The green hydrogen revolution was widely talked about in the post-pandemic period, as governments worldwide pursued a green transition more aggressively. Many viewed hydrogen as a promising alternative to fossil fuels, as it can be used for a variety of applications for which other green energy sources are not well-suited.
Following the introduction of President Biden’s Inflation Reduction Act (IRA) in 2022, the Department of Energy (DoE) introduced major new funding opportunities for hydrogen development, aiming to establish the United States as a hydrogen hub. However, a wide range of development challenges has led to project delays and cancellations, further exacerbated by the lack of support from the Trump administration.
The Hydrogen Boom
During the post-COVID green transition momentum, governments and energy companies worldwide were showing greater interest in hydrogen, particularly “clean hydrogen.” A 2023 International Energy Agency (IEA) analysis stated that as part of the Net Zero Emissions Scenario 2021-2050, hydrogen and hydrogen-based fuels could help avoid up to 60 metric gigatons of CO2 emissions by 2050.
Hydrogen is widely viewed as a complement to renewable energy sources, as it can be used in hard-to-abate industries, mobility, and power generation. This spurred a 5% increase in the global demand for hydrogen between 2020 and 2021, followed by another 2.5% demand increase between 2022 and 2023.
Hydrogen can be produced in several ways, and while the end product is identical, the production pathway—commonly labeled gray, blue, or green—determines its environmental impact. Gray and blue hydrogen are both produced by combusting natural gas, with blue hydrogen being considered cleaner as it utilizes carbon capture and storage technology to remove CO2 emissions. By contrast, green hydrogen is produced using an electrolyzer powered by renewable energy, making it the cleanest of the three types.
U.S. Support for Hydrogen
In October 2023, the DoE announced plans to develop seven Regional Clean Hydrogen Hubs (H2Hubs) across the United States, supported by $50 billion in funding from President Biden’s Investing in America agenda and a $7 billion DoE grant. The agency stated that it anticipated U.S. green hydrogen production to increase from almost nothing in 2022 to more than 10 million metric tons, or nearly $18 billion in value, by 2032.
The Rise and Fall of U.S. Hydrogen
The DoE warned in its 2024 report Commercial Liftoff: Clean Hydrogen that the U.S. was likely to miss its 10-million-metric-ton clean hydrogen production target. Despite a positive start, with a project pipeline of 13.9 million metric tons of annual production capacity in early 2024, the DoE expected project delays and cancellations to reduce this figure to between 7 and 9 million metric tons. Meanwhile, any projects announced after 2024 are not expected to start producing until after 2030.
Between March 2023 and January 2024, there was little increase in the number of projects reaching a final investment decision or commencing construction. According to the DoE, this was owing to the rising cost of production, particularly for green hydrogen, and a lack of financing.
In 2023, the levelized cost of green hydrogen production over 25 years from 2025 at an illustrative 500-megawatt project in west Texas was expected to total $2.80 per kilogram without subsidies. However, due to cost increases, when the price was reassessed in 2024, it came to between $5 and $6 per kilo without subsidies at the same facility.
Trump Administration Puts the Nail in the Coffin
As several countries move ahead with green hydrogen projects, the Trump administration is cutting funding for U.S. projects in favor of fossil fuel expansion. In October, as part of the 321 grants that were revoked to save $7.5 billion in spending, the DoE rescinded $2.2 billion in awards to two of the seven regional hydrogen hubs.
The hubs in California and the Pacific Northwest were designed to focus exclusively on green hydrogen production, unlike the other five hubs, making them an easy target. The DoE is reportedly discussing whether to halt funding to all seven hubs.
Carrie Schoeneberger, an industrial analyst covering hydrogen for the Natural Resources Defense Council, wrote, “The cuts to these hubs seem shortsighted and ultimately will result in the loss of jobs in our country… This will put the U.S. a step back and threaten U.S. leadership, which is against the stated aims of the current administration for American energy dominance.”
However, the Ohio Fuel Cell and Hydrogen Coalition is pressing on with works at the Appalachian Regional Clean Hydrogen Hub, or ARCH2, in the face of rising uncertainty. Bill Whittenberger, the executive director of the coalition, said, “We’re building businesses in this state regardless of that federal funding,” offering the promise of at least limited growth in the sector.
Whittenberger highlighted the growing demand for the fuel and the strong business case for the project. This suggests that even if the industry is growing more slowly than expected and may not have the support of the federal government, many are still invested in establishing their states as hydrogen hubs.
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