California halts Angeles Link, but the need to decarbonize industry remains

California regulators halted the Angeles Link hydrogen pipeline, but the need to decarbonize industrial energy use has not gone away. As the state charts next steps, it needs to develop a viable decarbonization strategy for its largest gas users: heavy industry.

A proposal aimed at hard-to-electrify industrial gas operations

In 2022, Southern California Gas Company proposed Angeles Link, a dedicated green hydrogen pipeline that would serve the Los Angeles Basin. Their goal was to deliver hydrogen to large industrial users, power plants and other customers that cannot easily electrify.

The concept centered on building new pipeline infrastructure designed specifically for hydrogen rather than trying to force it through an existing gas system that was not built to handle it safely or reliably. Purpose-built infrastructure would avoid many of the safety and material compatibility challenges associated with repurposing pipelines designed for methane transport.

SoCalGas positioned the project as a way to support regional hydrogen production and reduce emissions in hard-to-electrify sectors. At the same time, it asked regulators to approve recovering early development costs from natural gas ratepayers, raising concerns about cost allocation and financial risk.

Ratepayers should not bear the risk

After years of debate, regulators drew a clear line and denied SoCalGas’s request to recover costs for the next phase of Angeles Link, effectively putting the project on hold. The decision protects residential customers from paying for infrastructure designed primarily for large industrial users, a central concern throughout the proceeding. It also reinforces a key principle: ratepayers should not carry the risk of speculative infrastructure investments.

At the same time, the proceeding surfaced broader questions that remain unresolved. Should regulated utilities play a role in developing hydrogen infrastructure? If so, under what conditions, and who should pay? Those questions will shape California’s path forward.

Hydrogen must deliver real climate value

The decision also underscores a deeper point. Clean hydrogen could play a role in reducing greenhouse gas emissions, but only if it delivers real climate benefits. That depends on how it is produced, transported and used.

Leakage is central to that equation. Hydrogen is not a direct greenhouse gas, but it contributes to warming through atmospheric interactions. Leaks from pipelines are not a one-time issue; they could create a steady stream of emissions over time, which can erode or even negate the intended climate benefits of hydrogen use.

This puts pressure on system design. Any future hydrogen infrastructure must minimize the distance between production and end use, utilize materials that can safely contain hydrogen and meet stricter performance standards than those applied to natural gas systems. If leakage rates are too high, the system risks undoing the benefits it has promised.

Hydrogen blending is not a decarbonization solution

While the state is not moving forward with a dedicated hydrogen pipeline, it should not assume there are viable climate benefits to blending hydrogen into the existing natural gas pipeline network. That system was built for methane, and hydrogen behaves differently. Its smaller molecules can escape more easily through seals, fittings and certain pipe materials, and it can weaken metals over time, increasing the risk of leaks and failures.

Utilities already struggle to manage methane leaks, and introducing hydrogen would add unnecessary complexity, raise costs for all customers, and deliver limited benefits. Blending achieves limited greenhouse gas emissions reductions relative to its cost. As seen in the below chart, by contrast, electrification provides a more direct, cost-effective path to cut emissions across many applications, especially for residential uses. While climate action is urgent, blending is not a practical substitute for a well-designed strategy to decarbonize industrial energy use.
 
California still needs an industrial decarbonization strategy

The underlying challenge remains: decarbonizing large industrial gas customers. Unlike homes, many industrial processes rely on a fossil fuel to trigger chemical reactions or generate high-temperature heat that is difficult to electrify with current technologies. For these applications, hydrogen may be one of the few viable lower-carbon options. But deploying it raises important questions about cost, risk and system design.

A more targeted approach is needed. Policymakers should assign costs to the customers who directly benefit, require shareholder investment to reduce risk to ratepayers and leverage public and federal funding to support early infrastructure development.

At the same time, regulators should set strict leakage and performance standards and tie approvals to demonstrated results over time. This approach allows progress while protecting customers from unnecessary costs and ensuring hydrogen delivers meaningful emissions reductions.

This is a reset, not the end

Angeles Link will not move forward as proposed, but the need it aimed to address is real. California now has an opportunity to move forward with greater discipline and clarity.

The state should stay focused on real emissions reductions for the industrial sector, with hydrogen playing a targeted role in a broader industrial decarbonization strategy