Air Products’ triple project cancellations, announced today, follow Air Liquide’s move to reduce its involvement in the $7bn US Hydrogen Hubs programme from six hubs to two. The programme itself is under federal review currently.
Both steps are a response to new realities in the US when it comes to clean energy, as well as already-shifting priorities in the case of Air Products.
Air Liquide CEO Francois Jackow spoke about the hubs after President Trump’s decision to freeze federal funding for clean energy projects, and as Air Liquide announced in the same earnings call that it expects more final investment decisions (FID) on its projects to be pushed back to the second half of this year as everyone waits on the policy review.
Read more: Air Liquide grapples with FID slowdowns
At times of great uncertainty, the priority is to de-risk projects as thoroughly as possible.
In the case of Air Liquide, it is partnering with ExxonMobil’s Baytown project in Texas, investing up to $850m to build, own and operate four large modular air separation units as well as related infrastructure. It will produce a daily volume of 9,000 tonnes of oxygen which will be used by ExxonMobil’s Autothermal Reformers (ATR) to produce low-carbon hydrogen. Texas has the triple attributes of established energy infrastructure, tax credits and streamlined permitting procedures.
Air Products, for its part, is embarking on a strategic reset following the recent replacement of its CEO. It has also said it is in active discussions with equity partners for its Louisiana Clean Energy Complex, which is a key project still going ahead along with NEOM, to reduce capital outlay.
The fact is that large scale hubs require massive capital investment across the value chain. The original hubs programme was designed to reduce costs and encourage private sector investment. But with federal funding now looking precarious, companies must take a cautious and pragmatic approach, and the progress of the hubs has been slow already, even when the federal government was fully behind them.
White outwardly Air Products’ decision to scale back on projects relating to sustainable avaition fuels (SAF) and green liquid hydrogen is another blow for clean energy development, such strategic shifts may lead to more controlled development in the near future, rather than widespread withdrawal.
Air Products said the decision to cancel the Massena green liquid hydrogen project is based on ‘recent regulatory developments rendering existing hydroelectric power supply ineligible for the Clean Hydrogen Production Tax Credit (45V) as well as slower than expected development of a hydrogen mobility market in the region’.
Certainly it has been a turbulent first quarter for the hydrogen trucking sector. Nikola has been forced into Chapter 11 bankruptcy, UK-based HVS announced it will focus on licensing its hydrogen propulsion systems rather than making trucks, and Hyzon’s Q3 2024 results revealed the firm had burned through nearly $25m in cash reserves, leaving it with just $6.5m.
Ongoing cost challenges remain a major hurdle for green hydrogen, with current costs of $4 to $6 per kilo, compared with $1.50 to $2 for blue hydrogen. That reality is behind the shift in focus towards blue hydrogen, built on carbon capture, in the near term.
