That’s not exactly how we think about it. We look at the long term prospects just like we do any other use of capital. It’s very important to understand that. We treat our capital the same whether it’s for buybacks, projects because it’s one homogeneous pool of capital and we have to find the best use of it for our owners. So when we look at the long term repurchases of stock, that has been a good continued use of excess capital and it also instills discipline in the organization and that if we don’t meet our investment criteria on projects, we have an alternate use of capital. Because the one thing about this industry is if you invest poorly in a project, it can create problems for you for two decades. So for us, it’s an important element of our overall capital allocation process and this is something we are going to continue to do.
But dividend growth and buybacks are both important for our capital allocation and will continue to be.
Stephen Richardson : Thanks so much.
Operator: We will take our next question from Patrick Cunningham with Citi. Your line is open.
Patrick Cunningham : Hi, good morning. I just had a follow-up on EMEA. Clearly, it’s been a strong performer tightened productivity in the phase of weaker onsite volumes. I am sure on your thinking of the region longer term in the phase of potential of deindustrialization. Did you see any risk to holding these margin levels if we see continued deindustrialization and weakness going forward?
Matt White : Patrick, as I mentioned earlier on, EMEA hasn’t quite been the industrial growth story other than maybe a couple of countries, broadly our growth capital is largely been deployed in Americas and APAC, which is where we saw most of the growth come through. Now having said that, EMEA has as I mentioned earlier on been a very strong profit growth story for us, we manage that whole process right through the negative volume trend.
Sanjiv Lamba: As I look ahead, I see two trends. First, a very resilient base business. Look, there was a view that if volumes in EMEA would crash two years ago when we saw the energy crisis that didn’t happen. We have seen a steady decline. We are – I am looking at the January numbers as we speak and I am seeing that flattened out a little bit. So, my expectation is the resilience of that base business which is also driven by the contract structures that we have with fixed fees and rentals and so on and so forth actually remains a very important part of that portfolio. The other piece which I think is encouraging is, we are seeing large project opportunities led largely by decarbonization. The European Union has very complex rules as you know well.
But it hasn’t intent a very steady and stable intent to move forward with decarbonization and push industries in that direction. We see that spurring growing momentum around projects and you should expect that there will be projects that will develop and announced even from a Linde point of view in the next one, two, three years and again, that will kind of underpin the long-term trend that we see holding there. I will end off by just saying that I expect the EMEA market to continue to be an important industrial gas market for us. I don’t think that will ever change. And they will have a strong contribution to mix to the EPS growth that we look at.
Patrick Cunningham : Okay. Thank you so much.
Operator: We will take our next question from John McNulty with BMO Capital Markets. Your line is open.
John McNulty: Yeah, good morning. Thanks for taking my question. Sanjiv, on the – you spoke on the IRA bill and kind of your views on the green hydrogen opportunity. Can you help us to think about the types of customers that you are seeing for the liquid green hydrogen? And also the types of premiums that they are willing to pay?
Sanjiv Lamba: Sure. So, and that’s a good question, John, because the distinction I want to make is I want to just talk about carbon intensity and blue hydrogen to begin with transition to green. So, my view is, large onsite customers recognize the benefits that come from low technical risk, established references in around blue hydrogen development. Blue hydrogen is all about using existing natural gas and converting that into hydrogen, capturing the CO2 and sequestering it to enable a low carbon intensity hydrogen to be developed and we’ve given the example of – that we are doing it already at an existing facility and with OCI project we will do that as we start that project up in a couple of years. So, there is an example of a large onsite customer looking for reliable – with low technology risk option in terms of something that they can then sustain over a 15, 20 year period.
We are – so, that’s kind of the baseline against which I am now going to reference what’s happening with green hydrogen. As far as green hydrogen is concerned, people are increasingly recognizing that the electrolyzer technology is fairly improved, hasn’t thought the same level of reliability, cost effectiveness and I think those factors are deterring long-term off take agreements that will enable green hydrogen to – that off take agreement will enable the modernization of green hydrogen technology to be more effective longer term. There are small green hydrogen customers and that’s largely built around mobility where you’ll expect small volumes and you are starting to build an infrastructure and you want to have small volumes feed that infrastructure as it transitions into kind of larger broad scale infrastructure.
So I think that’s where you will see most of the green hydrogen. There are some small mandates that companies can impose in terms of green hydrogen being utilized in some of the chemical processes, fertilizers, et cetera. But again these are really small scale. And the last point I just want to make is that, I think people talk about gigawatts, as far as hydrogen is concerned the reality is the facility that we are setting up for OCI as an example, the facility that we set up in Sweeny for Philips 66, those are both traditional hydrogen with carbon capture sequestration producing blue hydrogen they are both a gigawatt and plus. Whereas building a gigawatt facility for electrolyzers just hasn’t happened yet. You are building 20, 30, 40 megawatts which is miniscule in terms of the volume requirements that a large typical onsite customer would typically have.
So, that scale is what deters the large onsite development. At the moment that scale of 20, 30 megawatts only allows for some of the developments around mobility and smaller end-users.
John McNulty: Got it. Thanks very much for the color.
Operator: And we will take our next question from Steven Byrne with Bank of America. Your line is open.
Steven Byrne: Yes, thank you. So in the last two years, your sale of plant and your sale of gas backlog have both roughly increased 50%. Do you expect the latter, the sale of gas to increase at maybe a faster cliff either by your preference and that you do have benefits in the rest of your business from that or from the clean energy opportunities presumably would be more in sale of gas? And then just one more – for that $8 billion to $10 billion that you highlighted as your pipeline for clean energy, how much of that would be associated with existing customers where you could either retrofit or expand the existing facilities which could generate an even higher IRR?
Sanjiv Lamba: Steve, let me going to provide the headlines first and then I will dive a little bit deeper. So the headline is, you should expect our sale of gas backlog to continue to grow and you absolutely right that the $8 billion to $10 billion that I referenced earlier on over the next few years, we will see that translate into projects that go into the backlog. That $8 billion to $10 billion is probably weighted as far as they are concerned. So, clearly, we understand that many of those projects will move forward, some may not and that’s where the opportunity pipeline which is rich with 200 plus projects that I’ve referenced a few times in the past is a good feeder into that $8 billion to $10 billion number that I’ve talked about.
So, we should really see that sale of gas backlog reflects those projects moving from an opportunity pipeline into contracts and then being reflected into the backlog number. Your question on incumbency and new projects as a default, I’d say to you that that mix is a little bit opportunistic and we have made a commitment you might recall sales from our sustainability side, we said that we expect to invest about $3 billion in retrofitting and repurposing our existing asset with carbon capture facilities to ensure we capture as condition CO2 to be able to sequester it and could roll those facilities to blue hydrogen. That’s where most of the retrofit will likely happen and you might recall when we said that $3 billion number, that is in the context about a pipeline we expected over a decade of $30 billion of investments in the US.
