Hydrogen Update: An Energy Option or Pipe Dream?
By R. NEMEC, Contributing Editor
(P&GJ) — If and when hydrogen (H2) lives up to its potential as an abundant, clean energy source transforming the national and global energy economy, Texas will have to play a major role, according to many energy researchers and experts like Rice University’s Ken Medlock. Major players in the oil and natural gas sector have their fingerprints and pocketbooks all over the potential future of H2 as a global energy source.
In fact, the likes of ExxonMobil, Royal Dutch Shell, Sempra Energy and GTI Energy are supporting a broad collaborative approach in the Washington, DC (U.S.)-based Clean Hydrogen Future Coalition (CHFC), pushing the advancements in low-carbon H2 (LCH). CHFC officials note that their efforts represent “a diverse group of energy companies, utilities, non-governmental organizations (NGOs), equipment suppliers, project developers and labor groups who are committed to the advancement of a clean H2 economy that is supported by infrastructure and investments across the supply chain.”
Medlock, senior director of the Center for Energy Studies at Rice's Baker Institute, views H2 as “a versatile and important component of the energy transition, particularly for the decarbonization of hard-to-abate sectors like industry and heavy transport.” He likes to emphasize the need for robust infrastructure, policy support and cost reduction as needed to make H2 commercially viable at scale.
Currently, he is of the mind that “H2 is struggling because the economics are tough, but there is still long-term potential.” The reality for him is that “lower commodity prices, macroeconomic uncertainty and policy uncertainty all paint a slower developing picture.
“Texas is well-positioned to lead the U.S. in the H2 economy due to existing infrastructure (natural gas production and transport), a skilled workforce and proximity to industrial demand centers,” he also has noted earlier in 2025. And some of the prime H2 advancement in 2025 bears this out.
Under construction with a projected 2026 startup, the TerraSite-TX1 project is a planned 1-gigawatt (GW) off-grid, H2-powered artificial intelligence (AI) project on 1,483 acres east of Houston. Developed by California-based Edge Cloud Link Inc. (ECL), the project is designed to meet the high-density power demands of AI workloads without relying on the Texas power grid. The first phase, a 50 megawatt (MW), $450-MM module, will be offered by ECL as a “data center-as-a-service” with the full 1-GW site expected to cost around $8 B.
Working closely with Intel Corp., ECL is a standalone company emphasizing that it is focused on building “sustainable, off-grid, modular data centers powered primarily by green H2 fuel cells.” While Intel is a major player in edge computing technology and offers its own software and hardware solutions like the Intel Edge Platform and various edge processors, ECL has its own distinct technology and business model. In 2025, Intel reversed a strategy for selling or spinning off its own internal Network and Edge Group (NEX), deciding to keep it as part of its core operations.
ECL’s power source is onsite H2, supplied by three converging pipelines, operating off of the grid, separate from the Electric Reliability Council of Texas (ERCOT). Designed to scale between 1 GW and 2 GW of capacity, depending on customer demand, TerraSite’s purpose is to supply power for what is described as “high-density AI and cloud workloads” comprising future data centers. It will use cooling water that is produced onsite as a byproduct of H2 fuel cells.
The multi-billion-dollar project’s construction will be modular, 3D-printed concrete structures that can be delivered in 1-MW increments in under 12 months, according to ECL officials. San Francisco-based Lambda Labs, a 13-yr-old ($1.5 B in equity) AI services infrastructure provider, will be the first ECL project tenant to deploy AI infrastructure at the campus.
In the U.S., there are at least three other major green H2 projects underway, and globally there is serious activity in Europe and China. Europe is seeing acceleration in project pipelines, with plans for extensive H2-capable gas transmission pipelines, while the EU-backed 2,050-mi SoutH2 Corridor project aims to build a large-scale pipeline to transport renewable H2 from North Africa to Italy, Austria and Germany. Additionally, 2025 has seen the commissioning of significant production projects, such as a 500-MW facility in China.
U.S. projects include: St. Gabriel Green Hydrogen Plant in Louisiana operated by Hidrogenii, a joint venture of Olin Corp. and Plug Power, Inc.; Sauk Valley Green Hydrogen Plant developed by Invenergy in Illinois, using solar power from a nearby array and Ohmium electrolyzers to produce clean H2 for its nearby gas-fired plant and potentially for offsite use; and Douglas County Green Hydrogen Project, led by public sector Douglas County PUD in Washington state and using surplus hydroelectric power from Wells Dam to produce green H2 via electrolysis that can be applied as a clean fuel for transportation and power generation, reducing grid strain and boosting the local economy.
Rice’s Medlock and his colleagues at the Baker Institute energy policy center offer some caveats on clean H2, noting the road ahead is not all smooth. They see ruts and obstacles, such as too much focus on production at the expense of transportation and storage; not enough research/development (R&D); and issues such as infrastructure gaps, reducing costs and implementing effective, comprehensive policy frameworks.
A Biden administration perk for clean H2 in its 2022 U.S. Inflation Reduction Act (IRA) was extended through 2027 in the Trump “big beautiful” tax bill in mid-2025, extending the so-called “45V tax credit.” CHFC hailed the action as a life saver for the sector by providing more time for the industry “to take root” under more policy certainty. “The support from Washington sends a clear signal to the international market that the U.S. is serious about scaling a H2 economy that uses all of America’s energy resources,” said CHFC President Shannon Angielski, noting that the coalition was “deeply grateful” to U.S. Senators for recognizing H2’s role.
On a podcast, Medlock noted that analysts needed “to take a step back when we want to talk about the IRA and talk about other pieces of legislation that were also passed under the previous administration. He thinks the bipartisan infrastructure law really set aside a significant amount of funding directed at multiple investment opportunities to stimulate what he calls shovel readiness to build stuff, and energy was a major component of that.
“Of course, the [U.S. Department of Energy (DOE)] H2 hubs were something that sort of fell out of the Infrastructure and Investment Jobs Act (IIJA) and it boils down to effectively a grant program where the government allocates funding to create hubs for these low-carbon—H2 in particular—energy resources to evolve,” according to Medlock. “The IRA in many ways was an addition to that suite of legislation. What the IRA did is put in place a series of tax incentives that would affect the investments that will be triggered under the broader jobs act and the stimulating impacts of those investment dollars that would be flowing from the government to create these new hubs.”
In the summer podcast, Medlock went on to observe that low-carbon H2 was a significant beneficiary of all of the above. He notes that the Biden administration pushed a collection of stimulus-promising legislation. “There was a collection of legislation that really promised to be game changing with regard to the U.S. approach to energy in particular low-carbon energy. As a matter of fact, in the international community, when the IRA was passed, there was a robust reaction, in particular by European governments and companies that were operating in Europe saying, this is not fair and they couldn’t compete.”
With the comprehensive federal budget slashing from the first year of the second Trump administration, the Washington, DC-based Carbon Capture Coalition began sounding the alarm each time a new tranche of DOE grant programs was canceled. Jessie Stolark, the coalition executive director, cited a lot of past bipartisan support in Congress for the programs being slashed. “Carbon management technologies are key to building a more reliable, affordable and sustainable American energy system—one that supports existing industries while doubling down on technology innovation,” Stolark said. “The U.S. has attracted significant investments and local economic development potential through various federal carbon management programs.
“While other nations, such as China, Canada and members of the EU, reinforce strategic investments in carbon management technologies, [cutback] actions like this cede ground in a sector where the U.S. has led the world in developing and deploying technologies for decades,” Stolark noted.
Energy transportation promises to be a key, according to Edward Emmett, a transportation and energy fellow, writing in part of the Baker Institute’s 2025 Energy Briefing. Emmett considers the intersection of fuels, transportation and climate policy, opining that transitioning away from petroleum-based fuels presents “economic and technical challenges, including high capital costs, fuel infrastructure replacement and uncertainty in the economic and technical efficiency of alternatives like H2 and biofuels.” For H2, fuel infrastructure replacement is a key. In the white paper, he stressed the importance of “coordinated policy, supply chain development and global standards,” and he concluded that the future of fuels in transportation will have broad ramifications.
Other considerations are the technology advancements along the supply chain and the various end-use applications for the H2. As would be expected, the overarching goal is to make green H2 cost-effective at an industrial scale. So far, this often has been easier said than done.
In the EU, a German company, Hydrogenious LOHC Technologies, is addressing one of the would-be H2 economy’s toughest challenges—safe and efficient storage and transport. The 12-yr-old company’s liquid organic hydrogen carrier (LOHC) system uses benzyl toluene, a reusable heat transfer oil, to chemically bind H2, enabling H2 to be stored and transported just like traditional fuels using existing infrastructure—cutting down both cost and risk.
Hydrogenious, along with units of Bosch and partners, are installing a H2 power system at a hospital in Erkelenz, Germany. Funded by Germany’s Education and Research Ministry, the multi-technologies combine LOHC and solid oxide fuel cell (SOFC) technologies to deliver clean heat and power.
The project aims to reduce carbon emissions by up to 40%. Initially, Bosch’s SOFC units run on natural gas while still achieving up to 60% electrical efficiency. Even in this early phase, the system cuts emissions by roughly 150 metric tons per year (tpy).
Other technology advances can be found in the U.S., UK and Norway, offering potential for global scale commercialization, focusing on advancements in the making and operation of electrolyzers. Massachusetts-based Electric Hydrogen, a 5-yr-old enterprise, states as its mission the goal of making green H2 “cost effective at an industrial scale” by building the next generation electrolyzer. Officials with the start-up company say their product will be compatible with steel/metal and chemical/ammonia production, cement manufacturing and the aviation fuel space.
Promoting a self-described innovative plant called the “HYPRPlant,” Electric Hydrogen in 2023 raised $380 MM, pushing the company’s overall valuation past a billion dollars. Investors include BP plc, Microsoft Corp. and United Airlines. The company’s HYPRPlant is characterized as a fully integrated, modular electrolyzer platform designed for speed, scale and cost savings.
Another 5-yr-old firm in Oslo, Norway is also concentrating on the proton exchange membrane (PEM) technology crucial to the electrolysis process in clean H2 production. Hystar is considered a key developer in the clean H2 space, seeking the reengineering of how electrolyzers work with a proprietary PEM technology with which it hopes to make green H2 production cheaper and more scalable.
Hystar boasts an ultra-thin membrane design, which it promotes as 90% thinner than standard PEM systems. “This breakthrough allows its systems to run at much higher current density, meaning lower energy consumption, more H2 output per unit of power, and reduced use of critical raw materials,” according to Hystar officials. “The result is a serious step-change in how economically green H2 can be produced at an industrial scale.”
UK-based HiiROC is focused on lowering costs and emissions with what it calls thermal plasma electrolysis (TPE) by breaking down hydrocarbons into H2 and solid carbon black. It avoids electricity-heavy electrolysis and/or carbon-intensive methane reforming. According to the British project supporters, this approach uses 80% less power than water electrolysis, emits no carbon dioxide (CO2), uses a scalable modular design and has a commercial byproduct in carbon black used in the production of tires, plastics and inks.
HiiROC officials have reported raising more than $35 MM from major investors like Centrica and Kia Motors, which they point to as showing “strong market confidence.” It is partnering with Associated British Ports to build a production facility at Saltend Chemicals Park, set to produce 10 tons per day (tpd) of H2. Last September, Centrica and HiiROC, supported by the Net Zero Technology Centre (NZTC), successfully demonstrated the injection of H2 into a natural gas-fired peak power plant at Centrica’s Brigg Energy Park, North Lincolnshire, marking a UK first in using H2 to decarbonize peak power generation supplying power directly to the electricity grid.
In the U.S. engineering standards (B31.8) for both H2 and H2 blend pipelines and related infrastructure have been updated in the past 2 yrs with both the American Society of Mechanical Engineers (ASME) and the Pipeline Research Council International (PRCI) closely involved to help federal and state regulatory and legislative efforts. PRCI reviewed the ASME standards and carries out various research on H2, but its officials declined to comment to P&GJ for this article.
The respected International Energy Agency (IEA) has published a global database on low-carbon H2 projects worldwide since 2000, accumulating data sets as part of efforts to track advances in H2 technology. H2 production projects data covers all projects commissioned worldwide to produce H2 for energy or climate change-mitigation purposes.
“It includes projects that have the objective either to reduce emissions associated with producing H2 for existing applications, or to use H2 as an energy carrier or industrial feedstock in new applications that have the potential to be a low-emissions technology option,” the IEA noted. Projects in planning or under construction are also included. A separate infrastructure database covers all projects under development to build H2 pipelines, underground storage facilities and import/export terminals dedicated to low-emissions H2 and H2-based fuels.
These databases complement other technology-related tracking efforts on clean energy demonstrations and carbon capture and storage systems. The IEA also lists the various global sources that it taps for its data on production and infrastructure (see sidebar).
The IEA cites these organizations and companies as sources of “essential input and feedback on the databases,” including:
- Infrastructure: AmberGrid, Bulgartransgaz, DESFA, Enagás, ENTSOG, FGSZ, Gascade, Gasco, Gasgrid, Gasunie, Geostock, H2Global Foundation, NaTran, NET4GAS, OGE, Ontras, Plinacro, Port of Bordeaux, Port of Duisburg, Port of Rotterdam, RAG Austria, Snam, Teréga, Thyssengas, TotalEnergies H2 and Uniper
- Production: Acciona Plug, Air Liquide, Asociación Nacional de Industriales of Colombia, Asociación Hidrógeno Colombia, CF Industries, Confederation of Indian Industry, Dii Desert Energy, EDF, Enagas Renovable, Enapter, Engie, Eni, Hydrogen Cluster Finland, France Hydrogene, Galp, Gasunie, H2Chile, HDF Energy, HIF, Hynamics, Iberdrola, KBR, Moeve, Natural Resources Canada, INNOVX, Pertamina, Repsol, Scottish Power, TE H2, TES and World Energy GH2.
In other releases, A Platts Energy SP report noted that the cost gap between conventional and low-emissions H2 was widening due to declining natural gas prices and higher electrolyzer costs driven by inflation and slower-than-expected technology deployment. Meanwhile, the IEA was characterizing the global market as stimulated, but still not meeting the expectations of industry and policymakers in recent years.
Globally, statistics indicate H2 demand up 2% to 100 MMtpy in 2024; low-carbon potential dropping (30 MMtpy in 2030), and meanwhile, China now controls 65% of the installed electrolyzer capacity. Despite these statistics, the IEA is predicting that the global low-carbon H2 sector is poised for substantial growth through 2030, even in the face of recent project cancellations and persistent cost challenges that have reduced the listing of announced projects by nearly 25%.
“Low-emissions H2 uptake is not yet meeting expectations set by industry and governments in recent years," the IEA said in a statement last September that accompanied its latest H2 report. "Growth is being restrained by high costs, demand and regulatory uncertainty, and slow infrastructure development."
About the author
RICHARD NEMEC is a long-time contributor to P&GJ who can be reached at: rnemec@ca.rr.com.