Paul Rodden • Season: 2025 • Episode: 396
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Welcome to The Hydrogen Podcast!
Green hydrogen has hit roadblocks—high costs, infrastructure delays, and supply chain issues have led to major project cancellations. But does this mean hydrogen’s future is in jeopardy? Not so fast. In this episode of The Hydrogen Podcast, I break down:
✅ Why green hydrogen costs remain high ($4–$6/kg vs. $1–$2/kg for gray/blue hydrogen)
✅ Recent green hydrogen project cancellations—Air Products, SAF production & more
✅ Regions where green hydrogen still makes sense (Australia, Spain, North Africa, Middle East)
✅ Low-cost hydrogen alternatives: Blue hydrogen, natural (geologic) hydrogen, and hybrid models
✅ Plug Power’s Louisiana plant and how it fits into the U.S. hydrogen infrastructure
✅ What needs to happen for green hydrogen to scale economically
🌍 The hydrogen industry is at a turning point. While green hydrogen faces challenges, low-cost hydrogen alternatives are building momentum. What does this mean for the future of clean hydrogen? Let’s discuss.
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Respectfully,
Paul Rodden
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Transcript:
Green hydrogen has been positioned as a key solution for decarbonizing industries, but recent project cancellations highlight the economic and technical challenges it faces. High production costs, supply chain constraints, and infrastructure gaps have slowed deployment, prompting a reevaluation of how best to scale the hydrogen economy. While setbacks have raised concerns, they also present an opportunity to refine strategies, focusing on geographic regions where green hydrogen is viable today while leveraging lower-cost low-carbon hydrogen to accelerate market growth. In this episode, I’ll break down the latest industry developments, examine where green hydrogen makes the most economic sense, and explore how other hydrogen pathways can build momentum in the near term. All of this on today’s Hydrogen Podcast
The Current State of Green Hydrogen: Economic and Technical Realities
Green hydrogen has long been heralded as the cornerstone of a future clean energy economy. Unlike conventional hydrogen, which is primarily produced using hydrocarbons through steam methane reforming (SMR), green hydrogen is derived from water electrolysis powered by renewable energy sources such as wind, solar, or hydropower. This process eliminates carbon emissions, making it the most environmentally sustainable form of hydrogen production. However, despite its promise, the economic and technical barriers to large-scale deployment remain formidable.
The most pressing challenge facing green hydrogen is cost. The price of producing green hydrogen varies significantly based on local electricity prices, electrolyzer efficiency, and operational factors. At present, the global average cost of green hydrogen production falls between $4 and $6 per kilogram, with some regions experiencing even higher costs due to expensive electricity or supply chain constraints. In comparison, traditional hydrogen production using SMR—without carbon capture—ranges from $1 to $2 per kilogram, making it the dominant production method today. Even blue hydrogen, which integrates carbon capture technology to reduce emissions, remains significantly cheaper at $1.50 to $2.50 per kilogram in regions with available carbon storage infrastructure.
Electricity accounts for the majority of green hydrogen’s production cost. Electrolysis is an energy-intensive process, requiring between 50 and 60 kilowatt-hours (kWh) of electricity per kilogram of hydrogen produced. Given that industrial-scale electricity prices typically range from $30 to $60 per megawatt-hour (MWh) in many parts of the world, the electricity cost alone can contribute between $1.50 and $3.50 per kilogram of hydrogen, before even factoring in capital expenditures, operational costs, and water supply. In some cases, where electricity prices are particularly high—such as in parts of Europe—this cost can rise even further, rendering green hydrogen economically unviable without substantial subsidies.
The cost of electrolyzer technology itself is another significant hurdle. Proton exchange membrane (PEM) and alkaline electrolyzers, the two leading technologies in green hydrogen production, remain expensive due to material costs and manufacturing limitations. Current capital costs for electrolyzers range from $900 to $1,200 per kilowatt, with the expectation that economies of scale and technological advancements will drive these prices lower in the coming years. However, as of today, high upfront investment requirements continue to hinder rapid deployment.
Furthermore, supply chain disruptions have exacerbated project costs and timelines. Critical components such as iridium, which is used in PEM electrolyzers, are not only expensive but also in limited supply, creating concerns over long-term scalability. Delays in electrolyzer manufacturing and shipping have slowed the commissioning of many green hydrogen projects, further compounding financial risks for investors.
Infrastructure is another major barrier. Unlike conventional hydrogen production, which is often co-located with industrial consumers, large-scale green hydrogen projects require extensive infrastructure development, including new hydrogen pipelines, storage facilities, and distribution networks. While some regions, such as Europe and the U.S. Gulf Coast, are making strides in hydrogen infrastructure planning, many areas still lack the necessary transport and storage solutions to support widespread green hydrogen deployment.
The uncertainty surrounding government policies and incentives adds another layer of complexity. In the United States, the Inflation Reduction Act introduced a $3 per kilogram production tax credit for clean hydrogen, which could significantly improve green hydrogen’s cost competitiveness. However, the final implementation details of the tax credit, particularly regarding strict carbon intensity requirements, remain unclear, causing some developers to hesitate before committing to large-scale investments. In Europe, the EU’s Green Hydrogen Strategy provides subsidies and funding support, but regulatory uncertainties continue to pose risks to long-term financial planning.
These economic and technical challenges have led to a series of setbacks for high-profile green hydrogen projects. Recently, Air Products, one of the world’s largest industrial gas companies, canceled a $500 million green hydrogen project in Massena, New York, citing unfavorable market conditions. Similarly, the company withdrew from a major green hydrogen project in California that was intended to supply sustainable aviation fuel (SAF) production. Other projects worldwide have been delayed or downsized, with developers opting to wait for further cost declines before moving forward.
While these setbacks may appear discouraging, they reflect a natural phase in the energy transition. The initial stages of any new energy technology are typically expensive, requiring strategic government support and industry collaboration to drive down costs over time. Green hydrogen remains a crucial part of the long-term decarbonization strategy, but its economic challenges underscore the importance of adopting a diversified approach to hydrogen production in the near term.
Despite the current hurdles, green hydrogen is still expected to become cost-competitive with conventional hydrogen in the coming decades. The International Energy Agency (IEA) projects that with continued technological advancements, electrolyzer costs could fall by 50% by 2030, and renewable electricity prices could continue their downward trend. If these projections hold, green hydrogen could reach a cost parity of around $1.50 to $2.50 per kilogram in optimal regions by the early 2030s.
Geographic Regions Where Green Hydrogen Remains Viable
Despite these challenges, certain regions around the world remain well-positioned to develop green hydrogen successfully. The key to economic viability lies in access to low-cost renewable energy, favorable policy environments, and industrial demand that can provide immediate offtake for hydrogen production.
Australia is one of the most promising locations for green hydrogen development. With some of the world’s lowest solar and wind energy costs, Australia has the potential to produce green hydrogen at highly competitive prices. Estimates suggest that production costs could fall below $2 per kilogram in some areas. The Australian government has committed billions of dollars in funding to support hydrogen hubs, and several major projects, such as the Asian Renewable Energy Hub, are moving forward.
Spain and Portugal are also emerging as green hydrogen leaders due to their abundant solar and wind resources. Both countries have launched ambitious hydrogen roadmaps, with Portugal targeting green hydrogen production costs as low as $1.50 per kilogram by 2030. Spain’s HyDeal España initiative is another significant project, aiming to integrate renewable hydrogen into industrial supply chains, particularly in steel manufacturing.
North Africa, particularly Algeria, presents another intriguing opportunity. The region’s high solar irradiance makes it an ideal location for large-scale solar-powered electrolysis. Additionally, Algeria’s proximity to Europe positions it as a potential hydrogen exporter, supplying clean hydrogen to industrial centers in Germany, France, and the Netherlands. However, infrastructure challenges, including water availability and pipeline development, must be addressed before large-scale hydrogen exports become feasible.
Saudi Arabia and the UAE are leveraging their low-cost solar energy to develop competitive green hydrogen production. Saudi Arabia’s $5 billion NEOM hydrogen project, expected to produce 650 tons of green hydrogen per day using 4 gigawatts of renewable power, is one of the most ambitious projects in the world. The UAE is also investing heavily in hydrogen, with plans to become a global hydrogen export hub.
Low-Cost Low-Carbon Hydrogen Alternatives
While green hydrogen remains the long-term goal, alternative low-carbon hydrogen production methods are gaining traction due to their ability to scale more quickly and cost-effectively.
Blue hydrogen, produced through SMR with carbon capture and storage (CCS), has gained momentum as a transitional solution. The U.S. Gulf Coast has emerged as a leading hub for blue hydrogen, benefiting from extensive natural gas infrastructure and existing CCS projects. Companies like ExxonMobil and Air Products are investing billions into blue hydrogen projects, which can supply industrial customers while reducing emissions.
Geologic, or white, hydrogen represents a potentially game-changing development. Naturally occurring hydrogen reservoirs have been discovered in regions such as the central U.S., Canada, and Africa. If extraction methods prove cost-effective, geologic hydrogen could provide a naturally replenishing, low-emission hydrogen source. Companies like Koloma, backed by Bill Gates’ Breakthrough Energy Ventures, are actively exploring these opportunities.
The Role of Plug Power’s Louisiana Hydrogen Plant
Amid these broader industry developments, Plug Power’s new hydrogen plant in St. Gabriel, Louisiana, represents a significant step forward. This facility, capable of producing 15 tons of hydrogen per day, utilizes byproduct hydrogen from Olin Corporation’s chlorine production process, reducing costs and minimizing waste.
Louisiana’s existing infrastructure makes it an ideal location for hydrogen production. The state already has a robust pipeline network, industrial demand from refineries and petrochemical plants, and access to export markets via the Gulf Coast. Plug Power’s investment underscores the importance of leveraging existing assets to accelerate hydrogen deployment while green hydrogen costs continue to decline.
Conclusion: A Pragmatic Path Forward
The hydrogen industry is evolving rapidly, balancing ambitious long-term goals with practical near-term solutions. While green hydrogen faces financial and technical barriers, certain regions remain well-positioned for early adoption. Meanwhile, low-carbon alternatives such as blue hydrogen and geologic hydrogen are helping to build the hydrogen economy. Strategic investments, such as Plug Power’s Louisiana plant, demonstrate how industry players can navigate current challenges while laying the groundwork for future growth.
Alright, that’s it for me, everyone. If you have a second, I would really appreciate it if you could leave a good review on whatever platform you listen to. Apple podcasts, Spotify, Google, YouTube, etc. That would be a tremendous help to the show. And as always if you ever have any feedback, you are welcome to email me directly at info@thehydrogepodcast.com. So until next time, keep your eyes up and honor one another.
