U.S. hydrogen hype gives way to more practical prospects
Hydrogen’s one-time promise as a wonder fuel has been replaced in 2025 with a more practical understanding of its limitations, a momentum shift welcomed by industry proponents gathered in Houston, Texas, last week at the CERAWeek by S&P Global energy conference.
It has been a roller coast ride for the sector since the administration of President Joe Biden zeroed in on hydrogen as a means of reducing emissions and creating jobs, unveiling lucrative tax incentives in 2022’s Inflation Reduction Act. A frenzy of project proposals soon followed.
That excitement dissolved into a frustrating wait as the administration embarked on a years-long review process that only concluded in January with the release of finalized rules for the 45V production tax credits, leading some to conclude the hydrogen dream crashed before takeoff. The truth is more nuanced.
“The death of hydrogen has been greatly exaggerated,” said Chevron’s vice president of hydrogen, Austin Knight, while speaking at CERAWeek. “There are real projects actually happening,” he said, pointing to the company’s ACES Delta joint venture with Mitsubishi Power. The Utah project is forecast to initially convert 220MW of renewable power into 100 metric tonnes hydrogen, which will be stored in underground salt caverns. The sitewill begin operations this year, said Knight.
Whittling the sector down to its most realistic prospects is a welcome development from previous years when hydrogen was viewed as the “Swiss knife” of fuels, or one that could be used to solve almost any problem, said Oleksiy Tatarenko, senior principal at Rocky Mountain Institute.
“Swiss knives are very expensive and not used very often,” he said. Instead, hydrogen is now being viewed as a more precise tool for specific applications in “hard-to-abate” industries like steel and chemicals, said Tatarenko.
Hydrogen’s shifting role in the clean energy landscape could even be seen in the CERAWeek conference’s floor plan this year. In a space dedicated to showcasing new technologies and ideas, the so-called Hydrogen Hub from previous years had disappeared. In its place stood the “New Energies Hub” under which hydrogen was but one of multiple clean-energy solutions on display, along with biofuels, nuclear power and other renewables.
“That is a positive thing for this space writ large,” said Zane McDonald, executive director of GTI Energy’s Open Hydrogen Initiative. “We are starting to get very practical. We want to focus on projects that are going to make money, that have an offtaker and can materialize in the next two years.”
Among the projects expected to take off the most rapidly are those that can tap into demand for lower-carbon fuels in Europe and Asia or more modestly sized domestic producers located near specialty industries that are seeking to curb emissions.
“The quality of the projects we’re seeing in our pipeline is better,” said Bryan Mandelbaum, director of hydrogen and ammonia at Black & Veatch, who sees a growing niche for projects between 10MW to 200MW that target heavy industries like chemical processors. This week, the global engineering, procurement and construction company secured a deal with Verdagy to provide FEED services for a 60MW renewable hydrogen plant near the Texas Gulf coast.
Mandelbaum favorably contrasted the current scenario with the flurry of clients that appeared shortly after the 45V hydrogen production tax was first announced.
“It was good for business in the short term but at the same time you knew 80pc of those were never going to develop beyond that first phase of work,” he said.
Source: Jasmina Kelemen, Argus
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