Less than three months after its July passage, the One Big Beautiful Bill (OBBB) is already reducing the planned expansion of ammonia and hydrogen production.
ORVI’s March 2025 report on the ammonia industry found that if all the proposed facilities as of October 2024 were built, annual US ammonia production would increase by more than 62 million metric tons (mt), more than quadrupling in less than ten years. This buildout was made financially possible because facilities planned on using the lucrative 45V clean hydrogen production tax credit to recover costs.
Note: this analysis reclassified the Port of Corpus Christi Blue and Green Ammonia Facility from 8 million mt blue ammonia and 2 million mt green ammonia to 10 million mt blue ammonia.
Analysis of the Oil and Gas Watch database shows that the planned expansion was still growing as of July 2025. The capacity of proposed “blue” ammonia facilities—which produce ammonia using natural gas as feedstock for hydrogen, capturing and sequestering the resultant carbon emissions—increased from 57 million mt to 59 million mt. Capacity for “green” ammonia facilities, which produce ammonia using water as feedstock and renewable electricity for power, increased from 2.6 million mt to 4.1 million mt.
But following the OBBB’s passage in July, five blue ammonia projects amounting to 5.4 million mt annual production capacity have either been canceled or put on hold. These five projects would have all been constructed along the Gulf Coast.
The impact of the OBBB is seen more acutely in proposed hydrogen facilities. Between July and September, four hydrogen projects were canceled or put on hold. This includes the single largest blue hydrogen facility recently proposed, the 900,000 mt facility at the ExxonMobil Baytown Olefins Plant, and a proposed 36,500 mt pink hydrogen plant (powered by nuclear energy) in Ohio.
The reason for the drastic decline in proposed new capacity is almost certainly due to the provision of the OBBB that changed how facilities might qualify for the lucrative 45V clean hydrogen tax credit. Prior to the OBBB, to qualify for the 45V tax credit, facilities had to have begun construction before January 1, 2033, and their entire production process would need to emit less than 4 kilograms of carbon dioxide (CO2) per kilogram of hydrogen produced. To qualify for the most lucrative credit of $3 per kilogram, facilities need to emit less than 0.45 kg CO2 per kg of hydrogen. Considering that conventional gray hydrogen production emits between 10 and 14 kg CO2 per kg of hydrogen, blue facilities would need to capture and sequester more than 95% of greenhouse gas emissions to qualify for the most lucrative credit. Because carbon capture and sequestration of 95% efficiency has not yet been proven at commercial scale, blue hydrogen facilities are unlikely to qualify for the $3/kg hydrogen tax credit. Even before the OBBB, blue hydrogen facilities would have had a tough time meeting the standards for the most lucrative 45V tax credit.
The OBBB made a simple change: it moved up the construction start date deadline by five years for facilities to qualify for 45V tax credits, to January 1, 2028 (OBBB Section 70511). Facilities that were banking on improvements in carbon capture and sequestration technology reaching 95% efficiency over the next few years lost their technological runway.
ORVI’s July analysis of the likely impact of the OBBB predicted that “companies may try to speed through the review process to begin construction on their facilities before the January 1, 2028 deadline. A rushed review process could heighten safety risks for frontline communities if regulators do not have sufficient time to properly review the impacts of proposed facilities. At the same time, companies may abandon projects deemed unlikely to pass through the review processes in time.”
Three months after the OBBB became law, we are starting to see this bear out. Companies now have a scant 27 months to break ground on their proposed facilities if they are to qualify for the 45V tax credit. The nine ammonia and hydrogen facilities canceled in just the last three months could be the start of a wave of cancellations.
