Clean hydrogen is losing momentum in the U.S. because of higher costs, new tariffs and policy uncertainty, BloombergNEF analyst Payal Kaur said at a California Energy Commission workshop on firm zero-carbon resources July 29.

The U.S. has approved tax credits and grants for hydrogen production, but it’s taking longer for those incentives to come to fruition, Kaur said. There also has not been much progress in creating pipelines and storage for clean hydrogen, she said.

“It’s harder to get final investment decisions for these projects because of the uncertainty in the policy environment and lack of demand,” Kaur said.

Kaur said she expects the One Big Beautiful Bill Act to boost the production of blue hydrogen — splitting hydrogen from methane and capturing the carbon — but that the law “takes a jab at green hydrogen” — split from water using renewable energy.

President Donald Trump’s tariffs could also increase the cost to produce green hydrogen in the U.S. by 14%, Kaur said.

“Having tariffs is going to increase your levelized cost of green hydrogen. You’ll see additional costs in your electrolyzer equipment, solar and wind equipment, and other factors,” Kaur said.

The U.S. has announced plans to supply about 15 million metric tons of clean hydrogen per year, amounting to 1.2% of global supply, Kaur said. About 11.7 MMT will be blue and 3.8 MMT green. Currently, blue hydrogen is about 50% cheaper to produce than green, Kaur said.

In California, officials have announced plans to build infrastructure to produce about 1.1 MMT of green hydrogen per year, the fourth most out of all states. Louisiana has announced the most green hydrogen production, about 4.5 MMT per year.

The dim outlook for hydrogen fuel also applies to California’s transportation sector, where the price of hydrogen increased from about $15/kg in 2022 to more than $35/kg in 2024. (See Report: Hydrogen Transportation Future Down Significantly in California.)

Data Center Power Requests

At the CEC’s workshop, commissioners also heard from city and energy company representatives about the state’s integrated energy policy report, specifically how data centers are impacting future procurement plans.

Mandip Samra, general manager of Burbank Water and Power, told commissioners that data center developers are suddenly interested in building projects in the city because of its reliable, low-cost supply of electricity.

The utility did not include data centers in its load forecasts in 2023, but since then, “we’ve had a lot of data centers come to us because Burbank has a lot of reliability. We’re actually one of the highest reliability areas in the state and top 5% in the nation,” Samra said.

Sustainability was ranked last in importance in surveys submitted from stakeholder groups to the utility, Samra said.

Kent Leacock, senior director of public affairs for Mainspring Energy, told commissioners that his company is working with a rural community in the Midwest to help bring a new data center online there. The project is in development and is a combination of providing immediate power and allowing for data center load growth in the region.

The rural community could not meet the load demand of the new data center, so it decided to hire Mainspring to supply about 30 MW, Leacock said. The company builds linear generators, which supply power by releasing electrons out of copper coils.

“As you are all probably aware, with data centers, time is of the essence,” Leacock said. “You’re falling behind if you’re a month behind energizing your data center.”