Pennsylvania-based CNX Resources Corp. said Dec. 15 it is exiting the Adams Fork ammonia project and is evaluating alternative sites for clean hydrogen projects in West Virginia.

The decision was made after an inability to reach commercial terms with project developers amid delays and hydrogen production tax credit uncertainty.

The natural gas producer was the feedstock provider for Adams Fork, a proposed multibillion-dollar anchor project for the Appalachian Regional Clean Hydrogen (ARCH2) hub. The hub is one of seven selected by the U.S. Department of Energy in October to enter negotiations—currently underway—for a share of up to $7 billion to form regional hydrogen hubs to jumpstart the sector in the U.S.

Adams Fork plans to produce up to about 2.1 million tonnes per year of ammonia, equivalent to more than 300,000 metric tons of hydrogen annually, in its first train, according to the project’s website.

CNX said Dec. 15 it “remains committed” to supporting the hub with its feedstock, but its “final investment decision remains contingent upon tax credit guidance that unambiguously supports low carbon intensity feedstock projects that will facilitate development of the regional clean hydrogen hubs, including ARCH2.”

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Hydrogen players and watchers are eagerly awaiting guidance from the U.S. Treasury Department on what is known as 45V, the hydrogen production tax credit, unveiled as part of the Inflation Reduction Act. The 45V hydrogen production tax credit offers up to $3 per kg of hydrogen, depending on greenhouse-gas emissions intensity.

However, project developers and partners do not yet know what electricity power sources will qualify for the credit and other details on how the credit will be implemented. The verdict is also still out on whether the credit will include an additionality provision that favor hydrogen producers powering their facilities with new renewable electricity generation instead of existing sources.

Stricter rules could favor green hydrogen production, which utilizes renewables such as wind and solar, in an effort to lower emissions; while looser rules could allow the sector to scale more quickly with the use of natural gas combined with carbon capture.

The ability to claim the full credit could play a role in financing hydrogen projects in the U.S.

Leaked details of draft guidance from the Treasury Department were reported earlier this month by Politico and Bloomberg. Citing anonymous sources, media reports claimed the Treasury Department would issue draft tax credit guidance backed by climate advocates instead of fossil fuel producers. Electrolytic hydrogen, or green hydrogen, produces hydrogen with electricity made from renewable energy resources, while blue hydrogen utilizes natural gas as feedstock with carbon capture and storage.

The economic viability of some hydrogen projects hinges on the ability to claim the full credit.

“CNX calls on the federal government to heed the advice of elected officials, organized labor, and stakeholders across the country who have advocated for rules that would catalyze, not stifle, the burgeoning hydrogen economy,” CNX said in the release. The company later called the Appalachian region the “textbook location for a clean hydrogen hub due to its unique access to ample low-cost natural gas feedstock, end-user demand, workforce and technology capability, and carbon sequestration potential.”

ARCH2, with applied science and tech company Battelle as program manager, is in line to get up to $925 million in federal funds. Speaking during Hart Energy’s recent DUG East conference in Pittsburgh, CNX COO Navneet Behl said private investment required for the hub is about six times as much. The hub, he said, could bring more than $6 billion in investment to the region.

When the draft guidance is released by the Treasury Department it may still undergo revisions before being finalized. The Treasury Department has recently issued guidance on the sustainable aviation fuel credit and the 45X advanced manufacturing production credit.

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