From Subsidies to Survival: Hydrogen’s Next Chapter

DOE ends $7.56B in grants, leaving hydrogen hubs to seek private capital and demand-based models

2 Oct 2025

The US hydrogen industry faces a major test after the Department of Energy cancelled $7.56bn in clean-energy grants across 223 projects this week, leaving regional hubs in California, the Pacific Northwest and the Gulf Coast without federal backing. Analysts say the move may accelerate a shift toward projects tied more closely to market demand.

Large-scale hydrogen plants, storage systems and transport networks have relied heavily on government support. Without it, companies will need to secure stronger commitments from end-users in chemicals, refining and export markets. Industry observers note this could result in a more commercially disciplined sector, with only the most viable projects advancing.

Several companies have already responded. Air Products emphasised that its investments would prioritise projects with firm customer demand. BASF withdrew from a Gulf Coast ammonia initiative, citing the need for greater market certainty. California’s ARCHES hub has said it intends to appeal the DOE decision while also considering alternative financing to sustain its programme.

Supporters of the cuts argue that moving away from subsidies will strengthen the sector’s long-term competitiveness. Critics, however, warn that the US could lose ground to Europe and Asia, where public funding remains substantial. Analysts suggest the new conditions may sharpen US projects by fostering efficiency, partnerships and more disciplined use of capital.

“This is a wake-up call,” said one industry analyst. “Hydrogen must show it can compete as a real-world energy solution, not just a subsidized one.”

While near-term disruptions are expected, longer-term prospects may favour companies with deep industrial ties and access to private capital. Some experts view the shift not as a retreat from government involvement but as a transition toward a market-driven phase, potentially shaping the next stage of America’s clean-energy development.