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Key projects for the Energy Department’s hydrogen hubs are dropping like flies. And it’s really not obvious why.
Three hubs DOE selected for potential federal support have lost projects that were linchpins. Industrial giant Fortescue is no longer publicly committing to a hydro-powered hydrogen production plant proposed in Washington state that was key to the Pacific Northwest hub. News of a pause at the project was previously reported, but the company notably declined to even say the project was still getting built when asked about it this week.
“While Fortescue will continue to maintain a portfolio of other projects for the future, our financial discipline always comes first. We will never do projects that are not currently economically viable,” the company said in a statement provided to me this morning.
Meanwhile CNX, a natural gas company, has indefinitely put the kibosh on a blue hydrogen ammonia plant in West Virginia crucial to the Appalachian hydrogen hub known as ARCH2. Marathon Petroleum’s midstream subsidiary MPLX also confirmed to me they’ve canceled a hydrogen storage facility planned for that hub, and Chemours is no longer involved with the hub either.
Another blue hydrogen ammonia plant in North Dakota crucial to a different hub – known as the Heartland hub – has been canceled by Marathon and TC Energy.
In other words: a year after the Biden administration made a big announcement about the seven hubs that could potentially receive billions of dollars in government funding, almost half of them are running into serious trouble.
The companies that have quietly pulled out or paused projects are laying blame on implementation of the federal hydrogen production tax credit, claiming rules enforcing the “three pillars” and carbon intensity requirements are too onerous. Meanwhile critics of the hydrogen hubs are seizing on project cancellations and delays to argue against their construction outright; the Ohio River Valley Institute, an environmental group opposed to the ARCH2 hydrogen hub, has received a lot of press in recent days for a report claiming the hub is “coming apart.”
I’m already hearing whispers from industry insiders in D.C. who are trying to spin these cancellations as evidence the credit implementation has been too favorable to climate activists and is constraining growth in the nascent hydrogen space.
But what’s really going on?
Conversations with experts and stakeholders indicate to me this could be evidence of broader macroeconomic issues hitting the hydrogen industry, from inflation pushing up the price of electrolyzers to the stubbornly low price of natural gas. We saw this with the Plug Power project in New York, which we were first to report problems with. These market issues may be overpowering the subsidies and demand-side benefits of the bipartisan infrastructure law and Inflation Reduction Act.
These hiccups may also be a calm before a storm of hydrogen investment and a reshuffling of capital that’ll become more evident after the IRA’s production tax credit is fully implemented with final regulations. Perhaps it’ll take final rules to see the companies supportive of the “three pillars” move more projects forward.
It could also be a mixture of these things and other factors, like issues with the specific sites companies had selected for their plants.
No matter the cause for these hubs stuttering, these projects falling out of the fold is a shock to no one, especially supporters of the “three pillars” approach to the tax credit. Though it may indicate flaws with a disorganized approach to the energy transition.
“I’m not surprised if at the end of the day some of the many projects supported by DOE are not viable in the end,” said Jesse Jenkins, an assistant professor at Princeton University and expert in energy systems engineering. In addition to co-hosting Heatmap’s Shift Key podcast, Jenkins leads the REPEAT Project, which produced influential policy analysis supporting the “three pillars” approach to Treasury’s implementation of the hydrogen production tax credit.
Irrespective of the reasons, it’s important to remember that on some level both industry and the Biden administration stumbled into this mess. That’s because Congress passed the bipartisan infrastructure law mandating the creation and financing of these hubs before the IRA was even introduced. The infrastructure law itself required DOE to start soliciting proposals for hub funding mere months after it was enacted. This means the hub program was crafted independent of a tax subsidy boosting supply.
The hubs may be lobbying for a specific version of the hydrogen production credit to be implemented, as many D.C. lobbyists like to point out, but the program wasn’t referenced in the tax credit’s statute either.
As Jenkins put it, any conflict between the hubs and tax credit provisions is evidence “that reflects that many of the projects [selected] are not compliant.”
Biden administration officials spoke to me for a half hour this morning about the canceled projects on the condition of anonymity to candidly discuss the tax credit and hubs. To them, this can be explained as the process working as intended, and they emphasized how the credit and hub are independent programs. They also expect more capital to be unleashed after the credit is finalized, as companies who’ve supported the “three pillars” get certainty to make final investment decisions.
The administration’s view sounded akin to the optimistic vision relayed to me by Clean Air Task Force’s Conrad Schneider: “This is what progress looks like. It’s slow, it’s steady. It’s not [a] steady state though.”
My take? This is further proof we live in a disorganized energy transition. So far in The Fight, we’ve covered the struggles to get projects built because of opposing forces at a grassroots level. That same dynamic applies to the federal climate programs incentivizing a switch from carbon-intensive business practices. And sometimes, there’ll be tug-of-war competing interests between the climate programs themselves.
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A battle ostensibly over endangered shrimp in Kentucky
A national park is fighting a large-scale solar farm over potential impacts to an endangered shrimp – what appears to be the first real instance of a federal entity fighting a solar project under the Trump administration.
At issue is Geenex Solar’s 100-megawatt Wood Duck solar project in Barren County, Kentucky, which would be sited in the watershed of Mammoth Cave National Park. In a letter sent to Kentucky power regulators in April, park superintendent Barclay Trimble claimed the National Park Service is opposing the project because Geenex did not sufficiently answer questions about “irreversible harm” it could potentially pose to an endangered shrimp that lives in “cave streams fed by surface water from this solar project.”
Trimble wrote these frustrations boiled after “multiple attempts to have a dialogue” with Geenex “over the past several months” about whether battery storage would exist at the site, what sorts of batteries would be used, and to what extent leak prevention would be considered in development of the Wood Duck project.
“The NPS is choosing to speak out in opposition of this project and requesting the board to consider environmental protection of these endangered species when debating the merits of this project,” stated the letter. “We look forward to working with the Board to ensure clean water in our national park for the safety of protection of endangered species.”
On first blush, this letter looks like normal government environmental stewardship. It’s true the cave shrimp’s population decline is likely the result of pollution into these streams, according to NPS data. And it was written by career officials at the National Park Service, not political personnel.
But there’s a few things that are odd about this situation and there’s reason to believe this may be the start of a shift in federal policy direction towards a more critical view of solar energy’s environmental impacts.
First off, Geenex has told local media that batteries are not part of the project and that “several voicemails have been exchanged” between the company and representatives of the national park, a sign that the company and the park have not directly spoken on this matter. That’s nothing like the sort of communication breakdown described in the letter. Then there’s a few things about this letter that ring strange, including the fact Fish and Wildlife Service – not the Park Service – ordinarily weighs in on endangered species impacts, and there’s a contradiction in referencing the Endangered Species Act at a time when the Trump administration is trying to significantly pare back application of the statute in the name of a faster permitting process. All of this reminds me of the Trump administration’s attempts to supposedly protect endangered whales by stopping offshore wind projects.
I don’t know whether this solar farm’s construction will indeed impact wildlife in the surrounding area. Perhaps it may. But the letter strikes me as fascinating regardless, given the myriad other ways federal agencies – including the Park Service – are standing down from stringent environmental protection enforcement under Trump 2.0.
Notably, I reviewed the other public comments filed against the project and they cite a litany of other reasons – but also state that because the county itself has no local zoning ordinance, there’s no way for local residents or municipalities opposed to the project to really stop it. Heatmap Pro predicts that local residents would be particularly sensitive to projects taking up farmland and — you guessed it — harming wildlife.
Barren County is in the process of developing a restrictive ordinance in the wake of this project, but it won’t apply to Wood Duck. So opponents’ best shot at stopping this project – which will otherwise be online as soon as next year – might be relying on the Park Service to intervene.
And more on the week’s most important conflicts around renewable energy.
1. Dukes County, Massachusetts – The Supreme Court for the second time declined to take up a legal challenge to the Vineyard Wind offshore project, indicating that anti-wind activists' efforts to go directly to the high court have run aground.
2. Brooklyn/Staten Island, New York – The battery backlash in the NYC boroughs is getting louder – and stranger – by the day.
3. Baltimore County, Maryland – It’s Ben Carson vs. the farmer near Baltimore, as a solar project proposed on the former Housing and Urban Development secretary’s land is coming under fire from his neighbors.
4. Mecklenburg County, Virginia – Landowners in this part of Virginia have reportedly received fake “good neighbor agreement” letters claiming to be from solar developer Longroad Energy, offering large sums of cash to people neighboring the potential project.
5. York County, South Carolina – Silfab Solar is now in a bitter public brawl with researchers at the University of South Carolina after they released a report claiming that a proposed solar manufacturing plant poses a significant public risk in the event of a chemical emissions release.
6. Jefferson Davis County, Mississippi – Apex Clean Energy’s Bluestone Solar project was just approved by the Mississippi Public Service Commission with no objections against the project.
7. Plaquemine Parish, Louisiana – NextEra’s Coastal Prairie solar project got an earful from locals in this parish that sits within the Baton Rouge metro area, indicating little has changed since the project was first proposed two years ago.
8. Huntington County, Indiana – Well it turns out Heatmap’s Most At-Risk Projects of the Energy Transition has been right again: the Paddlefish solar project has now been indefinitely blocked by this county under a new moratorium on the project area in tandem with a new restrictive land use ordinance on solar development overall.
9. Albany County, Wyoming – The Rail Tie wind farm is back in the news again, as county regulators say landowners feel misled by Repsol, the project’s developer.
10. Klickitat County, Washington – Cypress Creek Renewables is on a lucky streak with a solar project near Goldendale, Washington, getting to bypass local opposition from the nearby Yakama Nation.
11. Pinal County, Arizona – A large utility-scale NextEra solar farm has been rejected by this county’s Board of Supervisors.
A conservation with George Povall of All Our Energy
Today’s chat is with George Povall, director of the All Our Energy pro-offshore wind environmental group. Povall – who told me he was inspired to be an environmentalist by the film Avatar – has for more than a decade been a key organizer on the ground in the Long Island area for supporting offshore wind development. But these days he spends a lot more time fighting renewables disinformation, going so far as to travel the community trying to re-educate people about this technology in light of the loud activism against it.
After the news dropped that states are suing to undo the Trump executive order against offshore wind, I wanted to chat with Povell about what environmentalists should do to combat the anti-renewables movement and whether there’s still any path forward for the industry he’s spent nearly a decade working to build as an activist.
The following conversation transcript was lightly edited for clarity.
Okay so first of all, what made you become a pro-wind environmental activist?
This all goes back to maybe 15 years ago. I’ve always been environmentally minded. I’m 55 years old and not from the nonprofit sector. I like everybody else was living my normal life and maybe with some naivete thought that if things were good and economical and made sense and worked better than what we were doing in the past, we’d move on from that. But time kept creeping along and we went through the 1990s and 2000s and then I began to become more aware. I just thought people who knew more than I did would do something about this.
Surprisingly I look back and a movie that really motivated me to do what I’m doing is Avatar. They’re destroying the planet for the materials – exactly what we’re seeing now. We’re seeing it more than ever, with someone who is almost like a comic book villain now wanting to strip-mine the sea bed. I wonder what the anti-offshore wind people have to say about that.
It’s been surprising to me. We had always known there was going to be opposition to offshore wind, and disinformation coming. We had always tried to get out ahead of it but we were always unsuccessful in getting funding to deal with that.
Did the developers get ahead of it?
No. I think the developers got a lot of bad advice from the public relations firms they were using.
We kept telling them, please just tell the people what’s going on. I can see how they got into that position because people were asking questions about things that weren’t decided yet. But instead of saying they didn’t know and it wasn’t decided yet, they refused to admit they didn’t know something, even if that was the case. It engendered a lot of distrust in the communities that opponents were able to seize on quite easily.
I know from someone who has done campaigns of community organizing before, you just tell people what it is and what you know. It engenders trust. Unfortunately it didn’t go that way and I think a big part of that is they should’ve been more ready for people who were not willing to accept any answer as acceptable.
It feels to me like offshore wind has now become a wedge issue. A culture war issue. And they got people who frankly should’ve known better to listen to some of the least reliable people in the community throwing out claims that were ridiculous. And they overwhelmed a lot of people with half truths, misinformation. People couldn’t keep up.
What is the environmental movement actually doing now to address what is not just a policy problem but a cultural problem?
Well, that’s a great question and we have been trying to turn it around for a while. Though we have some resources, it is really hard to deprogram people. It’s very hard. I have spoken to people who came to me and said, I haven’t made up my mind. I am just looking for the right information. And when I gave it to them, they told me I was a “climate cult zealot.” That’s what everybody in the environmental movement is to them.
We need to really just bring in the people who support this stuff. It’s a basic concept but unfortunately we’ve never had the capacity to do that kind of thing. It’s something bigger organizations were doing, but they don’t have capacity for it now either. So it’s on us to just find the things that aren’t being done and do them. It’s about building coalitions.
It’s about starting from zero. Having offshore wind 101 information sessions and getting other organizations involved and getting their people educated. It can’t be a single process doing that. If the general public knew how a wind turbine works, if the average person on the street knew how it works, they’d laugh at people when they throw disinformation at them – but they don’t know it’s nonsense yet.