Regional Hydrogen Hubs Move Forward, Ignoring Community Pushback and Economic Uncertainty

In October of 2023, the U.S. Department of Energy (DOE) announced $7 billion in federal funding for seven regional Hydrogen Hubs. As of January 2025, five of the Hubs have been awarded an initial pot of money to initiate Phase 1 activities, which entail additional project planning and analysis as well as community and labor engagement, and two remain in negotiations. So far, development of the Hubs has been marked by lackluster community engagement and transparency efforts, pushback from local advocates, and financial uncertainty regarding continued support and funding under the incoming Trump Administration, as well as long-awaited tax credit guidance from the Treasury. 

The recently published final 45V Clean Hydrogen Production Tax credit guidance largely adheres to the “three pillars” approach from the draft rules. These include incrementality, which requires that all clean hydrogen production facilities are paired with new clean energy generation; temporal matching, which requires that hydrogen production be matched, initially annually and eventually hourly, with clean energy generation; and deliverability, which requires that the clean energy resource be located within the same transmission region as the hydrogen production facility. As Clean Energy Group stated in our comments on the draft rules, these three pillars are crucial for creating truly low emissions hydrogen.  

The groups backing Hub development were not as supportive of the three pillars approach. In February 2024, all seven Hubs signed onto a letter urging Treasury to revise the “overly restrictive” proposed guidance, citing concerns that the projects would not be able to meet the requirements, jeopardizing the economic viability of the Hubs. The final guidance does loosen the incrementality requirement, creating pathways to use existing clean energy from states with strict decarbonization standards, energy from formerly retired nuclear plants, and fossil fuel plants retrofitted with carbon capture and storage (CCS). While it’s still too soon to know how exactly the final 45V guidance will impact all the Hubs, community concerns have continued to go unaddressed as development has progressed.  

Pacific Northwest Hub (Washington, Oregon, Montana) 

Status: As of July 2024, the Pacific Northwest Hydrogen Hub (PNWH2) was awarded $27.5 million of an anticipated $1 billion award by DOE to begin Phase 1 activities, including additional project planning and analysis as well as community and labor engagement. Phase 1 is anticipated to last 12-18 months. DOE is currently preparing an Environmental Impact Statement (EIS) for the Hub and will accept public comments on the EIS until March 3, 2025.  

PNWH2, led by the Pacific Northwest Hydrogen Association, has proposed to build approximately 10 projects across Washington, Oregon, and Montana. The project sites, referred to as “nodes,” will produce hydrogen for power generation, heavy-duty transportation, public transit, and agriculture. Each of the projects involved has committed to working with local unions as well as neighboring Tribal Nations, although further details have not been shared and will likely not be released prior to the end of Phase 1. Community groups have raised concerns about the potential water use ramifications of the 300-400 metric tons of clean hydrogen the Hub plans to produce, and project partners have already pulled out due to financial uncertainty, spurred in part by concern that the project will have difficulty meeting the requirements for the 45 V tax credit.  

Mid-Atlantic Hydrogen Hub (Pennsylvania, Delaware, New Jersey) 

Status: As of December 2024, the Mid-Atlantic Hydrogen Hub (MACH2) remains in negotiations with DOE to begin Phase 1 of the Hub development process. The Hub is anticipated to receive a total of $750 million in federal funding.  

MACH2 has proposed to build approximately 20 projects across Pennsylvania, Delaware, and New Jersey, although the exact sites of these projects have not been confirmed. The Hub intends to initially focus on producing hydrogen via electrolysis powered by renewables, as well as hydrogen produced from biomethane paired with CCS. Under the final 45V Guidance, biomethane and other alternative methane feedstocks cannot be blended into fossil fuels to offset overall greenhouse gas emissions, and emissions accounting for biomethane must consider potential indirect emissions from increased methane production, as well direct emissions.  Pairing CCS with biomethane is no less climate intensive than blue hydrogen produced from CCS and natural gas, particularly as CCS has been proven to be ineffective at reducing carbon emissions and capturing upstream methane emissions. Given this, it is unlikely that hydrogen produced from biomethane with CCS will qualify for the highest tier of 45V, adding to the uncertainty regarding the Hub’s future – two project partners have already dropped out, as well as HRP Group, a real estate group that was intended to be an “anchor offtaker” for green hydrogen produced by the Hub. The Hub has faced strong community opposition and has been criticized for its lackluster community engagement.  

Alliance for Renewable Clean Hydrogen Energy Systems (California)  

Status: As of July 2024, DOE awarded the Hub $30 million of an anticipated $1.2 billion award to begin Phase 1 activities, including project planning and stakeholder engagement to take place over 18 months. DOE is currently preparing an EIS for the Hub and will accept public comments on the EIS until March 3, 2025.  

ARCHES has proposed to build 35 projects producing hydrogen via electrolysis powered by renewable energy as well as steam methane reforming using biomethane and CCS, producing an estimated 400-500 metric tonnes a day. Environmental justice groups have voiced serious concerns about the Hub, which poses a risk to California’s already depleted groundwater resources – an average green hydrogen plant can use up to 45.1 million gallons of water a year. The Hub had pushed for a laxer approach to green hydrogen accounting in 45V, to provide a needed financial boost outside of its anticipated federal funding. While the final guidance does not provide a lot of boons for ARCHES, the new pathway for using existing energy from states that have set goals requiring that 100% of retail energy sales be carbon-free by 2050 does benefit the California based Hub, as California is one of only two states that currently qualify.   

Heartland Hydrogen Hub (Minnesota, North Dakota, South Dakota) 

Status: As of December 2024, the Hub remains in negotiations with DOE to begin Phase 1 of the development process. The Hub is anticipated to receive a total of $925 million in federal funding.  

The Heartland Hub has proposed to develop projects across Minnesota, North Dakota, and South Dakota, with potential to expand to other states, although it has not released any public information about the exact number of proposed project sites. A major focus of the Heartland Hub will be producing blue hydrogen, which is known to have an emissions and climate impact 20 percent greater than burning gas or coal for heat. Blue hydrogen, or hydrogen produced from fossil fuels using CCS, can take advantage of the 45V tax credit, but producers stand to gain an even bigger windfall from the 45Q Tax Credit for Carbon Sequestration, which provides incentives for carbon captured and sequestered at even low levels of emissions reduction. Exacerbating the potential harms of this Hub is the fact that it intends to focus on hydrogen pipeline buildout and combusting hydrogen in power plants. Combusting hydrogen in power plants leads to six times more nitrogen oxide emissions, a powerful local air pollutant, than natural gas. Hydrogen pipelines also remain dangerously unregulated, and put communities at risk of danger from explosions, leaks, and soil contamination. Despite these risks, it is likely the Hub’s projects will move forward, thanks to a financial boost from 45Q.  

Midwest Hydrogen Hub (Illinois, Indiana, Iowa, Michigan) 

Status: MachH2 was awarded Phase 1 funding on November 20^th, and is set to receive $22.2 million in federal funding during this phase. Phase 1 will follow a 12–18-month timeline involving planning, development, and community engagement.  

The Midwest Hydrogen Hub has proposed nine projects across Illinois, Indiana, Iowa, and Michigan, with the potential to expand into neighboring states. In addition to hydrogen production powered by wind, nuclear, and natural gas, projects include the construction or redevelopment of hydrogen refueling stations, hydrogen liquefaction and storage, and dedicated hydrogen pipeline construction. Among more general concerns about transparency and a lack of public information, community groups are worried about the scope of community engagement required in Phase 1 after MachH2 stated that input and discussions around pipelines would not be included. The Midwest Hydrogen Hub has not only proposed the construction of dedicated hydrogen pipelines, which are insufficiently regulated and can pose grave safety and health risks, but the construction of CO₂ pipelines leading to storage in underground geologic formations as a part of blue hydrogen production. Transporting and storing carbon dioxide in rock formations can cause groundwater contamination and earthquakes, and the greenhouse gas can leak back into the atmosphere. Residents in East Chicago protested a potential project site on November 16^th 2024, voicing concerns over the efficacy of CCS and a mistrust of bp, a MachH2 project partner. 45V’s exception for nuclear plants to be eligible as new energy sources if they are at risk of retirement could be seen as a potential win for the Midwest Hydrogen Hub, with its focus on hydrogen produced from nuclear power (pink hydrogen), although this change did not go as far as the Hub requested.  

Gulf Coast Hydrogen Hub (Texas) 

Status: HyVelocity was awarded Phase 1 status on November 20^th, and is set to receive $22 million in federal funding during this phase.  

The Gulf Coast Hydrogen Hub has proposed seven projects across Texas, including the creation of green and blue hydrogen facilities, dedicated hydrogen pipeline infrastructure, hydrogen liquefaction with storage, and the use of produced hydrogen for e-methanol and lower-carbon ammonia. Emissions from the production of blue hydrogen, the most prominent type of hydrogen proposed at this hub, vary depending on where the natural gas is sourced. A recent study found that due to leaks, venting, and flaring throughout the supply chain, blue hydrogen made from natural gas from Texas’ Permian Basin will never be considered “clean” at existing emissions rates. Emissions calculations for 45V don’t currently account for regional differences in natural gas production, potentially leading to the funding of further pollution on the Gulf Coast. Community groups have also expressed concern over the use of hydrogen to produce petrochemicals, an industry that is known to pollute surrounding waterways. Introducing new sources of pollutants will bring harm to the already overburdened communities of this region. The Gulf Coast Hydrogen Hub had requested the 45V credit allow production facilities constructed before 2033 to be grandfathered in to more lax regulations for the duration of the project, a change which was rejected in the final rules.    

Appalachian Regional Clean Hydrogen Hub (Ohio, West Virginia, Pennsylvania) 

Status: ARCH2 was awarded Phase 1 status on July 31^st and is set to receive $30 million in federal funding to carry out this phase. Phase 1 will last up to 36 months and will involve planning, analysis, design, and community engagement. On December 18^th, DOE published a notice of intent to prepare an environmental impact statement and will be receiving comments on the scope of the EIS until March 3, 2025.  

The Appalachian Regional Clean Hydrogen Hub has proposed 11 projects across Ohio, West Virginia, and Pennsylvania focused on the production of blue hydrogen, hydrogen liquefaction, and blending hydrogen into natural gas pipelines. The Appalachian region has been devastated by the fracking industry and residents have suffered extreme health and environmental damages at the hands of many of the Hub’s project partners. Through the production of blue hydrogen, ARCH2 would further entrench the region into the legacy of natural gas, especially if proposals to blend hydrogen into the natural gas distribution system move forward. Blending hydrogen with natural gas increases rupture, leakage, and ignition risks in the pipeline, endangering nearby structures and allowing a potent indirect greenhouse gas to rise into the atmosphere. Community groups have spoken out about the lack of publicly available information and economic feasibility as partners and projects drop out, many due to uncertainty around eligibility for the 45V credit. While the new rules allow for existing natural gas generators to be considered for the incrementality pillar if fitted with CCS within three years before the new hydrogen facility, the revisions fall short of the Hub’s plea for relaxing natural gas guidelines.  

An Uncertain Future 

Despite Hub partners’ intense lobbying, the final guidance keeps the three pillars approach to clean hydrogen, although the future of the rules could significantly change with the incoming Trump Administration and a Republican-held Congress, who have indicated they are open to making the rules more industry friendly than they already are. As many of the Hubs move forward with Phase 1 activities, it seems unlikely that they will address the economic, environmental, and safety concerns repeatedly brought up by climate scientists and environmental justice advocates, nor has DOE indicated it will intervene to ensure community engagement needs are met. The final 45V guidance might not be a total win for the Regional Hydrogen Hubs, but it’s far from a total win for environmental justice communities either.