Building From the Ashes: Lessons From the Hydrogen Fiasco

A year ago, ITIF published an extended analysis of green hydrogen, a technology that has been touted as the “Swiss Army Knife” of clean energy, helping to decarbonize heavy trucks, light vehicles, cement, aviation and much more. We reviewed the $8 billion to be spent on “hydrogen hubs,” and the even larger sums for production and investment tax credits in pursuit of a new hydrogen-driven clean energy economy.

We concluded that hydrogen was essentially a mirage; that none of these markets offered real opportunity, and that the disastrous economics of green hydrogen (based on basic physical laws and the normal operation of energy markets) made green hydrogen simply impractical, at least for a long while.

An updated review of the landscape for mobility shows that our pessimism was fully justified. Mobility has been touted as the lead market for hydrogen. It is now in ruins.

• Heavy-Duty Vehicles: perpetual pilots, no scale. Heavy trucks were theprimary market for most proposed hydrogen hubs (in the United States and elsewhere). But after a decade of pilot projects, commercial deployment is in ruins. Nikola, the hydrogen truck pioneer once valued at $30 billion, is bankrupt after delivering only a handful of trucks. Other high visibility startups have also failed – Hyzon Motors, Quantron, and Hyvia. Hyundai's XCIENT fuel cell truck pilot in Switzerland has been canceled. The Toyota/Kenworth hydrogen truck pilot at the Port of Los Angeles has ended with no further action. There are many other examples, because battery electric trucks are clearly a more realistic choice for clean trucks; for example, a 2023 analysis found that across Europe, the total cost of ownership in most scenarios for hydrogen-powered trucks is at least 40% more per mile than for battery-electric vehicles (BEVs). That gap is growing. Hydrogen has been left at the starting gate in the race to dominate next-generation trucking.
• Light vehicles sales have collapsed. Despite more than 20 years of development and billions in investment, sales are catastrophically low: in the United States, 56 FCEVs had been sold in 2025 (as of the end of February), and a total of 18,674 FCEVs had been sold since 2014. Toyota's flagship Mirai has sold 21,000 units (as of 2022) globally since 2014, despite a more than $10 billion investment. Unsurprisingly, companies like Daimler-Mercedes, Honda, and Volkswagen have abandoned passenger hydrogen development to focus on BEVs.
• Hydrogen mobility infrastructure has failed as well. In 2023, more than half of all hydrogen refueling stations in California were not operable, and Shell – a major provider – closed all its stations permanently. Retail hydrogen fuel prices reached more than $30/kg, so operating costs were much higher than for BEVs.
• Aviation: No takeoff. ZeroAvia has delayed efforts to deploy an entirely new hydrogen-powered design, focusing instead on retrofitting existing planes for hydrogen. Airbus has quietly extended the timeline for its ZEROe hydrogen aircraft from 2035 to "2035 or beyond." Universal Hydrogen's demonstration flights revealed significant performance limitations. In reality, hydrogen-powered flight remains a fantasy, requiring complete redesign of aircraft and massive restructuring of airport fuel infrastructure. Even using hydrogen for e-fuels is a dead end.
• Other sectors show little progress. Germany train maker Stadler has concluded that hydrogen consistently loses out to battery electric trains in technology-neutral tenders. A 2023 report from the European Maritime Safety Agency concluded that direct use of hydrogen would likely be limited to small vessels and short routes, representing a minimal fraction of maritime emissions, while Norway's Norled hydrogen ferry project faced repeated delays and technical issues.

The reality then is that hydrogen is indeed the Swiss Army Knife of clean energy—a second-best solution that will soon be gathering dust in the junk drawer of failed policies.

The failure of hydrogen for mobility is also a disaster for the proposed hydrogen hubs. Each of the major hubs has a substantial mobility component: California’s (ARCHES) Hub for example will dedicate approximately $700 million to mobility applications, for hydrogen fuel-cell buses for multiple transit agencies, medium and heavy-duty truck deployments along key freight corridors, hydrogen refueling infrastructure for ports, light vehicle fleets for government agencies, and maritime applications at the Ports of Los Angeles and Long Beach. The Appalachian Hydrogen Hub includes hydrogen refueling infrastructure along I-79 and other key corridors, and adoption of hydrogen fuel cell buses. The Gulf Coast Hydrogen Hub anticipates heavy-duty truck hydrogen refueling stations along the Texas Triangle (Houston-Dallas-San Antonio), hydrogen-powered cargo handling at the Port of Houston along with pilot programs for hydrogen-powered tugboats and port vessels, and re-powering of regional waste collection fleets. The Mid-Atlantic Hydrogen Hub includes New York MTA plans to deploy hydrogen fuel cell buses, Port Authority of NY/NJ hydrogen applications for port equipment and airport ground support vehicles, New Jersey Transit exploring hydrogen-powered commuter rail, hydrogen ferry applications in New York Harbor; hydrogen refueling infrastructure along I-95 corridor. These are all core functions of the proposed hubs, and their failure makes the hubs even less viable.

The failure of hydrogen despite the hype and despite the funding carries important lessons.These lessons have yet to be learned.

First, there are practical things to do. We should eliminate the hydrogen hubs as soon as possible, which should not be too difficult given that only token amounts of Federal funding have been spent to date. Instead, some of that money should be spent on basic and applied hydrogen research, looking for new hydrogen technologies that can reset the economics of hydrogen. Deployment of technologies that are not ready is a huge mistake.

Second, we still haven’t learned the lessons embedded in Charles Mackay’s famous book, Extraordinary Popular Delusions and the Madness of Crowds, first published in 1841. The rush into hydrogen recapitulates in modern form previous periods of hysterical investment, like Holland’s Tulip Mania and the South Sea Bubble in the UK. Crowds become irrational, and the rush into hydrogen is a perfect example. We need a much more realistic and measured policy process.

Third, industrial policy matters and is important, but it operates within the context of a market economy. Simply ignoring the market and seeking to push the technology has ended in tears many times before, and that’s how it’s ending for hydrogen. There has to be a convincing business case that the technology will eventually reach price and performance parity (P3) with the alternatives. If it can’t, it won’t be adopted. Hydrogen technology isn’t at P3 today, and won’t be over the next ten years at least.

Fourth, in the United States, sector policy is made more or less completely in the absence of strategic thinking and assessment. There is no entity near the center of power in Washington capable of providing a strategic assessment of hydrogen across its complete development cycle from basic and applied R&D, through development, to commercial demonstration, and finally to scaleup. Equally, there is no entity capable of enforcing such a vision. The Council of Economic Advisors has no capacity for this kind of work; DOE is primarily a science agency; there is minimal inter-agency coordination; OSTP has no significant budget and clout even within the White House let alone across Federal agencies; and the White House itself is busy putting out fires. U.S. clean energy industrial policy under Biden was therefore all muscle and no brain, as the hydrogen fiasco demonstrates.

Fifth, political polarization is a problem. There is now a possible consensus on the need for industrial policy to support energy dominance (or abundance, depending on your affiliation). It is possible to find bi-partisan paths forward, as support for the CHIPS Act demonstrated. However, the urge to attack currently overwhelms the opportunity to collaborate, and that is disastrous, because an effective sector-focused policy only works if it is applied consistently and methodically over long periods of time, perhaps decades. Instead, we get the irresistible urge to act now, when opportunity presents – as it did with the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) for hydrogen. The result of that is projects like the hydrogen hubs.

At the center of these lessons is a core requirement: governments seeking to implement policies for clean energy sectors must develop both the capacity and the will to assess proposed interventions against the yardstick of reaching price/performance parity with fossil fuels. Technologies that don’t reach parity won’t be adopted globally, especially in low-income countries with rapidly growing emissions. So the U.S. government must develop the capacity to stress-test economic, technical, and market assumptions, retest them regularly, insist that projects be conducted transparently, and change course when necessary. None of those capacities exists today.

New technologies take time to become competitive, so they don’t need to be at P3 today (or even tomorrow), but there must be a realistic pathway to parity in the future. Without that, we will have many more hydrogen fiascos, and we will miss increasingly important opportunities to develop the industries and technologies that will power our economy tomorrow.