GRAND FORKS — A project to produce commercial-scale quantities of clean hydrogen that would be used for American-made, low-carbon nitrogen fertilizer is in limbo.
The Heartland Hydrogen Hub is stalled due to changing priorities and a lack of new federal contracts, according to John Harju, vice president for Strategic Partnerships at the University of North Dakota Energy and Environmental Research Center (EERC). It’s one of seven hubs proposed across the country.
In October, the U.S. Department of Energy (DOE) canceled $2.2 billion in funding for two hubs located on the West Coast intended to produce hydrogen using clean energy. There’s been no word if the remaining five hubs will be affected, including the hub that was announced would be constructed in North Dakota.
This has put a halt to what was expected to be a major project for the EERC. The core issue stems from divergent policies between the DOE and the U.S. Department of the Treasury, particularly regarding the 45V (clean hydrogen) tax credit, which was intended to support hydrogen production platforms. Harju said draft guidance released in December 2023 introduced three pillars — temporal matching, incrementality/additionality and deliverability — that created significant disincentives for planned projects.
“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,” Harju said. “If there was one word to describe where we are today, it would be ‘uncertain.’ That’s just the crazy reality of it.”
Challenges to the hydrogen hub project include the withdrawal of a major partner, Marathon Petroleum, which stepped away from the hub in July 2024 due to the financial uncertainty caused by the draft guidance, impacting a planned $2.5 billion facility that would have received an estimated $400 million in funding.
A second challenge is that Xcel Energy’s nuclear facility and a constrained wind farm in South Dakota were initially deemed ineligible for the tax credit due to the “incrementality” test (facilities older than three years would not qualify), despite nuclear energy being a mandated focus for one of the hubs. While final guidance in January 2025 marginally improved, the wind asset still appears ineligible.
The ongoing uncertainty about the tax credit guidelines, compounded by the federal government’s inability to provide clear direction, has made it difficult to secure commitments from commercial clients, yet another challenge.
Finally, the Office of Clean Energy Demonstrations (OCED), which administers the program, has been reorganized, with key personnel leaving and the office’s future uncertain. This has led to delays in contracting for projects that have already been selected for awards.
When the Infrastructure and Jobs Act was passed in November 2021, it was built on the Energy Policy Act of 2020. That earlier legislation laid the groundwork, introducing the idea of creating hydrogen hubs across the country — centers of innovation meant to form the core of a national network for producing, transporting and using hydrogen to help reduce greenhouse gas emissions, Harju explained. That was one of its key goals.
As with many major policy acts, the Energy Policy Act didn’t immediately spend the money — it authorized it. So it might say, for example, that hundreds of billions of dollars could be used for certain programs, but each year, Congress decides how much actually gets funded based on priorities, resources, and the economy at the time. Those authorization bills are more about setting a long-term vision — what the country wants to work toward over the next 5, 10 or even 20 years.
“They took the entire Energy Policy Act of 2020 and said, you know what? We’re going to fund it. This huge authorization bill was thrown into IIJA (Infrastructure Investment and Jobs Act) and passed into law in November 2021, which had everybody scurrying (and wondering) ‘holy cow, what’s all in there?’ It was the following spring that we started the work on what we thought might be a regional vision for what ultimately has become the Heartland Hydrogen Hub,” Harju said.
The EERC was busy working with a series of partners by 2022. In September of that year, the Energy Department released a Federal Opportunity Announcement, which outlined that it would look at a series of concept papers from as many people or teams who wanted to submit proposals. The Infrastructure and Jobs Act specified there were at least four of these hubs needed across the country, and it outlined some conditions on what those hubs needed to look like in the law, Harju said. One should focus primarily on the use of nuclear energy to create hydrogen. One needed to primarily focus on green energy. A third had to be a leading producer of hydrocarbons, specifically natural gas, and the fourth wasn’t specified.
The nuclear energy hub was expected to be located in either the northeast or southeast region of the country, where nuclear energy is abundant and forms a dominant backbone of the power grid. The hub focused on natural gas production would most likely be built in Texas or Louisiana, somewhere along the Gulf Coast. A hub primarily focused on green energy would most likely be located along the West Coast, leaving competition vying for the fourth hub.
“We started asking, what are the strengths of our region? The North Dakota Legislature had appropriated funds to EERC in 2021 to develop a road map for hydrogen for the state. We had a little bit of a head start,” Harju said. “We were looking at the strengths of the state and our connection to the region — South Dakota, Minnesota, Montana and beyond — and thought about what we could do with those building blocks on a relatively short schedule to become an epicenter of the ecosystem that might be a hydrogen economy.”
A memorandum of understanding was signed in October 2022 by North Dakota’s then-Gov. Doug Burgum, along with the governors of Minnesota, Wisconsin and Montana, stating they’d all work together to develop this regional hub proposal, and it was specified that EERC would be the lead on developing the proposal. The concept paper was submitted to the DOE in November 2022.
“We were pretty busy already at that point,” Harju said.
The following month, the DOE encouraged EERC to develop a full proposal. It was one of 67 concept papers submitted and one of 11 that were encouraged to submit full proposals.
“At that point, it was all hands on deck. The proposals were voluminous; it was a multi-volume submission. About 30 discrete elements of that proposal were submitted — all electronically submitted. On paper, it would have been boxes and boxes of documents,” Harju said. “That was in April 2023.”
In August 2023, group members were invited to a day-long interview where they answered questions from a panel of experts and executives from both the federal government and federally approved contractors.
Six weeks later, in October 2023, EERC was notified that it had been selected for an award. Draft guidance then came out in December 2023.
“The Energy Department had solicited projects that looked a whole lot like what was in the IIJA package, stating this is what we want you to bring us in terms of the construct of these regional hubs. The DOE funds were to help subsidize the capital requirements in the construction of these hydrogen production, transportation and end-use platforms,” Harju explained.
“We anticipated this 45V tax credit, which was enumerated in the IRA (Inflation Reduction Act) bill, would be as described: to support the projects in these hubs. Well, it was completely divergent,” he said. “… As is often the case, big vision and detail don’t line up well.”
The presidential election was held in November 2024, and there was still no final guidance from the federal government on what the 45A tax credit would look like. Getting a commercial client to commit to doing something while the federal government is not giving clear guidance is a very difficult task, he said.
In January 2025, the Office of Clean Energy Demonstrations
awarded the Heartland Hydrogen Hub with $20 million
(of the total federal cost share of up to $925 million) to begin Phase 1 activities. The hub would increase supply in the region, lower costs for farmers and could reduce carbon dioxide emissions by 525,000 metric tons per year, which is the equivalent of more than 120,000 gasoline-powered cars. Phase 1 includes initial planning, design and community and labor engagement activities.
“At that point, it’s four years later, and we’re upside down financially like crazy,” Harju said. “I think we’re still waiting to see what the Trump administration sees as a set of priorities for hydrogen going forward. Hopefully, we’ll see some clarity there.”
U.S. Sen. John Hoeven, R-N.D., said his office will continue working with EERC during the DOE’s review of the hydrogen hub program to “ensure the best use of taxpayer dollars and find the right path forward for the North Dakota Project.
“At the same time, we continue to advance the wide range of important work the EERC is doing to help secure the future of energy production in North Dakota. This includes working to secure additional federal support for our Crack the Code 2.0 initiative, which will utilize enhanced oil recovery to both double oil recovery in the Bakken and provide an additional revenue stream to double the operational life of our coal-fired power plants,” Hoeven said.
U.S. Sen. Kevin Cramer, R-N.D., said an appeals process was established for hydrogen hub projects targeted for cuts, moving from a terminated list to a modified list, allowing for technical changes that would bolster an application. However, the Heartland Hydrogen Hub has not received any official notification that it was on that list.
“That’s very important. We’ve been encouraging projects to make sure they do a thorough job of responding,” Cramer said. He also noted that if an appeal or corrected application is needed, the state’s federal delegates will support it.
Despite the setbacks, Harju remains hopeful. The EERC is actively seeking replacement projects and believes there are still strong opportunities that align with regional strengths, such as utilizing North Dakota’s abundant natural gas for hydrogen production, decarbonizing the steel industry in northern Minnesota, and integrating stranded nuclear or wind assets. However, the “clock is ticking” to get projects under construction, and a lack of clarity from the federal government continues to hinder progress.
