The Heartland Hydrogen Hub project, aimed at producing clean hydrogen for low-carbon nitrogen fertilizer, is currently stalled due to shifting federal priorities and a lack of new contracts. According to John Harju, vice president for Strategic Partnerships at the University of North Dakota Energy and Environmental Research Center (EERC), this development has put the initiative in limbo, raising concerns about its future viability.
The hub is one of seven proposed across the United States. In October 2023, the U.S. Department of Energy (DOE) canceled $2.2 billion in funding for two West Coast hubs designed to produce hydrogen with clean energy. While it remains unclear if the five remaining hubs will be affected, the uncertainty surrounding federal support has raised significant concerns for the North Dakota project.
Central to the issue is a divergence in policies between the DOE and the U.S. Department of the Treasury, particularly regarding the 45V tax credit, which is intended to support hydrogen production initiatives. Draft guidance released in December 2023 introduced three key criteria—temporal matching, incrementality/additionality, and deliverability—that have resulted in disincentives for planned projects. Harju highlighted the pervasive climate of uncertainty, stating, “There’s a lot of consternation regarding policy and with that, a lot of the capital is sitting on the sidelines, trying to decide where it should or shouldn’t go.”
The situation worsened when Marathon Petroleum, a major partner in the project, withdrew in July 2024, largely due to financial uncertainties stemming from the new guidelines. This withdrawal jeopardizes a planned $2.5 billion facility, which was expected to receive around $400 million in funding. Additionally, the eligibility of Xcel Energy’s nuclear facility and a constrained wind farm in South Dakota for the tax credit remains uncertain, further complicating the funding landscape.
The ongoing ambiguity about tax credit guidelines has also made it difficult to secure commitments from commercial clients, hampering progress. Compounding these challenges, the Office of Clean Energy Demonstrations (OCED), which administers the hydrogen hub program, has experienced a reorganization, leading to turnover among key personnel and uncertainty about the office’s future. This has resulted in delays for projects that have already been awarded funding.
The Infrastructure Investment and Jobs Act, passed in November 2021, was built upon the Energy Policy Act of 2020, which set the stage for creating hydrogen hubs as part of a national effort to reduce greenhouse gas emissions. Harju explained that while the Energy Policy Act authorized substantial funding, it did not immediately allocate resources. Each year, Congress determines actual funding levels based on various factors, including economic priorities.
In response to the federal initiatives, the EERC began collaborating with partners in 2022. In September of that year, the DOE released a Federal Opportunity Announcement, inviting concept papers for hydrogen hub proposals. The Infrastructure and Jobs Act mandated at least four such hubs across the country, each focusing on different energy sources, including nuclear, green energy, and natural gas.
By October 2022, North Dakota’s then-Governor Doug Burgum, along with the governors of Minnesota, Wisconsin, and Montana, signed a memorandum of understanding to collaborate on the hub proposal, with the EERC leading the effort. The concept paper was submitted to the DOE in November 2022, and following encouragement from the department, a full proposal was developed, submitted in April 2023.
In August 2023, the EERC was invited for a day-long interview with DOE officials, and by October 2023, it received notification that it had been selected for an award. However, the subsequent draft guidance in December introduced complications that Harju described as a disconnect between the grand vision and the detailed execution necessary for success.
As the 2024 presidential election approached, the lack of final guidance regarding the 45A tax credit posed further challenges for securing commercial commitments. In January 2025, the OCED awarded the Heartland Hydrogen Hub $20 million, part of a potential $925 million federal cost share, to initiate Phase 1 activities, which include planning, design, and community engagement.
Despite these setbacks, Harju remains optimistic about the project’s potential. The EERC is actively pursuing alternative projects that align with regional strengths, such as leveraging North Dakota’s abundant natural gas for hydrogen production and decarbonizing the steel industry in Minnesota. Nonetheless, he cautioned that the “clock is ticking” on getting projects under construction, emphasizing that clarity from the federal government is crucial for overcoming the current hurdles.
U.S. Senator John Hoeven has pledged to work alongside the EERC to optimize resource use and secure the future of energy production in North Dakota, while U.S. Senator Kevin Cramer noted the establishment of an appeals process for hydrogen hub projects facing funding cuts. However, the Heartland Hydrogen Hub has not received official notification regarding its status in this process, underscoring the ongoing uncertainty surrounding its future.
As the EERC continues to navigate these challenges, the need for a cohesive federal strategy on hydrogen production remains paramount for the project’s success and for advancing the broader goals of clean energy innovation.