Air Products, AES to invest $4 bln in building largest U.S. green hydrogen plant – EQ Mag
Air Products & Chemicals will build a $4 billion hydrogen plant in northern Texas in a joint venture with AES Corp. that will use renewable energy and produce gas without emitting carbon.
The hydrogen plant will be powered by solar and wind energy gathered at the site. The gas will be produced by electrolyzers, which split water into oxygen and hydrogen. The generation of power and gas will not result in carbon emissions, thus the product is known as “green hydrogen.”
Lehigh County-based Air Products is the world leader in hydrogen production and the joint venture in Wilbarger County, Texas, near Wichita Falls, aligns with the company’s goal of promoting carbon neutrality.
“It is absolutely in line with our higher purpose of doing something good for humanity,” Seifi Ghasemi, chairman, chief executive officer and president of Air Products said during a conference call today. By producing green fuels for heavy industry and transportation, Air Products is helping other companies generate fewer carbon emissions, which are linked to global warming.
The project will be the largest green-hydrogen project in the U.S., and it will make money for shareholders, he said. Ghasemi said Air Products’ target return on projects is 10%.
Joint venture partner AES is a utility company based in Arlington, Virginia. Air Products and AES will own equal shares in the Texas plant, and Air Products will distribute the hydrogen. Operations will begin in 2027.
The U.S. government has a big role in the plant too. The federal Inflation Reduction Act, signed into law by President Joseph Biden, provides a $3 per kilogram tax credit for green hydrogen to promote the U.S. shift away from carbon.
Ghasemi said today that IRA is pushing the transition to a clean-energy economy forward.
“The tax credits are doing what the U.S. government intended them to do, which is to accelerate the implementation of these kinds of projects in the United States,” he said. “The tax credit has given us the incentive to announce the project and move the project forward.”
Air Products and AES have been discussing the project for more than three years, he said.
Even for a company with big projects around the world, the Texas venture stands out. It will generate about 1.4 gigawatts of wind and solar energy that will power electrolyzers, which will produce more than 200 metric tons of green hydrogen daily. The wind and solar power will feed directly into the hydrogen plant.
“If all the green hydrogen were used in the heavy-duty truck market, it would eliminate more than 1.6 million metric tons of carbon dioxide emissions annually when compared to diesel use,” according to an Air Products statement.
Ghasemi has promoted green hydrogen as a substitute for fossil fuels in the heavy industry and transportation industry.
Air Products, with headquarters in Upper Macungie Township, expects low labor costs for the project once it is operating. Building the north Texas complex will create about 1,300 jobs, but the plant will need about 115 on a permanent basis.
The main cost will be the capital investment.
“We are obviously very optimistic about the future of hydrogen,” Ghasemi said.
In the language of new energy, renewable energy is used to generate electricity that splits water into hydrogen and oxygen, resulting in green hydrogen. There are no carbon emissions. Another product is blue hydrogen, made from natural gas with carbon emissions captured and stored underground. Blue hydrogen can be combined with nitrogen to make blue ammonia, another fuel for heavy industry.
Traditional grey hydrogen is made from natural gas or methane, and the carbon emissions are not captured.
At a conference last month, Ghasemi promoted the idea of a carbon tax to promote the transition to a zero-emission economy. He also said then that no other country has the financial firepower to match the $400 billion the U.S. Inflation Reduction Act provides for the energy transition.
He is not the only one to see the IRA as a big boost to domestic industry. During a recent U.S. visit, French President Emmanuel Macron raised concerns about the subsidies on the European economy, according to Reuters.
Air Products is traded on the New York Stock Exchange under the ticker symbol APD. It traded at $318.92, up 1%, at 10:50 a.m. The shares are close to the 52-week high of $320.96.
Source: Reuters
