Clean Energy Exit
Air Products Exits Major Louisiana Clean Energy Project, Stock Soars Despite $2.9 Billion Charge
Anonymous
Key Points
1
Air Products’ shares jumped about 6.8% in pre-market trading after the cancellation of the Louisiana Clean Energy Complex, signaling a positive market reaction despite the significant charges.
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The Yara International renewable ammonia deal from NEOM is described as independent of the LCEC decision, enabling ammonia from NEOM to be sold and delivered worldwide through Yara's global supply chain.
3
The canceled LCEC project was described as involving hydrogen production and carbon-dioxide sequestration, i.e., a hydrogen production and CCS component, highlighting the scope of the multibillion-dollar facility.
4
Air Products has a long-standing dividend track record, having paid dividends for 56 consecutive years with a current yield around 2.67%, underscoring its ongoing shareholder returns despite project cancellations.
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Costs related to the cancellation are not fixed and may be refined over time; estimated charges are subject to refinement and could differ materially from final amounts.
Air Products and Chemicals scrapped its $4.5 billion Louisiana Clean Energy Complex on June 30, 2026, and said it will take a pre-tax charge of up to $2.9 billion in its fiscal third quarter, according to Reuters. The hit covers asset write-downs and contract termination costs. Despite the massive charge, investors cheered the move — shares jumped about 6.8% in pre-market trading.
CEO Eduardo Menezes said the exit was driven by "expected financial returns not meeting stringent return criteria," Investing.com reported. Air Products also canceled a zero-carbon liquid hydrogen plant in Casa Grande, Arizona, and several smaller clean-energy projects.
A $4.5 Billion Blue Hydrogen Dream Falls Apart
Air Products announced the Louisiana Clean Energy Complex back in October 2021. The facility was designed to produce over 750 million standard cubic feet of hydrogen per day by reforming natural gas. It would have captured roughly 5 million metric tons of carbon dioxide per year and stored it underground, Gasworld reported. It was one of the largest blue hydrogen projects ever proposed in the United States.
Three problems killed it. Federal rules tightened around what counts as "clean" hydrogen, making tax credit eligibility uncertain. Demand for hydrogen in trucking and transport grew far slower than expected. And local groups in Louisiana fought hard against a carbon dioxide pipeline planned to run through the Maurepas Swamp near schools and wetlands, according to TipRanks.
Charges Hit $2.9 Billion but Only 4% of Company Value
The pre-tax charge will not exceed $2.9 billion. After taxes, analysts estimate the hit at around $2.2 billion. About $925 million of that will be actual cash spending on contract exits and site cleanup. The rest is a non-cash write-down of assets, TipRanks noted.
That sounds large, but Air Products has a market cap of about $60.4 billion. The charge equals roughly 4% of that total. Analysts called it a healthy cleanup of the balance sheet. The company has paid dividends for 56 consecutive years and currently yields about 2.67%, signaling it plans to keep rewarding shareholders, according to Investing.com.
Louisiana Jobs Lost as Company Pivots to Saudi Arabia
The cancellation wipes out roughly 2,000 construction jobs and about 200 permanent roles that paid an average of $93,000 a year in Ascension Parish, Louisiana. State officials had promoted the project as a key part of Louisiana's path to net-zero emissions by 2050. Environmental groups, however, called the exit a win. Earthjustice said the project was a "false solution" that would have cost billions in subsidies for limited environmental gain, Reuters reported.
While closing up shop in Louisiana, Air Products is doubling down in Saudi Arabia. The company's NEOM Green Hydrogen Project is reportedly 80 to 90 percent complete. Air Products also finalized a separate deal with Yara International to market and distribute renewable ammonia from NEOM through Yara's global supply chain, Gasworld reported. That agreement is independent of the Louisiana decision.
Investors Bet the Cleanup Unlocks Future Returns
The 6.8% pre-market stock jump tells the real story. Investors had grown frustrated watching Air Products pour capital into projects with uncertain returns. Analysts at Seeking Alpha praised the "capital reallocation" toward higher-return assets. Air Products said it plans to redeploy certain equipment from canceled projects to existing or future operations, limiting waste, TipRanks noted.
The company warned that the $2.9 billion charge is not yet final. Costs may be refined over time and "could differ materially from final amounts," according to the SEC Form 8-K filing cited by Investing.com. Air Products still operates dozens of facilities and a hydrogen pipeline network serving Gulf Coast refineries, and it says it remains committed to profitable growth in the region.
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