Full Title: Blue Hydrogen's Carbon Capture Boondoggle
Author(s): Anika Juhn and David Schlissel
Publisher(s): Institute for Energy Economics and Financial Assistance
Publication Date: March 27, 2025
Full Text: Download Resource
Description (excerpt):
Legislators looking for a bipartisan issue should focus on blue hydrogen. IEEFA’s latest analysis shows that the process, which uses methane gas with carbon capture to produce a supposedly cleaner fuel, is a lose-lose proposition that would cost billions of dollars in subsidies for essentially zero environmental benefit. It is an issue that both fiscal conservatives and environmental advocates should agree needs changing.
The focus of this analysis is Air Products’ planned Louisiana Clean Energy Complex (LCEC), one of the largest blue hydrogen projects in development in the U.S. The company says the facility, estimated to cost $7 billion, will begin commercial operation in 2028 and produce almost 600,000 metric tons of hydrogen per year from methane gas. Air Products also says the facility will capture and store 5 million metric tons of carbon dioxide (CO2) annually, which would qualify for generous federal tax credits under the existing 45Q program.
The analysis shows that the project, while a potential money-making bonanza for Air Products, will have little if any environmental benefit, while costing taxpayers billions of dollars. Under optimal operating assumptions, particularly assuming very high carbon capture rates, the facility could produce a minimal reduction in net emissions. But if more realistic assumptions are used, reflecting real-world data and current scientific research, our evidence-based estimates find that this project will likely result in substantial new CO2 emissions at enormous cost to taxpayers. Specifically, Air Products could claim up to $440 million per year and $6.3 billion over the 12 years of eligibility for the 45Q credit for the capture and storage of 5 million metric tons of CO2, even if the project achieves no net reduction in greenhouse gas emissions.