A mixed picture of the industry's perspective for US blue hydrogen is taking shape, as ExxonMobil warns that its plans for the world's biggest low-carbon hydrogen and ammonia plant on the Texas Gulf coast are in limbo while other companies express optimism in the market's long-term trajectory and federal production tax credits.
ExxonMobil chief executive Darren Woods recently expressed concern that the early expiry of the 45V tax credits could prevent the development of a US market for low-carbon hydrogen and derivatives. There is "a strong possibility" that a final investment decision (FID) on its project in Baytown, Texas, may be delayed, Woods said, warning that the firm might not move forward at all if it cannot "see an eventual path to a market-driven business".
The energy behemoth's dour assessment contrasts with those of executives from other companies eyeing or developing projects on the US Gulf coast who expect continued strong export demand for hydrogen and derivatives, specifically ammonia, produced from natural gas with carbon capture and storage (CCS).
"I strongly believe that blue ammonia from the US Gulf Coast will be very competitive in Europe, and I think there is room for our project and probably a few more," industrial gas producer Air Products' chief executive Eduardo Menezes said about a site the firm is developing on Louisiana's Gulf coast.
Fertilizer maker CF Industries also conveyed optimism about the prospects for its Blue Point CCS-based ammonia plant in Louisiana, for which it made a final investment decision in April with its Japanese partners Jera and Mitsui.
"We remain excited about the compelling growth opportunity at Blue Point, given the … interest that has been generated in the ultra-low carbon ammonia that will be produced there," said chief operating officer Christopher Bohn.
Crucially, Air Products, CF and others are targeting ammonia exports to overseas demand centers, especially in Europe and northeast Asia, and so are not dependent on the development of a domestic market.
In contrast, ExxonMobil would use only a small share of its output for this purpose. The firm plans to make around 860,000 metric tonnes (t)/yr of CCS-based hydrogen at Baytown, of which around 20pc would be used to make 1mn t/yr of ammonia for exports. The remainder would be used to decarbonize ExxonMobil's own operations and to supply other offtakers in the region. This makes the plans contingent on a market for low-carbon hydrogen offtake developing in the US, and the oil and gas major appears to be concerned that the early sunset date for 45V will hinder this.
Additionally, some of the prospective low-carbon ammonia producers on the US Gulf coast, including CF, are eyeing the 45Q tax credits — which yield $85/t of sequestered CO2 — rather than the 45V production tax credits.
"Shot clock" ticking
The 45V tax credit narrowly escaped an end-of-2025 deadline that would have derailed most project plans, but was still shortened by five years to the end of 2027 in the energy and tax bill signed by President Donald Trump on 4 July. Still, while ExxonMobil's Woods expressed disappointment in the shorter timeline because of its potentially detrimental effect on the development of a hydrogen market, others noted the defined deadlines gives developers an extra incentive to stick to their previously laid out plans.
"The rush to get things done has been quite encouraging," said Michael Sykes, a partner at law firm White & Case. "I've seen a number of different projects where now it's 'OK, it's time to get things going, we need to make things work because there is a shot clock.' "
Indeed, shortly after Trump signed the bill, Chevron formally requested a property tax abatement from Jefferson County for the potential site of a $5bn CCS-based hydrogen and ammonia facility on the Texas Gulf coast, leading some analysts to wonder if the petition was related to recent clarity on the future of 45V.
During Air Liquide's recent earnings call, an analyst asked the industrial gas producer's chief executive, Adam Peters, if he thought Chevron was an example of a company motivated by the bill's passage.
Peters demurred on commenting specifically on Chevron's project but noted that Air Liquide has been watching low-carbon hydrogen developments "extremely closely over the past two years" and expects the 2.5-year construction runway to push some projects toward FID.
"I think this is going to open the doorway for a number of projects to move forward in the low-carbon space to allow for the development of an ecosystem for hydrogen in the US," Peters said. "So, this is very exciting."
