Exxon, Mitsubishi link arms on hydrogen project
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Illustration: Annelise Capossela/Axios
Mitsubishi Corp. is exploring an equity stake in Exxon's proposed Texas hydrogen and ammonia plant and would also be a customer under the brewing deal.
Why it matters: Exxon is lining up corporate giants behind what it calls the world's largest low-carbon hydrogen project.
- It underscores the stakes of the Treasury Department's looming decisions on IRA hydrogen tax credits.
Dan Ammann, who heads Exxon's low-carbon unit, tells me the Mitsubishi agreement is "further evidence of real world demand now materializing for the project."
Driving the news: Mitsubishi, under the preliminary deal, would use ammonia from the Baytown plant for power generation, process heating and other industrial uses in Japan.
- The companies didn't disclose the size of the potential investment or the ammonia purchases.
- Mitsubishi plans to convert part of its liquified petroleum gas terminal to handle ammonia.
Catch up quick: Today's "project framework agreement" comes a week after UAE state oil giant ADNOC announced a 35% equity stake in the project.
- In March, Japanese power giant JERA and Exxon unveiled a potential deal similar to the Mitsubishi agreement.
- In June, industrial gases giant Air Liquide said it would invest to supply on-site oxygen and nitrogen units and allow Exxon pipeline access for hydrogen.
Friction point: Exxon has yet to green-light the multibillion-dollar project that would come online in 2029 and says looming federal policy will dictate its viability.
- It says Treasury's draft rules fail to adequately recognize its plan for hydrogen produced using natural gas alongside CO2 capture.
- Ammann said the proposed rules counter the IRA's intent to credit hydrogen's carbon intensity on a "technology neutral" basis.
The other side: Some environmentalists fear changes they allege would badly undercut the credits' climate benefits.
- Check out comments on all sides of the topic.
The bottom line: The project has big partners and big questions about its future.
