Queensland Premier cans hydrogen pipe dream
Australia’s largest green hydrogen project has collapsed, with Queensland’s Crisafulli government pulling funding from construction of the $12.5bn plant and pipeline in Gladstone.
Australia’s largest green hydrogen project has collapsed, with Queensland’s Crisafulli government pulling funding from construction of the $12.5bn plant and pipeline in Gladstone championed by their Labor predecessors.
Treasurer David Janetzki on Sunday confirmed the government would not be investing further in the Central Queensland Hydrogen project, initially touted as being able to produce up to 200 tonnes of liquefied hydrogen by 2028, and four times that by 2031.
Mr Janetzki said the government had rejected a request for “more than $1bn in state government funding” for the project being developed in a consortium led by the state-owned Stanwell Corporation, Queensland’s largest electricity generator, and several Japanese and Singapore-based companies.
The project, which would have exported the majority of its production, was dealt a blow in November when Japanese utility Kansai Electric Power Company withdrew from the consortium citing higher than expected costs.
Kansai would have been one of the main customers of the hydrogen, which former Labor premier Steven Miles declared would help make Gladstone a global hydrogen heavyweight.
Sources told The Australian it was unlikely Stanwell’s consortium partners would be willing to go ahead with the project without another major investor. It follows the collapse or withdrawal of investors in several major green hydrogen projects across Australia over the past year.
Woodside Energy shelved two green hydrogen projects in Australia and New Zealand, Origin withdrew from its electrolysis-based Hunter Valley Hydrogen Hub venture and Kawasaki Heavy Industries withdrew from the Latrobe hydrogen project because of cost concerns.
That has happened as the Albanese government promotes renewable technology, legislating a production tax incentive worth $2/kg of renewable hydrogen produced from mid-2027 to mid-2040.
Stanwell had sought up to $1.6bn from the Liberal National Party government to inject into the project by the end of the month. It’s understood the initial $12.5bn estimated cost of construction had blown out to $14.75bn in a 2022 feasibility study and since then was increasing significantly with the worldwide hike in input costs.
The state government’s refusal to invest further is a blow to the project, with more $100m in state, federal and private sector funding already spent on development.
In a statement, Mr Janetzki said the government had inherited a budget in deficit and with soaring debt and could not justify further investment in the emerging renewables technology.
“The Queensland government will not be committing the substantial equity and grant funding requested for Stanwell Corporation to progress the CQ-H2 project,’’ he said.
“It would have required significantly more than $1bn in state government funding, including infrastructure for water, port, transmission and hydrogen production. We are focused on our energy generators providing affordable, reliable and sustainable power for Queenslanders.
“Stanwell’s investment in renewable hydrogen does not align with these expectations and this government’s objectives to focus on core financial and operational performance, and to maximise value from existing generation assets for Queenslanders.”
The project involved development of a hydrogen production facility at Aldoga, near Gladstone, a gas pipeline to transport to Gladstone Port and an ammonia production facility.
It was first flagged in 2019 when Stanwell began investigating the development of green hydrogen technologies.
It was earmarked to deliver about $15bn in export earnings and $9bn in direct foreign investment.
The government’s refusal to invest further in the project came after the Andrew Forrest-led Fortescue moved to shed 700 jobs, including in its emerging energy business, and pulled back on the Gibson Island project in Queensland.
Fortescue said it was still developing its small hydrogen plant in Gladstone.
The refusal of the government to further fund the development of green hydrogen is the latest renewables project to be cut since the LNP won power.
Just after the election, Mr Jantezki announced the government would scrap the proposed Pioneer-Burdekin pumped hydro scheme after its estimated cost had jumped from $12bn to more than $30bn.
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