Hydrogen advocates pin hopes on state governments as Trump rolls back subsidies

US hydrogen boosters are turning to the states in their bids for clean fuel production mandates and demand-side subsidies, having determined their chances of progress are much worse at the federal level.

The Biden administration offered billions of dollars in funding to ramp up clean hydrogen production, but industry members and climate groups argue there is still not enough incentive for fossil fuel customers to switch to hydrogen. Now the Trump administration has proved skeptical of the alternative fuel.

"There's a need for demand-side policy," said Erik Kamrath, a hydrogen advocate at Natural Resources Defense Council (NRDC), an environmental group. "The federal government's probably not going to do it the next couple of years. States have an opportunity to do to fill that gap right now."

Meanwhile, "there's a lot of defense being done at the federal level," Kamrath said during an interview at the Hydrogen Americas conference near Washington, DC, on Sept. 4.

Industry watchers were surprised when Congress voted in July to shorten the deadline for claiming hydrogen production tax credits by five years. The US Energy Department has also been threatening to cancel grant and loan contracts for clean energy projects, including the Biden administration's $7 billion hydrogen hub program.

Rather than fighting the Trump administration, Roxana Bekemohammadi said she is encouraging hydrogen players to shift their resources "in a direction that's actually going to be productive."

"If we're building infrastructure, it's going to be done on a local and state level," said Bekemohammadi, founder and executive director of the industry group US Hydrogen Alliance. "There's simply no way to build anything foundational other than from the state and local level."

The US Hydrogen Alliance, whose members include Japanese industrial gas company Air Water Inc., fuel cell maker Ballard Power Systems Inc. and clean tech upstart Modern Hydrogen Inc., has successfully pushed bills in both red and blue states. One such victory was the passage of a hydrogen tax credit in Utah.

While Republican policymakers at the federal level have mixed attitudes toward hydrogen, for many state lawmakers, the clean energy technology is a "blank slate," Bekemohammadi continued in an interview.

"A lot of our work at the end of the day is educating policymakers," the founder said.

Policy agenda

As with the NRDC, the US Hydrogen Alliance is seeking state incentives for hydrogen offtakers with the hope that hydrogen suppliers would then be able to secure private-sector financing. But unlike most industry groups, NRDC prefers renewable-powered electrolysis to other clean hydrogen production methods.

"That's not to say that we would never consider policies that take a technology-neutral approach, as long as they fairly assess everyone's climate impact and health impacts," said Pete Budden, senior hydrogen advocate at NRDC.

NRDC is targeting a narrower set of states with strong clean energy mandates, such as California and Washington, though the environmental group also sees potential in red states that were awarded federal hydrogen hub funding.

One of NRDC's proposals is a state procurement mandate, requiring that a certain percentage of jet fuel or maritime shipping fuel be replaced with green hydrogen or ammonia. The climate group is also seeking grant programs such as one recently implemented in Minnesota, which encourages farmers to source their fertilizer from distributed green ammonia plants, Kamrath said. Today, almost all ammonia in the US is derived from natural gas in large-scale facilities.

Exactly how much states are willing to spend on clean hydrogen is unclear.

"We're still waiting for the hammer to drop on the hubs," Budden said. But if that federal funding is clawed back, "I think there's an opportunity there where states will need to step up if they want to achieve their climate commitments, because they recognize they need hydrogen to do that."