Johnson Matthey slashes green hydrogen spending by 83% under investor pressure

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JOHNSON MATTHEY is cutting its investment in green hydrogen technologies by 83% following pressure from shareholders to offload the business.

The cut comes after half-year sales in its hydrogen technologies division fell 46% to £20m (US$25m). The business makes components for fuel cells and electrolysers including catalyst coated membranes (CCMs) and membrane electrode assemblies (MEAs) that lie at the heart of green hydrogen equipment. It blamed the slump on lower demand for products, higher expected lifetime costs of hydrogen-powered vehicles, and slow development of the infrastructure, regulations, and incentives it says are required to scale up green hydrogen supply chains.

Tom Baxter, a founder of the energy advisory network Hydrogen Science Coalition, said: “The market is cooling for green hydrogen. It comes at a significant premium over blue hydrogen and the projected reductions in green hydrogen costs are not being materialised. Prospects for making profits are not looking good. Similarly for fuel cells. The main market is transport but they are finding it very hard to compete with battery electric that has double the efficiency of a fuel cell.”

Johnson Matthey responded last year by cutting jobs at the division, delaying plans to open a fuel cell components factory in Royston, UK and limiting capital expenditure in green hydrogen technologies to £90m over three years. The company has now been forced to go much further after its largest investor, Standard, published an open letter in December attacking the performance of the board, and urging the company to minimise spending and explore selling the division.

Standard said: “The business has consumed [around] £310m of cash and continues to generate operating losses with no apparent path for return on capital. The Board continues to demonstrate a clear lack of discipline around expected returns and an inability to invest thoughtfully and to appropriately anticipate market changes.”

The comments refer to the hundreds of millions of pounds that Johnson Matthey lost in 2022 after selling its battery materials business because the costs were too high and the chance of market differentiation too low.   

In response to Standard, Johnson Matthey has now promised to slash planned capital expenditure by 83% to “maintenance levels” of no more than £5m a year.

“This business remains on track to achieve operating profit break-even by the end of FY2025/26,” Johnson Matthey said in a statement. “In addition, the group is pursuing options to further de-risk this business.”

It says that it expects its existing green hydrogen projects, which include partnerships with Refire, Doosan, and Hystar, will be unaffected by the changes.

Blue hydrogen projects untouched

Johnson Matthey has also confirmed that the spending cuts do not affect its blue hydrogen production technologies which are instead sold out of its catalyst technologies division. This includes the LCH process that is licensed for use at the blue hydrogen plant that bp is building in Teesside and another that EET is building at Stanlow. Profits from that division were up 47% last year to £75m.

Air Products, the industrial gases giant, is under similar pressure with its board fighting a testy campaign against activist investor Mantle Ridge which has sowed doubts about the company’s management and the merits of its clean hydrogen investment. Shareholders sided with Mantle Ridge, electing three new directors and last week replacing Air Products’ long-standing CEO Seifi Ghasemi with Mantle Ridge’s candidate, the former Linde executive Eduardo Menezes.

Hydrogen is seen as crucial for decarbonising energy-intensive heavy industry including steelmaking, but analysts have warned that government targets are likely to be missed, and demand will be lower than previously projected.

EU auditors warned last year that the bloc’s “industrial policy on renewable hydrogen needs a reality check” and that “demand stimulated by the EU’s strategy is unlikely to reach 10m t/y by 2030 let alone the 20m t/y target set.”

Meanwhile, McKinsey published a global energy review last year projecting that growth in demand for hydrogen could be 10–25% lower in 2050 than previously estimated.