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The company has a new CEO and a new strategy — to refocus on its “core business.”
After a proxy fight, a successful shareholder revolt, and the ousting of a CEO, Air Products, the largest hydrogen company in the world, is floundering. In early May, it posted a $1.7 billion net loss for the second quarter of the fiscal year. While Air Products produces an array of industrial gases, the newly appointed CEO, Eduardo Menezes, told investors on the company’s recent Q2 earnings call that he blamed its investments in clean hydrogen projects for its recent struggles.
“Over the past few years Air Products moved away from its core business in search of growth,” Menezes said. (That core business would be traditional industrial gases such as oxygen, nitrogen, and hydrogen, produced sans newfangled clean technologies.) “We deployed capital to complex, higher risk projects with first-of-a-kind technologies — and, more importantly, without committed offtake agreements in place.” The company took on significant debt and increased its headcount to try and carry out its ambitious agenda, he explained. “This had a negative impact on both cost and execution quality, leading to significant project delays.”
This is, of course, in line with the overall downward trend in fortunes for clean hydrogen. Demand has long lagged behind production capacity, and projects have fallen apart left and right as uncertain economics, the Trump administration’s fossil fuel-friendly agenda, and the future of the clean hydrogen tax credit threaten to reverse what early-stage progress producers have made to date. But while these hurdles could be expected to flatten the hopes of some emergent startups or oil and gas industry tourists, it’s a more telling signal when the world’s biggest hydrogen supplier can’t make an expedient transition to clean energy work.
“I think that they’re just at the forefront of the industry pulling back,” Krzysztof Smalec, an equity analyst at Morningstar, told me. Air Products has committed $15 billion to the energy transition overall, making a more aggressive push into the low-carbon hydrogen space than its competitors such as Linde and Air Liquide. “They’re the most exposed, so it’s the most high profile, but it’s not unique to Air Products,” Smalec said.
The company has been facing investor pushback over its ostensibly risky investments in this space for some time now. In January, shareholders voted to replace three of the company’s board members, including former 81-year old CEO Seifi Ghasemi, who drove the company’s enthusiastic expansion into the clean hydrogen market. This was a major win for activist hedge fund Mantle Ridge, which holds a nearly 2% stake in Air Products. The investor spent much of last year ginning up support for the idea that Air Products needed new voices in the boardroom to scale back its clean energy projects, many of which had not yet secured buyers. (Air Products did not immediately respond to a request for comment.)
The Mantle Ridge campaign — called Refreshing Air Products — backed Menezes for CEO. On last week’s call, he was frank with investors as he echoed his supporters’ — and much of the industry’s — perspective when he emphasized “the importance of refocusing” on tried and true outputs. This refocusing means major layoffs. The company employs about 23,000 people, and Menezes told investors that 1,300 layoffs are already “in process.” Between next year and 2028, the company intends to eliminate another 2,500 to 3,000 positions.
Air Products is also scaling back its plans for a controversial blue hydrogen project in Louisiana. This means the hydrogen is made from natural gas, with the resulting CO2 emissions captured and stored underground. Initially, Air Products had planned to turn about 80% of the hydrogen from this project into ammonia; now it’s looking to sell off the ammonia portion of the business, as well as the plant’s carbon capture and sequestration operations. The goal is to reduce the project’s costs from around $8 billion to $5 billion or $6 billion. All funding will be paused while the company pursues this “derisking strategy,” and will restart only once firm offtake agreements are secured. As of now, none have been announced.
This comes on the heels of three project cancellations Air Products announced in February, two of which were hydrogen-related. One was a sustainable aviation fuels project in California that proposed using hydrogen to convert diesel into jet fuel. The company nixed it due to “challenging commercial aspects.” The other was a planned green hydrogen facility in New York that would use clean electricity to produce hydrogen. That decision followed the January release of final hydrogen tax credit rules, which mandate that projects buy energy from new renewable sources (Air Products had planned to use existing hydropower facilities), as well as slower than anticipated development of the market for hydrogen-powered vehicles.
“I think Air Products just went out on a limb and just took a bet that they’ll be able to finish these projects, be the first mover, and be able to charge a premium,” Smalec told me. “And that was a lot of additional risk.”
The difficulty of deploying new technologies is certainly not confined to the hydrogen industry. “A lot of energy transition industries are struggling at the moment,” Murray Douglas, the head of hydrogen research at Wood Mackenzie, told me. No kidding. “That’s a result of many different factors, not least higher borrowing costs, high rates of inflation across much of the world.”
There is one hydrogen project that the new leadership appears to be relatively happy with, though perhaps predictably, it’s not domestic. That’s a green hydrogen complex in Saudi Arabia, expected to come online in 2027. On its website, Air Products boasts that the facility is “based on proven technologies,” running counter to the new leadership’s narrative that this novel tech might be too risky a bet. While Menezes told investors that from the outside he was “very concerned with this project” he’s been pleasantly surprised that it appears poised to produce low-cost green ammonia from hydrogen. As for the upfront costs, he told investors that Air Products has “successfully limited our spend on this project through partnership and project financing.”
The fact that a green hydrogen project — said to be the world’s largest — is taking root in a fossil fuel-rich nation like Saudi Arabia could be seen as a ray of hope. But on the whole, Douglas isn’t surprised that Air Products is pulling back. So many companies — be they industrial gas behemoths or oil majors — are winnowing down their once robust clean energy project pipeline now that political and economic realities have shifted. BP, for example. stopped work on 18 early-stage hydrogen projects last year and shut down its hydrogen-focused low carbon transportation team. Similarly Shell is scaling back its hydrogen ambitions, scrapping its hydrogen vehicles division.
“They’ve had to probably accelerate the narrowing of that portfolio a bit quicker than what we were expecting because the market just isn’t maturing quickly enough,” Douglas told me. “Maybe the rules are a bit more difficult, cost escalation, inflation has really got in the way.”
But while the tide is certainly out for clean hydrogen, Smalec reads Air Products’ pullback as more of a push towards prudency than a companywide disavowal of the category. Under the right conditions, including manageable costs and secure offtake agreements, “my sense is that they would definitely be willing to invest,” Smalec said. That’s how the company’s competitors are approaching things, he added.
For the near future, though, expect the drama around Air Products to simmer down. “For the next three years or so, I would not expect any major announcements,” Smalec told me. “I think that they have a pretty straightforward path to really improve their performance.”
Unfortunately for the clean hydrogen industry, the path to profitability has changed significantly in recent months, and green and blue hydrogen might be more of a side quest these days.
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When I reached out to climate tech investors on Tuesday to gauge their reaction to the Senate’s proposed overhaul of the clean energy tax credits, I thought I might get a standard dose of can-do investor optimism. Though the proposal from the Senate Finance committee would cut tax credits for wind and solar, it would preserve them for other sources of clean energy, such as geothermal, nuclear, and batteries — areas of significant focus and investment for many climate-focused venture firms.
But the vibe ended up being fairly divided. While many investors expressed cautious optimism about what this latest text could mean for their particular portfolio companies, others worried that by slashing incentives for solar and wind, the bill’s implications for the energy transition at large would be categorically terrible.
“We have investments in nuclear, we have investments in geothermal, we have investments in carbon capture. All of that stuff is probably going to get a boost from this, because so much money is going to be flowing out of quote, unquote, ‘slightly more established’ zero emissions technologies,” Susan Su, a climate tech investor at Toba Capital, told me. “So we’re diversified. But for me, as a human being, and as somebody that cares about climate change and cares about having an abundant energy future, this is very short-sighted.”
Bigger picture aside, the idea that the Senate proposal could lead to more capital for non-solar, non-wind clean energy technologies was shared by other investors, many of whom responded with tentative hope when I asked for their thoughts on the bill.
“The extension of the nuclear and geothermal tax credits compared to the House bill is really important,” Rachel Slaybaugh, a climate tech investor at DCVC, told me. The venture firm has invested in the nuclear fission company Radiant Nuclear, the fusion company Zap Energy, and the geothermal startup Fervo Energy. As for how Slaybaugh has been feeling since the bill’s passage as well as the general sentiment among DCVC’s portfolio companies, she told me that “it's mostly been the relief of like, thank you for at least supporting clean, firm and bringing transferability back.”
Indeed, the proposed bill not only fully preserves tax credits for most forms of zero-emissions power until 2034, but also keeps tax credit transferability on the books. This financing mechanism is essential for renewable energy developers who cannot fully utilize the tax credits themselves, as it allows them to sell credits to other companies for cash. All of this puts nascent clean, firm technologies on far more stable footing than after the House’s version of the bill was released last month.
Carmichael Roberts of Breakthrough Energy Ventures echoed these sentiments via email when he told me, “the Senate proposal is a meaningful improvement over the House version for clean energy companies. It creates more predictability and a clearer runway for emerging technologies that are not yet fully commercial.” Breakthrough invests in multiple fusion, geothermal, and long-duration energy storage startups.
Amy Duffuor, co-founder of Azolla Ventures and managing director at the Prime Impact Fund also acknowledged in an email that it’s “encouraging” that the Senate has “seen the way forward on clean firm baseload power.” However, she issued a warning that the unsettled policy environment is leading to “material risks and uncertainties for start-ups reliant on current tax incentives.”
Solar and wind are by far the most widely deployed and cost-competitive forms of renewable energy. So while they now mainly exist outside the remit of venture firms, there are numerous climate-focused startups that operate downstream of this tech. Think about all the software companies working to optimize load forecasting, implement demand response programs, facilitate power purchase agreements, monitor grid assets, and so much more. By proxy, these startups are now threatened by the Senate’s proposal to phase out the investment and production tax credits for solar and wind projects beginning next year, with a full termination after 2027.
“I think solar and wind will survive. But it's going to be like 80% of the deals don't pencil for a long time,” Ryan Guay, co-founder and president of the software startup Euclid Power, told me. Euclid makes data management and workflow tools for renewable project developers, so if the tax credits for solar and wind go kaput, that will mean less business for them. In the meantime though, Guay expects to be especially busy as developers rush to build projects before their tax credit eligibility expires.
As Guay explained to me, it’s not just the rescission of tax credits that he believes will kill such a large percent of solar and wind projects. It’s the combined impact of those cuts, the bill’s foreign entity of concern rules restricting materials from China, and Trump’s tariffs on Chinese-made components. “You’re not giving the industry enough time to actually build that robust domestic supply chain, which I agree needs to happen,” Guay told me. “I’m all for the security of the grid, but our supply chains are already very constrained.”
Many investors also expressed frustration and confusion over why Senate Republicans, and the Trump administration at large, would target incentives for solar and wind — the fastest growing domestic energy sources — while touting an agenda of energy dominance and American leadership. Some even used the president’s own language around energy issues to deride the One Big Beautiful Bill’s treatment of solar and wind as well as its repeal of the electric vehicle tax credits.
“The rollbacks of the IRA weaken the U.S. in key areas like energy dominance and the auto industry, which is rapidly becoming synonymous with the EV industry,” Matt Eggers, a managing director at the climate-tech investment firm Prelude Ventures, wrote to me in an email. “This bill will still ultimately cost us economic growth, jobs, and strategic positioning on the world stage.”
“The only real question is, are we going to double down on the future and on American dynamism?” Andrew Beebe, managing director at Obvious Ventures, asked in an emailed response. “Or are we going to cling to the past by trying to hold back a future of abundant, clean, and affordable energy?”
Su wanted to focus on the bigger picture too. While the Senate’s proposal gives tax credits for solar and wind a much longer phaseout period than the House’s bill — which would have required projects to start construction within 60 days of the bill’s passage and enter service by 2028 — Su still doesn’t think the Senate’s version is much to celebrate.
“The specific changes that came through in the Senate version are really kind of nibbling at the edges and at the end of the day, this is a huge blow for our emissions trajectory,” Su told me. She’s always been a big believer that there’s still a significant amount of cutting edge innovation in the solar and wind sectors, she told me. For example, Toba is an investor in Swift Solar, a startup developing high-efficiency perovskite solar cells. Nixing tax credits that benefit the solar industry will hit these smaller players especially hard, she told me.
With the Senate now working to finalize the bill, investors agreed that the current proposal is certainly not the worst case scenario. But many did say it was worse than they had — perhaps overly optimistically — been holding out for.
“To me, it's really bad because it now has a major Senate stamp of approval,” Su told me. The Senate usually tempers the more extreme, partisan impulses of the House. Thus, the closer a bill gets to clearing the Senate, the closer it usually is to its final form. Now, it seems, the reconciliation bill is suddenly feeling very real for people.
“At least back between May 22 and [Monday], we didn't know what was going to get amended, so there was still this window of hope that things could change more dramatically." Su said. Now that window is slowly closing, and the picture of what incentives will — and won’t — survive is coming into greater focus.
Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors.
You might not think that often about medium-duty trucks, but they’re all around you: ambulances, UPS and FedEx delivery trucks, school buses. And although they make up a relatively small share of vehicles on the road, they generate an outsized amount of carbon pollution. They’re also a surprisingly ripe target for electrification, because so many medium-duty trucks drive fewer than 150 miles a day.
On this week’s episode of Shift Key, Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors. Harbinger is a Los Angeles-based startup that sells electric and hybrid chassis for medium-duty vehicles, such as delivery vans, moving trucks, and ambulances.
Rob, John, and Jesse chat about why medium-duty trucking is unlike any other vehicle segment, how to design an electric truck to last 20 years, and how President Trump’s tariffs are already stalling out manufacturing firms. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: What is it like building a final assembly plant — a U.S. factory — in this moment?
John Harris: I would say lots of people talk about how excited they are about U.S. manufacturing, but that's very different than putting their money where their mouth is. Building a final assembly line, like we have — our team here is really good, that they made it feel not that hard. The challenge is the whole supply chain.
If we look at what we build here in-house at Harbinger, we have a final assembly line where we bolt parts together to make chassis. We also have two sub-component assembly lines where we take copper and make motors, and where we take cells and make batteries. All three of those lines work pretty well. We're pumping out chassis, and they roll out the door, and we sell them to people, which is great. But it’s all the stuff that goes into those, that's the most challenging. There's a lot of trade policy at certain hours of the day, on certain days of the week — depending on when we check — that is theoretically supposed to encourage us manufacturing.
But it's really not because of the volatility. It costs us an enormous amount to build the supply chain, to feed these lines. And when we have volatile trade policy, our reaction, and everyone else's reaction, is to just pause. It’s not to spend more money on U.S. manufacturing, because we were already doing that. We were spending a lot on U.S. manufacturing as part of our core approach to manufacturing.
The latest trade policy has caused us to spend less money on U.S. manufacturing — not more, because we're unclear on what is the demand environment going to be, what is the policy going to be next week? We were getting ready to make major investments to take certain manufacturing tasks in our supply chain out of China and move them to Mexico, for example. Now we’re not. We were getting ready to invest in certain kinds of automation to do things in house, and now we're waiting. So the volatility is dramatically shrinking investment in US manufacturing, including ours.
Meyer: And can you just explain, why did you make that decision to pause investment and how does trade policy affect that decision?
Harris: When we had 25% tariffs on China, if we take content out of China and move it to Mexico, we break even — if that. We might still end up underwater. That's because there's better automation in China. There's much higher labor productivity. And — this one is always shocking to people — there’s lower logistics costs. When we move stuff from Shenzhen to our factory, in many cases it costs us less than moving shipments from Monterey.
Mentioned:
CalStart’s data on medium-duty electric trucks deployed in the U.S.
Here’s the chart that John showed Rob and Jesse:
Courtesy of Harbinger
It draws on data from Bloomberg in China, the ICCT, and the Calstart ZET Dashboard in the United States.
Jesse’s case for EVs with gas tanks — which are called extended range electric vehicles
On xAI, residential solar, and domestic lithium
Current conditions: Indonesia has issued its highest alert level due to the ongoing eruption of Mount Lewotobi Laki-laki • 10 million people from Missouri to Michigan are at risk of large hail and damaging winds today • Tropical Storm Erick, the earliest “E” storm on record in the eastern Pacific Ocean, could potentially strengthen into a major hurricane before making landfall near Acapulco, Mexico, on Thursday.
The NAACP and the Southern Environmental Law Center said Tuesday that they intend to sue Elon Musk’s artificial intelligence company xAI over alleged Clean Air Act violations at its Memphis facility. Per the lawsuit, xAI failed to obtain the required permits for the use of the 26 gas turbines that power its supercomputer, and in doing so, the company also avoided equipping the turbines with technology that would have reduced emissions. “xAI’s turbines are collectively one of the largest, or potentially the largest, industrial source of nitrogen oxides in Shelby County,” the lawsuit claims.
The SELC has additionally said that residents who live near the xAI facility already face cancer risks four times above the national average, and opponents have argued that xAI’s lack of urgency in responding to community concerns about the pollution is a case of “environmental racism.” In a statement Tuesday, xAI responded to the threat of a lawsuit by claiming the “temporary power generation units are operating in compliance with all applicable laws,” and said it intends to equip the turbines with the necessary technology to reduce emissions going forward.
Shares of several residential solar companies plummeted Tuesday after the Senate Finance Committee declined to preserve related Inflation Reduction Act investment tax credits. As my colleague Matthew Zeitlin reported, Sunrun shares fell 40%, “bringing the company’s market cap down by almost $900 million to $1.3 billion,” after a brief jump at the end of last week “due to optimism that the Senate Finance bill might include friendlier language for its business model.”
That never materialized. Instead, the Finance Committee’s draft proposed terminating the residential clean energy tax credit for any systems, including residential solar, six months after the bill is signed, as well as the investment and production tax credits for residential solar. SolarEdge and Enphase also suffered from the news, with shares down 33% and 24%, respectively. You can read Matthew’s full analysis here.
Chevron announced Tuesday that it has acquired 125,000 net acres of the Smackover Formation in southwest Arkansas and northeast Texas to get into domestic lithium extraction. Chevron’s acquisition follows an earlier move by Exxon Mobil to do the same, with lithium representing a key resource for the transition from fossil fuels to renewable energy sources “that would allow the company to pivot if oil and gas demands wane in the coming decades,” Bloomberg writes.
“Establishing domestic and resilient lithium supply chains is essential not only to maintaining U.S. energy leadership but also to meeting the growing demand from customers,” Jeff Gustavson, the president of Chevron New Energies, said in a Tuesday press release. The Liberty Owl project, which was part of Chevron’s acquisition from TerraVolta Resources, is “expected to have an initial production capacity of at least 25,000 tonnes of lithium carbonate per year, which is enough lithium to power about 500,000 electric vehicles annually,” Houston Business Journal reports.
The Federal Emergency Management Agency prepared a memo titled “Abolishing FEMA” at the direction of Homeland Security Secretary Kristi Noem, describing how its functions can be “drastically reformed, transferred to another agency, or abolished in their entirety” as soon as the end of 2025. While only Congress can technically eliminate the agency, the March memo, obtained and reviewed by Bloomberg, describes potential changes like “eliminating long-term housing assistance for disaster survivors, halting enrollments in the National Flood Insurance Program, and providing smaller amounts of aid for fewer incidents — moves that by design would dramatically limit the federal government’s role in disaster response.”
In May, FEMA’s acting administrator, Cameron Hamilton, was fired one day after defending the existence of the department he’d been appointed to oversee when testifying before the House Appropriations subcommittee. An internal FEMA memo from the same month described the agency’s “critical functions” as being at “high risk” of failure due to “significant personnel losses in advance of the 2025 Hurricane Season.” President Trump has, on several occasions, expressed a desire to eliminate FEMA, as recommended by the Project 2025 playbook from the Heritage Foundation. The March “Abolishing FEMA” memo “just means you should not expect to see FEMA on the ground unless it’s 9/11, Katrina, Superstorm Sandy,” Carrie Speranza, the president of the U.S. council of the International Association of Emergency Managers, told Bloomberg.
The Spanish government on Tuesday released its report on the causes of the April 28 blackout that left much of the nation, as well as parts of Portugal, without power for more than 12 hours. Ecological Transition Minister Sara Aagesen, who heads Spain’s energy policy, told reporters that a voltage surge in the south of Spain had triggered a “chain reaction of disconnections” that led to the widespread power loss, and blamed the nation’s state-owned grid operator Red Eléctrica for “poor planning” and failing to have enough thermal power stations online to control the dynamic voltage, the Associated Press reports. Additionally, Aagesen said that utilities had preventively shut off some power plants when the disruptions started, which could have helped the system stay online. “We have a solid narrative of events and a verified explanation that allows us to reflect and to act as we surely will,” Aagesen went on, responding to criticisms that Spain’s renewable-heavy energy mix was to blame for the blackout. “We believe in the energy transition and we know it’s not an ideological question but one of this country’s principal vectors of growth when it comes to re-industrialisation opportunities.”
Metrograph
“It seems that with the current political climate, with the removal of any reference to climate change on U.S. government websites, with the gutting of environmental laws, and the recent devastating fires in Los Angeles, this trilogy of films is still urgently relevant.” —Filmmaker Jennifer Baichwal on the upcoming screenings of the Anthropocene trilogy, co-created with Nicholas de Pencier and photographer Edward Burtynsky between 2006 and 2018, at the Metrograph in New York City.