Colorado loses bid to build a federally funded regional hydrogen hub

Sam Brasch/CPR News
Xcel Energy plans to build a hydrogen storage at the intersection of 160th Avenue and Hayesmount Road outside Hudson, Colo., pictured here in July 2023.

Colorado’s vision for a hydrogen-powered future isn’t getting part of a coveted $7 billion pool of federal funding. 

President Joe Biden is expected to announce federal grants for seven hub projects across the country at a press conference Thursday in Pennsylvania. The funding is meant to spur a new economy built around carbon-free fuel, which could someday serve as an alternative to fossil fuels currently necessary to power long-haul trucks, aircraft, steel mills and other industrial applications. 

But those winners won’t include a joint bid from Wyoming, Utah, New Mexico and Colorado, according to senior officials with the U.S. Department of Energy. The federal government will instead fund regional hubs centered around California, Washington, Oregon, Pennsylvania, Ohio, Minnesota, Texas and Indiana.

Those officials did not explain the reason behind the rejection. It nevertheless marks a major blow for the multi-state partnership, which sought to use federal funding from the 2021 Infrastructure Investment and Jobs Act to build a network connecting hydrogen producers and consumers across the Rocky Mountain West.

In a press statement, Gov. Jared Polis said Colorado’s future with green hydrogen remained bright. 

“Although we are deeply disappointed that the strong, bipartisan application from states in the West was not approved, we look forward to making more progress on renewable energy and jobs. Colorado is a national leader in renewable energy and this will not stand in the way of achieving our energy goals,” Polis said.

The four states formed the Western Interstate Hydrogen Hub to seek a $1.25 billion grant from the federal government. The final application, submitted in April 2023, included partnerships with a range of private companies to create hydrogen from water, natural gas and even scrap wood from fire mitigation projects in Utah. 

In the proposal, Xcel Energy, Colorado’s largest gas and power company, included plans to produce hydrogen using wind and solar along the Eastern Plains. While the full application is sealed to protect confidential business information, a concept paper released last November suggests the company hoped to sell the gas to industrial customers and use it to generate electricity at existing power plants.

The concept paper further notes private partners could mix hydrogen into natural gas supply for homes and businesses, potentially using the clean-burning fuel to cut the climate impact of stoves and furnaces across the region. 

Xcel Energy has proposed a now-delayed plan to test the idea in a subdivision near Hudson, a small town about 30 miles northeast of Denver. It’s now facing pushback from residents worried the project could damage appliances that burn traditional methane. 

Environmental advocates have also criticized the idea, claiming a switch to renewable electricity is a far more cost-effective option to cut climate-warming emissions from homes and businesses.

The Colorado-led hydrogen proposal also faced formal opposition from New Mexico No False Solutions, a coalition of Indigenous, climate and environmental justice groups. In a letter to the U.S. Department of Energy sent last June, it urged the federal government to reject the plan, warning the proposals would further pollute low-income communities, consume precious water resources and provide an excuse for continued fossil fuel investments.

Alejandría Lyons, the coordinator of the coalition, said there’s a further concern hydrogen production could dominate the market for limited wind and solar resources.

“There’s not even a nuanced conversation about whether that energy should go to transportation, public buildings or homes. I really wish we were having those local discussions instead of treating hydrogen as a blanket solution,” Lyons said.

Editor's note: This story was updated to include a comment from Gov. Jared Polis.