WSJ: How Hydrogen, the Fuel of the Future, Got Bogged Down in the Bayou

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The chief executive of Air Products & Chemicals visited the Louisiana governor’s mansion in 2021 to unveil the industrial-gases supplier’s biggest-ever investment: a $4.5 billion facility that would make the fuel of the future by the Mississippi River.

Seifi Ghasemi’s plan was to produce hydrogen from natural gas, capture the carbon dioxide, pipe it through wildlife-rich wetland and sequester it below picturesque Lake Maurepas.

Ghasemi had a grand vision. Beyond its regular uses in oil refining and ammonia for fertilizers, hydrogen would power buses, trucks, trains, ships, planes and steel mills after the plant opened in 2026, he predicted.

Nearly five years after his visit, the project’s price tag has swelled to $8 billion, the construction timeline has slipped and the company is still seeking customers. Ghasemi has been ousted as CEO, and his successor is reining in spending.

The idea that low-carbon hydrogen could replace oil and gas in many applications was taking off when Ghasemi visited Baton Rouge, La., as politicians and executives were vowing to slash emissions.

But sentiment has since soured. This fossil-fuel alternative remains stubbornly expensive, and governments in the U.S. and elsewhere have shied away from putting their weight behind it.

The tax bill approved by House Republicans would cut off hydrogen production tax credits, part of an effort to undo many Biden-era climate programs and reduce funding for wind and solar power. President Trump, meanwhile, has cast himself as the savior of U.S. oil and gas.

Companies that once looked like early movers—such as the steel producer ArcelorMittal and Airbus, the plane maker—have delayed plans to use hydrogen.

“The main challenge right now is finding buyers,” said Martin Tengler, a BloombergNEF analyst who estimates that just 4% of the announced low-carbon hydrogen production capacity had secured funding as of 2024.

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Today, most hydrogen is extracted from natural gas, a process that adds carbon dioxide to the atmosphere. There are two main alternative methods—and Air Products pursued both.

The Louisiana plant intends to make blue hydrogen. It is produced the traditional way, but the carbon is captured and kept out of the atmosphere—forever, if possible. Green hydrogen is made by splitting water into oxygen and hydrogen using renewable electricity.

Blue hydrogen is more controversial. Carbon-capture facilities often catch less pollution than hoped—Air Products says it will capture more than 95%—and using natural gas ties this ostensible climate solution to a source of emissions.

The House tax bill would eliminate tax credits for hydrogen production, which would kill most green-hydrogen projects, Tengler expects, but not the carbon-capture credits that benefit blue-hydrogen producers.

“It was a feeding frenzy” of a wave of blue-hydrogen projects that were drawn to Louisiana by tax credits and rocks suitable for storing carbon dioxide, said Corinne Van Dalen, a lawyer at the nonprofit Earthjustice.

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In Louisiana, Air Products is trying to limit its exposure. Its risky strategy was criticized by activist investors who began calling for a change of course last year.

The company is now seeking buyers for the ammonia-production and carbon-sequestration parts of the project, which could reduce its share of the cost by as much as $3 billion, Menezes said. Work won’t continue until customers are found.

Van Dalen, the environmental lawyer, would be pleased if Air Products’ vision for the bayou crumbles. The hydrogen-production site is near a school, and the 40-mile carbon-dioxide pipeline would pass through rare wetland occupied by ospreys, largemouth bass and migratory birds.

At Lake Maurepas, the plan to sequester carbon dioxide is troubling to some nature lovers and crabbers. Air Products says it consulted with government agencies on its project and is funding environmental-monitoring efforts.

While Menezes looks for customers, Ghasemi’s legacy in Louisiana can be seen in projects funded through Air Products’ $1 million-a-year plan to secure communities’ support, such as $200,000 for Lake Maurepas field trips and $50,000 for neutering feral cats.

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