Released December 16, 2024 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Viacheslav Zgonnik is a scientist and developer in the hydrogen sector, specifically regarding the "white" or naturally-occurring variety. His connections in that realm are "deeply concerned, as there is a risk that funding for hydrogen hubs could stop under the new (U.S. presidential) administration, which puts their business models into big trouble."
Zgonnik is convinced that white hydrogen will be competitive on its own someday, but "having tax credits in its early years of adoption" would increase research investment, which would speed its development.
Green energy has already been losing steam in recent months. Even with existing incentives in place, consumers have been reluctant to actually buy into the energy transition. Chevron Corporation (NYSE:CVX) (San Ramon, California) has announced a 25% reduction in green energy spending for 2025, and BP (NYSE:BP) (London, England) has announced an offshore wind joint venture with Japanese energy producer JERA, which is widely seen as part of BP's efforts to distance itself from renewable energy. These and others are dealing with rising costs and stockholder demands for increased profitability. For related information, see December 9, 2024, article - Chevron Favoring Cash Flow Over Increased Production and December 10, 2024, article - BP, JERA, Form Offshore Wind JV as BP Backs Off Renewables.
Uncertainty Rules
For most green energy developers, the biggest question revolves around how much change can/will actually happen after Donald Trump's presidential inauguration on January 20, 2025, in addition to the vagaries already in place. Argus addressed this in a recent story about 45Z clean fuels tax credits, saying, "Companies in the biofuel supply chain say the current lack of clarity from Treasury--particularly on how it will calculate carbon intensities for various fuels and feedstocks--has slowed first-quarter dealmaking. Government guidance could make or break the economics of certain plants, particularly for relatively higher-carbon fuels like soy biodiesel or jet fuel derived from corn ethanol."
And IIR Energy Senior Director, Energy Market Intelligence, Hillary Stevenson agrees, saying, "We are seeing a real hesitancy in capital expenditure given the uncertainty around tax credits with the shift from the Blender Tax Credit to yet undefined 45z under the tax credit pathways."
Created by the Inflation Reduction Act of 2022, 45Z credits are set to take effect January 1, 2025. Their purpose is to encourage and help fund production of clean transportation fuels, including sustainable aviation fuel (SAF).
Stevenson noted that the number of renewable projects in the pipeline is shrinking. "For U.S. biodiesel and renewable diesel/SAF capital projects (additions, expansions, and new builds) of the nearly $6 billion in projects previously planned in 2024, none are now expected to be completed in 2024. More than half have been pushed to 2025, $1.73 billion moved to 2026 and beyond, and $740 million were cancelled outright. In comparison, $1.5 billion in capital projects were completed in 2023."
IRA Future
The act made available tax credits totaling between $500 billion and $1 trillion to qualified projects, but only about 10% of that has been allocated so far. Trump has said the act is wasteful and inefficient. Many have said that the new Congress is unlikely to repeal the act altogether, because Republicans in certain states were in favor of much of the law's provisions, but it could certainly be scaled back.
Trump's new Department of Government Efficiency (DOGE) advisory panel, headed by Elon Musk and Vivek Ramaswamy, may put these facets of the IRA under their microscope, but will have no authority to directly actuate any changes. Only Congress can do that, but the DOGE may get a better hearing from a Republican House and Senate than it would were the Democrats in the majority.
Dangling in the Wind
Some have pointed out that in the first Trump administration, particularly when Ryan Zinke was Interior Secretary, they favored an all-of-the-above approach, approving significant numbers of offshore projects for both wind and oil and gas. But in 2020, the administration looked to block the Vineyard wind project offshore New England, which the Biden administration immediately moved to clear. The new Trump administration's intentions seem to be more like the end of Trump 45, strongly opposing many green funding initiatives. For related information, see December 11, 2025, article - U.S. Offshore Wind Year in Review.
Worldwide Pushback
Elections around the world have shown citizens' varying degrees of disenchantment with the cost of the energy transition. While the U.S. change in administration may have been mostly tied to dissatisfaction with the economy and immigration than with energy, the latter was a key plank in the GOP's campaign platform.
Many on the environmental, social and governance (ESG) side agree with Zgonnik, asserting that their energy format can eventually be economic on its own, but any drop in tax credits or other government funding will greatly slow the development process.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Zgonnik is convinced that white hydrogen will be competitive on its own someday, but "having tax credits in its early years of adoption" would increase research investment, which would speed its development.
Green energy has already been losing steam in recent months. Even with existing incentives in place, consumers have been reluctant to actually buy into the energy transition. Chevron Corporation (NYSE:CVX) (San Ramon, California) has announced a 25% reduction in green energy spending for 2025, and BP (NYSE:BP) (London, England) has announced an offshore wind joint venture with Japanese energy producer JERA, which is widely seen as part of BP's efforts to distance itself from renewable energy. These and others are dealing with rising costs and stockholder demands for increased profitability. For related information, see December 9, 2024, article - Chevron Favoring Cash Flow Over Increased Production and December 10, 2024, article - BP, JERA, Form Offshore Wind JV as BP Backs Off Renewables.
Uncertainty Rules
For most green energy developers, the biggest question revolves around how much change can/will actually happen after Donald Trump's presidential inauguration on January 20, 2025, in addition to the vagaries already in place. Argus addressed this in a recent story about 45Z clean fuels tax credits, saying, "Companies in the biofuel supply chain say the current lack of clarity from Treasury--particularly on how it will calculate carbon intensities for various fuels and feedstocks--has slowed first-quarter dealmaking. Government guidance could make or break the economics of certain plants, particularly for relatively higher-carbon fuels like soy biodiesel or jet fuel derived from corn ethanol."
And IIR Energy Senior Director, Energy Market Intelligence, Hillary Stevenson agrees, saying, "We are seeing a real hesitancy in capital expenditure given the uncertainty around tax credits with the shift from the Blender Tax Credit to yet undefined 45z under the tax credit pathways."
Created by the Inflation Reduction Act of 2022, 45Z credits are set to take effect January 1, 2025. Their purpose is to encourage and help fund production of clean transportation fuels, including sustainable aviation fuel (SAF).
Stevenson noted that the number of renewable projects in the pipeline is shrinking. "For U.S. biodiesel and renewable diesel/SAF capital projects (additions, expansions, and new builds) of the nearly $6 billion in projects previously planned in 2024, none are now expected to be completed in 2024. More than half have been pushed to 2025, $1.73 billion moved to 2026 and beyond, and $740 million were cancelled outright. In comparison, $1.5 billion in capital projects were completed in 2023."
IRA Future
The act made available tax credits totaling between $500 billion and $1 trillion to qualified projects, but only about 10% of that has been allocated so far. Trump has said the act is wasteful and inefficient. Many have said that the new Congress is unlikely to repeal the act altogether, because Republicans in certain states were in favor of much of the law's provisions, but it could certainly be scaled back.
Trump's new Department of Government Efficiency (DOGE) advisory panel, headed by Elon Musk and Vivek Ramaswamy, may put these facets of the IRA under their microscope, but will have no authority to directly actuate any changes. Only Congress can do that, but the DOGE may get a better hearing from a Republican House and Senate than it would were the Democrats in the majority.
Dangling in the Wind
Some have pointed out that in the first Trump administration, particularly when Ryan Zinke was Interior Secretary, they favored an all-of-the-above approach, approving significant numbers of offshore projects for both wind and oil and gas. But in 2020, the administration looked to block the Vineyard wind project offshore New England, which the Biden administration immediately moved to clear. The new Trump administration's intentions seem to be more like the end of Trump 45, strongly opposing many green funding initiatives. For related information, see December 11, 2025, article - U.S. Offshore Wind Year in Review.
Worldwide Pushback
Elections around the world have shown citizens' varying degrees of disenchantment with the cost of the energy transition. While the U.S. change in administration may have been mostly tied to dissatisfaction with the economy and immigration than with energy, the latter was a key plank in the GOP's campaign platform.
Many on the environmental, social and governance (ESG) side agree with Zgonnik, asserting that their energy format can eventually be economic on its own, but any drop in tax credits or other government funding will greatly slow the development process.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
