Arnold Schwarzenegger declared in 2004 that California will construct a Hydrogen Highway, a network of gas stations that would stretch the length of the state and be prepared to fill a new generation of zero-emission automobiles, while driving a hydrogen-powered Hummer to a news conference. The photo opportunity was captivating. It wasn’t followed through on. After more than 20 years, that initial idea has subtly evolved into something more like to a warning about the disconnect between ambitious clean energy policies and the obstinate economics that underpin it.
California has invested more money in hydrogen transportation than any other state. With Governor Newsom’s support, the ARCHES hub was established in 2022 and brought together over 400 public and private partners, including Chevron. It was backed by over $10 billion in private sector cost-share commitments and a promised $1.2 billion in federal funding. It was one of the nation’s most ambitious hydrogen projects.
Then, as part of a larger $7.5 billion rollback that reduced hydrogen grants to Democratic-leaning states while maintaining them in Republican-governed ones, the Trump administration ended its financing arrangement with ARCHES on October 1, 2025. It was vengeful, according to Newsom. California has filed an appeal. However, the commercial reality, which was challenging long before the federal support vanished, is unaffected by the legal dispute.
According to Matthew Hodgkinson, an analyst at S&P Global Energy, hydrogen is around four times more expensive per mile for cars in California than regular gasoline, even after taking into consideration the recent increase in gas prices. Hydrogen passenger cars are a very difficult product to market only based on that figure.
Although hydrogen vehicles make up only around 1% of California’s zero-emission vehicle market, the state is home to the great majority of the nation’s hydrogen fuel cell passenger cars. At EV stations, charging lineups extend beyond parking lots. When they are open at all, hydrogen stations see a trickle of cars, many of which are driven by people who got good lease deals but are now forced to use a fuel that is costly, hard to come by, and sometimes unavailable due to supply disruptions or malfunctioning nozzles that can be out of commission for weeks at a time.
The shift to heavy industries, such as power generation, transit busses, and freight trucks powered by hydrogen, was meant to save the technology’s California narrative. Rather, it has exposed an additional layer of issues. The majority of the production facilities that were initially planned under ARCHES have been postponed or scrapped. The main issue, according to Green Hydrogen Coalition lobbyist Alfredo Arredondo, is that there aren’t enough consumers. By the end of 2025, there were around twenty times as many electric busses and trucks on Californian roads than hydrogen-powered vehicles. Similar to the network of passenger cars before it, the infrastructure needed to enable hydrogen heavy-duty vehicles has not yet reached the scale required by the business case.
One of the few ongoing hydrogen projects in California that is still proceeding after ARCHES paused is the Los Angeles Department of Water and Power, which is forging forward with plans to convert its Scattergood Generating Station in Playa del Rey to run on a hydrogen-natural gas blend. Despite opposition from the Sierra Club and LA Waterkeeper, who claim the utility disregarded how much water green hydrogen production requires and how much nitrogen oxide a hydrogen-gas blend combustion process emits into an airshed already plagued by smog, the Los Angeles City Council reaffirmed the plan this summer. These are not peripheral issues. The fact that the plant is using a renewable blend does not negate the concerns environmental health researchers have been making about hydrogen combustion for years.
In a 2025 analysis, BloombergNEF declared California’s hydrogen sector to be “already dead”. Although some industrial and port applications may still find hydrogen economically viable, that framing is perhaps sharper than reality justifies. Nevertheless, it indicates a real fall in commercial momentum that the ARCHES budget cut only accelerated rather than caused. Prior to October 2025, the projects were put on hold. The clients were not showing up.
The cost curve was not advancing quickly enough. It’s difficult to ignore how drastically the narrative has changed since Schwarzenegger’s Hummer moment, with the technology that was supposed to improve California’s air quality now being questioned on the basis of air quality in the state that spent more money than any other state attempting to make it work.
