A recent report from GlobalData (Modern Power Systems parent company), The US Power Market Outlook to 2035, Update 2024 – Market Trends, Regulations, and Competitive Landscape, summarises potential changes in US energy and climate policy that can be anticipated under the new Trump administration as follows:
Renewables reversal. The new administration plans to halt all offshore wind energy projects. Federal permits for new and ongoing offshore wind developments may be revoked, posing a significant challenge to the industry’s growth.
There is likely to be a significant pivot away from federal leadership on renewable energy. As federal support wanes, renewable energy projects may rely more on state policies and private investments to fill the gap.
The Inflation Reduction Act (IRA), a cornerstone of Biden’s clean energy agenda, is expected to face restructuring or even partial repeal.
End of subsidies for renewables. The Trump administration is expected to reduce or eliminate federal subsidies for wind, solar, and other renewable energy projects. With reduced federal support, the renewable energy sector may increasingly rely on state-level initiatives and private investments to sustain growth. This marks a sharp departure from the previous administration’s extensive incentives for clean energy projects.
Shift in long-term goals. Trump 2.0 energy policies will emphasise boosting domestic energy production to achieve energy independence, prioritising ‘traditional’ indigenous energy sources such as natural gas, oil, and coal, alongside support for advanced nuclear (eg, small modular reactors) and geothermal technologies.
Critical minerals. Trump’s administration is expected to continue policies aimed at reducing dependence on China by promoting domestic mining and processing of critical minerals.
Fossil fuels favoured. Trump’s administration favours fossil fuels, easing regulatory burdens on oil, gas, and coal. This shift could slow the progress of federal climate initiatives.
Hydrogen hubs
The future of the $7 billion allocated for the Department of Energy’s Regional Clean Hydrogen Hub Program is also uncertain, with possible delays or reallocation of funding. The hydrogen hubs, as proposed under the Biden administration, are intended to help accelerate the commercial scale deployment of low cost, clean hydrogen, with clean hydrogen seen as a flexible energy carrier that can be produced from a diverse mix of domestic energy resources, including renewables, nuclear, and fossil resources with carbon capture. The hydrogen hubs plan envisages networks of hydrogen producers, consumers, and local connective infrastructure.
As recently as November 2024, in the final few weeks of the Biden administration, the Department of Energy announced up to $2.2 billion in award commitments for two further Regional Clean Hydrogen Hubs (H2Hubs), $1.2 billion to Gulf Coast H2Hub, led by HyVelocity (HyV), and $1 billion to Midwest H2Hub, led by the Midwest Alliance for Clean Hydrogen LLC (MachH2). These awards follow three previously awarded H2Hubs: Appalachian Hydrogen Hub (ARCH2); California Hydrogen Hub (ARCHES); and Pacific Northwest Hydrogen Hub (PNWH2). Two further hydrogen hubs of the envisaged seven-hub programme remain under negotiation: Heartland Hydrogen Hub; and Mid-Atlantic Hydrogen Hub.
Section 45V
Amendments to the IRA could include the potential removal of the Section 45V Production Tax Credit (PTC), which supports green hydrogen production.
The US Treasury and Internal Revenue Service (IRS) have only just released final rules for implementing 45V. This was on 3 January 2025, just over two weeks prior to the Trump inauguration, after over two years of deliberation – including taking on board about 30 000 public comments and intensive collaboration with the DoE and EPA.
These final rules include significant “changes and flexibilities” aimed at helping the US hydrogen industry grow and moving projects forward, while adhering to the law’s emissions requirements for qualifying clean hydrogen. With the inclusion of these changes, the final rules provide “clarity, investment certainty, and flexibility”, including for participants in projects planned as part of the Department of Energy’s Regional Clean Hydrogen Hubs Program (see above).
The final 45V rules aim to clarify how producers of H2, including those using electricity from various sources, natural gas with carbon capture, renewable natural gas (RNG), and coal mine methane can determine eligibility for the credit.
The rules enable pathways to be established for hydrogen produced using both electricity and methane, providing investment certainty while ensuring that clean hydrogen production meets the law’s lifecycle emissions standards. By law, the tax credit’s value is based on the lifecycle greenhouse gas (GHG) emissions of hydrogen production. To qualify as clean hydrogen under the statute, the lifecycle GHG emissions of the hydrogen production process must be no greater than 4 kg of carbon dioxide equivalent (CO2e) per kg of hydrogen produced. Qualifying clean hydrogen falls into four credit tiers, with hydrogen produced with the lowest GHG emissions receiving the largest credit. Calculation of the lifecycle GHG analysis for the tax credit requires consideration of direct and significant indirect emissions.
Electrolytic hydrogen
For electrolytic hydrogen production (eg, green hydrogen using renewables and pink hydrogen using nuclear power), the final rules incorporate crucial safeguards proposed in December 2023, but with additional clarity and flexibility that will help facilitate clean hydrogen investment.
Specifically, the final rules require that taxpayers seeking to use Energy Attribute Certificates (EACs) to attribute electricity use to a specific generator meet certain criteria for temporal matching, deliverability, and incrementality. These safeguards help ensure that electricity consumption for hydrogen meets the statutory lifecycle GHG emissions standards, including that the lifecycle assessment take into account both direct and significant indirect emissions from hydrogen production. As the final regulations explain, without those safeguards, that additional load on the grid from hydrogen production will result in induced emissions.
The final rules also reflect a U-turn on the role of existing nuclear power plants, which are now allowed to earn credits for hydrogen production.
Methane based hydrogen
The final regulations provide rules for determining eligibility of hydrogen produced using methane reforming technologies, including with CCS (“blue” hydrogen), as well as with the use of natural gas alternatives such as renewable natural gas or coal mine methane.
The final rules aim to enhance the accuracy of upstream methane leakage rates used in determining the credit value.
For hydrogen production using natural gas alternatives, the final regulations provide rules on how to calculate lifecycle GHG emissions and claim the credit for alternatives sourced from a wider range of biogas and fugitive methane than the rules proposed initially allowed – including wastewater, animal manure, and landfill gas – and for coal mine methane.
What becomes of hydrogen policy and hydrogen under Trump 2.0 remains to be seen, of course.
EPA uncertainties
These are also uncertain times for the Environmental Protection Agency, with significant efforts to reduce regulation to be expected from Trump’s preferred leader Lee Zeldin.
A recent initiative, announced by the EPA in November and among its last under the Biden administration, proposes tighter limits on NOx emissions from most new, modified, and reconstructed fossil-fuel-fired stationary combustion turbines, “reducing exposure to dangerous air pollution for nearby communities.”
The EPA says that the proposed New Source Performance Standards (NSPS), which are based on the application of combustion controls and selective catalytic reduction (SCR), would ensure that new turbines built at power plants or industrial facilities — especially large ones that could operate for decades — would be among the most efficient and lowest-emitting turbines ever built. The proposal provides regulatory certainty for the power sector, while supporting the continued delivery of reliable and affordable electricity, notes the EPA.
EPA is proposing to maintain the current limits for sulphur dioxide, which it says is “well-controlled in this sector” based on the long-term required use of low-sulphur natural gas and distillate fuels. The proposed stronger standards for NOx would apply to facilities that begin construction, reconstruction, or modification after the date of publication of the proposed standards in the Federal Register.
To strengthen the NOx performance standards for new stationary combustion turbines, EPA is proposing:
To determine that combustion controls with the addition of post-combustion SCR is the best system of emission reduction (BSER) for most combustion turbines.
To lower the NOx standards of performance for affected sources based on the application of the BSER.
To establish more protective NOx standards for affected new sources that plan to fire or co-fire hydrogen, ensuring that these units have the same level of control for NOx emissions as sources firing natural gas or non-natural gas fuels.
EPA is proposing size-based subcategories that reflect consideration of the performance of different combustion turbine designs and current NOx control technologies. The proposed NSPS would establish size-based categories based on base load heat input. The proposed size-based categories include:
Large combustion turbines — facilities with a base load heat input rating of > 850 MMBtu/h (> ~ 85 MW).
Medium combustion turbines — facilities with a base load heat input rating of > 250 and ≤ 850 MMBtu/h (> ~ 25 MW and ≤ ~ 85 MW).
Small combustion turbines — facilities with a base load heat input rating of ≤ 250 MMBtu/h (≤ ~ 25 MW).
EPA is proposing to further subcategorise affected sources based on whether they operate at high, intermediate, or low loads and whether they burn natural gas or non-natural gas fuels:
High load — capacity factor greater than 40% (ie, baseload).
Intermediate load — capacity factor greater than 20% and less than or equal to 40%.
Low load — capacity factor of less than or equal to 20%.
The EPA says it also recognises that at smaller sizes and at lower or more variable operating levels the cost-reasonableness on a per-ton basis and efficacy of SCR technology becomes less favourable. Thus, the EPA proposes to establish standards for certain combustion turbines based on the use of combustion controls without SCR. This includes: small combustion turbines that operate at low and intermediate loads; medium combustion turbines that operate at low loads; and large combustion turbines that operate at low loads.
How this and other EPA initiatives will fare under the new regime is unclear.
