Danish electrolyser and emission reduction technology manufacturer Topsoe has decelerated a project to invest more than $400m in a US production base, despite renewed clarity over US green hydrogen policy, a spokesperson told Hydrogen Economist.

Topsoe said last year that it had bought a plot of land in Virginia for the development of a solid oxide electrolyser cells production base in Virginia, and had started design and engineering work on the project.

However, it does not see strong enough demand for its electrolysers as the scale-up of green hydrogen production in the US has faltered because of uncertainty over the 45V production tax credit.

“The prolonged delay and lack of clarity around the credit over the past two years have contributed to the cancellation or postponement of several projects across the sector,” the spokesperson said. “As a result, we have slowed our pre-FID activities and will revisit the timeline for potential construction (in Virginia) as the market strengthens.”

Topsoe’s decision to slow the Virginia project comes despite the passing by Congress of President Donald Trump’s tax and spend One Big Beautiful Bill Act, which brough clarity to the administration’s implementation of 45V.

Under the final version of the bill, projects hoping to qualify for the tax credit must start construction by the end of 2027.

This means the credit—which offers up to $3/kg and is key to the viability of most, if not all, green hydrogen projects in the US—ends five years earlier than planned under the previous administration’s Inflation Reduction Act.

However, the new deadline for sunsetting 45V could have been tighter. In May, House Republicans had called for the credit to expire at the end of this year.

“While we finally have clarity on the 45V clean hydrogen production tax credit—which is an essential step toward building a viable US hydrogen market—broader market conditions remain uncertain and key market signals have yet to fully align, the Topsoe spokesperson said.

Skew to blue

Commodities research firm Wood Mackenzie reckons the new deadline for projects aiming to qualify for 45V means more than three-quarters of the existing US green hydrogen project pipeline is “unlikely to qualify without rapid progress”

The US accounts for about 16% of the global clean hydrogen project pipeline, according to Gulf Energy Information’s GEI database. Of the US projects, about a third are green, with blue trailing at about 14% and grey around 38%.

The curtailing of 45V will skew the US clean hydrogen sector further towards blue projects, as the bill leaves the 45Q tax credits for carbon sequestration largely intact, except for a tightening of the rules around credit transferability and access for certain prohibited foreign entities.

“In hydrogen, the changes [to 45V] will further tilt the economics away from green production and towards blue,” said Woodmac. “Blue hydrogen, supported by the 45Q tax credit for CCUS, is significantly more bankable under current policies.  

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Author: Stuart Penson