Hydrogen at a Crossroads: What’s Next for U.S. Infrastructure?

The federal government in 2021 passed the Bipartisan Infrastructure Investment and Jobs Act (BIIJA), which allocated $8 billion in funding to establish hydrogen hubs at multiple locations across the U.S. Seven hubs were approved for funding by the Biden administration, and some work has already begun to build centers of low-carbon hydrogen production within these hubs, alongside necessary downstream infrastructure to support its use.

COMMENTARY

While hydrogen has faced less criticism than other elements of the energy transition, such as electric vehicles and wind power, its future under federal policy remains uncertain. While concerns about hydrogen’s safety and the “untested” nature of hydrogen technology have been raised, there has been no clear indication yet on how it will be treated under future federal energy policy. There has been some speculation that the funding for some of these hydrogen hubs may be revoked as part of the new administration’s program of government spending cuts.

It’s important to note the legal constraints on revising programs that have already been established under the IRA and BIIJA. Since these were passed into law by Congress, they cannot simply be undone by executive order. However, it may be possible to influence the priorities and the timing of the funding of these programs, if the new administration decides to use them to find spending efficiencies.

However, there are a few factors that might mitigate in favor of continued investment in low-carbon hydrogen infrastructure under the Trump administration. First, several of the seven approved hydrogen hubs include states that voted for Trump in the 2024 election. Investment in low-carbon hydrogen will create well-paid, skilled jobs in these states. This has led to bipartisan support for preserving hydrogen tax credits, as stakeholders recognize the economic potential in these regions.

Second, Donald Trump has placed the growth of the energy sector high on his agenda. The U.S. oil and gas majors are positioning themselves to pay a significant role in the development of the hydrogen hubs. Major oil and gas companies such as Exxon and Chevron are already heavily involved in low-carbon hydrogen, particularly blue hydrogen produced from natural gas with carbon capture. Given their expertise and the significant investments, they are making in this area, these companies are well-positioned to influence support in favor of hydrogen infrastructure.

Finally, the U.S. faces global competition, particularly from China, which has established dominance in the production of lithium-ion batteries and solar panels. If the US doesn’t prioritize hydrogen infrastructure, it risks losing ground in this emerging sector, potentially leaving the door open for other countries to take the lead.

However, Trump has also been clear that he aims to reduce government spending, and low-carbon hydrogen programs could be a casualty of his federal cost cutting. Given the complexities and competing priorities, the future of U.S. investment in low-carbon hydrogen under this administration will depend on a delicate balancing act. It remains to be seen whether political pressures, economic incentives, and global competition will align in favor of continued growth for the hydrogen sector.

—Peter O’Sullivan is CEO of Penspen (a member of Sidara). He joined Penspen as CEO in September 2013, bringing a strong track record in oil and gas engineering, project management, and management consultancy.