Global industrial gases group Nippon Sanso Holdings Corporation (NSHD) has written off $173m following the cancellation of a hydrogen production plant in the US.
NSHD’s decision came after a reassessment of the project’s viability. The company concluded that resuming construction, which was already paused, was no longer feasible, leading to the write-down of the plant’s value. The financial hit, however, is not expected to affect any other plans.
While NSHD did not name the project, it is likely to be a proposed hydrogen facility in Mobile, Alabama, planned by its US operating company Matheson Tri-Gas. The plant was expected to produce over 30 million standard cubic feet per day of hydrogen, using renewable hydrocarbon feedstocks such as bio-naphtha and other bio-offgases, to supply a 75,000 barrel per day renewable diesel refinery operated by Texas-based specialty refiner Vertex Energy.
This cancellation follows a wider trend in the industry. Air Products recently cancelled three major US hydrogen projects, resulting in a much bigger $3.1bn write-down. The company cited rising costs, regulatory challenges and concerns about the commercial viability of green hydrogen as reasons for the cancellations.
Read more: Air Products axes three major US projects
Every cancellation highlights the growing difficulties in scaling large-scale hydrogen projects. Despite hydrogen being a confirmed part of the clean energy transition, the growing number of cancelled projects raises concerns about the sector’s ability to meet its ambitious targets.
The added financial strain of developing associated hydrogen infrastructure, combined with regulatory and market uncertainties, has made many projects look that much less viable.
The US, through the previous Biden administration, has set ambitious targets for hydrogen as part of clean energy plans. However, recent write-downs and project cancellations suggest that turning these ambitions into reality may take longer than initially expected, and the political climate has now changed, adding another layer of uncertainty.
By May it is expected that more clarity will be forthcoming around US hydrogen projects, but some companies have concluded their risk assessments now based on the available evidence around costs and other variables and decided there is not enough reason to wait.
