A billion-dollar, taxpayer-funded enterprise to kickstart a clean hydrogen industry in the Pacific Northwest took another hit due to energy companies getting cold feet.

Portland General Electric and its partner Mitsubishi Power have quietly shelved a planned hydrogen production, storage and hydrogen-fueled generation complex near Boardman, Oregon.

“Given the exit of an essential project partner in June, along with challenging project economics for utility customers and federal policy changes, PGE is no longer pursuing” the hydrogen complex, PGE spokesman Drew Hanson said via email.

The cancellation comes at a dicey time for the tri-state Pacific Northwest Hydrogen Hub, the ringleader that is channeling federal money to projects in the region. The U.S. Energy Department is scrutinizing clean energy programs and initiatives launched under the Biden administration, including the Northwest hub. Energy Secretary Chris Wright said he is ready to terminate funding for projects that he deems “a bridge to nowhere.”

Elected officials from across the political spectrum in the Northwest have defended low-emissions hydrogen as a promising means to create new jobs and meet climate goals, particularly in sectors that are proving difficult to convert directly to clean electric power.

“We have several new projects in the pipeline that we’re excited to share more on soon,” spokesperson Kaitlin Sheppard said in an emailed statement on behalf of the Northwest hydrogen hub. “PNWH2 continues to evaluate additional project interest and remains focused on supporting a broad, resilient regional hydrogen ecosystem with the potential to deliver lasting economic value to Oregon and the greater Pacific Northwest.”

The PGE and Mitsubishi Power pullback follows in the wake of the scrapping of a different hydrogen factory in Centralia, Washington, proposed by Fortescue, which was to be one of the primary producers of the alternative fuel within the regional clean energy hub. Another founding partner in the PNWH2 Hub, Seattle-based developer of hydrogen-powered mining trucks First Mode, declared bankruptcy last December.

PGE’s pivot calls into question what will happen at the nearby Port of Morrow, where Air Liquide planned to build a hydrogen liquefaction plant to support distribution of clean hydrogen to urban fueling stations and the ports of Seattle and Tacoma. PGE and Mitsubishi were supposed to supply the gaseous hydrogen to Air Liquide via a short pipeline from the site of PGE’s demolished coal power plant outside Boardman.

Air Liquide acknowledged a request for comment, but a spokesperson declined to shed more light about where things are headed now.

The Pacific Northwest Hydrogen Hub said in its emailed statement that “project adjustments were expected and planned for” in the early development phase of the nascent industry. The pullback in this region tracks with what is happening elsewhere.

Brand name corporations — such as Shell, BP and Airbus — and lesser-known startups around the world are scaling back their hydrogen ambitions. Commonly cited reasons include a slower-than-anticipated emergence of customer demand and stubbornly high costs to produce green hydrogen.

The developers behind the two remaining large-scale projects in the Northwest hydrogen hub are pressing ahead. Switzerland-based Atlas Agro plans to build a $1.5 billion green fertilizer factory near Richland, Washington, for which hydrogen produced on site will be a key ingredient. Meanwhile, Calgary-based AltaGas has a costly plan to redevelop the closed Alcoa aluminum smelter near Ferndale, Washington, to produce climate-friendly hydrogen for refinery use, transportation fuel and possibly power generation.

Crucially, Atlas Agro and AltaGas need to secure large volumes of affordable renewable electricity for the energy-intensive process of making hydrogen. The green fertilizer plant reportedly needs around 300 megawatts of power, which is a bigger load than all of the rest of Richland combined.

AltaGas estimated last year that it needs about 265 megawatts of electricity to achieve its maximum production target at Ferndale. Neither company has confirmed they have a power supply contract amid rising competition for sources of renewable electricity.

“The success of this project is contingent on regulatory and financial incentive certainty, timely approvals, and a clear and predictable path forward from government and commercial partners,” said Andrea McNamara Doyle, Washington state external affairs manager for AltaGas, in an emailed statement.

The Pacific Northwest Hydrogen Hub game plan envisions that producers will make “green” hydrogen exclusively by splitting water molecules with an electric current. This process (known as electrolysis) must use renewable electricity for the resulting hydrogen to be considered green.

Hydrogen sector dependent on uncertain government support

A year ago, the Pacific NW hub collected the first installment from its potentially $1 billion federal allocation. That $27.5 million in initial funding through the Energy Department partially passed through to participating companies and to Washington State University to begin site planning and community outreach.

Under the original program terms, another tranche of funding would come 12-18 months after the first to subsidize developer permitting and engineering. A third tranche could underwrite the construction phase for multiple years, before a possible final shot of money comes to subsidize production ramp up. In all, the hub could pass through federal subsidies to its participants for 8-12 years.

But this past May, Wright, President Donald Trump’s energy secretary, announced a department-wide review of grant programs to root out “wasteful spending of taxpayer dollars.” Wright expressed skepticism about government support to scale up clean hydrogen.

“Hydrogen, it’s tough with the math to see how in the long term it becomes a meaningful commercial energy source,” Wright told senators at a budget hearing in front of the Senate Energy Committee in June, during which Sen. Maria Cantwell, D-Washington, pressed him to state his position on the hydrogen hubs.

“It’s expensive to produce, but there are high value uses,” Wright went on to say about hydrogen. He predicted the agency will continue funding some projects under review, modify others and terminate the “low-value” ones.

Cantwell responded that the Northwest’s renewable hydropower made her region a good place to make hydrogen for hard-to-decarbonize sectors.

A spokesperson at Energy Department headquarters confirmed this past week that the program vetting was ongoing, but declined to estimate when the results will become known.

Democrats in the U.S. Senate preemptively wrote a joint letter to Wright in April asserting it would be illegal for the Trump administration to unilaterally cancel Congressionally-approved spending on clean energy projects. Oregon’s Ron Wyden and Jeff Merkley and Washington’s Patty Murray and Cantwell signed on.

“Our Constitution gives Congress the power of the purse and exclusive power to appropriate funds,” the 27 senators wrote. “In this instance, where Congress has authorized and appropriated funds for programs that support clean energy projects, the Department must faithfully execute the law and expend the funds for the purposes provided.”

If the PNWH2 Hub survives the Energy Department vetting, the pressure will still be on. Earlier this year, the Republican-controlled Congress shortened the window for companies to get lucrative tax incentives that were created in the 2022 Biden climate and clean energy package.

Private developers now have until the end of 2027 to begin construction on a hydrogen plant in order to qualify for production tax credits. The deadline was previously 2033. Clean hydrogen producers strive to qualify for the tax credit in order to lower the otherwise high retail price of the fuel.

“Under current federal and state permitting regimes, this accelerated timeline may jeopardize our eligibility for the tax credit, which is essential for achieving positive project returns, and we are evaluating our ability to meet the new timelines,” said Doyle from AltaGas.

Oregon Capital Chronicle reporter Alex Baumhardt contributed to this story.

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News Source : https://www.opb.org/article/2025/09/05/oregon-boardman-hydrogen-developer-regional-clean-energy-project/