Hydrogen Production Faces New Uncertainty as U.S. Poised to Cut Federal Tax Credits

The push to build out hydrogen infrastructure along the Gulf Coast is hitting a pretty big bump in the road—and it’s coming from the halls of Congress. Republican lawmakers in the House want to axe two major clean energy tax credits: 45V for hydrogen production and 45Q for carbon capture. If that happens, tens of billions of dollars in low-carbon projects could stall out, potentially knocking the U.S. off its leading perch in the global hydrogen race.

Tax Credit Cuts Could Sideline $30 Billion in Projects

This shake-up is part of a sweeping $1.5 trillion federal budget proposal, and a recent draft from the House Ways and Means Committee (May 2025) suggests slashing the credits that are central to getting projects like hydrogen infrastructure and carbon capture and storage (CCS) off the ground. Industry insiders are sounding the alarm, warning that gutting these incentives could put $7 billion in federal hydrogen hub investments and about 45,000 clean energy jobs at serious risk.

Big players like Exxon Mobil, Chevron, and project consortiums like Hyvelocity Hub have a lot riding on these credits. Their projects along the Texas-Louisiana Gulf Coast are deeply rooted in scaling up hydrogen production and CCS — but none of it makes financial sense without the current tax support. Pull that out, and you’re looking at a major slowdown in clean energy investment.

Hydrogen Hubs Hanging in the Balance

Take the Hyvelocity Hub for example. It’s based in Houston and has already scored $1.2 billion in backing from the Department of Energy to jumpstart a regional hydrogen economy. The vision? A vast network of pipelines, CCS-ready storage in salt formations, and large-scale production of clean ammonia aimed at international markets, especially in the Asia-Pacific region. Those markets are banking on importing 10 million tons of hydrogen per year by 2030 — but only if the U.S. delivers.

“Without 45V and 45Q credits, the economics of these projects just don’t stack up,” said one project executive who asked to stay anonymous. It’s a sentiment broadly echoed by the Carbon Capture Coalition, which represents a couple hundred climate tech firms. They’re calling the proposed cuts a step in the wrong direction—one that could unravel U.S. progress on industrial decarbonization.

Export Strategies and Ammonia Deals at Risk

For big energy firms like Exxon Mobil, these tax credits aren’t just helpful — they’re foundational. Their recent deals with companies like Trammo and Calpine hinge on the economics of low-carbon ammonia production. It’s a dual revenue stream: selling clean fuels and offering CCS-as-a-service.

The catch? Global buyers want assurance that U.S. projects will be operational—and soon. According to S&P Global forecasts, projects need to be up and running by 2027 to stay competitive. But if those credits go away? Buyers may start looking elsewhere. China and the EU are already racing ahead with stable policies and major public funding, and they won’t wait around.

Decades of Policy Under Threat

Let’s not forget — these tax credits didn’t appear out of nowhere. The 45Q carbon capture credit has been around since 2008, originally created for enhanced oil recovery. Over the last few years, strengthened by the 2021 Infrastructure Investment and Jobs Act and expanded with the 2022 Inflation Reduction Act, these credits have become key tools in building a future around clean energy and sustainable infrastructure — with bipartisan support, no less.

That’s exactly why many in the industry see this sudden rollback as politically charged. Some Republican leaders have labeled these credits as “green welfare,” arguing that they distort market competition. But from the perspective of developers and investors, these incentives simply account for the real costs of early technology adoption — something that’s unavoidable in any emerging sector fighting for its place in the energy mix.

Policy Pivot or Political Posturing?

So here’s the big question: Is this a true policy shift or just negotiating fodder in a bigger budget fight? The stakes couldn’t be higher. Thousands of jobs are on the line. Massive infrastructure investments are already in motion. What happens next could either green-light a transformative wave of U.S. hydrogen infrastructure—or trigger sweeping project cancellations across the Gulf Coast.

Chevron and its partners in the Hyvelocity consortium are expected to ramp up pressure on lawmakers. Groups like the American Petroleum Institute are also making the case that without strong, consistent policy, the U.S. risks falling behind — especially with China aggressively chasing hydrogen dominance.

What to Watch

• Will the U.S. Treasury come out in defense of 45V and 45Q as key parts of national energy strategy?
• How will private sector funding shift if these tax credits are scrapped?
• Could state-led incentives or new public-private partnerships step in to pick up the slack?

The outcome of this debate won’t just impact today’s projects — it’ll shape the U.S. role in global clean energy for years to come. If Washington walks away from these credits now, it could hand the advantage to rivals abroad and stall momentum on everything from hydrogen production to clean ammonia exports. The coming months are crucial. Buckle up.