Air Products Cancels Blue Hydrogen Megaproject in Louisiana, Takes $2.9 Billion Charge

Air Products canceled the Louisiana Clean Energy Complex (LCEC) on June 30, 2026, its largest blue hydrogen project with carbon capture in the United States, and will record a pre-tax accounting charge of up to $2.9 billion in its third fiscal quarter. The project's budget had doubled from $4.5 billion in 2021 to approximately $9 billion by the end of 2025.

The project, located in Ascension Parish, Louisiana, was designed to produce 750 million cubic feet per day of blue hydrogen (produced from natural gas with capture of 95 percent of carbon dioxide, or CO₂) and sequester up to 5 million metric tons of CO₂ annually beneath Lake Maurepas, according to Bloomberg. Norway's Yara International, which in December 2025 had agreed to purchase 80 percent of the low-carbon hydrogen and operate the ammonia plant on site, withdrew after determining that the project required a firm Carbon Border Adjustment Mechanism (CBAM) in the European Union to achieve the necessary returns. The LCEC cancellation exposes a structural tension in the U.S. Gulf Coast energy transition: the economics of large-scale blue hydrogen do not close without long-term offtake contracts and regulatory certainty on incentives.

LCEC detailed engineering was 90 percent complete and all major equipment, including air separation units, steam methane reformers, and ammonia synthesis loops, had already been procured, Oil & Gas Journal reported. Air Products estimates it will recover approximately $1 billion through the sale or redeployment of that equipment. Chief Executive Seifi Ghasemi was replaced in 2025 by Eduardo Menezes under pressure from activist investors who questioned the company's overexposure to low-carbon projects with extended return horizons. The LCEC cancellation compounds ExxonMobil's decision to pause its blue hydrogen project in Baytown, Texas, in late 2025. According to the Institute for Energy Economics and Financial Analysis (IEEFA), approximately 65 percent of the $45 billion in blue hydrogen and ammonia projects announced in the United States are now considered unlikely to be completed.

Air Products is simultaneously advancing an agreement with Yara to commercialize renewable ammonia from the NEOM project in Saudi Arabia, signaling a strategic pivot away from U.S. blue hydrogen and toward green hydrogen in other geographies. The company's quarterly report, expected in August 2026, will detail the full accounting impact and the asset recovery roadmap.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.