CERAWEEK: Gas Companies Say Hydrogen Industry Isn’t Dead, Just More Realistic

The Hydrogen Industry in 2025: Practicality, Incentives, and Advocacy

The hydrogen industry in 2025 and onward can best move forward by focusing on practicality, increasing demand-side incentives, and advocating through an uncertain regulatory environment, panel speakers said March 10.

Panelists at the CERAWeek energy conference by S&P Global in Houston said the narrative around hydrogen has evolved from the molecule being a "Swiss army knife" of the energy transition into more measured applications.

"The death of hydrogen has been greatly exaggerated," said Austin Knight, Vice-President of Hydrogen at Chevron, pointing to the ACES Delta joint venture between Chevron and Mitsubishi Power. The facility, which has 220 MW of alkaline electrolysis capacity, got a final investment decision back in 2022 and is slated to begin operations this year.

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Hydrogen projects must meet the willingness-to-pay of customers and businesses to move forward under this new reality of a more pragmatic market, said David Burns, Vice-President of Global Clean Energy at Linde.

Burns said one of the end-uses most promising for hydrogen is in ammonia. Linde is developing two "blue" hydrogen facilities, one in Texas and one in Alberta. He and other panelists also cited heavy-duty transportation and decarbonized shipping as realistic end-uses.

Oleksiy Tatarenko, Senior Principal, Climate-Aligned Industries at Rocky Mountain Institute (RMI), said RMI is focused on hydrogen's application in heavy industries like steel, chemicals, and shipping. These sectors are sometimes called "hard-to-abate" because of the massive amounts of capital that need to be injected into relatively cost-conservative industries, Tatarenko said.

"Green steel" in particular is a sector that is developing "a little bit slowly," Burns said, noting some future pain points could be uncertainty from CBAM rules and tariffs.

Tatarenko said the "biggest pain point" facing the clean hydrogen industry is an "insufficient level of support on the demand side." He cited an RMI report that said $45 billion worth of public support would be required to meet the European Commission's 2030 hydrogen goals, and less than 10% of that amount has been dispersed.

"So if you put less than 10% of what is required, guess what happens?" Tatarenko said.

Costs

Burns and Knight both emphasized the comparative cost advantage of blue hydrogen produced from natural gas with carbon capture and sequestration.

Burns said the goal of reaching $1-$1.50/kg electrolysis and renewable-derived hydrogen is "just impossible" considering all the factors that go into its production.

Green hydrogen production costs through alkaline electrolysis, including capex, were assessed by Platts at $3.68/kg on average in January, a 23% month-over-month increase. The region's carbon-neutral hydrogen production costs were assessed at $1.64/kg in January, a 16% month-over-month increase.

Platts' carbon-neutral hydrogen price assessments consider trading activity where emissions were avoided with low-carbon generation, removed through carbon capture and storage, and/or offset through carbon credits. Platts is part of S&P Global Commodity Insights.

Despite the comparative cost advantages of blue hydrogen, the carbon capture element of the infrastructure could provide an additional barrier in scaling the industry.

Scaling up carbon capture and sequestration infrastructure in the U.S. requires a "durable, predictable, and sustainable" regulatory environment, including permitting and fiscal stimulus in the early stages of projects, said Chris Powers, Vice-President of CCUS at Chevron.

Creating this environment means more advocacy from the industry, said Laurie Fitzmaurice, President at Drax Group-owned Elimini. She emphasized that CO₂ pipelines and well injections have been parts of the incumbent gas and chemical industries "for a long time.""We need to do a better job of explaining and speaking to communities and speaking to the public practice," Fitzmaurice said. "I think that is our responsibility."