key takeaways:
- Air Products canceled its Louisiana Clean Energy Complex on June 30, citing expected financial returns below its criteria.
- The company will take a pretax charge of up to $2.9 billion related to the Louisiana project and other clean energy initiatives.
- Air Products will also close a zero-carbon liquid hydrogen facility and small clean energy delivery projects in Arizona.
Air Products & Chemicals Inc. It is canceling plans to develop a billion-dollar project in Louisiana that would produce hydrogen and capture carbon dioxide.
Air Products said in a statement June 30 that the company will take a pretax charge of more than $2.9 billion in its fiscal third quarter to offset the cancellation of the Louisiana Clean Energy Complex and other initiatives. The company said it decided to halt the project based on expected financial returns not meeting its “stringent” criteria.
Allentown, PA-based Air Products is ranked No. 72 on the Transportation Topics Top 100 list of North America’s largest private carriers.
The move is the latest setback in the effort to develop hydrogen as a clean fuel in the US, as the Trump administration’s signed tax bill slashes tax credits for the gas. It is also another blow to carbon capture and sequestration, which the oil and natural gas industry has long promoted as the key to fighting global warming.
“What you’re seeing here is a reduction in long-term government support for the industry,” said Joseph Majkut, director of the Center for Strategic and International Studies, a Washington-based research group. “The future of hydrogen projects in the United States is in considerable question given the lack of support for climate action, no federal climate policy, and a more challenging fiscal picture ahead.”
Once seen as a climate-friendly way to power heavy industry from ships to steel and cement factories, hydrogen projects have been canceled or scaled back around the world amid weak demand and high costs. The Trump administration has canceled billions of dollars of hydrogen projects destined for the West Coast that the previous Biden administration saw as helping jump-start the market for the nascent fuel.
Air Products announced the Louisiana Clean Energy Complex in 2021, its largest U.S. investment to date, with an expected cost of $4.5 billion. As envisioned, the project would use natural gas to produce 750 million cubic feet of so-called blue hydrogen, using hydrocarbons as feedstock with carbon capture. CEO Sefi Ghassemi, who oversaw the project, was later ousted. The project was expected to be commissioned in 2026.
Air Products also said that on June 30 it would close a zero-carbon liquid hydrogen facility in Casa Grande, Ariz., and other small-scale projects supporting clean energy delivery.
“These exits are being driven by challenging business conditions, project-specific economic factors and slower-than-expected growth in some markets, driven largely by hydrogen for mobility,” the company said.
Research firm Capstone said in an email that the decision by Air Products to stop developing the project was likely the result of factors including unexpected costs or challenges securing offtake agreements.
“The market reality is not matching the industry enthusiasm of a few years ago,” said Majkut, director of CSIS’s energy security and climate change program. “We are not seeing the demand for hydrogen projects that was envisioned.”
