Air Products and Chemicals, Inc. and AK Steel Corp. jointly announced that they have terminated work on the development of an energy project proposed for the AK Steel facility in Middletown, Ohio. The project would have used waste gas from AK Steel’s Middletown blast furnace to produce steam and electrical power. The project would have cost about $310 million and had been under development since 2008. The companies said that, despite a contingent $30 million grant from the U.S. Department of Energy, current and projected electricity costs do not justify the economics of proceeding with the project. If operational, it was expected to produce one million megawatt-hours of electricity per year.

The AK Steel-Air Products project was designated as a renewable energy resource under Ohio's renewable portfolio standard ("RPS") as part of Ohio Senate Bill 289, sponsored by Senator Bill Coley (R-Middletown), and enacted in April of this year. SB 289 strictly limited its application to qualifying projects in Butler County, where AK Steel's production facility is located. The designation would have allowed the project to generate renewable energy credits to help pay for the project. The size of the project had created some concern in the renewable energy industry that it may overwhelm the in-state REC market.

Ohio Senate Bill 315--a more comprehensive energy bill signed into law last month by Governor John Kasich--again amended the state's RPS to qualify certain waste energy recovery projects as renewable energy resources. A summary of SB 315, including a brief explanation of the section of the Ohio Revised Code that classifies "waste energy recovery systems" as renewable energy systems, is available here. A chart explaining Ohio's RPS is available here.