Air Products has cancelled its Louisiana Clean Energy Complex, a US$9 billion blue hydrogen project, after projected costs doubled and expected financial returns failed to meet what the company called its "stringent return criteria."

The decision, announced more than a year after IEEFA flagged risks around the project's dependence on federal tax credits, places carbon capture and storage (CCS) under renewed commercial scrutiny. CCS rests on two promises — permanent emissions cuts and bankable economics — and project results suggest both are difficult to meet.

How much subsidy is at stake?

IEEFA's 2025 analysis estimated the Louisiana project could have claimed up to US$6.3 billion under the federal 45Q tax credit — even if it produced no net reduction in greenhouse gas emissions. Air Products made its own commercial judgment and walked away.

The same arithmetic applies in the United Kingdom. IEEFA estimates more than £50 billion in subsidies has been earmarked for UK projects that account for only 8% of the country's 2050 CCS target. Roughly three quarters of that support flows through levies on electricity consumers.

That scale of backing suggests the projects may not stand on their own without shifting significant cost and risk onto taxpayers and bill-payers.

Is there a real market for captured carbon?

Europe's 2025 pipeline data answers with numbers:

• 5.4 million tonnes of proposed annual capture capacity was cancelled;
• 4.2 million tonnes of capacity reached final investment decision;
• blue hydrogen accounted for 71% of the cancelled volume.

Companies behind four cancelled hydrogen projects cited weak hydrogen demand, planning challenges and funding uncertainty. Announcements, in short, are not evidence of a bankable market.

Can the technology deliver its rated capacity?

Chevron's Gorgon LNG facility in Western Australia — the world's largest commercial CCS project — stored only 25% of the CO₂ removed from its reservoir, one third of its annual target. IEEFA calculated an effective cost of A$265 per tonne captured, nearly four times the original A$70 estimate.

A review of 13 flagship CCS projects found underperformance and failure were the norm, not the exception. More realistic capture assumptions could push blue hydrogen's carbon intensity to more than three times the U.S. clean-hydrogen standard.

The storage chain carries its own record:

• A 2020 CO₂ pipeline rupture in Mississippi forced evacuations and sent almost 50 people for medical attention;
• In Algeria, excessive underground storage pressure fractured caprock and suspended a project;
• In Illinois, corrosion caused a monitoring-well casing failure at Decatur, leaking 8,000 tonnes of CO₂.

IEEFA's analysis of Norway's Sleipner and Snøhvit projects shows long-term CO₂ storage remains technically uncertain, requiring sustained oversight and investment.

Is CCS the best use of capital?

IEEFA's reading of the IEA's World Energy Outlook 2025 found CCUS contributes less than 5% of emissions reductions in a net-zero scenario. Renewables, electrification, fuel-switching and efficiency together deliver more than 82%.

The question is sharpest in steel. India's 2026 Union Budget allocated US$2.2 billion over five years to industrial CCUS — money IEEFA argues could lock the country's expanding steel sector into a high-emissions pathway and deepen reliance on imported metallurgical coal. Green hydrogen-based ironmaking and recycled steel may offer better value.

The track record reinforces the point. Al Reyadah in the UAE — the only commercial-scale CCUS plant in the steel sector — captured less than 27% of emissions from the gas-fueled steel plant it serves. No commercial-scale blast furnace steelmaking currently operates with CCUS.

Capital discipline does not mean ruling out every CCS proposal. It means requiring a convincing commercial case before investors, taxpayers or consumers carry the risk. The Louisiana cancellation, and the UK subsidy allocations behind it, are the milestones that will determine whether the next wave of projects clears that bar or joins the cancellation column.