US Hydrogen Projects Stall as Funding and Demand Weaken

The Biden administration announced up to $2.2 billion in award commitments in November 2024 for two of seven planned Regional Clean Hydrogen Hubs: the Gulf Coast H2Hub in Texas and the Midwest H2Hub across Illinois, Indiana, Iowa and Michigan. The hubs were part of a broader $7 billion federal funding programme intended to develop hydrogen production, including green hydrogen, and decarbonise industries such as shipping and steelmaking.

Projects in Pennsylvania and neighboring states are also in limbo. The Mid-Atlantic Regional Hydrogen Hub (MACH2), based in Philadelphia, was expected to receive a $750 million Department of Energy award and support more than 20,000 jobs in the Delaware Valley. The Appalachian Hydrogen Hub (ARCH2), spanning parts of West Virginia, Ohio and Pennsylvania, was slated for $925 million to produce blue hydrogen from fossil fuels with carbon capture and storage (CCS). Both projects have halted development while operators await clarity on funding, amid reported shifts in federal commitments under the Trump administration. “Until I see significant evidence to the contrary, I just don’t think the hubs are happening,” said Tom Torres, chief of staff at the Ohio River Valley Institute. Pennsylvania Gov. Josh Shapiro warned that losing the funding would “harm Pennsylvania.”

In Louisiana, Air Products abandoned its $4.5 billion Clean Energy Complex, which was planned as a major blue hydrogen and ammonia project using fracked gas and CCS. The company reported about $2.9 billion in pretax charges tied to exiting the Louisiana project, an Arizona hydrogen project and other initiatives, saying the Louisiana plan no longer met its financial expectations. Air Products and Norway’s Yara, which had discussed taking over the ammonia and CCS components, dropped the project this year, citing financial concerns and an inability to find customers. Environmental groups had challenged the project’s low-carbon claims, arguing that producing hydrogen from fracked gas with CCS did not make it low-carbon.

Exxon Mobil also paused development of its Baytown, Texas, hydrogen facility in November last year. The plant was designed to produce up to 1 billion cubic feet of blue hydrogen a day. CEO Darren Woods cited weak customer demand; he also pointed to financing uncertainty, cuts to green-energy grants and loans, industrial slowdown and economic uncertainty in Europe. Exxon and partners including Abu Dhabi National Oil Company had invested around $500 million in a project estimated to cost several billion dollars. Woods said it could restart if market conditions allow.