Hydrogen’s Slower Roll. Incentives Uncertainty and Cost Inflation.

Key Points

A confluence of events will likely add more negative momentum to the clean hydrogen market in 2024, with renewable power costs staying too high in most locations and incentive uncertainty rising.
The US tax code may be less important in 2024 than second-guessing the election and what a Trump administration would mean for 45V – if you think it may go away, you do not invest in 2024.
Blue hydrogen may fare better in 2024, but not in the US if no Class 6 permits exist. We are seeing blue hydrogen progress in Europe, although falling carbon prices are a concern.
China is investing and growing in hydrogen and equipment and, by the end of 2024, will have a greater cost edge over the West than it has today – the place to go for cheap equipment and hydrogen.
Cash flow negative companies serving the hydrogen space need to be sure to have at least one more year of cash than they thought they needed. Great opportunity for private equity to pick winners.

Exhibit 1: Green hydrogen is expensive, and the incentives needed to encourage it are onerous for taxpayers.