SoCalGas customers spared paying $266M for hydrogen pipeline project

California regulators have denied utility Southern California Gas permission to collect $266 million from its customers to fund a sprawling hydrogen pipeline network it hopes to build across Southern and Central California. Environmental and consumer advocates are cheering the decision — and urging state policymakers to push for better options than costly hydrogen infrastructure projects to tackle the challenge of decarbonizing heavy industry.

Thursday’s announcement from the California Public Utilities Commission represents a major setback for SoCalGas’ Angeles Link project. First proposed in 2022, the plan envisions a network of pipelines to carry hydrogen produced with clean electricity in the Mojave Desert and Central California to industrial and commercial customers seeking a carbon-free alternative to fossil gas in the Los Angeles Basin.

Angeles Link came under immediate fire from environmental groups questioning its efficacy as a climate solution, given the enormous energy losses involved in using renewable electricity to produce the gas and the technical and safety challenges of transporting it in pipelines.

And consumer advocates challenged the idea of forcing all the utility’s customers to pay for building a pipeline network for a gas that would serve only a subset of industrial and commercial users.

Those cost concerns heightened as the utility’s forecast of expenses for the second phase of the project nearly tripled from $92 million to $266 million between 2022 and 2024. And that was just for planning. While SoCalGas has not disclosed estimates for actually building the pipeline network, the Sierra Club has estimated that ​“construction costs will likely be billions of dollars.”

The CPUC’s decision found that ​“it is not reasonable to approve cost recovery” for the project’s next phase ​“before the Project is constructed, dedicated to public use, and demonstrated to be used and useful to ratepayers.” The decision allows the utility to file another application.

SoCalGas spokesperson Brian Haas told Canary Media in an email that the utility was ​“disappointed” by the CPUC decision. ​“We continue to believe that hydrogen — including clean renewable hydrogen — can help advance California’s energy and climate goals while supporting the long‑term affordability, security, and reliability of energy service for customers,” he said.

But it’s far from clear that hydrogen can provide an environmentally or economically viable route to meeting those goals — either in California or across the country. Over the past three years, a boom in clean hydrogen investment has largely evaporated in the U.S. Billions of dollars meant to spur projects to generate, store, and transport hydrogen have been canceled or put on hold.

Critics have long argued that the cost and complexity of using hydrogen to replace fossil fuels outweigh the potential benefits in all but a handful of industries, such as fertilizer production, steelmaking, cement production, and shipping fuel.

Clean hydrogen proponents say that governments must subsidize early investments to meet eventual demand in such hard-to-decarbonize industries. But in the U.S., government backing has largely dried up. The One Big Beautiful Bill Act passed by Republicans in Congress in 2025 cut short the timeline for securing tax credits vital to making clean hydrogen cost-competitive with hydrogen derived from fossil fuels.

And last year, the Trump administration announced it was canceling billions of dollars in federal funding for seven ​“hydrogen hub” projects meant to foster regional production, storage, transport, and use of the fuel. Last month, the Department of Energy stated that it may reinstate those funds for five of the seven hubs. But it has not restored funding for two hubs on the West Coast — including $1.6 billion for one in California.

“SoCalGas is not able to recoup costs for this project from ratepayers — and on top of that, SoCalGas will not get any federal funding,” said Andrea Vega, senior California organizer with Food and Water Watch, a nonprofit that has been longtime foe of the project. Without those two sources of money, ​“there’s not really a path forward for the Angeles Link project. It would essentially be dead,” she said.

That is welcome news to environmental groups that have been fighting plans by gas utilities across the country to promote hydrogen in lieu of electrifying transportation, building heating, and other key sources of carbon emissions.

“The Commission is right to recognize that SoCalGas’ proposal would expose customers to significant financial harm — before even accounting for the potential environmental and safety concerns,” Julia Dowell, a Sierra Club senior campaign organizer, said in a Thursday statement.

Vega highlighted that the loss of funding for the Angeles Link project will force utilities in the state to rethink their plans to rely on clean hydrogen for some controversial projects. In particular, Los Angeles Department of Water and Power’s effort to refurbish its Scattergood fossil-gas power plant to burn hydrogen may no longer be viable without the prospect of the SoCalGas pipeline, she said.

“If there is no major network of hydrogen pipelines, it’s going to be really difficult for Scattergood to function and receive the hydrogen blend that it needs,” she said.

At the same time, California policymakers and utilities will need to find alternatives to large-scale hydrogen production to cut carbon emissions from heavy industries, said Michael Colvin, California energy program director at the Environmental Defense Fund.

“In the near term, California could be exploring ways to make it easier for large industrial customers to pursue energy efficiency to use less gas for their high-heat processes,” he said. Electricity rates and tariffs that reward industrial customers for using the state’s increasingly cheap and abundant solar power could also lower the cost of switching from fossil fuels to electricity for less heat-intensive industrial processes, he said.

As for industrial processes that require fossil fuels for chemical reactions or high-temperature heat, ​“hydrogen may be one of the few viable lower-carbon options,” Colvin said in a Thursday blog post. ​“But deploying it raises important questions about cost, risk and system design. A more targeted approach is needed.”