A new report calls into question the environmental benefits and tax credits linked to a Louisiana project that will include storing carbon emissions deep under Lake Maurepas, touted by state officials as a major economic development victory.

The report may add to the controversy surrounding Air Products’ Louisiana Clean Energy Complex, which has faced strong opposition from residents over its carbon capture plans. Air Products dismissed the report as inaccurate while state officials highlighted the Geismar project’s economic benefits, which include creating 170 permanent jobs as part of its aim to produce cleaner fuel through hydrogen.

The analysis was conducted by the Institute for Energy Economics and Financial Analysis, a global think tank based in Ohio that advocates for diverse and sustainable energy sources. It looked at the amount of greenhouse gas emissions likely to be avoided across the chain of the $7 billion project as well as the federal tax credits available to it.

The report concludes that the project, originally scheduled to be operational in 2026, “will have little if any environmental benefit, while costing taxpayers billions of dollars” through federal tax credits for carbon capture and storage. One of the report’s authors, Anika Juhn, said the Louisiana plant highlights issues with similar blue hydrogen and blue ammonia projects being developed nationwide with the use of tax credits.

“Those kinds of projects are definitely extremely expensive and really not returning any kind of climate benefit, certainly not in the way that they seem to be promising,” said Juhn, an energy data analyst with the institute.

The study found that, under a best-case scenario, the project would lead to a net reduction of 200,000 metric tons of carbon dioxide equivalent per year, or 5% of a standard coal plant’s annual emissions. Under what it labeled a more realistic scenario, there would be a net increase of 7.5 million metric tons of CO2 equivalent per year.

It says the tax credit the plant will use, known as 45Q, could allow it to recoup between $4 billion and $6.3 billion over a 12-year period.

The report’s authors question the company’s claim that it will capture 95% of carbon emissions. They also allege that the figure does not include emissions from upstream methane leaks, the operation of carbon capture equipment or the compression and transport of hydrogen.

Further, it argues that both fiscal conservatives and environmentalists should be concerned over the subsidies for what it labels “blue hydrogen’s carbon capture boondoggle.”

‘Proven technology’

Air Products said it stands by its technology and 95-percent capture rate, adding that the plant will help reduce carbon emissions further down the chain through its hydrogen and ammonia production. It intends to sell its products both across the Gulf Coast and globally.

“We remain confident in the ability to meet the carbon reduction goals of our facility with this technology,” it said in a statement in response to the report. “The products from the Louisiana Clean Energy Complex can help to decarbonize various sectors, providing additional downstream benefits. The facility also will create 170 permanent, good paying, jobs in Louisiana.”

It added that “this report simply repeats old, unsubstantiated arguments while ignoring the benefits of this proven technology.”

Louisiana Economic Development defended the state’s embrace of the project. It noted that state economic incentives “are tied to jobs and capital expenditures,” unlike the federal tax credits related to carbon capture.

It also highlighted the 170 permanent jobs as well as “413 new indirect jobs.”

“LED strategically evaluates and administers incentives to attract and retain businesses that drive economic growth, job creation and long-term investment,” it said in a statement. “The Air Products expansion is a prime example of how LED’s efforts contribute to our state’s economic success.”

‘Major industrial investment’

Former Gov. John Bel Edwards announced the project in 2021, billing it as a “major industrial investment that will create quality manufacturing jobs while limiting environmental impacts.” The project had been called the largest U.S. investment by the Pennsylvania-based company.

Edwards had set a goal of slashing emissions from Louisiana’s industrial and petrochemical base, but concerned environmentalists by embracing carbon capture technology as a means of doing so.

The state has sought to position itself as a hub for carbon capture technology and the potential new revenue that could come with it. But residents have expressed increasing concern over the process, which would see carbon emissions stored permanently deep underground.

Industry and many scientists vouch for its safety, but residents are concerned over the possibility of dangerous leaks and potential damage to water aquifers. State legislators have been contemplating bills that would give local communities more power over what projects could move forward in their areas.

Carbon emissions drive climate change, which is projected to greatly exacerbate sea level rise along Louisiana’s fading coastline. President Donald Trump, however, has castigated the well-documented science surrounding climate change, making it unclear whether the tax credits will continue in their current form.