Queensland’s Deputy Premier Jarrod Bleijie has told parliament the state will seek repayment of $65 million paid to billionaire Andrew “Twiggy” Forrest’s Fortescue Metals Group for an abandoned hydrogen energy project.

Speaking in state parliament on Tuesday morning, Bleijie criticised the former Labor government for pursuing the company’s electrolyser manufacturing facility in Gladstone as a “vanity project”.

“The state Labor government approved $92.5 million for this project of taxpayer funding, and $65.97 [million] has already been paid to Fortescue under the former Labor government’s terrible deal,” Bleijie said.

“On behalf of Queensland taxpayers, I’ve directed my department to advise Fortescue that the Crisafulli government will issue a notice to comply and a default notice and seek full reimbursement of the $65.97 million towards this now discontinued project.

“That is value for taxpayers’ money, and we’re going to try to get it back.”

The part-built $140 million Gladstone project was supported with joint funding by the state and federal government, and announced with great fanfare by Forrest and then-premier Annastacia Palaszczuk in 2021.

Fortescue abandoned both stages of its hydrogen projects near the central Queensland city, touted as the future leading hub for the technology to meet demand in Australian and beyond, in May.

The West Australian company confirmed last month it would not proceed with the plant, also axing a major United States project as Donald Trump slashed tax breaks for clean energy investment.

Federal Industry Minister Tim Ayers had since flagged the Commonwealth would seek to claw back the $49.44 million it had tipped into the Gladstone project.

At the time, a company spokesperson told one industry publication it would “return funds where required under the grant agreement”.

In a statement on Tuesday, a spokesperson reiterated the pledge to return the money and said Fortescue continued to act in good faith amid “constructive, in-confidence discussions” with the state.

“We are committed to working with the government to assess the requirements of the grant agreement,” they said.

Forrest appeared on the front of Time magazine touting his green energy push earlier in the year.

Hydrogen, which emits only water when burned, had been fast firming as a major front in the global race to decarbonise economies and reduce the impact of climate change.

In its so-called “green” form – as opposed to the fossil-fuel-powered processing most of the current end product results from – electrolysis powered by renewable energy splits water molecules to produce the hydrogen gas without any emissions.

Fortescue has insisted it remains committed to green hydrogen, but has been forced to hit the brakes on its ambitions over the past year, citing the high cost and amount of renewable energy required.

Releasing its latest earnings on Tuesday, the company noted in its annual report to investors that it had “reviewed our global green energy pipeline to reflect changes in market conditions, policy settings and project economics”.

“Our ambition remains to lead in green hydrogen and green metals, while maintaining discipline in capital allocation,” it noted.

Woodside Energy, Australia’s biggest oil and gas company, has also walked away from a liquid hydrogen project it had planned in the US state of Oklahoma.

With James Hall

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