JUNE 4, 2025

Hello!

In Cipher this week: 

• Bill Spindle traveled to the furthest reaches of South America to visit a unique clean hydrogen project. He shares why hydrogen's path forward is tricky and reflects on the trip.
• Cat Clifford looks at how industrial decarbonization technologies fared in early 2025 — and what could be next.

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Illustration by Nadya Nickels.

Clean hydrogen’s tricky path to production

BY: BILL SPINDLE AND PATRICIA GARIP

PUNTA ARENAS, Chile — Along the wind-battered Straits of Magellan in the far reaches of southern Chile, the final pieces of a unique demonstration project by Chilean energy company HIF were recently falling into place.

The project’s sole wind turbine was getting a tune up. An electrolyzer, a machine that uses electricity to separate hydrogen from water, was up and running. And workers were building the foundation for another machine, in transit from Germany, that would pull carbon dioxide from the air.

With this final piece in place, the plant, named Haru Oni in a local indigenous language, will demonstrate a way to scale up production of sustainable methanol and gasoline that can directly replace the emissions-heavy fossil fuels that power planes, boats and vehicles.

What’s needed now are committed customers — buyers willing to sign long-term contracts for future purchases of the fuels. Those promised purchases are critical in order for HIF to borrow the money it would need to build a full-scale plant a hundred times bigger than the demonstration plant.

“These are large-scale projects, so they have to have off-takers,” said Lee Beck, senior vice president for global policy and commercial strategy at HIF Global, referring to buyers for the fuels.

And therein lies the challenge, not only for HIF, but also for the clean hydrogen industry overall.

It’s a chicken-and-egg problem: Until costs fall, buyers are hesitant to commit to purchasing cleaner hydrogen, or fuels made from it. But without confirmed buyers, manufacturers are struggling to raise the funds necessary to increase production enough to reduce the cost.

Clean hydrogen, which is made using renewable energy or from natural gas with carbon capture, could be a key tool for reducing the carbon dioxide emissions that cause global warming, especially in industries for which reducing emissions is most challenging.

These industries include aviation, shipping, steelmaking, agriculture and refining petroleum products.

But making clean hydrogen is expensive. And deploying it to make useful and transportable products such as gasoline, methanol, kerosene and ammonia makes the process even more costly.

The governments of the United States, European Union, Japan and China have set up ambitious, and expensive, subsidy programs to try to jump-start the clean hydrogen industry. But many of these efforts are faltering.

Still, clean hydrogen could potentially help some industries, such as global aviation and shipping, meet growing clean-fuel requirements.

HIF’s Patagonia project — with German partners Porsche and Siemens Energy — is the company’s first effort to pair hydrogen production and carbon capture in the same facility, with both powered by the region’s legendary winds, blowing almost constantly. They can spin a turbine about 70% of the time, compared to around 30% for turbines in Germany, said Juan José Gana, the chief strategy officer for HIF Global.

“You need a place with stable electricity,” he said. But whether the project leads to full-scale commercial operation will depend on whether the price gets low enough to attract buyers.

Read this article and share it on Cipher’s website.

Lunchtime Reads and Hot Takes

Nuclear Power Giant’s Stock Climbs on 20-Year Deal With Meta — The Wall Street Journal
Cat’s take: Meta is looking to secure large amounts of clean energy to power AI, and the deal will provide Constellation long-term financial certainty 

DOE cancels $3.7B in carbon capture, decarbonization awards — Utility Dive
Amena’s take: According to DOE, "these projects failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return on investment of taxpayer dollars."

EDF backs Apple in carbon credit lawsuit — E&E News (subscription)
Cat’s take: Notable to see EDF take a stand. While there are examples of unscrupulous carbon accounting, "high-quality" credits "can achieve meaningful emissions reductions," as EDF said in court documents.

What’s Missing from the U.S. Debate on Electric Vehicles — Center for Strategic & International Studies
Bill’s take: The U.S. auto could be heading into a fossil fuel cul-de-sac, passed by as the world adopts electric cars while the U.S. focuses on outdated combustion engines fewer and fewer consumers want.

NuScale secures NRC approval for second small reactor design — E&E News (subscription)
Cat’s take: This is the second time NuScale has had an SMR design approved by the NRC. Its first SMR design approval was the nation's first. Now, let's see when these SMRs start getting built.

Supreme Court narrows scope of environmental reviews — The Washington Post
Amena’s take: The court said the law requires agencies to analyze environmental impacts of the projects, like highways and pipelines, not potential effects of future or geographically separate projects.

Microsoft Feels the Heat as ‘Carbon Negative’ Goal Looms Nearer — The Wall Street Journal
Cat’s take: As part of Microsoft's effort to be carbon negative by 2030, it has bought a cornucopia of carbon removals including everything from planting trees to direct air capture to enhanced rock weathering.

More of what we're reading:

• EU picks 13 new critical material projects, including in Greenland — Reuters

• Global temperature rise could spike to near 2C for first time in the next five years, WMO says — Financial Times (subscription)
• PetroStates and ElectroStates in a World Divided by Fossil Fuels and Clean Energy — The National Interest
  
  

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In a faraway region, winds and nature are powerful forces to balance

Illustration by Nadya Nickels. Photo by Bill Spindle.

BY: BILL SPINDLE

PUNTA ARENAS, Chile — The lone wind turbine that towered over us when journalist Patricia Garip and I recently visited the Haru Oni sustainable fuels project in southern Chile does a lot of work.

It powers the production of hydrogen (from water) and drives a process that pulls carbon dioxide from the air (via a direct air capture facility). The plant puts those two ingredients together to produce methanol. That methanol can also be made into gasoline and aviation fuel.

Wind turbines here have a big advantage: the presence of some of the strongest winds on the planet. They were blowing forcefully as we toured the site on a typically cool, overcast summer morning near the Strait of Magellan, just about as far south as one can get in the Americas.

The facility is owned by HIF, a Chilean energy provider pushing hard to develop sustainable replacements for fossil fuels used in airplanes and ships.

For the moment, the output of the plant is being used in the engines of Zodiac power boats for tourists in Antarctica. If the project finds overseas buyers and reaches commercial scale, that one turbine would become 70 or so, HIF officials said.

We arrived at the site after a 20-minute drive from Punta Arenas, the region’s largest city. On the way, we could see that the region is a natural wonder — a way station for migratory birds with majestic views of the Andes Mountains to the north and the frigid waters to the south, where hundreds of islands are populated by penguins, sea lions and gulls.

Preserving these views and the region’s delicate ecosystem requires a careful environmental balance by the government as dozens of projects similar to HIF’s are proposed for the region.

Read this article and share it on Cipher’s website.

After years of historic growth, industrial cleantech investments falter

Source: Clean Investment Monitor, Quarter 1, 2025, Rhodium Group and the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research.

BY: CAT CLIFFORD

Investments into low-carbon technologies in the industrial sector have grown enormously over the last four years, thanks largely to federal subsidies in the Inflation Reduction Act and related new laws — but they’re starting to fall as Washington rolls back those same policies.

Such investments include a sundry mix of nascent technologies, like clean hydrogen, sustainable aviation fuel and carbon management, aimed at cleaning up a range of industrial processes.

These investments fell in early 2025 after climbing for more than three years — a sign of the uncertainty roiling the cleantech market in the United States, according to a recent analysis by Rhodium Group and the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research.

Investments into industrial decarbonization technologies (shown in the chart above) edged down 3% in the first quarter of 2025 to just under $1.5 billion. Those investments are expected to fall further as companies pledge less money to the sector.

Check out Cipher’s Cleantech Tracker, which now features industrial decarbonization technologies.

These types of industrial cleantech investments, which also include technologies that cut emissions from cement, iron and steel, are earlier in their development stage compared to, say, wind and solar, so federal support is far more important.

Bigger picture, investments in all manner of clean-energy technologies have grown significantly in the past few years, driven by laws passed during the Biden administration, including the 2022 Inflation Reduction Act and the 2021 Bipartisan Infrastructure Law.

Cleantech investment made up 4.7% of all private investment in structures, equipment and durable consumer goods in the U.S. in the first quarter of 2025. While that’s down slightly from 4.9% in the last quarter of 2024, it still represents significant growth since 2018, when it was just 1.2%, according to Rhodium data.

The IRA has been “a big driver of our economic growth in the U.S.,” said Hannah Hess, associate director with Rhodium Group’s energy and climate practice.

But examining other data suggests a potentially much-different future, especially for nascent industrial decarbonization technologies.

Although not shown in the above chart, the value of announced investments into such projects in the first quarter of this year fell off a cliff compared to a year ago: Just $79 million — from $16 billion.

“It’s a really staggering decline,” said Hess, connecting it to the federal policy changes ushered in by President Donald Trump’s second administration.

“In general, we would attribute the drop-off in announcements to uncertainty around the tax credits ... and also around the public funding in the form of grants, loans and loan guarantees,” Hess said.

Congress is looking to significantly roll back tax credits originally passed in the IRA. And the Trump administration has attempted to claw back related funding already awarded under Biden’s administration for clean energy and climate projects.

To wit, on Friday, Energy Secretary Chris Wright announced the U.S. Energy Department was canceling awards to 24 projects worth $3.7 billion. Many of those projects were in the industrial decarbonization sector, including carbon capture and sequestration projects and decarbonized cement projects.

ExxonMobil’s nearly $332 million award for a project in Baytown, Texas, where the oil giant was testing technology to produce chemicals burning hydrogen instead of fossil fuels, was canceled. And two decarbonized-cement startups, Brimstone and Sublime Systems, also had their awards rescinded, for $189 million and almost $87 million, respectively.

Editor’s note: Brimstone’s investors include Breakthrough Energy Ventures, part of Breakthrough Energy, which also supports Cipher.

AND FINALLY...
Train views

Cipher reader Raahul Ramakrishnan snapped this photo of wind turbines while on a train to Antwerp, Belgium this spring. The turbines were just five minutes outside the city center, he told Cipher.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.