How 45Q Credits Revived This Troubled $9B Megaproject

What was once a stalled megaproject is now showing signs of new life. Air Products has found a strategic partner in Norwegian fertilizer giant Yara International, and the economics are looking better than expected, thanks to the federal 45Q carbon capture tax credit.

The Louisiana Clean Energy Complex, one of the largest blue hydrogen projects in North America, had faced significant delays earlier this year. Now, with a clear path forward and a 25-year offtake agreement in sight, this project could deliver returns higher than traditional grey hydrogen for over a decade.

A Partnership That Changes the Game

Under the proposed deal, Air Products will build, own, and operate the industrial gases production portion of the complex. About 80% of the low-carbon hydrogen produced will flow to Yara, which will convert it into 2.8 million tonnes of low-carbon ammonia annually. The remaining hydrogen will be supplied to Air Products' Gulf Coast customers through its 700-mile pipeline system.

Yara, the world's largest ammonia trader and shipper, currently transports over four million metric tonnes annually. Their fleet of 12 ammonia vessels and established distribution network eliminates much of the market risk that had plagued the project.

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The 45Q Advantage

The 45Q carbon capture tax credit, which survived recent clean energy funding cuts, offers up to $85 per tonne of carbon dioxide captured, stored, or used in industrial applications. For a project of this scale, that translates into serious money.

With an expected 5.5 million tonnes of CO2 captured annually, Air Products could collect over $460 million per year from 45Q credits alone. This fundamentally changes the project's financial outlook for its first 12 years of operation.

Project at a Glance

From Stalled to Strategic

The project's turnaround marks a significant shift for Air Products. Earlier this year, the company halted spending on the Louisiana facility and began seeking partners for the ammonia and carbon capture portions. CEO Eduardo Menezes, who took over in February, has been focused on returning the company to its core industrial gas business while maintaining disciplined capital allocation.

The Yara partnership addresses several key concerns that had stalled progress:

1. Market Access: Yara's global distribution network eliminates volume risk
2. Capital Efficiency: Yara will acquire ammonia production, storage, and shipping facilities for approximately 25% of total project cost
3. Operational Focus: Air Products can concentrate on what it does best, industrial gas production

Beyond Louisiana: The NEOM Connection

The Air Products and Yara relationship extends beyond U.S. borders. The two companies are also working together on the NEOM Green Hydrogen Project in Saudi Arabia, now more than 90% complete, with commercial production expected in 2027.

A final marketing and distribution agreement for renewable ammonia from the Saudi project is targeted for the first half of 2026, creating a comprehensive partnership across both blue and green hydrogen value chains.

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What Happens Next

While the partnership signals renewed momentum, Air Products has been clear that final investment decisions remain contingent on several factors. The company is still negotiating the carbon capture segment with a third party, and construction contracts must be finalized at acceptable cost levels.

The Louisiana Gulf Coast continues to attract major blue ammonia investments. The region's combination of natural gas infrastructure, carbon storage geology, and export access makes it a natural hub for low-carbon energy production.

The Bigger Picture

This deal reflects a broader trend in the blue hydrogen sector. With 45Q credits providing economic certainty, projects that can deliver low-carbon products at scale are finding willing partners and investors. For Air Products and Yara, the Louisiana Clean Energy Complex is a test case for how industrial gas companies and global commodity traders can work together to build the low-carbon ammonia supply chains the world will need in the coming decades.