Blue hydrogen investment will surge in US in 2025 as green H2 opportunities shrink, says analyst

Blue hydrogen investment will surge in US in 2025 as green H2 opportunities shrink, says analyst

Trump's America will become the world’s leading blue H2 producer while a substantial number of renewable H2 will get cancelled, predicts WoodMac

President-elect Donald Trump.

President-elect Donald Trump.Photo: Getty

Leigh Collins

Editor, Hydrogen Insight

Published 13 December 2024, 16:55

Investment in the US blue hydrogen sector will surge in 2025, with at least three large-scale projects reaching final investment decision (FID), according to analyst Wood Mackenzie.

At the same time, the green hydrogen sector will face “significant headwinds” and shrinking opportunities next year, with “a substantial uptick in [project] cancellations”.

“In 2025, the US hydrogen market will consolidate its position as a blue-focused market, driven by policy developments under a Trump administration, the analyst states in a new report.

“We predict that blue hydrogen investment will see a surge, with at least three large-scale blue hydrogen projects reaching FID, totalling over 1.5 Mtpa [million tonnes per annum] in capacity,” it says, adding that this will be ten times higher than FIDs for green hydrogen.

“This would cement the US — which is already home to more post-FID blue hydrogen capacity than any other country — as the world’s leading blue hydrogen producer.”

The report, entitled Hydrogen: 5 things to look for in 2025, adds that this “belief is based on the expectation of continued support for the 45Q tax credit”, which offers $85 per tonne of CO2 captured and stored and “has strong backing from the oil and gas sector”.

“this support will help the financial viability of blue hydrogen projects, promoting domestic uptake, and preserving the US’ advantaged position to export blue hydrogen as global demand rises in markets like Japan and Europe,” the eight-page report continues.

“On the other hand, we predict that green hydrogen development will face significant headwinds in 2025, with FIDs continuing to disappoint.”

This is based on expectations that the incoming Trump administration will not champion decarbonisation technologies; the uncertainties caused by the US Supreme Court’s recent overturning of the Chevron Deference — a previously established legal principle that judges should broadly defer to government agencies’ decisions; and the fact that long interconnection queues will mean new renewables projects will struggle to get a grid connection.