Exxon Mobil has pulled the plug on what would have been one of the world’s largest hydrogen plants, the latest setback for the effort to scale production of low-carbon versions of the fuel.
In 2022, the oil giant announced plans to build a facility at its refining and petrochemical complex in Baytown, Texas, with the capacity to produce 1 billion cubic feet per day of so-called blue hydrogen, which is made using natural gas and carbon-capture equipment. It won a nearly $332 million grant from the Biden administration’s Department of Energy to finance the project.
But the Trump administration yanked that funding this spring. Since blue hydrogen typically costs about one-third more than the “gray” version of the fuel made with unmitigated gas, Exxon Mobil CEO Darren Woods said the company could not find enough buyers willing to pay the premium.
“There’s been a continued challenge to establish committed customers who are willing to provide contracts for off-take,” Woods said in an interview with Reuters.
Exxon Mobil Corp. did not return Canary Media’s call Wednesday requesting comment.
The pullback highlights mounting problems for the clean hydrogen industry. Green hydrogen, the zero-carbon version of the fuel made with clean electricity and water, costs even more than the blue or gray types. In October, the Trump administration terminated federal funding for two regional hydrogen hubs on the West Coast that were meant to help bring down the cost of the green fuel. Blue hydrogen, in theory, was seen as less politically vulnerable since its production ensures a market for gas. But that, too, now appears to be running into similar problems.
“Exxon’s decision reflects a broader reality: Large-scale hydrogen projects depend on long-term market signals, stable policy environments, and customers ready to commit,” said Roxana Bekemohammadi, the founder and executive director of the United States Hydrogen Alliance, an industry group. “These dynamics take time to mature.”
But it’s not just the Energy Department’s decision to shutter its Industrial Demonstrations Program, which had given Exxon Mobil the grant, and the cuts to the 45V federal tax credits, which support low-carbon hydrogen production, that have put the industry on shaky ground.
Trump administration moves have also undermined demand for low-carbon hydrogen. In October, the U.S. government thwarted an effort at the United Nations’ International Maritime Organization to put a price on carbon emissions from the shipping sector, pressuring foreign delegates to back off a proposal that would have expanded the market for low-carbon hydrogen.
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