25/03/27
US mulls cutting funds to H2 hubs outside of GOP states
Houston, 27 March (Argus) — The US Department of Energy (DOE) is considering
cutting funding to hydrogen hubs that are located in primarily Democratic
states, while sparing those mostly spread across Republican states, according to
a list shared with Argus . A table circulating among officials shows hubs that
are to receive federal funding labeled as either "cut" or "keep." Out of the
seven hubs, only three are set to "keep": HyVelocity, in Texas and Louisiana,
the Appalachian hub spanning Ohio, Kentucky and West Virginia and the Heartland
hub spread across Minnesota, South Dakota and North Dakota. The hubs that may
lose federal support include California's ARCHES; the Pacific Northwest Hydrogen
Association (PNWH2) spanning Oregon, Washington and Montana; the Midwest hub
encompassing Illinois, Indiana and Michigan, and the Mid-Atlantic hub in
Pennsylvania, Delaware, and New Jersey. With the exception of the Midwest hub,
most of the hubs facing potential cuts would use renewable and nuclear power to
produce hydrogen. Most of the projects in the hubs on the "keep" list would be
powered by natural gas and use carbon capture and storage (CCS) facilities to
reduce emissions. The DOE did not immediately respond to requests for comment.
Fuel Cell and Hydrogen Energy Association (FCHEA) chief executive Frank Wolak
said the list came from DOE but cautioned the department's plans are still
unclear."We're aware a list has been created that shows four of seven hubs being
cut," said Wolak. "We haven't seen anything formal and don't understand exactly
what is the DOE intention." Hydrogen hub funding advanced by the administration
of former president Joe Biden was expected to come under scrutiny after
President Donald Trump paused disbursements and ordered a review of clean-energy
initiatives. Federal funding for the hubs grew out of the bipartisan Inflation
Reduction Act and the Infrastructure and Investment Jobs Act, which together
dedicated $8bn to jump start domestic hydrogen production in industrial clusters
from the east to west coasts. The funding was structured to pay out to the hubs
over four phases spanning a decade, with disbursements dependent upon projects
meeting defined objectives related to operational progress and
private-investment commitments. The first tranches to the seven hubs, totaling
over $20mn, have been delivered but the list of potential cuts puts the fate of
the second phase into doubt. "So far the Trump administration hasn't attempted
to claw back that phase-one funding," said Sara Gersen, senior attorney for
Earthjustice. "The question is, what happens in 2026 when they try to renew
contracts for phase 2?" ARCHES chief executive Angelina Galiteva said the
California hub "remains committed to working with our partners to establish a
secure, reliable and competitive hydrogen ecosystem". Spokespeople for the
others hubs vulnerable to losing federal funds did not immediately respond to
requests for comment. However, at least one of the hubs put out a public
statement highlighting how its goals align with the administration's objectives.
"Many of these opportunities will support rural communities" and "advance
American energy independence", the Pacific Northwest hub said in a social media
post. Environmental advocates argue that the climate benefits from hydrogen
originating from natural gas with CCS, the technology proposed for projects on
the "keep" list, evaporate when net emissions are taken into account and do not
justify the potentially billions of dollars in federal support they may receive
when compared to other decarbonization techniques. "Spending billions of dollars
on untested carbon capture technology in applications with no net-climate
benefit is a waste of taxpayer money," said Anika Juhn, IEEFA energy data
analyst and co-author of the report Blue Hydrogen's Carbon Capture Boondogle .
"Building out renewable power infrastructure, improving energy efficiency, and
reducing methane leakage from the natural gas system are more cost-effective and
proven approaches to a clean energy transition." For now, both fossil-fuel based
and renewable energy companies have been lobbying the Trump administration to
keep clean energy incentives enacted by the IRA without differentiating how the
hydrogen is produced. The potential cut to federal funding is not expected to
affect industry support for the most lucrative incentives that come in the form
of tax cuts, such as the support that has coalesced around protecting the 45V
hydrogen production credit, said Wolak. "I don't see any change to the agenda of
45V, that effort is primary," said Wolak. "I see an effort perhaps arising to
define the hubs and the merit of the hubs rising parallel to the 45V effort."
FCHEA is advising its members that may be affected by hub funding cuts to
contact their congressional representatives, Wolak said. By Jasmina Kelemen Send
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