transitions, and we remain confident in the continued progress of Phase 1 activities,” said ARCHES CEO Angelina Galiteva, who leads the team developing California’s hydrogen hub, in an emailed statement Feb. 13. “The initial funding is already in place and several projects are well underway.”

“The impact is going to be widely different for different companies depending upon how established they are, what their different sources of financing are, their access into private funding markets,” said Drew Young, a renewable energy tax partner for DLA Piper LLP.

The Hubs’ potential to spur clean energy research and millions of manufacturing jobs will depend on whether Congress and the executive branch can align its priorities for the energy sector, said Katie Ellet, the chief executive officer of clean energy company ETCH.

“These projects do provide manufacturing jobs, they produce energy, they produce energy independence,” said Ellet, who worked on six of the seven approved hubs as president of Hydrogen Energy & Mobility for Air Liquide North America. “They are the kind of projects that, regardless of partisanship, that I would say everyone would want in their district.”