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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 conversation with Frank Maisano of Bracewell
Today’s Q&A is with Frank Maisano, one of the most sought-after energy lobbyists in Washington. Maisano, a Beltway veteran who has worked in Congress as well, has a long history with me that goes back to the earliest days of my environmental reporting career. So when I helped author a story for Heatmap this week about the budget risks to the Inflation Reduction Act, he reached out and asked if he could give me his take: that our reporting missed the mark.
Naturally, I asked if I could publish the whole thing in my newsletter, because what good is a lobbyist’s words if they aren’t written down? The following is an abridged version of our conversation, lightly edited for clarity.
Frank, once again, thanks for taking the time to reach out and tell us why we’re wrong. Let’s start with my burning question: tell me why?
Well I don’t know that everything you wrote about is wrong, but I think historical perspective is important here. Unfortunately when you’re as old as I am, and have been involved in this game as long as I have, you know from things that happened before that everything is not new again.
When I worked on the Appropriations Committee in 1994, 1995 and Republicans took over with House Speaker Newt Gingrich, many of these types of budget-cutting plans were in place. At the time, Republicans didn’t have total control because Clinton was president, but Project 2025 isn’t just Project 2025. It was Project 2005. It was Project 1985. The Heritage Foundation has been making these proposals every year for the 40 years I’ve been around. I’d just want to remind people of the operational historical context for how Congress works and how folks have been trying to do this for years.
I was talking to somebody the other day and I said, Talk to me in December of this year. Because in December of this year, a lot of this hyperbolic symbolism and walking people out of agencies — all of this will be over. Congress will have spoken and we’ll have a better sense of the true direction they’re going in.
I’m not going to say there won’t be significant cuts. I suspect there will be reductions in government spending. But it’s certainly not going to be as harried, frantic, and news-splashed as we’re seeing now.
Do you actually think these Republicans who signed onto a letter defending the Inflation Reduction Act will stand by these statements when a final bill comes for a vote?
Are you asking if the 21 will stand by the statements?
Yeah, I mean, the point of our story was to say the budget math matters more than that and there’ll be a choice between tax cuts and saving more of the IRA.
Like I said, when we went through this in 1994, you would think the budget math mattered more, but it never does. Once people start lobbying and start advocating for their own constituencies, local projects, I think you’re going to see a significant trimming of the attitude.
There’s a few people who, budget be damned, will be in the ‘let’s cut everything’ book. I don’t think that’s a majority of the [Republican] caucus, though, especially when you look at provisions of the IRA. There are many provisions of the IRA that are how Republicans have done energy policy for years. There were provisions in the bipartisan infrastructure law that were how Republicans have done energy policy for years.
Has every Republican supported it? No. Are there certain loud voices on the budget hawk side? Absolutely. Do either of those sides have a full measure of support that’s going to pull someone like a tug of war over to the other side? Most likely not. There’s going to have to be an internal party agreement but also an internal congressional agreement which I think will tend to pull this budget hawk-ness further away from the absolute spending cuts they want to impose.
Do you think the administration’s views on wind, solar, or battery storage deployment will matter when it comes to the fate of the IRA?
They may have a specific view. But a lot of it is out of their hands. The market has made decisions already. Utilities, investor-owned, even rural co-op utilities have made decisions already in balancing their generation sources.
I don’t think any sort of administration policy to X one off or close it out is probably that viable. Especially in the sense where we need all the energy we can get.
Demand takes control of the policy levers. We saw this with the Biden administration on oil and gas where they tried mightily to reduce our output, but then 2022 came around and they felt compelled to push more development and then we had record development under the Biden administration.
I think we’re going to see similar energy trends in this administration with the policy levers the administration is less interested in. Let me give you an example: I think offshore wind is going to still be able to play a role in meeting that energy demand. Look at what’s happening in the Northeast, and in Virginia, where they have incredible energy demand projections. Offshore wind along with natural gas along with some nuclear are [together] going to play a role in how we meet that demand in the future. Even if the administration pushes back on offshore wind, [Republican Virginia Gov.] Glenn Youngkin sees it as a part of his mix and that is a powerful force. I see that offsetting some of the policy push preferences this administration might have.
I know in the ‘90s you were involved in navigating this, but I’m still wondering after all this if the budget math we brought up in our story and parliamentary procedure will matter…
It certainly does matter and it’s certainly one way to look at it. But Congress has a way of coming to a deal.
1. Bristol County, Massachusetts – The state of Massachusetts is abandoning plans to build an offshore wind research center in New Bedford, a fishing town that has also hosted protests against Vineyard Wind.
2. Long Island, New York – Speaking of offshore wind woes, the anti-wind activist movement is now circling Empire Wind and asking President Donald Trump to rescind the EPA air permit to the Equinor offshore project.
3. Fayette County, Pennsylvania – This sought-after county for solar development appears to be on the precipice of enacting a sweeping 500-foot property setback requirement.
4. Tippecanoe County, Indiana – Solar developer Geenex is beginning what’ll likely be a tense battle to win special zoning approval for a large utility-scale solar project in an area that already is subject to a restrictive setback ordinance.
5. Jefferson County, Wisconsin – We’re about to get a glimpse of whether Wisconsin can be as difficult a battleground for large-scale solar in rural areas as Ohio.
6. Routt County, Colorado – We have our first-ever entry of Hotspots from Colorado, thanks to a zoning snafu.
7. Fannin County, Texas – County commissioners here are now forming a joint planning committee with the city of Savoy, where we told you residents fearful after the Moss Landing battery fire are trying to stop an Engie storage facility from being built.
8. Fresno County, California – The Moss Landing fire isn’t stopping Gov. Gavin Newsom from expediting new battery storage project permits.
9. Alaska – How do you kill a battery project if no one’s around to protest? Take away its money… and that’s why my mind is on the Kodiak State.
Developers have yet to see the approvals start flowing, however.
The Bureau of Land Management claims that Trump’s pause on solar energy permitting is no longer in effect — though no permits have yet come of it.
President Trump paused permitting for solar as well as wind projects for 60 days via executive order on his first day in office. The expiration date on that pause was technically last Friday, and in an exclusive statement to Heatmap, BLM spokesperson Brian Hires said “there is currently no freeze on processing renewable applications for solar” or “making authorization decisions” on projects.
Hires also said all transmission for wind projects is now allowed to advance through federal permitting, a statement that arrives after the agency indicated in emails I obtained that it may soon approve wires for a wind project in Wyoming sited on private land. BLM also approved a transmission project for a solar farm earlier this month, a decision it made public with a press release that also declared solar was part of the president’s “energy dominance” agenda.
This might sound like good news. But I’m going to wait and see before declaring the permitting pause for solar officially dead because we’ve yet to see a solar farm on federal lands permitted under Trump 2.0.
As we reported in February, a leaked industry memo outlined how Trump’s permitting freeze led to chaos and delays for solar energy developers who found that agencies on the fringes of the process — such as the Army Corps of Engineers — were suddenly dragging their feet on crucial permits. Even after the Army Corps told me it was no longer delaying solar permits, I heard conflicting tales from developers, who said there was a disconnect between the public line and government inaction behind the scenes.
A D.C. solar industry lobbyist who requested anonymity to speak candidly on the matter said they’ve yet to receive any clarity on whether the pause has actually been lifted and whether permits will actually be issued now. The source said they’ve heard little from state BLM offices or staff in Washington about what projects may be approved, and that the Interior Department — which oversees BLM — has been “weirdly opaque” with solar developers so far in Trump’s term.
“We can’t get straight answers,” the lobbyist said.
BLM told me the pause is still in effect for wind projects sited on federal lands and in federal waters, pending completion of a comprehensive government review of the wind sector’s environmental and national security implications. There’s been no timetable or deadline set for finishing that review, which has so far been conducted in secret. The agency did not provide me with any information on that study.