Global Green Hydrogen Projects Face Setbacks
- Details: Over the past 24 hours, reports indicate a global pullback in green hydrogen projects due to high production costs, weak demand, and regulatory challenges. Notable examples include:
- In the U.S., projects like Clean Hydrogen Works in Louisiana and Air Products' blue hydrogen plant have been impacted by the loss of tax credits due to the OBBBA, with specific cancellations noted, such as Air Products' $500 million facility in New York and sustainable aviation fuel project in California, citing commercial and regulatory issues.
- Hy Stor Energy canceled its 1 GW electrolyzer capacity reservation in Mississippi due to market headwinds, delays, and financial unfeasibility, as reported recently.
- In Europe, Shell scrapped a low-carbon hydrogen plant in Norway due to lack of demand, and BP's exit from the Australian project was noted. Iberdrola reduced its 2030 green hydrogen production target from 350,000 tons to 120,000 tons, and ArcelorMittal abandoned plans to convert two steel plants in Germany, both citing high energy costs and funding delays.
- In Australia, Woodside Energy shelved two green hydrogen projects, Trafigura abandoned a A$750 million ($491.5 million) plant at Port Pirie lead smelter, and the Queensland government pulled funding for a A$12.5 billion plant by 2028, all due to costs and market conditions.
- In Asia, Kawasaki Heavy Industries canceled a coal-to-hydrogen project in Latrobe, Australia, due to time and cost pressures.
- The reasons for these setbacks include soaring production costs, low offtake, high capital costs, and insufficient infrastructure, as highlighted in recent analyses. This global trend suggests a reevaluation of the sector's economic viability, with significant implications for future investments.
- Key Takeaway: The widespread cancellation and postponement of green hydrogen projects indicate economic headwinds and challenges in securing funding and demand, which could slow down the growth of the green hydrogen sector.
- Sources: