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Highlights
- Air Products exits three U.S. projects, citing economic and regulatory challenges.
- NEOM green hydrogen project in Saudi Arabia nears 80% completion, set for 2026.
- Louisiana Clean Energy Complex progresses with discussions for equity partners.
Air Products (NYSE:APD) has announced its decision to exit from three major U.S. projects after a review by its newly-elected Board and CEO. As a result, the company expects to record a pre-tax charge of up to $3.1 billion in Q2 fiscal 2025, stemming from asset write-downs and contract terminations. These moves reflect the challenges Air Products faces as it evaluates the economic and regulatory environment for its projects.
The three affected projects include the World Energy’s Sustainable Aviation Fuel expansion in California, the Massena green liquid hydrogen facility in New York, and a carbon monoxide production project in Texas. The company stated that these cancellations were driven by a combination of commercial difficulties, unfavorable regulatory changes, and slower market development.
Key Factors Behind the Project Cancellations
- World Energy's Sustainable Aviation Fuel Expansion (California): The decision to terminate this project was due to challenging commercial aspects that made the expansion financially unviable. Air Products cited that, despite the potential of sustainable aviation fuel, the commercial terms no longer met the company’s investment criteria.
- Massena Green Liquid Hydrogen Facility (New York): The cancellation of this project was influenced by regulatory changes that affected the eligibility for tax credits tied to hydroelectric power. Additionally, the slow pace of hydrogen mobility market development in the region contributed to the company's decision to withdraw from the project.
- Texas Carbon Monoxide Production Project: Unfavorable economic conditions led to the termination of this project. Despite initial expectations, the economics of the carbon monoxide production in the Texas market were no longer viable, prompting the company to exit.
Despite these setbacks, Air Products remains optimistic about its ongoing major projects, particularly its green hydrogen initiatives.
Ongoing Major Projects and Strategic Outlook
Air Products continues to make significant progress on several other key projects. The NEOM green hydrogen project in Saudi Arabia, a pivotal development in the company’s transition to clean energy, is currently at 80% completion. The project, which aims to produce green hydrogen, is expected to be fully operational by late 2026. This project represents one of the largest green hydrogen initiatives in the world and is a cornerstone of Air Products’ strategy to lead in the clean energy space.
In addition, the Louisiana Clean Energy Complex is progressing as planned, with a projected startup in 2028. The company is actively engaged in discussions with potential equity partners to reduce the capital outlay required for the project, making it a strategic development for Air Products’ long-term growth.
Conclusion
Air Products’ decision to exit three major U.S. projects signals the company’s responsiveness to changing market conditions and regulatory landscapes. Although these exits will result in a significant pre-tax charge, Air Products is still advancing its core projects, particularly in the green hydrogen space, where it holds a leading position. The company’s ongoing efforts to reduce capital expenditures through strategic equity partnerships for projects like the Louisiana Clean Energy Complex, combined with its progress on the NEOM green hydrogen project, suggest that Air Products remains committed to its long-term growth in clean energy. Investors will be watching closely for signs of recovery and further development as the company works to navigate these challenges and capitalize on new opportunities in the clean energy sector.
