Air Products quits $4.5bn Texas renewable H2 plant

Market: Hydrogen
08/11/24

US-based industrial natural gas firm Air Products has withdrawn from a planned $4.5bn renewable hydrogen joint venture in northern Texas citing the lack of an anchor customer for the plant.

Air Product has cancelled any ongoing commitment and engineering for the project and has sold its development rights to its partners, chief executive officer Seifi Ghasemi said on an earnings call.

Air Products had previously said it was waiting for US Treasury Department guidance on the 45V renewable hydrogen tax credits to make an investment decision.

Ghasemi puts the Texas project costs at $4.5bn, which marks a rise from previous guidance of $4bn, but he did not list this as a factor in the decision to exit.

Air Products planned to be the sole offtaker for the project on a 30-year contract when it announced the plan with partner utility company AES in 2022. This would have been a similar model to Air Product's Neom project in Saudi Arabia, where it has responsibility as sole offtaker and will then re-sell to the market.

Air Products has more recently chosen not to take more investment decisions on projects unless there is an anchor customer and until it sells 75pc of output from ongoing projects such as Neom, Ghasemi said. This would be closer to the model it has at its established industrial gas plants, where it sells half of the output to an adjacent customer and trades the rest, he said.

Some Air Products investors have pressured the company to sign more long-term deals and take less merchant risk on its clean hydrogen projects.

Air Products has secured more customers for its Neom project, in addition to an existing deal with France's TotalEnergies, Ghasemi said today. Its other customers prefer not to be named publicly yet, he said.

Air Products has also pre-sold 60pc of the output from its Canadian Edmonton CCS-hydrogen project on a long-term take-or-pay contract and is in "active discussion for the remainder of the capacity", Ghasemi said. He said earlier this year that the firm had committed almost all of its capacity at Edmonton.

Air Products will focus on projects at Neom, Edmonton, Louisiana and "one or two other projects in Texas," he said, but no other "major projects".

By Aidan Lea

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12/11/24

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12/11/24

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11/11/24

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Cop: US climate envoy says clean energy trends to stay

11/11/24

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Coalition collapse worries German hydrogen sector

08/11/24

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08/11/24

Coalition collapse worries German hydrogen sector

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DWV also reiterated calls for the implementation of a certification system for renewable hydrogen and derivatives, having previously said that this will be critical to unlock support for producers through greenhouse gas emissions certificates. Turn the page Persistent uncertainty over future budgets raises questions over subsidy mechanisms that are long overdue and which Berlin is counting on to reach its 10GW electrolyser capacity target for 2030. This includes tenders for 3GW of so-called "system-serving electrolysis capacity", intended to provide flexibility in the wider electricity system. These were due to be launched last year and run steadily until 2029 for 500 MW/yr of capacity. The economy and climate protection ministry told Argus in late August that it was planning to consult on the tender framework this autumn, but it has yet to do so. The DWV acknowledged that "the coalition, despite all the criticism, has also done a lot of good for the hydrogen ramp-up". Progress on the planned pipeline network, the carbon-contracts-for-difference scheme and the power plant plans has been made this year. But despite progress in some areas, Germany's 10GW electrolysis capacity is "far out of reach", according to David Hanel, head of public affairs in Germany for French hydrogen project developer Lhyfe. The "current political crisis" offers opportunities for a reset, especially a "reality check" on the effectiveness of support measures that have been drawn up for the sector, including the European hydrogen bank, Hanel said. A change in government following the election is highly likely. Polls show the conservative opposition sister parties CDU and CSU firmly in the lead, although with a projected 30-33pc share of votes they too would need coalition partners. A change in power is unlikely to lead to a major shift in Germany's course on hydrogen. But it could be good news for proponents of "blue" hydrogen made from natural gas with carbon capture and utilisation or storage (CCUS) or "turquoise" gas-based hydrogen made via pyrolysis. In a "discussion paper" on energy published earlier this week, the CDU/CSU called for a "fast, multi-coloured and broad" approach to hydrogen. In order to advance plans, barriers for domestic gas-based hydrogen production with abated emissions have to be removed, the parties said. The incumbent coalition had stressed openness to imports and use of hydrogen from different sources , including gas-based pathways, but limited funding support for domestic production of renewable hydrogen. A change in government could also mean that the recently-approved hydrogen network will be revised. The CDU/CSU has called for extensions to "cover all main economic regions," focusing specifically on the southern states of Baden-Wurttemberg and Bavaria . By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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