US industrial gases company Air Products is scrapping a green liquid hydrogen project because it will not qualify for federal incentives, Kallanish learns.

The facility would have been located in Massena, New York, with a capacity of 35 tonnes/day. The primary reason is that existing hydroelectric power supply is not eligible for the 45V Clean Hydrogen Production Tax Credit under the Inflation Reduction Act, as announced last month.

Air Products also cited “slower than expected development of a hydrogen mobility market in the region.”

Additionally, the company has terminated the agreement with World Energy for a sustainable aviation fuel (SAF) project in Paramount, California, due to “challenging commercial aspects surrounding the expansion project and current operations.” They were working on a $2 billion expansion of World Energy’s SAF complex to reach a capacity of 340 million gallons/year.

Finally, Air Products is also exiting a project in Texas for the production of carbon monoxide citing “unfavourable project economics.” Overall, the three contract terminations and related asset write-downs will result in a $3.1 billion charge to be recorded in the second quarter.

The decisions come shortly after an overhaul of Air Products’ board, amid promises to review its current portfolio. Activist investors led by Mantle Ridge pushed for the ousting of ceo Seifi Ghasemi, who was criticised for backing “speculative” clean hydrogen projects.

Earlier this month, Ghasemi was replaced by Eduardo Menezes, alongside the appointment of Wayne T. Smith as chairman and Dennis H. Reilley as vice chairman.

The company says it will continue to evaluate all its projects, but it doesn’t currently anticipate additional material cancellations going forward. It plans to provide an update on its ongoing projects during its next earnings call.

For now, it says the NEOM green hydrogen project in Saudi Arabia is nearing 80% completion, with green ammonia production scheduled to start at the end of 2026. Another major project, the Louisiana Clean Energy Complex, is also progressing while Air Products looks for new equity partners to participate to reduce capital outlay. New players would be involved in the ammonia and carbon dioxide sequestration parts of the project.