Air Products has axed a 35-tonne US green hydrogen plant and exited a hydrogen-based sustainable aviation fuel (SAF) project as part of a $3.1bn write-down just weeks after investors ousted its former CEO.
It has also said it will soon provide updates on its 2.2GW NEOM green hydrogen plant and Louisiana blue hydrogen project.
Aimed at streamlining its capital spending, the industrial gas major has left three US projects in total, which it said would lead to $3.1bn in pre-tax charges to write down assets and terminate contracts.
The company said it had cancelled its $500m plans to build a 35-tonne per day liquid green hydrogen plant in Massena, New York, due to US regulations ruling out existing hydroelectric power from lucrative tax credits.
Under finalised rules for the Inflation Reduction Act’s (IRA) 45V clean hydrogen tax credit, only new renewable energy assets powering clean hydrogen plants are eligible for the subsidies.
The Massena plant was due to supply hydrogen mobility in the region, which Air Products said had developed “slower than expected.”
Air Products has also terminated its agreement with World Energy for the SAF expansion project in California, due to the “challenging commercial aspects surrounding the expansion project and current operations.”
Announced in 2022, the $2bn expansion would have seen Air Products install a new hydrogen plant at the Paramount site, as well as expand its existing southern California hydrogen pipeline network.
It has also terminated a carbon monoxide project in Texas “due to unfavourable project economics.”
“The decision to exit these projects will streamline our backlog and focus company resources on projects that drive value for Air Products’ shareholders,” said new Air Products CEO, Eduardo Menezes.
A statement issued by Air Products also said it would provide updates on the 2.2GW NEOM green hydrogen plant, which is expected to start ammonia production in 2026, as well as its planned Louisiana blue hydrogen project.
However, it said it does not “currently expect any additional material cancellations going forward.”
The substantial write-down comes after investors ousted CEO of 10 years Seifi Ghasemi and installed former Linde executive Menezes, as well as board members, after issuing warnings about the firm’s high-risk, high-capital approach to large-scale projects.
Read more: Ex-Linde exec takes Air Products CEO role amid investor pushback on hydrogen
Led by Mantle Ridge, investors said Ghasemi’s leadership elevated Air Products’ risk profile to “unacceptable levels”, “generated inadequate returns”, and “destroyed substantial shareholder value.”
Much of that criticism was focused towards its clean hydrogen developments.
Read more:Analysis: risk, share performance and clean hydrogen at Air Products
These exits signal Air Products’ retreat from high-risk clean hydrogen investments in favour of safer returns.
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