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U.S Department of Energy Releases Updated Report on Pathways to Commercial Liftoff for Clean Hydrogen

The U.S. Department of Energy (DOE) recently released its latest Pathways to Commercial Liftoff report, an update to the Pathways to Commercial Liftoff: Clean Hydrogen report, which was first released in March 2023 at the of the Liftoff effort.

Loan Programs Office

January 16, 2025

The U.S. Department of Energy (DOE) recently released its latest Pathways to Commercial Liftoff report, an update to the Pathways to Commercial Liftoff: Clean Hydrogen report, which was first released in March 2023 at the of the Liftoff effort.

The U.S. clean hydrogen market is poised for rapid growth, accelerated by historic commitments like the Infrastructure Investment and Jobs Act’s Regional Clean Hydrogen Hubs, the Inflation Reduction Act’s Clean Hydrogen Production Tax Credit (45V), and DOE’s ongoing programs for research, development, demonstration, and deployment of clean hydrogen technologies. The Loan Programs Office’s investment activity supports at-scale clean hydrogen deployment, including a $1.04 billion conditional commitment to a natural gas pyrolysis project with Monolith, a $504.4 million loan guarantee to an electrolysis and energy storage facility with Mitsubishi Power Americas, Magnum Development, and Haddington Ventures, and a $1.66 billion loan guarantee to finance up to six electrolysis projects nationwide with Plug Power–the latter of which was just announced today. 

The newly updated Pathways to Commercial Liftoff: Clean Hydrogen report complements these efforts by addressing four major updates since the original report that will impact the timing of Liftoff.* 

 

Update (from 2023)Context

The U.S. is on track to reach 7-9 MMTpa in operational production capacity by 2030.

 

  • Over the last year, total announced clean hydrogen production capacity has increased 26% to 14 million metric tons per annum (MMTpa) based on private sector announcements. This increase does not include the additional 3 MMTpa target capacity from DOE’s Regional Clean Hydrogen Hubs (H2Hubs). 
  • Few projects have advanced to FID due to increased production costs, anticipation of the final rule for the Inflation Reduction Act’s 45V Tax Credit (45V), which the Treasury Department and IRS issued at the beginning of 2025, and lack of offtake agreements. As a result, 7-9 MMTpa of announced capacity is forecasted to come online by 2030.
Developers face higher production cost estimates due to higher electricity prices, installation costs, and cost of capital. Tax credits like 45V or 45Q can help offset some or all of these increases. 
  • Electrolytic hydrogen production cost estimates have increased to $5-7/kg—exclusive of 45V tax credits. 
  • Low-carbon reformation-based hydrogen production cost estimates have increased to $1.8-2.2/kg—exclusive of 45V and 45Q tax credits.
 Industrial sectors continue to pull near-term demand, although an increasing number of projects will service export markets. Starting in 2030, new end-use applications will emerge.
  • Low-carbon reformation projects can target large, industrial offtakers in the chemicals and refining spaces, which currently utilize 10 MMTpa of unabated fossil-based hydrogen in the United States.
  • Electrolysis projects can target emerging applications in which end users might have a higher willingness to pay or can stack additional incentives. These applications include clean fuels in states or countries with low-carbon fuel standards. 
  • Export markets with demand subsidies could also play an increasingly important role in clean hydrogen production scale-up.
Promising clean hydrogen production technologies continue to develop, like methane pyrolysis and drilling for geologic hydrogen. 
  • These new pathways will play a meaningful role in the commercial liftoff of clean hydrogen in the years ahead, although their production costs and carbon intensities are still to be determined.

 

This update marks the fifteenth installment in the Department of Energy’s Pathways to Commercial Liftoff series. The Liftoff series combines best-available data from across DOE other federal agencies with on-the-ground insight and realities from the private sector to develop a roadmap for how and when transformative clean energy technologies can reach full-scale deployment. These reports serve as “living documents.” This update serves as an analytical refresh of the original Clean Hydrogen Liftoff report, published in March 2023.

DOE develops its Pathways to Commercial Liftoff reports with extensive stakeholder engagement and system modeling. DOE continues to solicit input through industry forums, requests for information, and regular interaction in the context of our authorities; direct public input can be submitted via email to [email protected]. Discover more information about the reports here.

 

* The analysis in this report was completed following the publication of the Notice of Proposed Rulemaking (NPRM) for 45V, but prior to the publication of the final rules, which were issued by the United States Treasury Department and Internal Revenue Service on January 3, 2025.