Building the Next Phase of California’s Hydrogen Market: FPH2’s CEO Jason Caudle

Hydrogen is not new to California. It has long served industrial users, refineries, and critical infrastructure. What is new—and where First Public Hydrogen (FPH2) is focused—is the deliberate expansion of hydrogen into scalable, demand-driven markets, including public transit, distributed energy, and stationary power.

Ahead of VX26, FPH2’s Chief Executive Officer (CEO) Jason Caudle explains how California’s hydrogen market is shifting from policy anticipation to market execution. As cities, transit agencies, and suppliers align around offtake, Caudle outlines how FPH2 is aggregating demand, supporting bankable supply, and keeping momentum in the hydrogen market moving forward.

“Hydrogen already has a market in California. The work now is scaling the next segment…and ensuring the market grows with durability and discipline.” — Jason Caudle, CEO of First Public Hydrogen (FPH2)

Jason, please reintroduce both yourself and FPH2 to VX News readers.

I’m Jason Caudle, CEO of First Public Hydrogen. FPH2 is a Joint Powers Authority created by cities to function as a public hydrogen utility, focused on aggregating demand, improving cost transparency, and supporting the development of new hydrogen supply to come online.

Hydrogen has been part of California’s energy economy for decades. Our role is to help expand that market into new segments by organizing demand to support scalable, bankable investment. Today, our primary focus remains the same: to build a robust, cost-effective municipal public hydrogen network, and we will continue to do so.

How has the evolving tax and regulatory landscape reshaped hydrogen markets—and as 2025 closes, what’s your outlook for the sector?

We’ve seen changes under the new federal administration and in 45V, the ITC, and the PTC, affecting hydrogen in both positive and challenging ways. At the same time, the Department of Energy has signaled it may not fund any hydrogen hubs, underscoring the importance of leadership at the state and local levels.

California continues to send strong policy signals in support of hydrogen, including incentives that encourage investment in hydrogen equipment, production, and clean-energy solutions. That foundation matters.

There is still momentum in the marketplace. Local governments remain committed to significant hydrogen investments; projects like Scattergood continued to move forward last year. We continue to see growing demand in the mobility sector and increasing interest in hydrogen for distributed energy. We’re also optimistic that regulatory updates in 2026 will further support public and private entities committed to future hydrogen deployment.

The public-health opportunity is significant. The more we transition buses and trucks, the more we can deliver meaningful air-quality benefits along corridors that have historically been the most impacted.

On stationary power, we’re seeing strong momentum as well. Renewable hydrogen is a drop-in fuel that can replace fossil fuels for 24/7 baseload power. Data centers are a clear example of emerging demand; these facilities require extremely reliable power, and as new projects are built across California, hydrogen presents a compelling clean-energy solution. The same applies to ports and fuel-cell-based systems supporting demand management and resilience.

What are the immediate effects of pausing ARCHES? Who fills that vacuum?

We have supported ARCHES since its inception, and we support any effort, federal, state, regional, or private, that advances the hydrogen economy. We will continue to work with partners and projects wherever momentum exists.

At the same time, there is a growing recognition across the market that progress depends on organizing demand, securing offtake, and moving projects forward in a coordinated way. That shift toward execution is becoming increasingly important.

As the former City Manager of Lancaster, a city with a distinctly market-oriented identity, how is Lancaster impacted by changing federal energy policies?

Lancaster is a member of FPH2 and has hydrogen developments that could be directly affected by changes to 45V and related tax credits. The response for Lancaster and similar cities is straightforward: commitments are needed today so projects can move faster. 

That message extends beyond any one city. Across California, project timelines now directly affect project viability, they always have but do so even more now. 

For those unfamiliar, what is the 45V tax offset?

45V provides up to a $3-per-kilogram tax credit for clean hydrogen, based on carbon intensity. To qualify, projects must meet defined “beginning of construction” requirements under federal guidance.

What matters most for developers is timing. Eligibility is tied to when a project reaches construction milestones, which is why the credit is driving urgency across the market and reinforcing the need to organize demand and move projects forward now.

On that note, how have the transit agencies responded? 

We’re working closely with several transit agencies to form our first aggregation. Many already know what their future bus deliveries look like, whether that’s 10 buses or more than 100, and can forecast their hydrogen demand.

The challenge is coordination. Agencies recognize that coordinating demand is the most effective way to secure supply; it is common for public agencies to work together.

We’re pleased to be working with the Governor’s Office, including ARB and GO-Biz, and to co-host a January 9 webinar for transit agencies on demand aggregation. Discussing how fuel needed two years from now must be contracted today to ensure availability.

You’ve addressed demand aggregation; what about supply aggregation?

We’ve completed our RFP process. We know which projects exist, their pricing, locations, and timing. Supply is ready.

Every supplier we’ve spoken with has been clear: projects cannot move forward without aggregated buyers. The work now is contracting, securing supply, and matching it with coordinated demand in a compliant way.

For context: Describe the governing structure of FPH2. What market conditions are required for hydrogen to become not only financially self-sustaining, but truly bankable?

FPH2 is a Joint Powers Authority (JPA) with a governance structure designed to operate like a business rather than a political body. We anticipated multiple cities participating and structured the Board accordingly.

The Board includes the Mayor of Lancaster, R. Rex Parris, whose long-standing vision has catalyzed clean-energy innovation, the Vice Mayor of Industry, Newell Ruggles, representing participating cities, former legislator Bob Hertzberg, environmental engineer Tanya Peacock, UC Irvine Professor Jack Brouwer, Ernesto Medrano, President of the LA/Orange County Building Trades, and environmental advocate Aura Vasquez

FPH2’s member cities: Lancaster, Industry, Montebello, Shafter, and Fresno, anchor our work in real communities with real energy needs. Board members engage through advisory committees that support implementation and operations, allowing us to move with market discipline while maintaining public accountability.

We are grateful for the Board’s leadership and engagement. Their guidance is foundational to FPH2’s work.

Could you elaborate on your Board's priorities?

The priority is aggregating supply for transit. Transit agencies are already in the market, demand is increasing, and supply remains constrained.

Transit also drives volume. Once offtake is secured at scale, we can layer in stationary power and other applications, buildings, data centers, and resilience use cases, at marginal cost.

That initial aggregation is what enables the broader market.

California prefers green, but what does that exclude and include? And, what exactly is portable green hydrogen?

What matters most is carbon intensity. Hydrogen produced using renewable resources, wind, solar, geothermal, biomass, earns a lower CI score, which directly affects LCFS value and eligibility for incentives like 45V.

Lower CI means higher incentives and lower net fuel costs. Environmental and economic objectives are aligned.

The market challenge for hydrogen has always been cost. Are you now suggesting that current fuel sources are affordable?

In transit applications, yes. Based on current market visibility, hydrogen is cost-competitive, and in some cases less expensive, than conventional fuels.

For stationary power, competitiveness depends on the comparison point. Against peak retail electricity prices, hydrogen can be competitive for resilience and demand-management scenarios.

Before closing, Jason, our 19th annual VerdeXchange Conference is now set for the first week of June. Where do you hope to see this market will be in June?

By June, First Public Hydrogen expects to have completed its first demand aggregation. That milestone will indicate whether there is sufficient scale and alignment to secure a new green-hydrogen supply.

Let’s conclude with which is harder: being the City Manager of Lancaster or being the leader of this organization?

I wouldn’t say it is easier or more complicated; it is different. 

We’re not managing an existing program and established personnel. We’re building an entity and operations from scratch, which requires a different level of focus and urgency.