Where Hydrogen Will Boom in the U.S. by 2035

Welcome to The Hydrogen Podcast! I’m Paul Rodden, and this is Part 2 of our deep-dive series on building the U.S. hydrogen economy by 2035.

In Part 1, we broke down the top technologies: SMR with CCS, methane pyrolysis, natural hydrogen, and nuclear hydrogen.
Now in Part 2, we answer the critical question: Where will the U.S. hydrogen economy take root?

🌍 Featured Locations & Their Strengths:

• Gulf Coast (Texas, Louisiana): SMR with CCS, industrial clusters, CCS-ready geology
• Nebraska & Pennsylvania: Methane pyrolysis hubs with gas access and carbon markets
• Kansas & Appalachia: Natural hydrogen drilling sites near chemical clusters
• Illinois & New York: Nuclear-powered electrolysis with grid stability
• Texas & California: Green hydrogen from wind/solar near transport and SAF markets

📊 We also unpack:

• Impacts of the Senate-passed H.R.1 bill, including updates to 45V and 45Q tax credits
• U.S. hydrogen market forecasts: $186B in 2024 to $400B by 2035
• Offtake demand for ammonia, SAF, steel, methanol, and transport
• Green hydrogen’s cost reduction, infrastructure needs, and policy support on the road to 2050

📈 Whether you're an investor, policymaker, or technologist, this episode is your roadmap to hydrogen’s U.S. deployment and market evolution.

👉 Don’t forget to catch Part 1 on the top hydrogen technologies if you missed it!

Transcript

Today, we’re wrapping up our 2 part series on building the US hydrogen economy by 2035.  In part one we dove into the top technology opportunities including SMR with CCS, methane pyrolysis, natural hydrogen, and nuclear hydrogen.  And so in part 2 we’ll dive into to the top geographical locations and answer the question: Where will the U.S. hydrogen economy take root? Let’s tour the top locations for each production method, including green hydrogen, chosen for their resources, infrastructure, and market proximity. All of this on todays hydrogen podcast.

Where will the U.S. hydrogen economy take root? Let’s tour the top locations for each production method, chosen for their resources, infrastructure, and market proximity.

Start with the Gulf Coast (Texas, Louisiana) for SMR with CCS. With 1.5 million miles of natural gas pipelines, major CCS storage sites in the Gulf of Mexico, and industrial clusters like Houston’s petrochemical hub, it’s a powerhouse, per DOE. ExxonMobil’s Baytown facility produces 1 million tons annually, with CCS retrofits costing $100 million, achieving 0.5–1 kg CO2e per kg H2, per Nature Energy. The region’s low-cost gas ($1–$2 per MMBtu) supports 10–15 million tons by 2035, per IEA.

Nebraska and Pennsylvania shine for methane pyrolysis. Nebraska’s Monolith plant, backed by a $1 billion DOE loan, taps Midwest gas pipelines and carbon black markets ($3.3 kg CO2e per kg carbon), per C2ES. Pennsylvania’s Marcellus Shale offers low-cost gas ($1–$2 per MMBtu) and proximity to steel plants, with a CI of 3.3 kg CO2e per kg H2, per Nature Energy. Each could produce 0.5–1 million tons by 2035, per BloombergNEF.

For natural hydrogen, Kansas and Appalachia (Ohio, West Virginia) lead. Kansas’s Midcontinent Rift holds deposits with near-zero CI (0 kg CO2e per kg), with wells costing $10–$50 million, per Koloma. Proximity to ethanol plants supports methanol production, per Wikipedia. Appalachia’s deposits near chemical clusters reduce transport costs ($0.50–$1 per kg), per DOE, yielding 0.5–1 million tons by 2035, per IEA.

Illinois and New York are ideal for nuclear hydrogen. Illinois’s 11 reactors (12 GW) offer excess off-peak power ($20–$40 per MWh) for electrolysis, producing 0.1–0.5 kg CO2e per kg H2, per DOE. New York’s Nine Mile Point, with Constellation’s pilot producing 1 ton daily, targets 100,000 tons annually, per ScienceDirect. Each could hit 0.3–0.5 million tons by 2035, per DOE.

Green hydrogen thrives in Texas and California. Texas’s 200 GW of wind and solar potential, with electricity at $20–$40 per MWh, supports electrolysis at $3–$5 per kg with 45V credits, per DOE. California’s 50 GW renewable capacity and refueling infrastructure ($2–$3 million per station) align with fuel cell vehicle markets, per IEA. Both could produce 1–2 million tons by 2035, per BloombergNEF.

These locations—Gulf Coast, Nebraska, Pennsylvania, Kansas, Illinois, New York, Texas, and California—anchor the hydrogen economy, leveraging diverse strengths.

How will the U.S. hydrogen market evolve by 2035, and how do the Senate-passed H.R.1’s 45V and 45Q updates shape it? Starting from a 2024 market of $186.58 billion, projected to hit $400 billion at a 9.2% CAGR, per Grand View Research, let’s forecast growth and impacts.

H.R.1, passed by the Senate on June 30, 2025, extends the 45V clean hydrogen production credit (up to $3 per kg) to January 1, 2028, for facilities beginning construction by that date, softening the House’s 2026 cutoff, per H2 View. The 45Q carbon capture credit is enhanced, increasing its value by over 40% for non-sequestration CO2 uses (e.g., methanol production) and adding foreign entity restrictions, per Evergreen Action. Companies cannot claim both credits simultaneously, forcing strategic choices, per Federal Register.

SMR with CCS leads, capturing 55–60% of production (14–16 million tons by 2035). Its $1–$2 per kg cost, bolstered by enhanced 45Q credits ($85–$260 per ton CO2), drives scale, especially in the Gulf Coast, per DOE. CF Industries’ Donaldsonville expects $100 million annually from 45Q, per The Center Square. Methane leakage (7.4 kg CO2e per kg H2 in Permian) adds $0.20–$0.50 per kg, per Nature Energy, but 45Q’s boost offsets this, though $10–$15 billion in investments remains at risk if credits lapse post-2028.

Methane pyrolysis grows to 5–10% (1–2 million tons), fueled by pilots like Monolith’s. Carbon markets ($12.8 billion by 2032) ensure viability, per DataHorizon Research, but modular designs limit scale, requiring $2–$3 billion for 10–20 MW plants, per IEA. The 45Q boost for CO2-to-methanol supports hybrid pyrolysis projects, adding $0.10–$0.20 per kg in value, but 45V’s 2028 cutoff limits electrolysis-based pyrolysis, per Federal Register.

Natural hydrogen reaches 2–5% (0.5–1 million tons), constrained by geological limits. Koloma’s $245 million funding drives Kansas wells, but $1–$2 billion is needed for commercial scale, per DOE. Its $0.50–$1 per kg cost is subsidy-agnostic, unaffected by 45V/45Q changes, but exploratory risks require $5–$10 million per site, per IEA.

Nuclear hydrogen contributes 5–8% (1–1.5 million tons), supported by DOE’s $7 billion hub program. The 45V extension to 2028 unlocks $5–$10 billion in projects, keeping costs at $2–$4 per kg with off-peak power ($20–$40 per MWh), per DOE. H.R.1’s nuclear credit (45U) adds foreign entity restrictions, increasing fuel costs by 5–10% post-2027, per Evergreen Action, but co-located electrolyzers ($20–$30 million for 25 MW) mitigate risks.

Green hydrogen starts at 5–10% (1–2 million tons by 2035), with costs of $3–$5 per kg using renewables at $20–$40 per MWh, per DOE. The 45V extension to 2028 supports $10–$20 billion in electrolyzer investments, per BloombergNEF, but costs ($1,000–$2,000 per kW) and grid balancing ($5–$10 million per 25 MW) limit scale, per IEA. By 2050, green hydrogen could reach 20–30% (10–15 million tons), as electrolyzer costs drop to $200 per kW and renewable capacity triples to 1,500 GW, requiring $500 billion, per BloombergNEF.

Total production hits 20–25 million tons by 2035, half of DOE’s 50 million-ton 2050 goal. The 45V extension to 2028 stabilizes electrolysis projects, while 45Q’s boost favors SMR with CCS, but post-2028 uncertainty requires subsidy-agnostic models, per H2 View.

Who’s buying this hydrogen, and how does green hydrogen scale to 2050? Let’s explore offtake opportunities for ammonia, SAF, and other sectors, and chart green hydrogen’s long-term path.

Low-CI ammonia, a $200 billion market, needs 7–8 million tons of hydrogen by 2035, per TechEnergy Ventures. Gulf Coast’s SMR with CCS (0.5–1 kg CO2e per kg H2) fuels CF Industries’ Donaldsonville, producing 1 million tons annually at $500–$700 per ton, boosted by 45Q’s $85–$260 per ton, per IEA. Nebraska’s methane pyrolysis supports Monolith’s ammonia pilot. Kansas’s natural hydrogen (0 kg CO2e) and Illinois’s nuclear hydrogen (0.1–0.5 kg CO2e) target Midwest fertilizer plants, per McKinsey. Green hydrogen in Texas and California, at $3–$5 per kg and 0.1–0.5 kg CO2e, powers ammonia for coastal shipping by 2035, scaling to 5–7 million tons by 2050 as 45V supports $20–$30 billion in projects, per DOE.

Sustainable aviation fuel, a $1 trillion market by 2050, demands 1–2 million tons of hydrogen by 2035, per IEA. Nuclear and natural hydrogen in New York and Kansas, with near-zero CI, produce SAF at $1,500–$2,000 per ton, meeting CORSIA’s 70% emissions reduction, per BloombergNEF. Gulf Coast’s SMR with CCS fuels ExxonMobil’s Baytown for 500,000 tons annually, targeting Dallas airports, per McKinsey. Pennsylvania’s pyrolysis supports SAF for Northeast hubs. Green hydrogen in California, with refueling infrastructure, fuels SAF for Los Angeles airports by 2035, scaling to 3–5 million tons by 2050, per IEA.

Other opportunities include steel (Thyssenkrupp’s 151,000-ton tender in Pennsylvania), methanol (nuclear and natural hydrogen in Illinois and Kansas for ethanol plants, boosted by 45Q for CO2-to-methanol), and transport (fuel cell vehicles in California and Texas, with $2–$3 million refueling stations), per DOE. Green hydrogen supports transport in California by 2035, expanding to 10% of demand by 2050, per IEA.

Green hydrogen’s scaling pathway to 2050 relies on:

·       Cost Reduction: Electrolyzer costs fall from $1,000–$2,000 per kW to $500 by 2035 and $200 by 2050, cutting hydrogen costs to $1–$2 per kg, per BloombergNEF.

·       Renewable Expansion: U.S. renewable capacity grows from 500 GW in 2025 to 1,500 GW by 2050, with $1 trillion in investments, per DOE.

·       Infrastructure: $2–$3 billion for pipelines and $5–$10 billion for refueling stations by 2035, scaling to $50 billion by 2050, per IEA.

·       Policy Support: Extending 45V beyond 2028 or new incentives, like Europe’s Hydrogen Bank (€992 million), to unlock $500 billion, per BloombergNEF.

·       Partnerships: Collaborations with tech giants (e.g., Amazon’s hydrogen trials) and utilities secure offtake, per Forbes (June 13, 2025).

Green hydrogen’s near-zero CI and scalability complement SMR with CCS’s scale, pyrolysis’s innovation, and nuclear and natural hydrogen’s stability, with 45V’s 2028 extension providing critical early support.

Alright, that’s it for me, everyone.  If you have a second, I would really appreciate it if you could leave a good review on whatever platform you listen to. Apple podcasts, Spotify, Google, YouTube, etc. That would be a tremendous help to the show. And as always if you ever have any feedback, you are welcome to email me directly at info@thehydrogepodcast.com. So until next time, keep your eyes up and honor one another.