(The Center Square) — Louisiana has long been an energy powerhouse, and its existing hydrogen infrastructure puts it in a prime position to lead in the emerging clean hydrogen economy.
With major players like Air Liquide, Air Products, and Praxair operating hydrogen pipelines, and a well-established network of refineries and chemical plants that already produce and use hydrogen, the state has the potential to become a national hub for hydrogen and fuel cell development.
But that future is a bit uncertain with the new Trump administration. Shifting federal policies, regulatory uncertainty, and looming tax debates have left Louisiana’s hydrogen prospects in limbo.
The Trump administration has issued a wave of executive orders on energy policy, including a directive to review all federal funding mechanisms for energy projects.
“The new administration has indicated that they’re not the biggest fans of green energy tax credits under the [Inflation Reduction Act], both of which 40 5q and 40 5v have been either implemented or expanded under the [IRA],” Shawn Daray, a New Orleans tax attorney, told the Clean Hydrogen Task Force on Monday.
While the “Unleashing American Energy” order does not directly target 45Q and 45V tax credits, it could impact the broader financial support available for hydrogen development in Louisiana by targeting the Inflation Reduction Act.
Just before transitioning to the Trump administration, the U.S. Treasury Department finalized rules for the 45V Clean Hydrogen Production Tax Credit.
The final regulations for the 45V Clean Hydrogen Production Tax Credit, effective Jan. 10, introduced significant changes aimed at providing investment certainty while ensuring compliance with lifecycle greenhouse gas emissions standards.
These rules clarify eligibility criteria for hydrogen producers using various energy sources, including renewable electricity, natural gas with carbon capture, and renewable natural gas. The regulations also introduce stricter emissions accounting, requiring hydrogen producers to meet hourly matching standards for electricity use by 2030.
Despite these efforts to promote clean hydrogen, potential challenges loom over the tax credit’s future. The Congressional Review Act could be used to challenge the rule, while the Supreme Court’s recent decision overturning Chevron deference may influence future legal disputes over regulatory authority.
Additionally, new executive orders and any forthcoming tax legislation from the Trump administration or a potential new administration could reshape the policy landscape, affecting hydrogen investment decisions.
The final rules aim to support the growth of the clean hydrogen industry, particularly in projects tied to the Department of Energy’s Regional Clean Hydrogen Hubs.