California continues push for hydrogen after federal funding cuts

from Alejandro LazoCalMatters

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Los Angeles’ Scattergood Generating Station is a natural gas-burning oceanfront relic that’s on the precarious edge of a collision with clean energy.

On Tuesday, the Los Angeles Board of Water and Power Commissioners will decide whether to move forward with a plan to switch the plant to futuristic hydrogen-ready turbines. The more than $800 million upgrade is a mainstay in California’s efforts to boost hydrogen, a potentially clean fuel that for now remains expensive, water-intensive and rarely produced without oil and gas.

But California’s high hopes for hydrogen — and the state’s investment in it as a potential economic driver in the clean energy era — are at a crossroads.

Earlier this month, the Trump administration canceled $1.2 billion in federal funding for the California Hydrogen Center, a public-private partnership to build a clean hydrogen economy and support projects like Scattergood. The move follows a decision earlier this summer to reduce federal tax credits nationwide for hydrogen.

California says it is moving forward with hydrogen projects, including Scattergood, with or without federal support.

“The state remains committed to developing a renewable hydrogen ecosystem,” said Willie Rudman, a spokesman for the Governor’s Office of Business and Economic Development, or GO-Biz, which led the creation of the hydrogen partnership. Clean hydrogen, Rudman added, “holds incredible potential as California continues its transition from fossil fuels to renewable energy.”

Critics say the optimism ignores real costs and trade-offs.

Bold investment, uncertain climate

California politicians have pursued hydrogen for decades, seeking environmental and economic benefits. In 2004, Governor Arnold Schwarzenegger launched a hydrogen-powered Hummer and ordered a “Hydrogen Highway” from gas stations.

The state’s latest bid — an ambitious hydrogen hub — was its boldest investment yet.

In 2022, Governor Gavin Newsom launched the Alliance for Renewable Clean Hydrogen Energy Systems, or ARCHES, a partnership led by GO-Biz, the University of California and the State Board of Building and Construction. It now counts more than four hundred partners from the public and private sectors, including Chevron and other energy companies.

Most hydrogen today comes from natural gas, a carbon-intensive process that undermines its climate appeal. Over time, ARCHES hopes to help industry replace this process with “green” hydrogen produced by renewable energy water splitting, an expensive and elusive process.

Newsom sees hydrogen as both climate and economic policy.

“Scaling this in California isn’t just about addressing the climate crisis — it’s about creating hundreds of thousands of jobs,” Newsom wrote in August 2023. He ordered his administration to develop a “whole-of-government strategy to develop the hydrogen market,” similar to what California has done for electric cars.

ARCHES won up to $1.2 billion in federal funding from the Department of Energy as part of a A total of 12.6 billion US hydrogen hub. The award put California at the center of the nation’s clean hydrogen ambitions — until the Trump administration abruptly withdrew funding on Oct. 1.

Newsom called the move political and “common sense be damned.” While California lost its funding, several hydrogen hubs in Republican-led states kept theirs. California appealed the decision.

State Senator Anna CaballeroDemocrat from Merced, who authored legislation speeding up approval of hydrogen projects last year, said she expects talks next session about using cap-and-trade funds to keep the hydrogen hub alive. Private and international investors, she added, continue to be interested in the California market.

“People in my area are looking for good jobs as we make this transition — and they’re looking for clean air — and hydrogen has the capacity to do all of the above,” Caballero said. “We have an opportunity and I’d like to see us explore it.”

Not everyone was disappointed by the loss of California funding. Some environmental groups, concerned about the promotion of fossil fuels and the potential for explosions, welcomed the federal repeal. Nonetheless, Los Angeles is moving forward with Scattergood, one of several projects that were part of the state’s initial hydrogen push.

Why LA is betting on hydrogen

Until a few weeks ago, ARCHES, the state’s hydrogen center, was expected to contribute at least $100 million to upgrade Scattergood.

“Our understanding is that the federal dollars are not coming in,” said Jason Rondu, assistant general manager of power planning and operations for the Los Angeles Department of Water and Power. “We don’t know yet if there will be another mechanism to offset that $100 million.”

Still, the nation’s largest municipal utility wants its board’s approval of Scattergood’s conversion, calling it a step toward the city’s goal of fossil-fuel-free energy by 2035 and a similar state goal, due a decade later.

Utility officials say the Scattergood upgrade is necessary because the aging gas turbines are inefficient, dirty and cooled with seawater, a process now prohibited by state policy because of its impact on marine life. The plan is to replace the old turbines with a new combined-cycle unit designed to burn a mixture of hydrogen and natural gas.

The aim is to make Scattergood more of a ‘peaking’ plant – one that can ramp up and down to meet spikes in demand, rather than running around the clock. But environmentalists are concerned about a project that runs on “green” hydrogen when it’s not readily available at scale. The upgrade will keep the plant running on natural gas, with LADWP retaining the option to blend with up to 30 percent hydrogen if the fuel becomes available and affordable.

“You’re spending a lot of money on technology that doesn’t exist right now,” said Julia Dowell, a Long Beach-based organizer with the Sierra Club, which is leading opposition to Scattergood’s plan. “We don’t really know when it’s going to happen — if it’s going to happen at all.”

For now, it’s a natural gas plant, said Dan Esposito, a hydrogen expert at the clean energy think tank Energy Innovation. “In a place with high local air pollution, in a place that has these high clean energy goals … should we build a new gas plant if there are other clean technologies that we can invest in that we have more certainty that we’re going to meet those clean energy goals? That’s a very difficult question.”

In a recent analysis, the city’s payer advocate said the financial setback “doesn’t close the door on clean hydrogen,” but it does raise questions about who ultimately pays for the project — and how the company will balance its clean energy goals with affordability.

The upcoming risks

Los Angeles Water and Power commissioners are likely to approve the Scattergood upgrade on Tuesday. The vote won’t start construction, but it will clear the way for the city’s water and power department to seek builders and finalize designs.

The decision also points to a tough question about California’s hydrogen strategy: Without federal support, are public agencies investing scarce climate dollars in the right places?

Scattergood’s environmental review drew nearly 100 comments from residents, neighboring towns and advocacy groups.

The city of El Segundo warned that emissions and construction traffic could spill over its borders. Business groups supported the plan as a source of jobs and grid reliability. Meanwhile, environmental groups have warned of harm both locally and beyond.

Building even a large hydrogen project like Scattergood means committing to an entire network of pipelines, storage and supplies.

“Investment in hydrogen comes with opportunity costs,” said Alex Jasset, director of energy justice at Physicians for Social Responsibility Los Angeles, which opposes the project. “We are throwing away many of our very limited resources to address the climate crisis in an inefficient, expensive option, when we could instead be investing in cheaper, more scalable, more immediate benefits.”

Jassett said infrastructure for hydrogen projects would be paid for primarily by Californians — through taxes, utility bills or state business fees. And if these projects fail, they risk extending fossil fuel infrastructure into neighborhoods already burdened by pollution.

Esposito, the analyst at Energy Innovation, says the Trump administration’s cancellation of the hydrogen hub award and the loss of federal credits could offer a silver lining.

“There was so much money on hydrogen and so much excitement that we were honestly at risk of making very bad decisions,” Esposito said. “There were all these proposals that were coming out that weren’t on a solid financial footing — and they needed these big subsidies — and then a lot of that money dried up overnight.”

As Los Angeles considers its capstone project, Esposito added, the state’s hydrogen accelerators are getting something essential: a reality check. The challenge now is whether that clarity can guide smarter investments—and a more sustainable path forward.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.