US Dithering on Hydrogen Gives Foreign Investment a Way In

America’s nascent green hydrogen is getting a boost from an unlikely source. 

On Wednesday the Abu Dhabi National Oil Company (ADNOC) signed a deal with Exxon to buy a 35% share of a new hydrogen plant just outside Houston, Texas. The United Arab Emirates is more famous for its fossil fuel industry than its interest in green energies, but a stalled US hydrogen industry has created an investment vacuum where foreign investment can rush in.

We’re No. 1

Hydrogen generation is a relatively small, but growing, part of the green transition. Hydrogen can be produced during both fossil fuel and renewable energy production, and helps to decarbonize particularly dirty sectors like transport and steel production, per the International Energy Agency. The Biden administration tried to give the industry a jumpstart in 2022 with incentives under the Inflation Reduction Act, but according to a Bloomberg report last month, exactly who benefits from those incentives has been a battle of the bureaucrats. With a potential change in administration looming over next year, that’s put a lot of US hydrogen projects into hypersleep.

Abu Dhabi has Exxon’s Houston project up and at ‘em, but uncertainty hasn’t fully left the equation:

• In a statement to the Financial Times, Exxon said the cash injection from ADNOC was “contingent on supportive government policy and necessary regulatory permits.” The investment won’t be set in stone until next year.
• An ADNOC executive told the FT the company was pushing ahead on the assumption that the political climate in America will remain clement toward clean energy collaborations with the UAE.

Winds of Change: Across the Atlantic, the UK has managed to turn the tide on renewable investment. Whereas last year the UK attracted exactly zero bids for renewable energy state subsidies, this year it managed to nab 131 contracts, making it the biggest-ever round of contracts awarded. It’s a nice bit of PR for Prime Minister Keir Starmer’s Labour Party, although the Financial Times noted it wasn’t quite enough to put the country on track for its 2030 offshore wind targets.