‘Trump Effect’ Stalls Hydrogen FIDs, Already Killing Projects

The U.S. is expected to become the world’s leader in hydrogen production using abundant natural gas resources as feedstock, industry experts say, with energy powerhouses like Exxon Mobil and BP planning multibillion-dollar projects.

However, the nation trails other countries when it comes to the final investment decisions (FID) needed to make projects a reality. Regulatory and policy uncertainty coupled with offtake, costs and other concerns have given some developers pause.

Just last month, the U.S. Department of Energy (DOE) said it was reviewing all activities to ensure they “follow the law and align with the Trump administration’s priorities.” The review, which includes the hydrogen hubs selected to $7 billion in funding during former President Joe Biden’s administration, comes as the Republican-led Congress and Trump weigh regulatory rollbacks that sweeten the economics of clean energy projects, including hydrogen.

Though efforts to scale hydrogen production and use may have slowed in parts of the world, with some projects scrapped, some developers are still moving forward with ambitions for the energy carrier. Hydrogen, a promising route to lower greenhouse gas emissions, can be used in transportation, power generation and industrial processes.

“We’re currently tracking about $1.3 trillion of capex activity across 1,042 hydrogen projects across the world. This consists of blue, green, pink and waste-to-hydrogen or alternative projects for the most part,” Amanda Duhon, director of North and Central America for the Energy Industries Council (EIC), said during the World Hydrogen North America conference.

“The U.S. alone accounts for $107 billion of announced capex across 127 projects,” she added, noting “the U.S. is slated to be the world leader for global blue hydrogen production.”

Data from EIC show the U.S. follows Europe in the highest number of projects that have reached FID. With supportive energy transition frameworks in place, Europe has about $146 billion of capex dedicated for 373 projects, she said.

“As of earlier this week, our data shows 29 projects have reached FID in the last five years,” Duhon said April 2. That compares to 25 projects in the North American market.

Most of the projects that have reached FID are blue hydrogen projects, including Linde’s more than $2 billion plan to supply clean hydrogen for Dow’s Fort Saskatchewan Path2Zero project in Alberta, Canada, and plans to invest $1.8 billion to supply clean hydrogen to OCI’s blue ammonia project on the U.S. Gulf Coast.

“There are at least three large-scale projects expected to reach a final investment decision this year,” Duhon said. Among them is Exxon Mobil’s large-scale blue hydrogen and ammonia project at its integrated refining and petrochemical site in Baytown, Texas.

Awaiting FID

Exxon plans to produce up to 1 Bcf/d of hydrogen—using natural gas as feedstock from its Permian Basin operations—for its Baytown hydrogen project. Eyeing startup in 2029, the company said it anticipates taking FID on the project in 2025. The project, however, depends on Exxon securing tax incentives under Section 45V of the Inflation Reduction Act (IRA) to be economically viable.

“We’re planning on going through our final investment decision later this year,” Chris Duffy, Baytown Blue Hydrogen Venture executive at Exxon, said April 1 during a session at the hydrogen conference. He added, “Clearly, policy is important. 45V was an important first step with the release in January. We are seeking some clarity on a few points, and that will go into our final investment decision.”

Duffy did not go into detail about what detail Exxon Mobil sought but spoke about what is needed to reach FID: customers, market, infrastructure and low costs.

“We’re seeing good demand for ammonia in Japan and we’re supportive of the contract for difference in Japan, also in the European markets,” Duffy said.

Hydrogen can be stored in the form of ammonia for transport. The ammonia, which is used as fertilizer and as a raw material to produce chemicals and plastics, can be returned to hydrogen (and nitrogen) with catalysts and heat once it reaches its destination. But the process, known as cracking, is considered costly and energy intensive.

Duffy added fuel switching—using hydrogen in place of natural gas—at existing refineries and chemical plants is another option.

But “You have to drive costs lower. And how do you get costs lower?” he asked. One way is by leveraging existing infrastructure—something Exxon has plenty of on the Gulf Coast. The company has the world’s largest CO₂ pipeline system with access to ample pore spore. “These are huge advantages that we have. Those are really the key things you need to make a decision. If you need certain policy, you got to have your customers in the market. You have to be sure to drive your costs down.”

Fellow panelist LSB Industries CEO Mark Behrman agreed. Having an offtake agreement is mandatory for FIDs and ultimately getting some return on capital, he said.

“The idea that many people will build a facility and hope they come is probably extremely unrealistic,” Behrman said. He added that financiers “want to see real contracts with real customers at the other end.”

Tracking projects

Although the number of clean energy project announcements across the world increased in recent years, fewer than expected projects are moving into the FEED, EPC and FID stages, Duhon said. She noted that Australia has the most capex-intensive projects in the world at $245 billion across 78 projects, including the gigantic West Green Energy Hub. “It’s $64 billion in the anticipated spend and it’s being developed by InterContinental Energy, CWP Global and Mirning Green Energy.” The proposed project aims to produce up to 4 million tonnes of renewables-based hydrogen per annum at full capacity.

South America’s hydrogen targets are also high with $241 billion in capex across 140 projects, according to EIC. Here, Chile leads the way with a 25-gigawatt (GW) power capacity target for hydrogen production. The country’s project pipeline includes a 12-GW ammonia for export project by CWP Global and an 8-GW ammonia plant by TEH2.

In North America, an FID is expected in the second half of 2025 for ATCO’s Heartland Hydrogen Hub in Canada, which aims to produce 300,000 tons of clean hydrogen per year.

In the U.S., other projects besides Exxon’s Baytown site include BP’s hydrogen hub at its Whiting refinery in Indiana. The project, which Duhon said has an anticipated capex of $8 billion, is part of the Midwest Alliance for Clean Hydrogen (MACH2) hub.

Further south, Clean Hydrogen Works’ Ascension Clean Energy Blue Ammonia Project in Ascension Parish, Louisiana, is currently in FEED phase, she added, while Air Products is seeking potential equity partners in its Louisiana Clean Energy Complex. The blue hydrogen complex, also located in Ascension Parish, could startup in 2028. The project aims to produce more than 750 million standard cubic feet per day of blue hydrogen for Air Products’ pipeline customers in the Gulf Coast and blue ammonia for global hydrogen markets, according to the company’s website.

“The main driver for building these blue ammonia plants in North America is the lower cost of natural gas,” Duhon said. “You have an abundance where the key ingredient is about a quarter of the benchmark price than it is in Europe.”

The ‘Trump effect’

Speakers at the hydrogen conference also brought up what several have dubbed the “Trump Effect.” As conversations around tariffs took place outside the conference hallways, hydrogen players discussed the Trump administration’s review of hydrogen hubs, among other programs.

“It’s a cause for concern for many stakeholders in the industry,” Duhon said.

Citing “a source briefed on the matter,” Reuters reported in March that the DOE was considering cutting funds for four of the seven hydrogen hubs selected to jumpstart production of clean hydrogen across the U.S. Hubs in the crosshairs included those in the Midwest, Pacific Northwest, California and the Mid-Atlantic.

In an emailed statement to Hart Energy, a DOE spokesperson said it is conducting a department-wide review. “The review is ongoing, and speculation by anonymous sources about the results of the review are just that—speculation.”

Some companies had already adjusted plans, given uncertainties surrounding the Inflation Reduction Act and hydrogen production tax credits. These included Fortescue Energy, which is re-evaluating the timeline of its Phoenix hydrogen hub in Arizona due to the uncertainties. In a Feb. 20 investor call with analysts, Fortescue Energy CEO Mark Hutchinson said the “U.S. has been an interesting place with the Trump administration.”

“There’s been a flurry of executive actions. Some sections of the IRA from the grants have come into question and including the hydrogen production tax credit,” Hutchinson said. “So, until we really have a much clearer view on that, we are being quite cautious about what we’re doing.”

Air Products has canceled three of its planned U.S. projects, including a green liquid hydrogen project in New York. In February, the company said it scrapped the projects—which included a sustainable aviation fuel expansion project in California and a carbon monoxide project in Texas—due to unfavorable economics, challenging commercial conditions and regulatory conditions. Air Products expects to record a pre-tax charge of up to $3.1 billion in the second quarter of 2025.

“At this time, industry is going to have to drive the development of hydrogen projects specifically in the U.S. and Canada when we look the North American market. But the question remains, how do we make this bankable?” Duhon asked. “There really is a call to action for the entire value chain to come together with advocacy groups, academia, the community with government to leverage the opportunity that North America has to be the leader in hydrogen.”