Australia's Hydrogen Dreams Derailed: The Fall of a $14 Billion Project

2025-06-30 application

Gladstone, Monday, 30 June 2025.
The Central Queensland Hydrogen Project, once a hopeful green energy beacon, has been scrapped. This setback for Australia’s clean energy future may shift investment focuses, stressing financial and logistical challenges in hydrogen.

The Decision to Abandon

The Central Queensland Hydrogen Project (CQH2) was set to transform Gladstone into a hub for green hydrogen production. Yet, amid increasing financial challenges and government funding withdrawals, the developers had no choice but to pull the plug on this $14 billion project[1][2]. The initial phase aimed to produce 200 tonnes of hydrogen per day using a 720 MW electrolyser, later expanding to 2,880 tonnes daily[2].

Funding Debacles and Fallout

The financial backing woes began as early as February 2025 when the state government declined to match a $1.4 billion federal funding request[2][4]. Despite the federal government’s significant commitment, including a $20 million engineering study and more than $69 million through its regional hydrogen hubs program, the project stumbled as projected costs rose from $12.5 billion to an estimated $14.75 billion after a feasibility study in 2022[1][4].

Local and International Ramifications

Originally pitched as a significant international collaboration, the project’s demise marks a substantial narrative in Australia’s renewable energy landscape[1]. Setbacks like Kansai Electric Power’s withdrawal over production costs in November 2024 didn’t help[2]. Locally, the announcement left community leaders and conservationists, such as Emma Smith, disheartened about lost job potentials and future regional prospects[1]. ‘It’s a shame,’ she lamented, noting the loss of utilizing local skills and industries[4].

Future of Australia’s Green Energy

The cancellation of the CQH2 project echoes a broader sentiment across Australia’s hydrogen ventures. With at least eight major hydrogen projects scrapped in recent years, the enthusiasm for hydrogen as a cornerstone of Australia’s net zero strategy is waning[5]. Federal and local entities are urged to reassess their priorities and provide certainty for new energy industries. As LNP Senator Matt Canavan expressed, ‘Hydrogen is just not ready for prime time’[5].

Looking Forward in Gladstone

Despite the setback, local officials remain optimistic. Gladstone’s Mayor, Matt Burnett, believes in the city’s green hydrogen potential but underscores the need for private investment and federal support to make it a reality[2]. As we watch Australia’s clean energy strategy shift, the tale of the CQH2 project serves as both a cautionary tale and a hopeful reminder of what collaborative efforts can achieve when aligned with realistic expectations and robust financial backing[4][5].

Bronnen

green hydrogen project abandonment