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Air Products gives up on gasification

Air Products has opted to face a $1bn write-off in preference to carrying on with their doomed gasification projects in Tees Valley, and have belatedly decided to get out of the so-called ‘Advanced Thermal Treatment’ business “blaming technical problems and rising costs” (Source).

According to the firm (Source): “Air Products has announced that the Company will exit its Energy-from-Waste (EfW) business… Air Products expects to record a pre-tax charge in the range of $900 million to $1.0 billion in discontinued operations, primarily to write down assets associated with the EfW business…it is no longer in the best interest of the Company and its shareholders to continue the Tees Valley projects…We pushed very hard to make this new EfW technology work…”

This statement is a far cry from the way Air Products described matters in April 2015 when they boasted that: “…Air Products has successfully completed commissioning with Tees Valley 1 (TV1) and it is well into its start-up phase. It is expected to enter commercial operation later this year…” (Source).

Indeed, even as recently as last month, Air Products denied “suggestions that the beleaguered plant is to be mothballed with a view to being sold”, declaring that: “The TV1 site has not been mothballed….As previously stated, we have identified learnings that are being implemented into the TV1 facility…We expect the activity in the field to again pick-up in a few months.” (Source).

Back in April 2014 the Government announced that: “…The new 20 year contract with Air Products, worth 2% of government’s energy spend, is expected to deliver £84 million in savings over the life of the contract through an innovative fixed agreement that will provide stability in what the public sector pays for energy… Air Products has longstanding expertise in building and operating large, complex industrial gas and energy plants ensuring its projects are delivered safely, reliably and cost-effectively” (Source).

It appears that a great deal of money has been wasted on a scheme that the Government expected would save money. This calls into question the wisdom of the UK depending on such unreliable facilities for either energy generation or waste management.

Air Products’ decision to ditch gasification is reminiscent of New Earth Solutions, who decided in July 2015 to ditch their gasification business because, after years of trying, they could not get their gasification technology to work (Source). Many other gasification and pyrolysis failures have involved companies with less diverse portfolios, and simply ended with the company going bankrupt (Source).

Those still invested in gasification and pyrolysis will now presumably be considering whether they should follow suit with disinvestment. Companies such as Peel, who rely on a more experimental version of the technology that failed at TV1, could be next in getting out of the sector.

However, one-track companies such as Clean Power Properties have so far opted to burn through millions after millions by lurching from one failed thermal treatment technology to another rather than admit defeat, seeking refinancing and further investment despite their poor track record. Such ATT-only companies typically try to stick with gasification even if it ends in bankruptcy as they do not have a Plan B, and for them it is usually the investors and creditors who make the call to pull the plug.

According to Shlomo Dowen, National Coordinator of the United Kingdom Without Incineration Network (UKWIN): “Gasification and pyrolysis are synonymous with technology failures, bankruptcies and broken promises. As such, UKWIN is unsurprised that Air Products failed to get an unworkable technology to work. We hope this latest admission of defeat acts as a wake-up call for the Government who have been unwisely stoking this whole misadventure with environmentally harmful subsidies and other unwarranted financial support. Investment should focus on technologies for sorting and recycling and other infrastructure that will move us towards a circular economy, not wasted on disposal technologies which, even if they worked, would still be destroying valuable materials whilst exacerbating incineration overcapacity.”

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