By Avi Salzman

Several energy sources face a perilous future under President Donald Trump, but none seem to be on the brink of a make-or-break moment quite like hydrogen.

The world's most plentiful element could play a major role in a low-carbon future as a fuel for vehicles and industrial plants -- if companies can put it to use at the right price. But getting the hydrogen industry off the ground will depend on tax credits that could get cut under President Donald Trump and a Republican Congress.

Last week, a coalition of groups, including some from the oil and gas and auto industries, wrote a letter to Republicans in Congress asking them to keep the subsidies. They are putting their pleas in Trumpian terms: the tax credits "will serve as a catalyst to propel the United States to global energy dominance," the letter says.

Signatories include General Motors and chemical company Dow, along with the American Petroleum Institute.

Without those credits, the hydrogen industry's future looks bleak. The letter says that private companies are ready to invest billions in hydrogen tech, but that money is "at risk" if companies don't have certainty on the tax credits.

The news about hydrogen lately hasn't been encouraging. In a recent interview, the CEO of Bloom Energy, one of the leading companies associated with hydrogen, said he doesn't see the technology taking hold for a while. "We believe that the hydrogen economy will come one day, but it's not in the near future," said CEO KR Sridhar.

Energy and auto behemoths like Exxon and GM will be OK without hydrogen, because they have much larger businesses in other areas. But some other companies could face a tougher road.

Plug Power, the largest U.S.-based producer of clean hydrogen, has struggled due to the uncertainty. Its stock is down nearly 40% since the election, and now trades at just $1.58 per share. Plug has hydrogen plants in Georgia and Louisiana and received a federal loan in the final days of the Biden administration that would finance the construction of a new plant in Texas. The Trump administration has put those loans on hold for review. Plug President Sanjay Shrestha told Barron's he expects the company to make it through any vetting, given that the contract was already approved. "The way we're looking at it is it's a federally binding contract," he said.

In a statement on Monday, Plug CEO Andy Marsh said he still expects the contract to hold up. But in order "to mitigate potential funding risks" the company is "actively exploring alternative financing options, including private equity, to ensure sustained growth and operational flexibility despite potential disruptions in government funding."

Without the loan, Plug would be in a bind. It has contracts to sell hydrogen to customers like Walmart -- which uses it in heavy machinery like forklifts -- but it doesn't make enough hydrogen on its own to fulfill those contracts. So it has been paying a premium to buy it from other players, and losing money on each kilogram. It needs new plants so it can make more of its own hydrogen, which it says it will be able to do profitably.

The Department of Energy didn't respond to a request for comment on the status of the Plug loan.

Hydrogen is used in various U.S. industries, from refining to fertilizer. But almost all of it is made using a carbon-intensive process that involves natural gas. The Biden administration, along with officials in several other countries, think hydrogen could become a much more important energy source -- and a low-carbon one -- with some government help.

There are at least two ways to make "clean" hydrogen. One is to use renewable or nuclear electricity to power a device called an electrolyzer that separates the oxygen and hydrogen atoms in water. Another is to use the dirtier natural gas method but capture the carbon it produces and then store it underground. The Biden administration introduced tax credits called 45V for both methods through the Inflation Reduction Act. Hydrogen producers can receive credits worth as much as $3 per kilogram if they make it using the cleaner methods -- those subsidies make clean hydrogen cost-competitive with the dirtier kind, or even cheaper.

Hydrogen has two attributes that make it particularly useful in the energy transition. Unlike wind and solar power, it's combustible -- meaning it can be used in industrial applications that require heat. And it's transportable. Turning renewable power into hydrogen means the power can be stored in liquid form and shipped around the country or the world. It means that "excess" wind and solar power that isn't needed at the moment can still be useful, because it can be used to make hydrogen.

The problem is that there isn't much excess wind or solar power today. It's all needed to make electricity, according to Sridhar of Bloom Energy. "It's like asking me how much am I saving when I can't even feed myself every day. I'm not saving anything, right?" he said.

The Biden administration had high hopes for hydrogen, and even set up seven hydrogen "hubs" around the country that are eligible for $7 billion in federal funding through the 2021 infrastructure law. Big companies like Exxon Mobil and Mitsubishi Power are involved. Exxon Mobil CEO Darren Woods advocated for the tax credits on the company's latest earnings call. But the future of those hubs is in doubt as the Trump administration takes over.

"Those projects are really at risk," said Kate Gordon, who was a senior advisor to Energy Secretary Jennifer Granholm under Biden and is now CEO of nonprofit California Forward. If they fall through, Gordon expects the companies involved to pivot back to oil and gas, the industries where many of them already operate.

The Department of Energy didn't respond to a request for comment on the status of the hydrogen hub projects.

Bloom Energy is building devices called fuel cells that can run on natural gas or hydrogen. For now, customers are using natural gas, but Sridhar says they can switch to hydrogen if that industry gets off the ground. Decisions made in the next few weeks could determine if that happens.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 25, 2025 01:30 ET (06:30 GMT)

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