America’s Hydrogen Revolution Stalls Amid Funding Cuts and Weak Demand

Just a few years ago, the United States was developing new hydrogen hubs to support energy diversification and help achieve a green transition. However, the development of these fuel hubs has not proceeded as expected, with several major projects stalling and political support faltering.The Biden administration showed broad support for hydrogen production, aiming to massively expand the sector and advance green hydrogen development. In November 2024, the Biden administration announced up to $2.2 billion in award commitments for two Regional Clean Hydrogen Hubs (H2Hubs) – the Gulf Coast H2Hub in Texas and the Midwest H2Hub in Illinois, Indiana, Iowa, and Michigan, out of a total of $7 billion in federal funding for seven H2Hubs.Hydrogen can be used for a wide range of applications and, under Biden, was seen as having the potential to decarbonise hard-to-abate industries, such as shipping and steel production. Several countries around the globe began to rapidly expand their hydrogen industries about half a decade ago, with a particular focus on zero-carbon green hydrogen.One of the H2Hubs being developed – the Mid-Atlantic Regional Hydrogen Hub (MACH2) – was in Philadelphia, which was expected to become an important region for energy diversification. The Appalachian Hydrogen Hub (ARCH2), meanwhile, is based in West Virginia and covers parts of West Virginia, Ohio, and Pennsylvania. In 2023, Pennsylvania Governor Josh Shapiro said the hubs would “ensure Pennsylvania continues to be an energy leader for decades to come.”MACH2 was expected to support the development of more than 20,000 jobs in the Delaware Valley region and help the U.S. accelerate the development of its green hydrogen sector with a $750 million award from the Department of Energy (DOE). Meanwhile, ARCH2 was expected to receive $925 million to manufacture blue hydrogen from fossil fuels, incorporating carbon capture and storage (CCS) technology to reduce emissions.However, under the Trump administration, progress has stalled amid funding uncertainties. The federal government has reportedly gone back and forth on funding promises over the last year. This has led to the halt in development of both MACH2 and ARCH2 as operators await news on financing. “Until I see significant evidence to the contrary, I just don’t think the hubs are happening,” stated Tom Torres, chief of staff at the Ohio River Valley Institute, an Appalachia- focused think tank.Meanwhile, last year Shapiro said that losing the funding would “harm Pennsylvania”. “It’s going to mean we’re producing less energy. I have no idea why the president of the United States would want to do that.”In Louisiana, plans for hydrogen development have also stalled. Gas and chemicals company Air Products cancelled its $4.5 billion Louisiana Clean Energy Complex, which was expected to be one of the world’s largest blue hydrogen and ammonia projects. The company reported approximately $2.9 billion in pretax charges associated with exiting the Louisiana project, an Arizona hydrogen project, and other initiatives. Air Products said the Louisiana project no longer met its financial expectations.Hydrogen was expected to be produced at the facility using fracked gas, with plans to install the world’s largest CCS equipment to reduce emissions. Throughout development, environmentalists argued that using fracked gas for production could not be considered “low-carbon” and that the operators were greenwashing with plans to use CCS.By 2024, Air Products was already seeking partners to take over the ammonia and CCS components of the project, entering negotiations with the Norwegian fertiliser firm Yara in 2025. The two companies decided to abandon the project this year, citing financial worries and an inability to find customers for a speculative market. While local opponents of the project were happy to hear of the cancellation, it is just another example of U.S. hydrogen development stalling. Meanwhile, in November last year, Exxon Mobil paused the development of a major hydrogen production facility in Baytown, Texas, with the firm’s CEO, Darren Woods, citing weak customer demand for the fuel. The project had previously experienced delays. The cancellation reflected a broader shift in the U.S. energy industry, as several oil and gas companies backtracked on plans to diversify operations and invest heavily in clean energy. The facility was expected to produce up to 1 billion cubic feet of blue hydrogen per day once operational. While hydrogen is much more expensive than alternative fossil fuels, the introduction of far-reaching green energy and cleantech subsidies by the Biden administration was expected to encourage adoption in hard-to-abate industries. However, it seems that operators may have been overly ambitious in their target to produce affordable, low-carbon hydrogen.Financing uncertainties and cuts to several green energy grants and loans under the Trump administration have dampened interest in clean fuels over the last year. In addition, the industrial slowdown and economic uncertainty in Europe crimped demand, according to Woods. Exxon and its partners, including Abu Dhabi National Oil Company, had already invested around $500 million in the project, which is estimated to cost several billion dollars to complete and can recommence at any time if the market permits, Woods said last year.Several hydrogen projects have stalled over the last two years, as operators face greater uncertainties in federal financing and see a lack of interest in the U.S. market. So long as the government continues to oppose the development of the country’s green energy sector, this is unlikely to change.By Felicity Bradstock for Oilprice.comMore Top Reads From Oilprice.comADNOC Gas to Supply LNG to TotalEnergies Under Five-Year DealIran Reports More Tanker Fires in Strait of HormuzIndia to Require State Utilities to Add Energy Storage Capacity