Mid-Atlantic hydrogen hub survives new Trump cuts for now but outlook still uncertain

The Mid-Atlantic Clean Hydrogen Hub (MACH2) escaped the latest round of clean-energy funding cuts by the Trump administration but its future remains far from assured.

MACH2 said it will press on with its plans to produce, distribute and consume industrial hydrogen in Delaware, southern New Jersey and southeastern Pennsylvania after confirming that it was not among more than 200 clean-energy projects around the country that will no longer get federal funding.

“MACH2 and our partners are full steam ahead to produce affordable, reliable hydrogen and create good jobs,” the group said in a statement late Thursday.

Although funding for some hydrogen hubs, including two on the West Coast, was eliminated, MACH2 escaped the bloodletting, and attributed that to support from officials in the three-state region.

By contrast, hydrogen hubs in California and the Pacific Northwest were among the projects that were cut, according to media reports.

The U.S. Department of Energy said early Thursday that $7.56 billion for 223 energy projects would be cut but it did not name them, and did not say which projects had escaped the chopping block.

“DOE determined that these projects did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars,” the agency said.

Almost two years after former President Joe Biden announced the federal government would spend up to $7 billion to kick-start a national network of seven hubs including that partly based in Delaware, MACH2 and the other hubs are subject to new conditions over crucial tax breaks, amid talks that may determine their future.

MACH2 faces special challenges because it is the only hub that plans to use so-called green hydrogen – that generated solely from wind, solar or nuclear energy. It must overcome the federal government’s opposition to emissions-free fuels if it is to continue the subsidy of up to $750 million pledged by the Biden administration but now under scrutiny by the Trump regime.

Earlier this week, even before the new DOE cuts were announced, one MACH2 leader said MACH2 was still at risk.

“We have to be honest that it is an at-risk hub. It’s not in the safe zone,” said Dora Cheatham, a board member for MACH2, and Vice President of Sales & Commercialization for Aternium, a Delaware company that promises to produce industrial hydrogen exclusively with electricity from renewable sources as part of MACH2.

MACH2 consists of about 20 projects run by some 12 companies including DuPont, PBF Energy and Monroe Energy. Cheatham said two or three participants dropped out in the last two years but were replaced. She predicted that all current projects would qualify for tax breaks under a new accelerated schedule set by the Trump administration.

Last week, Aternium announced it received $1 million in funding from the Delaware Accelerator and Seed Capital Program, one of four small business programs administered by the state and funded by the federal government. The company said it will use the money to develop engineering for producing clean hydrogen.

Aternium

Despite continuing doubts about MACH2, the office of Gov. Matt Meyer told Delaware Public Media Tuesday the $1 million investment is also a boost for the hub.

“Aternium’s announcement strengthens the Mid-Atlantic Clean Hydrogen Hub by adding a real private-sector commitment to produce, use, and move clean hydrogen across our region. We remain optimistic that MACH2 can deliver on its original vision here in Delaware and in neighboring states because meeting rising energy demand and lowering costs will require a broader mix of reliable, lower-emissions solutions,” said Meyer’s spokesperson, Mila Myles, in a statement.

And Aternium’s chief executive, Andrew Cottone, said at last week’s funding announcement that the new funding for his company helps to overcome skepticism toward the hub.

“What I hope that this does is it shows the progress that the hubs are making because there is concern throughout the nation with the new administration that maybe those hubs are going to go away and what we can show is that this hub is producing hydrogen sooner than anyone else,” he said in an interview with Delaware Public Media.

Aternium said it can produce hydrogen profitably regardless of tax breaks that were initially promised by the Biden administration for hub participants that began construction before the end of 2032. Under the Trump administration’s ‘Big Beautiful Bill’, that deadline has been brought forward five years to the end of 2027, a timeline that some hub participants may find challenging, critics say.

But even if individual participants like Aternium can economically produce, consume or distribute hydrogen without subsidy, the hub as a whole may not get promised tax breaks and so may not survive.
Now, there’s additional uncertainty over whether MACH2 will get federal funding for its second phase, in which hub partners complete engineering plans and site-selection for their hydrogen producing or consuming plants. According to a U.S. Department of Energy formula, projects are eligible in the second phase for up to 15 percent of the total allocation. In MACH2’s case, that’s $112 million, but that must be matched by twice as much in private funds.

Any loss of Phase 2 funds would create new uncertainties for the whole project, said MACH2’s MACH2 Chief Operating Officer Manny Citron.

“The matching funds are important because the hub program is asking the private sector to break ground as we establish a new industry and new marketplace here in the U.S.,” Citron wrote in an email earlier this week. “If the DOE funds are eliminated, it makes the economics much harder for MACH2's industrial partners. It is unclear whether they could or would continue as part of the program without the federal matching funds.”

If Phase 2 funds are cut, Citron said MACH2 would consult with its industrial partners, and our regional elected officials “to see if there is a path forward.”
Although the Trump administration has made its opposition to renewables such as offshore wind very clear, it has not done so with hydrogen, and appears to be in the process of fact-finding in the hydrogen industry, Citron said.

“The project review for the hydrogen hubs, and the 200 other projects at DOE is in many ways standard procedure for a new administration that wants to get an understanding of what taxpayer dollars have been committed and how that lines up with new priorities,” he said.

If MACH2 is trimmed or eliminated, the action will support critics’ arguments that the idea was always dependent on subsidies and was never economically viable.

The project has always been opposed by the environmental group Delaware Riverkeeper Network, whose deputy director, Tracy Carluccio, said the economic doubts have been amplified by the new, much tighter deadline for qualifying for production tax credits under the US Treasury’s 45V tax code.

“It seems the limits put on 45V have had a chilling effect for hydrogen projects, and that so-called green hydrogen projects need more time and money to get started than is being allowed now,” she said. Coupled with the possibility that the funds allocated by Biden’s Inflation Reduction Act will be clawed back – even though they were authorized by Congress – “it seems dimly possible that MACH2 will materialize,” she said.

Dustyn Thompson of the Delaware Sierra Club predicted that MACH2 won’t happen because the Trump administration has reduced the financial incentives from a plan that was already economically suspect.

Asked why he thinks MACH2 officials have been largely silent for months, Thompson argued that they and leaders of other clean-energy projects that depend on federal funds or permits are trying to avoid alienating an administration that has no love for clean-energy projects, and an appetite for revenge on its critics.

“These projects are years out so if they can keep their investors calm and keep things slowly moving forward, by the time the project actually gets to production, then hopefully the next administration will be a bit better,“ he said. “That’s the same thing that wind’s doing, it’s the same thing that solar and batteries are doing right now.”

Like all hydrogen hubs, MACH2’s prospects are stymied by their potential to power hard-to-electrify sectors like long-haul trucking without adding to carbon emissions. Even though that’s an attractive prospect for environmentalists, it’s of no interest to President Trump, who told the United Nations last week that clean-energy policies were a “green scam.”

Unfortunately for their supporters, hydrogen hubs make everything they touch more expensive, and so would depend on government help to survive, according to Sean O’Leary, an analyst at the economic think-tank Ohio River Valley Institute, and a long-time critic of the hubs – two of which are in the Appalachian region.

“It’s hard to see how this ends happily for the hubs,” O’Leary said.