Delayed and Scrapped Green Hydrogen Initiatives Across US, EU, and Asia
In recent times, the global green hydrogen sector has encountered a series of setbacks, with numerous projects being cancelled, postponed, or scaled back. These developments have been primarily driven by high production and capital costs, weak and uncertain demand, regulatory and permitting challenges, and the loss or reduction of subsidies and funding.
United States
In the United States, projects like Air Products’ $500 million blue hydrogen plant in New York and sustainable aviation fuel initiative in California have been halted due to commercial challenges and regulatory hurdles. These challenges have been further compounded by the loss of critical tax credits under the Inflation Reduction Act and the OBBBA (Inflation Reduction Act-related legislation). BP has indefinitely paused a flagship blue hydrogen and carbon capture project in Indiana due to growing skepticism about carbon capture viability and shifting political priorities. Cleveland-Cliffs has cancelled a $500 million hydrogen-based steel facility in Ohio, and ExxonMobil has halted its $330 million clean hydrogen project in Texas after federal funding was withdrawn, signalling funding evaporation and unstable policy support. Hy Stor Energy has also cancelled a 1 GW electrolyzer capacity in Mississippi citing financial unfeasibility amid market headwinds and delays.
European Union
The European Union has also seen multiple green hydrogen projects stall or be cancelled, largely due to high energy costs, economic challenges, and lack of industrial demand. For instance, Shell has scrapped Norway’s low-carbon hydrogen plant, while ArcelorMittal has abandoned steel plant conversions in Germany. The EU’s complex regulatory framework and bureaucratic hurdles, particularly the Renewable Fuels of Non-Biological Origin (RFNBO) criteria and multi-layered permit requirements, delay project approvals and development. Many projects fail to secure off-take agreements because potential buyers are unwilling to pay green premiums, hindering financing and leading to cancellations. Market analysts forecast that only about 17% of planned EU hydrogen projects will be completed without stronger market intervention.
Asia and Australia
In Asia and Australia, major green hydrogen projects are facing similar challenges. High production costs and poor market conditions have led to the shelving or scaling back of projects in Australia, such as those by Woodside Energy. Kawasaki Heavy Industries has cancelled a coal-to-hydrogen project due to time and cost pressures. Broader Asia faces similar challenges with demand uncertainty, funding difficulties, and infrastructure gaps constraining growth.
Overarching Themes Across Regions
Despite these setbacks, the global trend reflects a critical reevaluation of the green hydrogen economic model, indicating it remains fragile and heavily dependent on external subsidies and stable policy frameworks. High production and capital costs remain a fundamental barrier, while lack of secured offtake agreements and demand uncertainty undermine project bankability. Regulatory and permitting complexity adds to delays and costs, especially in the EU. The withdrawal or reduction of public funding and tax incentives in the US and elsewhere exacerbate financial difficulties.
These economic, regulatory, and market factors have led to billions of dollars in write-offs and postponements, with significant impacts on the hydrogen value chain and related green energy sectors. Japanese investors Kansai Electric and Iwatani have exited a $12.5 billion plant to produce 200 tons of liquefied hydrogen by 2028 in Queensland, casting doubt on the project’s future. Spain’s Repsol has cut its 2030 target for green hydrogen production by up to 63%, while Iberdrola, Europe’s largest utility, has scaled back its green hydrogen ambitions by almost two thirds.
As the green hydrogen sector navigates these challenges, it is clear that a more sustainable and economically viable model is needed to ensure the long-term success of this promising technology.
[1] The Guardian [2] Bloomberg [3] Reuters [4] Wall Street Journal
- The industry is grappling with significant financial difficulties in the United States, as evident in the halting of Air Products' $500 million blue hydrogen plant and ExxonMobil's $330 million clean hydrogen project, due to losses of tax credits, regulatory hurdles, and withdrawals of federal funding.
- In the European Union, the complex regulatory framework and economic challenges have resulted in the cancellation of numerous green hydrogen projects, such as Shell's low-carbon hydrogen plant and ArcelorMittal's steel plant conversions, making it hard for projects to secure financing and meet their goals without stronger market intervention.
- Across Asia and Australia, high production costs and poor market conditions have hindered the growth of green hydrogen projects, with Woodside Energy's projects in Australia and Kawasaki Heavy Industries' coal-to-hydrogen project in Japan being shelved or cancelled. These trends suggest that a more sustainable and economically viable model for green hydrogen is necessary to secure the long-term success of this technology. (Reuters, Bloomberg, The Guardian, Wall Street Journal)
