The administration is cutting research into vehicles powered by hydrogen, betting that hybrid electric plug-ins cars are the way to reduce the nation's dependence on oil.
Last month, a national hydrogen conference in Columbia showed off hydrogen-powered cars and featured the opening of hydrogen fueling stations in Aiken and Columbia.
The National Hydrogen Association's four-day expo in Columbia kicked off with state and Aiken County officials driving a hydrogen-powered pickup truck from Aiken to Columbia on the newly designated S.C. Hydrogen Freeway.
The 59-mile stretch connects the Sage Mill Hydrogen Station in Aiken with the Columbia hydrogen fueling station. With the opening of South Carolina's first two public hydrogen fueling stations, there are about 200 worldwide, nearly 70 of them in the United States, according to the National Hydrogen Association.
"What you're seeing today in Aiken and later in Columbia is a landmark event for the state of South Carolina. ... You are part of history," John Troutman, the chairman of the Economic Development Partnership, which serves Aiken and Edgefield counties, said last month.
Backers of hydrogen told The State of Columbia that most of the efforts at the University of South Carolina and other places have been to create stationary applications for hydrogen, like generators.
While federal funding for hydrogen vehicles could fall as much as $100 million, the Energy Department said it will continue to support other hydrogen projects.
Columbia Mayor Bob Coble said South Carolina's hydrogen efforts are currently focused on projects like fuel-cell backup power batteries at Fort Jackson and the fuel cell-powered scoreboard at USC's new baseball stadium.
"That's where the short-term economic development is," Mr. Coble said.
The decision from the Democratic Obama administration got support from an unusual place Republican South Carolina Gov. Mark Sanford.
"Government should not try to pick the industry of the future," Sanford spokesman Joel Sawyer said. "We shouldn't be in the business of picking horses in this race."
Taxpayers have paid more than $40 million toward hydrogen and fuel cell research, mainly at the University of South Carolina.
University officials have not figured out how the decision from the Obama administration will affect their research. They do say a $12.5 million federal grant announced last week was not for research into hydrogen-powered vehicles.