Air Products quits $4.5bn Texas renewable H2 plant

Spanish 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US-based industrial natural gas firm Air Products has withdrawn from a planned $4.5bn renewable hydrogen joint venture in northern Texas citing the lack of an anchor customer for the plant.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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06/12/24

US H2 hopes at risk with 45V uncertainty: Industry

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Denmark's wind tender flop linked to H2 network doubts

06/12/24

Denmark's wind tender flop linked to H2 network doubts

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Newly agreed EU, Mercosur FTA faces uphill battle

06/12/24

Newly agreed EU, Mercosur FTA faces uphill battle

Montevideo, 6 December (Argus) — The EU and South America's Mercosur closed a free-trade agreement (FTA) nearly 25 years in the making, but there is still a long road to ratification. Uruguayan president Luis Lacalle and European Commission president Ursula von der Leyen announced the deal at a Mercosur summit in Montevideo, the Uruguayan capital. The presidents of the three other Mercosur founding members — Argentina, Brazil and Paraguay — were present. The FTA will remove tariffs on more than 90pc of goods among the members. Von der Leyen called the agreement a historic milestone that would benefit 700mn consumers. She said the agreement "is not only a trade agreement, but also a political necessity." Lacalle said "an agreement of this kind is not a magical solution, but an opportunity." Leaders recognized that the agreement still has major hurdles to clear as it requires approval from member states. The agreement will go to legal review and translation in the next month in view of its future signing, according to the Mercosur-EU declaration. While the Mercosur countries are in favor of the agreement, opposition is strong in France, Poland and several smaller EU states. Argentinian president Javier Milei, who supports the agreement, criticized Mercosur as a block. "Mercosur, which was born with the idea of deepening our commercial ties, ended up like a prison that does not allow its members to take advantage of their comparative advantages or export potential," he said. Van der Leyen said that more than 60,000 businesses, half of them small, export to Mercosur. The EU exported $59bn to Mercosur in 2023, while Mercosur's four founding members shipped $57bn to the EU. She also stressed the importance of EU investment in Mercosur, including in sustainable mining, renewable energy and sustainable forestry. Brazilian president Luiz Lula da Silva said during the summit that the region had to take advantage of its resources, including agriculture and energy. The four Mercosur countries are major food producers, including crops such as corn, soy and sugarcane, used for biofuels. Brazil is the world's top soy producer, while Argentina is third, Paraguay sixth and Uruguay in the 14th spot. Bolivia, which joined Mercosur in July, is the 10th producer. Brazil is a major mineral producer and Argentina is slowly beginning to strengthen its mining sector. It has the world's second-largest lithium resources. Argentina is also beginning to monetize its unconventional gas formation, Vaca Muerta, the second largest in the world with 308 trillion cf of reserves. It is working on different LNG projects, with a focus on exports to Europe. The Mercosur countries also have in common plans for low-carbon hydrogen production, which also see the EU as an export market for value-added products, such as fertilizers. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US extends hydrogen storage access to tax credits

05/12/24

US extends hydrogen storage access to tax credits

Hamburg, 5 December (Argus) — Investment tax credits for hydrogen storage in the US will no longer be restricted to sites that store supply for energy production, based on updated guidance from the Treasury. The Treasury on 4 December published its final updated guidance on the section 48 energy credit, which is primarily focused on projects for clean power production but will also provide investment tax credits for hydrogen storage. Previous guidance from November 2023 had foreseen that hydrogen storage projects could only make use of the tax credits — which in most cases amount to 30pc of project costs — if they store hydrogen that is eventually used for energy production, such as electricity generation. But the revised guidance removes this requirement, meaning that storage sites could also be eligible for the credits if they store hydrogen for other uses, including as feedstocks for fertiliser production or other chemicals. Several respondents to the initial guidelines suggested that restricting the "end use" to energy purposes "is not in accord with legislative intent, would cause delays, is unworkable, and misaligns" with the US' hydrogen strategy, the Treasury said. The Treasury noted that one commenter said that the restriction would make the credit "largely useless" for supporting the deployment of storage in ramping up a hydrogen ecosystem in the US. Industry bodies and other associations had lobbied for the access to tax credits to be expanded. Climate think-tank the Clean Air Task Force had said that the restrictions would be "difficult to administer, because hydrogen storage operators have limited mechanisms to track hydrogen after it exits their facility". Industry body the Fuel Cell and Hydrogen Energy Association (FCHEA) said the changed rules are "a huge victory for the hydrogen industry" ensuring that the tax credits "will be utilised as intended". FCHEA welcomed some other changes in the final guidelines, such as an extension of the equipment covered by the tax credits, which will now under some circumstances include pipelines connected to storage facilities and liquefaction equipment. But the Treasury did not accommodate requests from some respondents to include equipment for storing hydrogen carriers such as ammonia or methanol under the investment tax credit rules, stressing that the relevant legislation "specifically references only hydrogen, not compounds containing hydrogen". The Treasury clarified that storage facilities or equipment co-located with hydrogen production sites could receive the tax credits even if developers also make use of 45V production tax credits for the hydrogen output. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German 2030 coal phase-out called into question

03/12/24

German 2030 coal phase-out called into question

London, 3 December (Argus) — Germany's coal phase-out targets are being reassessed owing to the likelihood of further delays to the passing of the power plant security act (KWSG), as well as decisions already taken on the future design of the electricity market. Germany has pledged to phase out coal and lignite-fired generation by 2038 at the latest, but energy ministry BMWK said an earlier, market-driven phase-out by 2030 is possible . Grid regulator Bnetza said 21GW of new gas-fired capacity — which should in the future be hydrogen-ready — would be needed by 2031 for a complete coal phase-out. Utility Leag said it does not see the current government changing the legal phase-out deadline. But "any further delay" to adding controllable replacement capacities would create an "urgent" situation, it said. And utility EnBW told Argus that it remains committed to phasing out coal by 2038 at the latest, while adding that "security of supply must not be jeopardised". At a transmission system operators' (TSO) forum held in November, TSO Amprion's Peter Lopion said the KWSG is vital to encourage plant construction in the south, where more gas-fired capacity is crucial if coal is to be phased out. He also raised concerns about Germany's target to phase out gas-fired power by 2045 — the year in which the country aims to reach climate neutrality — given the lack of a hydrogen economy and hydrogen production. Earlier this month, the CDU/CSU opposition parties commissioned an investigation into the feasibility of reactivating decommissioned nuclear plants, seeing the shutdown of Germany's final nuclear plant in April 2023 as "ideologically wrong". EnBW has told Argus that the decommissioning of its 1.4GW GKN II plant — the dismantling of which began in May 2023 — is "virtually irreversible". By Bea Leverett and John Horstmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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