A controversial hydrogen production plant planned in Louisiana is on hold as the company considers divesting from plans to make ammonia and capture carbon from the facility and bury it under a wildlife refuge and fishing area.  

In a presentation to investors, the CEO of Pennsylvania-based industrial gases company Air Products announced it would delay its Louisiana Clean Energy Complex in Ascension Parish, southeast of Baton Rouge. Air Products is the world’s largest hydrogen producer and operates a 600-mile network of hydrogen pipelines in Texas and Louisiana. In October 2021, it announced plans for the facility that would use natural gas to manufacture both hydrogen and ammonia.  

But in a May 1 earnings call, Air Products CEO Eduardo Menezes said the company would try to sell off the carbon capture and ammonia production components of its Louisiana project, narrowing its focus on hydrogen production. Menezes described this strategy as “working to derisk” the project.  

“We announced ongoing discussions to divest the carbon sequestration and the ammonia production elements of this project,” Menezes said. He later described Air Products as an “industrial gases company” that “does not intend to be a retail marketer of ammonia.”  

The project is part of a wave of proposed hydrogen production facilities planned across the U.S., most of which would use natural gas combined with carbon capture meant to keep the resulting carbon dioxide (CO2) from reaching the atmosphere. Many of the projects that include carbon capture are being pitched as “clean energy” and would qualify for billions in taxpayer subsidies included in the 2022 Bipartisan Infrastructure Law.  

As of November 2024, the International Energy Agency listed 164 hydrogen projects in the U.S., though only 50 of them were operational.

According to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), Air Product’s plant in Louisiana could generate up to $440 million per year in carbon capture tax credits alone, not including revenue from selling hydrogen or ammonia.  

Anika Juhn, an IEEFA energy data analyst, described Air Products’ decision as a “bit of a head-scratcher” because of the profitability of tax credits for carbon capture and the potential sale of ammonia to Japan and Korea.  

The two Asian countries are collaborating on finding sources of low-carbon ammonia to use in power plants and potentially as a shipping fuel. Japan’s largest energy company, JERA, along with Japanese international trading firm Mitsui & Company and American fertilizer manufacturer CF Industries, recently reached a key financial milestone in a $4 billion ammonia plant in Ascension Parish, less than 8 miles from Air Product’s planned facility.  

“That’s where the money is,” Juhn said of carbon capture and ammonia. “I do think it’s interesting that a player like Air Products is signaling that the [carbon capture] aspect of this project is risky.”  

Environmental groups and nearby residents also view Air Products’ carbon capture plans as risky – to local waterways and public safety.  

Air Products had also proposed a more than 22-mile pipeline that would pump carbon dioxide under Lake Maurepas, a popular fishing area, and through the Maurepas Swamp Wildlife Management Area, a protected wildlife refuge northwest of New Orleans and one of the largest forested wetlands in the Gulf Coast. A $425 million project to restore this habitat by diverting Mississippi River water to the swamp is currently under construction.  
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The company’s plans to capture, pipe, and bury carbon dioxide below Lake Maurepas drew resistance from residents and sportsmen, with hundreds of people speaking out against the plans at public meetings over the past few years. So far, carbon capture has not proven itself to be financially viable or effective on a large scale and is propped up by federal subsidies.  
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Kaitlyn Joshua, Louisiana Gulf Coast Campaigner with Earthworks, who has spent years speaking to residents and organizing opposition to the project, said she was “beyond overjoyed” at the announcement of the delay.

“For me, it’s just about the viability of this particular type of technology,” Joshua said of carbon capture and storage. “It’s the billions and billions that we’re using to try and pull off a scam.” Instead of focusing on carbon capture, she said, the government could use the taxpayer funds “to completely revitalize our state, make sure people have livable wages, and also work on the climate crisis in a way that actually works for the rest of the country.”

Louisiana is an epicenter for dozens of proposed carbon capture projects, many of them located near old, abandoned oil and gas wells that could serve as pathways for carbon to leak into the atmosphere, undoing any benefit of pumping it underground. Carbon pipeline leaks can also threaten the health and safety of people living nearby. This happened in 2020 near Satartia, Mississippi, when a rupture caused an invisible but choking cloud of CO2 that hospitalized 45 people and caused the evacuation of 200.  

Air Products could still move ahead with its hydrogen production plans. The Louisiana Department of Environmental Quality has proposed a draft permit for the plant’s air emissions, and the company has an application pending to disturb wetlands for its pipeline and carbon dioxide injection sites.  

However, many hydrogen industry observers are pointing to other canceled projects as a sign of cooling interest nationally in hydrogen production. Air Products had previously announced it would cancel hydrogen production projects in Paramount, California and Massena, New York. It also canceled plans for a project in Texas City, Texas, that would use natural gas to produce “syngas” – a mixture of hydrogen and carbon monoxide that can be used as a fuel.  A subsidiary of Japanese firm Nippon Sanso also announced in March it would cancel a proposed hydrogen facility in Mobile, Alabama.

While hydrogen made using wind and solar power could be used in some industrial settings as an alternative to coal or natural gas – such as cement-making and steel manufacturing –Juhn, the IEEFA analyst, said she sees no benefit of using hydrogen in power plants or as a vehicle fuel. It takes so much energy to produce hydrogen, which is difficult and dangerous to transport, that companies are typically better off relying on renewable power and batteries, she said.  

“In most cases, when you look at the energy efficiency of the system, the cost and the emissions related to producing and moving hydrogen, it just doesn't make sense,” Juhn said.

For a copy of IEEFA’s recent report on the Louisiana hydrogen plant, click here.