[SMM Analysis] US Withdraws From Paris Agreement, Cancels Hydrogen Energy Subsidies, What Is the Future of US Hydrogen Energy?

On January 20, 2025, US President Donald Trump signed an executive order announcing the US withdrawal from the Paris Agreement, which aims to address climate change. This marks not only a significant setback in the US's global climate governance efforts but also its second withdrawal from the agreement. Back in 2017, Trump first announced the US's withdrawal from the Paris Agreement, which was formally completed by the end of 2020. However, with the Biden administration's inauguration in 2021, the US rejoined the international accord. Now, Trump's decision to withdraw again has sparked widespread concern and debate amid the global trend toward green energy development.

The Trump administration's rationale for withdrawing from the Paris Agreement primarily centers on protecting the US economy, particularly the traditional energy sector. The administration argued that the agreement is unfair to the US and imposes unnecessary economic burdens, especially on the industrial sector. To support this stance, the Trump administration also signed another executive order to suspend green hydrogen subsidies provided under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act.

Green hydrogen, as a clean and efficient energy source, is regarded as a key direction for future energy transition. However, the Trump administration's decision will undoubtedly have a profound impact on the US green hydrogen industry. Under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, green hydrogen subsidies are one of the critical measures to encourage companies to invest in new hydrogen technologies and promote the development of the hydrogen energy industry. The suspension of subsidies will directly affect companies' enthusiasm for R&D and the future development of new technologies.

Specifically, US hydrogen energy companies could originally receive substantial financial support through these acts for developing new technologies, expanding production capacity, and improving product quality. However, with the suspension of these acts, these companies will face funding shortages, making it difficult to maintain normal R&D and production activities. It is estimated that US hydrogen energy companies will lose billions of dollars in subsidy funds annually, which will undoubtedly be a heavy blow to the entire industry's development.

Moreover, this decision by the Trump administration will also negatively impact the future development of new hydrogen technologies. As a crucial component of the hydrogen energy industry, the R&D and application of green hydrogen production technologies are key to driving the industry's overall development. However, with the suspension of subsidies, companies will lack sufficient funds for technological R&D and innovation, leading to a slowdown or even stagnation in the development of new technologies. This will not only affect the competitiveness of the US hydrogen energy industry but also have negative implications for the global development of hydrogen energy technologies.

From a global perspective, the US withdrawal will have far-reaching impacts on global climate governance and green energy development. As one of the world's largest economies and greenhouse gas emitters, the US's withdrawal will directly weaken global emission reduction efforts and increase the difficulty of achieving the Paris Agreement's goals. Additionally, the US's withdrawal may trigger hesitation and wavering attitudes in other countries, thereby affecting the coordination and consistency of global climate governance.

It is worth noting that the US withdrawal will also negatively impact its own energy security and sustainable development. With the accelerated global energy transition, clean energy sources like green hydrogen will become an essential part of future energy systems. However, the US withdrawal will lead to reduced investment in clean energy, thereby affecting the optimization of its energy structure and the enhancement of energy security.

In summary, the Trump administration's decision to sign an executive order announcing the US withdrawal from the Paris Agreement and suspending green hydrogen subsidy acts is an event of significant international impact. This decision will not only adversely affect the US's green hydrogen production and the future development of new hydrogen technologies but also pose new challenges and difficulties for global climate governance and green energy development. In the face of this situation, countries need to strengthen cooperation and coordination to jointly promote global energy transition and sustainable development. Meanwhile, the US also needs to reassess its energy policies and climate governance stance to participate in global climate governance and energy transition processes with a more responsible attitude.

Written by: SMM Hydrogen Energy Analyst Xin Shi—13515219405 (WeChat available). If you are also interested in hydrogen energy, feel free to contact me.