A New Clean Hydrogen Option: Make It Underground

This week’s Current Climate newsletter also looks at tough market conditions for Tesla’s Semi and how offshore wind farms can stabilize New England’s electricity grid.

Clean hydrogen has been touted for years as a promising, though elusive, fuel for non-polluting cars and trucks. But the biggest impact of finding a source of hydrogen that’s not made from splitting natural gas would be to lower the carbon-intensity of industries that are the biggest hydrogen users: chemical manufacturers, oil refineries, steel makers and fertilizer plants.

So-called green hydrogen, made using just water and renewable power, is one option, but it isn’t cheap enough to replace traditional industrial hydrogen. Companies like Koloma are pursuing geologic hydrogen – pockets of the element that are generated underground – that it could drill for, using skills honed in the oil and gas industry. The challenge with that option is that it’s unclear how steady the flow of hydrogen might be from such a source over the long term.

>> In Other News: Scientists Use Sunlight And Liquid Metal To Produce Clean Hydrogen From Water

Startup Vema Hydrogen thinks it has a better, cheaper approach. Rather than simply relying on “what Mother Nature is willing to give,” it’s injecting a proprietary saltwater solution underground to generate carbon-free hydrogen from a reaction with particular types of iron-rich rock formations, said Pierre Levin, CEO. “Vema’s solution in this regard is much more industrial and predictable.”

Levin previously ran a geologic hydrogen startup, but was swayed by Vema’s approach. “It’s maybe the only way to produce economic and clean hydrogen at scale. All the other solutions have very serious shortcomings,” he told Forbes. “This business is so big that we could become the Shell of hydrogen in 15 years.”

That remains to be seen. However, Vema has drilled its first two pilot wells in Quebec to validate its claims about “engineered mineral hydrogen.” The pilot is the first field deployment of the technology, following many years of laboratory work, he said. If all goes to plan, Vema will supply hydrogen created at its Quebec pilot wells to be used for so-called e-fuels, including sustainable aviation fuel, among other things.

The types of geological formations it’s targeting are relatively abundant, and the company is looking at additional wells in Oregon and other U.S. locations.

It may take a few years to fully validate Vema’s approach, but what makes it especially appealing is that, at scale, the cost of engineered, zero-carbon hydrogen made underground could be less than $1 per kilogram, according to Levin. That would allow the company to sell it for about $3/kg, a price that’s fully competitive with dirty “gray” hydrogen made from natural gas.

“Basically, we know that when we start to produce, we're going to make a ton of money.”

Tesla’s Semi Is Finally Hitting The Road. The Timing Couldn’t Be Worse

Elon Musk spent Tesla’s last earnings call crowing about the electric vehicle maker’s planned transformation into an AI and humanoid robotics powerhouse. He mentioned the upcoming release of the Cybercab, a two-door EV he claims will be sold without a steering wheel or pedals (assuming regulators approve), and the death of the company’s Model X crossover and Model S sedan – the car that kickstarted the company’s success.

What he failed to mention, and no one bothered to ask about, was literally the biggest model rollout in Tesla history: the electric Semi that’s due in the first half of the year. (The company built at least 200 as part of a test program in 2023, for which Tesla has provided few details.) Given the timing of its release, that’s not surprising. While U.S. consumers will probably still buy more than 1 million new EVs this year, even as that segment could see a double-digit percentage drop from 1.28 million in 2025, demand for electric Class-8 semis will be just a fraction of that volume.

“It's sort of a wild card, but we see it for 2026 at pretty low numbers – just under 1,400 units,” Ann Rundle, vice president of trucking industry consultant ACT Research, told Forbes. “It's a tough sell now that the Trump administration has basically gutted any type of support.”

The truck, along with Tesla’s two-door Cybercab electric car, goes into production in the first half of the year, according to the company’s fourth-quarter earnings report. It also shows a map of “Megacharger” stations Tesla plans to build across the U.S. in 2026, specifically designed to repower the Semi’s massive battery pack that holds about 900 kilowatt hours of electricity.

Tesla hasn’t said how much the truck will sell for, though the price is above the $180,000 range Musk promised in 2017, said Jim Monkmeyer, president of DHL’s transportation services unit. The shipping company has been testing the Tesla Semi in its U.S. fleet and is eager to add more. “I can't tell you what the Tesla price is,” he said. “I will tell you that we're very excited to get the Teslas.”

Competing electric trucks from companies like Volvo and Navistar that it also uses run about $400,000 each, and “that price will come down – I think dramatically for the Tesla,” he said.

For DHL, as well as for other early customers like PepsiCo, which operates at least 86 Tesla Semis in its California fleet, part of an early limited production run, purchasing them is part of broader corporate efforts to lower carbon and tailpipe emissions. In DHL’s case, it aims to convert 30% of its fleet to electric power by 2030, “and we’re not wavering from that,” Monkmeyer said. “Our expectation is we want to get as many of these Teslas as we can.”

DHL intends to deploy the trucks mainly for short and medium-haul runs, rather than long-range shipping routes of up to 500 miles, Monkmeyer said. In PepsiCo’s California fleet, it’s unclear whether the trucks are hauling loads of potato chips for its Frito-Lay unit or soda, which is far heavier and drains the battery faster.

“It's probably smarter to transport potato chips,” Glen Kedzie, the former vice president and environment and energy counsel for the American Trucking Associations, told Forbes in 2022, ahead of an earlier planned production start for the truck in 2023. At that time, Musk was telling investors and analysts that Tesla’s goal was to supply 50,000 units annually by 2024, before the plan was subsequently pushed back to 2026.

Sales to other big, deep-pocketed shippers should help sustain some volume for the semi, though smaller fleets may not be willing to take a chance on them for a while. That’s because, aside from the purchase or lease price, operating costs won’t be anywhere as low as Musk promised. He boasted in 2017 that Tesla’s foray into commercial vehicles would be a game-changer for the trucking industry, touting benefits including 500 miles of driving range per charge, rapid acceleration, low maintenance due to high-tech monitoring tools and, most importantly, a cheaper cost of operation because electricity, at the time, was cheaper than diesel fuel.

“Trucking, the economics of trucking, matter tremendously. If your cost-per-mile is too high, it doesn’t make economic sense,” Musk said at the 2017 unveiling. “We’ve really thought about this a lot, and when you take everything into account – you take the lease cost, the insurance cost, maintenance, all of the factors, the fully accounted for true cost of trucking – a diesel truck will be 20% more expensive than a Tesla Semi per mile.”

That may have penciled out at the time, but it isn’t the case now. Tesla’s estimate was based on a fuel cost comparison of $2.50 per gallon of diesel fuel versus 7 cents per kWh of electricity. (A gallon of diesel fuel is the equivalent of 40 kWh of electricity.) Nine years later, the national average price for diesel is about $3.60, but electricity has spiked to 18.9 cents/kWh nationwide, according to the Federal Reserve Bank of St. Louis. It’s as much as 33 cents/kWh in California. The increase is largely due to insatiable power demands from data centers, like those operated by Musk’s own xAI, and it’s wiped out any potential savings on fuel.

“The Trump administration and loss of subsidies aside, we've seen this fall off in oil prices that have brought diesel prices down,” said Ken Vieth, president and senior analyst at ACT Research. “There are niches where electric vehicles in heavy-duty can be successful, but certainly it's a little more uphill now than it was this time last year.”

One trucking niche for electric big rigs – both battery and hydrogen fuel cell-powered varieties – is short-haul runs from big ports, like in Los Angeles, Long Beach and Oakland, to nearby warehouses and distribution centers. That’s a market Nikola targeted with its electric semis until it ran out of cash early last year, ultimately filing for bankruptcy last May. That coincided with a slowdown in demand for electric trucks after federal policy shifted away from supporting clean energy under the Trump administration.

“Tailwinds basically became headwinds – whether it was the lack of incentives, the lack of policy, or companies not being as aggressive about their image as they were a few years ago,” said Steve Girsky, managing partner for investment firm VectoIQ and Nikola’s final CEO. “A lot of European-based companies still want to pursue a green image, but I don't think many companies in the U.S. are as aggressive in pursuing that as they had been.”

Tesla is building its Semi on a new assembly line at the company’s vast Nevada Gigafactory, its main battery factory in the U.S. The exact timing of when trucks begin rolling off that line wasn’t announced in the earnings report, though there was a notable update to the plant capacity table Tesla publishes every quarter. Up through 2025’s third quarter, the Tesla Semi production line was listed as being able to build 50,000 trucks a year. Given that U.S. sales of Class-8 big rigs will only be about 245,000 units in 2026, that would seem to be way too much capacity.

Last week, in the fourth-quarter report, the line’s production capacity was left completely blank.