In a major setback for Australia’s hydrogen ambitions, Trafigura has canceled its $750 million green hydrogen project at Port Pirie, signaling broader challenges facing renewable energy investment.

A primary $750m green hydrogen plant has been axed in South ­Australia. It is a fresh setback for the fledgling industry just days after Anthony Albanese pledged the clean-energy source would help underpin its Future Made in Australia plan.

Global commodities company Trafigura, which owns the ­Nyrstar lead smelter at Port Pirie, had hoped to build the world’s largest hydrogen electrolyzer ­facility as part of an ambitious scheme that included funding from the state government.

While the mooted 100-tonnes-a-day facility was set to open in 2025, the developers opted not to proceed after completing an engineering and design process last year.

Sources said the prohibitive cost of constructing the green ­hydrogen plant and stunted ­interest from buyers in the green product both played into the ­decision to walk away from the project.

The cancellation at Port Pirie underscores Australia’s challenging environment in which to build a significant new green hydrogen industry.

The Albanese government has an $8bn war chest aimed at creating incentives for the nascent commodity. Last week, it pledged more than $800m in production incentives to kickstart the 1500MW Murchison green hydrogen project in Western ­Australia.

The plant will use solar- and wind-powered hydrogen and convert it to green ammonia for export.

Energy Minister Chris Bowen said the WA deal reflected Australia’s ambition to become a renewable energy superpower and boosted its Future Made in Australia policy. The deal will employ 3,600 workers in construction.

The Australian reported earlier in March the nation’s green hydrogen ­industry had failed to fire, with 99 percent of a $100bn supply pipeline failing to progress ­beyond the concept stage, ­punching a hole in Mr Albanese’s aim to develop a significant export ­industry by 2030 and meet net-zero goals.

However, Mr Bowen said last week that investment so far was broadly consistent with its ­national hydrogen plan while conceding the “odd setback” and some delays were inevitable as the sector attempts to build ­momentum.

As part of its flagship Future Made in Australia plan, the ­government allocated $6.7bn in 2024 to ­provide a $2 incentive for every kilogram of green hydrogen produced from 2027-28. It also committed $2bn for new projects under the Hydrogen Headstart program.

However, the Coalition has vowed to repeal the incentives should it win government. Opposition Leader Peter Dutton stated there was no business case for green hydrogen after a $600m plant at Whyalla was axed.

Consultancy EnergyQuest said using Australia’s huge renewable generation capacity for the power grid may make more sense than using green hydrogen.

“A key drawback of the existing green hydrogen production process is that a considerable portion of the renewable energy used to produce the hydrogen is lost in the production process,” EnergyQuest said.

“It takes around 45-kilowatt hours to produce one kilogram of green hydrogen, but that one kilogram can only be used to generate 30kWh of electricity, and production of green ammonia involves a further 13-25 percent energy loss.”

EnergyQuest estimates that the electricity required to generate 15 million tonnes of green hydrogen—the federal government’s target by 2050—requires more than double Australia’s total annual electricity generation.

In September, Mr Bowen said it was “no exaggeration” to say green hydrogen would be on the ballot paper.

Nyrstar, in December, wrote down the value of its smelters at Port Pirie and Hobart by more than $US500m ($794m) over the past two years, citing “continuing challenges” at the assets.

The Australian assets, which employ about 1300 people, include a zinc smelter at Hobart and a multi-metals recovery plant at Port Pirie. Due to the integration of their operations, they are accounted for as a single business unit.

Trafigura said both assets performed below expectations.

MST Marquee head of energy research Saul Kavonic said green hydrogen—produced by splitting water into hydrogen and oxygen through zero-emissions technologies—has proven to be marketing hype rather than a substantial new energy source.

Andrew Forrest’s Fortescue abandoned ambitious green ­hydrogen targets in July 2024. More recently, the newly elected Queensland LNP government scrapped the Central Queensland Hydrogen Project last month by rejecting a $1bn funding request from state-owned generator Stanwell Corporation.

Experts say current green ­hydrogen production costs are ­estimated between $5 and $6 per kilogram as the nascent industry struggles to build scale and battles high electrolyzer charges.

Hydrogen promoters maintain that it is too early to write off the sector, given broad government support and point to the role of ­renewable-based hydrogen in developing more lucrative industries such as green steel.

Follow the link to the original article » GO.

Australia Needs More Than Ambition — It Needs Execution

Canceling Trafigura’s Port Pirie hydrogen project highlights the uncertainty in investing in clean energy infrastructure. The solution? Smaller-scale, modular, and economically viable hydrogen systems that can scale fast.

Klean Industries Offers:

✅ Containerized green hydrogen production for rapid deployment
✅ Modular infrastructure with lower CAPEX and faster ROI
✅ Circular integration with tire, plastic, and waste-to-hydrogen systems
✅ Global partnerships for reliable fuel cell infrastructure and distribution

Connect with Klean Industries to explore real-world hydrogen solutions that deliver on performance, policy, and profitability — even where megaprojects fall short » GO.