The collapse of Air Products’ planned $4.5 billion Louisiana Clean Energy Complex is more than the loss of a single megaproject. It could reshape how companies view future carbon capture investments in Louisiana, according to economist Loren Scott.
Pennsylvania-based Air Products announced Tuesday it is abandoning the project, once touted as the company’s largest-ever U.S. investment, saying the development no longer met its financial return requirements. The company also expects to record up to $2.9 billion in pre-tax charges during its third quarter as it exits the project and several other investments.
For Scott, the decision follows a growing pattern.
“It wasn’t a total surprise,” Scott says, pointing to the project’s long-running challenges surrounding its carbon capture and sequestration component. He notes another major Louisiana project, the SunGas proposed $2.5 billion Beaver Lake Renewable Energy methanol facility near Alexandria, was canceled earlier this month after facing market challenges and opposition to its carbon capture plans.
Scott believes the canceled projects could prompt companies evaluating Louisiana projects to reconsider the state’s investment climate for developments that require carbon capture.
“I think they’re going to start wondering about their future in the state,” he says.
The announcement from Air Products ends a yearslong effort to build a blue hydrogen production complex spanning Ascension, Livingston, St. John the Baptist, St. James and Tangipahoa parishes.
Ascension Economic Development Corporation President and CEO Kate MacArthur tells Daily Report that when Air Products announced its partnership with Yara in December for Yara to acquire the Louisiana Clean Energy Complex’s ammonia production and distribution assets, the company indicated it expected to decide around July whether the broader Ascension project would move forward.
“It had that feeling that kind of if this was happening here in Louisiana, then it was a good sign that this project was going to get going again, but unfortunately, that did not happen,” she says.
MacArthur says leadership changes at Air Products following the project’s 2021 announcement―coupled with rising costs―suggested the development would likely need to evolve.
“I really don’t know what all of the factors that went into it were, other than what they had announced about trying to find additional partners, and kind of like cost-cutting measures, because the project was massive,” she says. “I think a lot of it went into maybe finding the location where it was best suited for their goals, and I think it was here, but then I think the project doubled in cost, and maybe it just wasn’t the board’s desire to spend that much money.”
Parish officials also plan to meet with Air Products representatives in the coming weeks to discuss the future of the project’s assets, including a fenced construction site and staging yard established during pre-construction.
Scott says the cancellation represents more than the loss of a single industrial development.
“We just lost a large number of very high-paying jobs,” he says. “They lost multimillions of dollars in initial property tax collections as a result of this loss, so this is not a trivial thing here that Ascension Parish and the Baton Rouge area lost.”
Despite the setback, Scott says Ascension Parish remains well positioned because of its broader industrial pipeline.
“The good news for Ascension Parish is that they’ve got so much going on right now in terms of construction, and so much awaiting a final investment decision,” he says. “It’s not like this was the only thing they were relying on,” Scott says. “Ascension has a great deal going for it, and it’s just a shame they lost this one.”
Ascension Parish President Clint Cointment echoed that sentiment in a statement to Daily Report Tuesday.
“This is a tough day for Ascension Parish and for Louisiana,” Cointment said. “We’re talking about the loss of thousands upon thousands of jobs and billions of dollars in potential investment. Projects of this size are never guaranteed. They take years of planning, significant investment, and cooperation at every level to succeed. Companies need certainty and a clear path forward, and when that changes, they have to make difficult business decisions. While we’re disappointed, our commitment hasn’t changed. We’ll continue working to attract responsible investment, create good-paying jobs, and keep Ascension Parish moving forward.”
While Ascension officials expressed disappointment, Livingston Parish leaders welcomed the announcement. The project’s plan to store captured carbon dioxide beneath Lake Maurepas had generated years of opposition from residents and elected officials.
“Over the past five years, there has been a tremendous amount of work done behind the scenes. I have worked with residents, community leaders, our legislative delegation, state officials, and Governor Jeff Landry’s administration to make sure the concerns of Livingston Parish were heard loud and clear,” Livingston Parish President Randy Delatte said in a statement. “Today’s decision reflects what our residents have consistently said from the start: They do not want carbon capture and storage beneath Lake Maurepas or in Livingston Parish.”
The cancellation also reflects broader headwinds facing the hydrogen industry. Developers around the world have delayed or canceled hydrogen projects amid escalating construction costs, weaker-than-expected demand and reduced federal support. Earlier this year, the Trump administration scaled back hydrogen incentives and canceled billions of dollars in planned investments tied to regional hydrogen hubs.
Looking ahead, Scott expects the debate over carbon capture to intensify unless state leaders take a more active role in supporting the technology.
“My hope is that somewhere along the line, the governor is going to start picking up the baton here and start coming out more in favor of CCS, approving more Class VI wells, which are necessary in order to inject this stuff into the ground,” Scott says. “I think that’s the thing that can turn the tide and help offset the very strong pushback against CCS.”
