Green Hydrogen Boom Fizzles as Projects Collapse Worldwide
Losing 45V tax credits is likely to seriously erode the economic viability of many hydrogen projects in the country, with Louisiana set to feel the heat the most. The state's 46 hydrogen and ammonia-related projects are currently eligible for the credits. Louisiana is home to some of the biggest hydrogen projects in the United States, including Clean Hydrogen Works' $7.5 billion ammonia and blue hydrogen projects as well as Air Products (NYSE:APD)' $4.5 billion blue hydrogen plant.
However, OBBBA is not solely to blame for the stalling hydrogen sector, with dozens of green hydrogen developers across the globe scaling back investments or scrapping them altogether thanks to weak demand for the low-carbon fuel coupled with soaring production costs.Last year, U.S. startup Hy Stor Energy canceled its reservation for over 1 gigawatt of electrolyzer capacity with Nel, a Norwegian electrolyzer manufacturer, for its Mississippi Clean Hydrogen Hub project. The company said the move was due to market headwinds and delays in bringing the project to fruition, making it financially unfeasible to make upcoming capacity reservation payments. However, Hy Stor said it was not canceling the hydrogen hub itself.
Back in February, Allentown, Pennsylvania-based Air Products announced plans to cancel several green hydrogen projects in the U.S., including a $500 million facility in New York and a sustainable aviation fuel project in California. These decisions are part of the company's broader $3.1 billion write-down and are driven by challenging commercial and regulatory factors, including the need to strengthen the company's focus on projects that deliver value for shareholders.
Not even Europe's energy heavyweights have been spared the carnage.
Last year, we reported that Shell Plc. (NYSE:SHEL) had scrapped plans to build a low-carbon hydrogen plant in Norway citing lack of demand, days before Norway's NOC Equinor ASA (NYSE:EQNR) announced similar plans, "We haven't seen the market for blue hydrogen materialize and decided not to progress the project," a Shell spokesperson has told Reuters.
BP Plc. (NYSE:BP) said in April that it was abandoning its hydrogen ambitions in favor of liquefied natural gas (LNG) for transport. This week, BP announced that it will exit the $36-billion green hydrogen production facility planned in Australia. BP has informed its Australian Renewable Energy Hub (AREH) partners that it will leave its role as the project's operator and equity holder.
Last year, Spain's Iberdrola (OTCPK:IBDRY)(OTCPK:IBDSF), Europe's largest utility, said it would scale back its green hydrogen investments by almost two thirds due to funding delays for some projects. The company cut its 2030 production target to ~120,000 tons of green hydrogen a year, down from its previous goal of 350,000 tons.
Luxembourg-based ArcelorMittal S.A. (NYSE:MT) has abandoned plans to convert two of its steel plants in Germany to hydrogen, despite the steelmaker being offered 1.3 billion euros in public subsidies for the 2.5 billion euro ($2.9 billion) project.
Meanwhile, back in February, Spain's Repsol (OTCQX: REPYY) scaled back its 2030 green hydrogen production target, cutting it by as much as 63%. The company's new target is between 0.7 and 1.2 gigawatts (GW) of electrolyzer capacity, down from a previous goal of 1.9 GW. Repsol cited challenges in market development, regulatory uncertainties, and the high cost of green hydrogen production, particularly without subsidies.
The Australian market has been hard hit, too. In September 2024, Woodside Energy (NYSE:WDS), the country's largest independent oil and gas producer, shelved plans to build two green hydrogen projects in Australia and New Zealand.
In March this year, giant oil and commodities trader Trafigura, ditched plans to build a green hydrogen plant at the company's Port Pirie lead smelter in South Australia for A$750 million ($491.5 million).
Meanwhile, the Queensland state government pulled the plug on plans to fund a A$12.5 billion green hydrogen plant by 2028, with the massive project slated to become one of Australia's largest and most advanced green hydrogen projects.
Finally, Japan's Kawasaki Heavy Industries announced it will not go ahead with its coal-to-hydrogen project in Latrobe, Australia, citing time and cost pressures.
The mounting cancellations suggest a sector still searching for viable economics, not just policy certainty. While OBBBA's accelerated tax credit deadline has undoubtedly raised the stakes for U.S. developers, the global pullback points to deeper market fractures: low offtake demand, high capital costs, and insufficient infrastructure. With major players in the U.S., Europe, and Australia walking away or scaling back, the once-hyped green hydrogen boom is looking more like a trickle. For now.
By Alex Kimani for Oilprice.com
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