The US Department of Energy has allocated nearly $1.7bn in government funding for six industrial projects using or producing clean hydrogen to reduce emissions, as part of a wider $6bn package.

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More than half of this announced funding — still subject to negotiation — will go toward making hydrogen-based direct-reduced iron (DRI) for green steelmaking.

The Industrial Demonstrations Program, which covers up to 50% of a successful project’s costs, has allocated $500m each to two steelmakers, Sweden's SSAB and Cleveland-Cliffs Steel Corporation, for DRI.

SSAB plans to set up its first commercial-scale DRI plant using its “Hybrit” concept, first trialled in Sweden, at a site in Mississippi. The plant will use green hydrogen and renewable electricity only, both supplied by US developer Hy Stor, which is planning an H2 production and salt cavern storage hub in the state.

The government funding would also go toward expanding SSAB’s steelworks in Iowa, which currently houses an electric arc furnace for processing scrap steel, which would then use the hydrogen-derived iron to make steel.

Meanwhile Cleveland-Cliffs, which also plans to install two electric arc furnaces with its funding, has only committed to a “hydrogen-ready” DRI plant for its Middletown Works in Ohio, without specifying the source or timeline for using clean H2.

The DOE also announced up to $75m for a project by aluminium supplier Constellium to fire hydrogen in its furnaces at a site in West Virginia.

ExxonMobil was another big winner from the funding call, with the government announcing $331.9m for its plan to replace fossil gas with hydrogen for industrial heat at its olefins plant in Baytown, Texas.

The oil major has proposed the world’s largest blue hydrogen complex to self-supply clean H2, as well as exports of ammonia to Japan and South Korea. However, the company has also warned that it may be unable to take a final investment decision based on the Treasury’s draft guidelines for the clean hydrogen production tax credit of up to $3/kg.

Danish renewables developer Orsted has also been awarded up to $100m for its US subsidiary’s “Star” project on the Texas Gulf Coast, which will produce up to 300,000 tonnes of e-methanol a year from green hydrogen self-supplied from 675MW of electrolyser capacity and biogenic CO2 from nearby industries.

While the company has signed a letter of intent with shipping firm Maersk to supply its fleet of methanol dual-fuel vessels, it has not yet taken a final investment decision on the facility, which was originally scheduled to be commissioned in the second half of 2025.

Downstream EPC consultant Technip Stone & Webster Process Technology has also been allocated up to $200m for the “Sustainable Ethylene from CO2 Utilization with Renewable Energy (SECURE)” project, which in partnership LanzaTech aims to demonstrate “gas fermentation” technology, which captures carbon dioxide and combines it with green hydrogen to create ethylene and ethanol.