Labor has faced a major setback in its push towards a renewable energy future as Origin Energy has announced its decision to “cease work on all hydrogen development opportunities”.

Australia's Origin Energy (OTCPK:OGFGF) (OTCPK:OGFGY) said Thursday it has canceled its potential hydrogen development project in the Hunter Valley Hydrogen Hub, the latest blow to the development of the hydrogen market as a clean-burning fuel.

Australian utility Origin Energy has withdrawn from its potential development at the Hunter Valley Hydrogen Hub on Koorangang Island in New South Wales, 170 kilometres north of Sydney, turning its focus to renewables and storage projects.

The project was intended to deliver a commercial-scale hydrogen supply chain in the industrial and port precinct in Newcastle, Australia.

In Australia’s pursuit to make hydrogen a key pillar in decarbonising the economy, one of the country’s biggest players has pulled the plug on its operations.

Origin Energy is abandoning its ambitious plans to develop hydrogen, striking another blow to the Albanese government’s dreams for the energy source to help drive the transition to net zero.

The electricity and gas giant will not proceed with a project in the Hunter which had been shortlisted for funding as part of Labor’s $2 billion incentive scheme.

Origin Energy is abandoning its plans to develop hydrogen at its Hunter Valley Hydrogen Hub deeming the project “too expensive and too risky,” says Sky News Business Reporter Edward Boyd.