Green hydrogen in California is losing momentum

Estimated reading time: 6 minutes · Last updated: 2026-08-18

California’s push for green hydrogen — electricity-made hydrogen intended to cut emissions — is stalling because of costs, weak demand and federal funding cuts, and industry leaders now describe the fuel as having a “non moment.” Hydrogen costs run about four times as much per mile as gasoline, production remains overwhelmingly fossil-based, and dozens of projects have been canceled or delayed. State and city utilities are the main remaining buyers, but environmental groups and local lawsuits complicate conversions to hydrogen blends. These are setbacks for California’s green hydrogen push, as first reported by Blanca Begert of the Los Angeles Times.

There was a race between batteries and hydrogen, and batteries won.

Bill Magavern, policy director at the Coalition for Clean Air

Why the green-hydrogen plan has stalled in California

California’s strategy depended on scaling green hydrogen production and a matching fleet of vehicles and industrial users. The core problem is economics: producing hydrogen by splitting water with clean electricity requires large amounts of energy and costly equipment, and the market currently lacks enough steady buyers to justify new plants.

Most hydrogen used today is made from natural gas — some 95% nationwide — because steam-reforming is cheaper than electrolytic production. That reality keeps price points high for clean hydrogen and deters transit agencies and fleet owners from buying into a fuel whose supply and station network are uncertain.

State officials and industry participants describe a feedback loop: fleets won’t buy vehicles without reliable fueling, and investors won’t build fueling if there are few vehicles. Transportation Secretary Toks Omishakin framed the dilemma as a chicken-and-egg problem for station build-out, while dealmaker Andrew Carman said there simply aren’t enough buyers to justify much new production.

Transport infrastructure, safety events and falling demand

The transport case for hydrogen has weakened on three fronts: falling vehicle uptake, shrinking station networks and supply interruptions. There were about 14,000 hydrogen cars registered in California, a number that declined for the first time last year, and the state now lists 57 fueling stations with about a third out of service.

Stations and distribution are expensive and fragile. Owners face millions of dollars in capital costs and difficulty securing reliable deliveries after a deadly hydrogen trailer explosion in Colton in February knocked out over half of regional supply. Operators and port officials showed idle cargo-handling equipment that cannot run without fuel, and a small transit agency deputy planning director advised caution because of high operating costs and uncertain fuel availability.

Electric vehicles have outpaced hydrogen in the market: at the end of last year there were about 20 times more EV trucks and buses on the road than hydrogen ones, a mismatch that undercuts the business case for station builders and vehicle manufacturers.

Utilities, pilots and the shift from transportation to power

With transportation demand waning, hydrogen producers and some utilities are shifting hopes to the power sector. Utilities recently received permission to count green hydrogen they burn toward renewable energy targets, which creates a potential customer base for larger producers.

Los Angeles Department of Water and Power has a plan to convert the Scattergood Generating Station to run on a hydrogen-natural gas blend; the L.A. City Council reaffirmed that plan despite lawsuits from Sierra Club and LA Waterkeeper. Southern California Gas Co. shelved long-standing plans for a hydrogen pipeline after an unfavorable regulatory ruling, showing the regulatory and political uncertainty utilities must navigate.

A handful of small green producers are moving ahead: one tiny Fresno facility makes hydrogen with electricity, and a larger Vernon project’s founder, Vishal Shah, says it will begin serving 10 trucks and buses a day at the end of August, with plans to ramp to 100.

Environmental opposition, resource limits and the policy gap

Environmental groups argue green hydrogen is resource-intensive and often a poor climate choice when renewables could displace fossil fuels directly. The Sierra Club has highlighted the large quantities of dedicated renewable energy required to produce green hydrogen and warned that the same power could serve end uses more efficiently.

Local lawsuits and public-health concerns focus on water use for electrolysis and nitrogen-oxide pollution from burning hydrogen blends. Those legal and environmental challenges complicate city and utility plans and increase the cost and timeline for conversions.

Policy shifts at the federal level widened the gap: the cancellation of up to $2.2 billion in ARCHES grants and cuts to tax credits removed a key incentive layer, leaving state and local actors to decide whether to absorb costs or scale back ambitions.

How hydrogen’s prospects could revive or slip further

The bottom line

California’s grand experiment with green hydrogen has entered a pause: economics, supply fragility and a shifting federal policy environment have removed the momentum that once justified broad investment. A handful of pilots and utility conversions keep the technology alive, but the near-term market is small and contested. Whether hydrogen becomes a niche solution for hard-to-electrify uses or remains a costly sideline depends on demonstrable cost reductions, stable supply chains and legal and regulatory outcomes now unfolding in courts and utility boards.

What to watch

• Watch for the Vernon green-hydrogen producer to begin serving 10 trucks and buses a day at the end of August 2026, as its founder Vishal Shah has said.
• Watch for developments in the court challenge to the Trump administration's cancellation of ARCHES grants; no date has been set for the next hearing.