One big, beautiful way to kill momentum
Trump’s rollback of green tax credits and policy see-saw on carbon capture will deal a major blow to the green and blue fuel production in the US.
The US risks falling behind in the race to produce cost-effective low- and zero-emission bunker fuels, as US President Donald Trump's 'One Big, Beautiful Bill Act' moves forward.
The latest blow comes after the US Senate's Finance Committee backed the removal of several clean energy tax credits under the US Inflation Reduction Act (IRA). These include the 45V credit for low-carbon hydrogen production, 45Z for clean transport fuels such as methanol and marine diesel and 45Y and 48E for green electricity production. The tabled bill has cleared the House of Representatives and is set to be approved by the Senate and Trump before becoming a law.
Stalled at the starting line
IRA's clean energy tax credits were designed to close cost gaps with fossil fuels.
They underpinned investor confidence in green fuels and offered buyers a shot at price relief amid high projected premiums. That aim now collides with a leadership bent on reversing course.
Trump pledged to redirect funds from green energy to fossil fuels when he took office, and green hydrogen producers had already started bracing for impact.
In February, Fortescue’s chief executive Mark Hutchinson said the firm would “reassess” the timeline for its Arizona green hydrogen project, citing “a flurry of executive actions” from the Trump administration and uncertainty over IRA credits such as 45V.
Chemical firm Air Products shelved three renewable energy projects in February, including its 35 mt/day green hydrogen facility in Massena, New York. It attributed the move to changes to 45V eligibility and sluggish hydrogen uptake in the region.
Japanese firm Nippon Sanso cancelled a project to build a low-carbon hydrogen plant in Alabama in March.
The whiplash extends beyond hydrogen.
In May, US-based direct air capture (DAC) firm Climeworks cut staff, citing “macroeconomic uncertainty” and “shifting policy priorities.” Another firm, Heirloom Carbon, reportedly followed suit “due to uncertainty over its U.S. operations,” according to the Wall Street Journal.
Green hydrogen and captured CO2 are crucial feedstocks for producing green marine fuels with net zero-emission potential. Now, e-fuel producers may struggle to maintain competitive production costs and attract fuel buyers.
With IRA credits on the chopping block, feedstock suppliers are canceling projects or facing setbacks.
From momentum to maybes
Then there are blue fuels, produced using fossil gas paired with carbon capture and storage (CCS). Trump’s support for natural gas and the Finance Committee's decision to retain the 45Q tax credit for CCS offer these fuels a temporary lifeline.
On paper, they seem better positioned. But they are not immune to turbulence either.
In May, the Department of Energy cancelled 24 clean energy projects worth $3.6 billion, including CCS projects, citing lacking economic viability. But in the 2026 Budget Brief just days later, the department announced financial support for CCS and blue hydrogen via the newly renamed Office of Fossil Energy.
These mixed signals seem to have rattled producers.
In May, Air Products said it was in “active discussions” to reduce financial risk on its $8 billion Louisiana blue hydrogen project by offloading its carbon capture and ammonia components. In June, reports emerged that BP had scrapped its Indiana blue hydrogen project due to economic and policy uncertainty.
Standing on shaky grounds
Some are still placing bets on blue fuels. CF Industries aims to produce 1.4 million mt/year of blue ammonia in Louisiana by 2029. Yara Clean Ammonia is expected to take final investment decisions on its US blue ammonia projects by mid-2026.
Both have allocated volumes for marine fuels, but there’s a risk they could redirect supply to sectors with stronger demand signals to hedge against potential losses.
There's also a cost factor. The Clean Air Task Force has advocated for raising the 45Q credit ceiling to $120/mt, up $35/mt from current levels. "Readjusting the credit value to account for inflation" will ensure widespread adoption among hard-to-abate industries, it argues.
45Q tax credits for CSS and blue fuels offer a sliver of hope, but greater subsidies may be a hard sell under Trump. Whether current support is enough to justify long-term investment in blue fuels remains to be seen.
What is clear, though, is that uncertainty is back. And with it, the risk of stranded projects, stalled investments and unstable supplies from what was once seen as a rising green fuel production hub.
In other news this week, Brazilian green energy supplier GoVerde Energia is planning to develop a 300 mt/day e-methanol production plant at the Suape Industrial Port Complex in Brazil’s Pernambuco state. Operations are expected to begin by 2028 and the firm plans to expand capacity to 900 mt/day by 2032.
Seaspan Energy has delivered a first LNG stem at Canada’s Port of Nanaimo, supplying the Eukor-chartered car carrier Lake Saint Anne. Seaspan’s LNG bunker vessel Seaspan Garibaldi supplied the stem.
DNV has approved an ammonia bunker vessel concept designed by Singapore-based SeaTech Solutions and Australian energy supplier Oceania Marine Energy. The 10,000-cbm-capacity vessel will bunker dual-fuel bulk carriers calling at the Port of Dampier and can supply enough fuel to support two round-trips between Australia and North Asia, the companies said.
The Pilbara Ports Authority plans to begin ammonia bunkering trials at Port Hedland in Western Australia by next year. Its roadmap focuses on sourcing locally produced green and blue ammonia for bunkering, with supply expected from upcoming production projects.
By Konica Bhatt
Please get in touch with comments or additional info to news@engine.online