A multi-billion-dollar green hydrogen project tipped to transform a Western Australian coastal town into a clean energy hub has been shelved, leading to questions about the viability of other projects in the state.

Province Resources has announced it is putting an indefinite hold on its Hyenergy green hydrogen and ammonia gas production facility in Carnarvon, almost 900 kilometres north of Perth.

The company said investors were losing interest in the project due to significant time delays by the state government in granting appropriate land tenure, a claim the state has denied.

The $25 billion proposal involved building a green hydrogen and ammonia gas production facility powered by 945 hectares of wind turbines and up to 10,000 hectares of solar panels.

It also included plans for an export port to South Asia.

Province Resources had secured land agreements and local shire support for a 600,000-hectare site in Carnarvon. 

But chief executive David Frances claimed the state over-valued the land parcel, making development unaffordable.

"The land is undeveloped, degraded and of very low value, hence its continued status as unallocated Crown land," he said.

"It would require extensive development including studies for heritage, planning, engineering and environmental approvals.

"Due to the slow down in the global appetite for hydrogen, Province needs to be mindful of holding costs which could be required for many years."

A WA government spokesperson said it was disappointed to see Province Resources blaming the state for its own inability to raise funding or secure offtake for its project.

"The WA Labor government passed legislation last year specifically to enable renewable energy projects on Crown land in WA," the spokesperson said.

"However Province Resources opted to ignore this pathway, instead making a number of unreasonable and highly complex requests around land tenure."

Developments derailed

Province Resources' decision to shelve its green hydrogen project comes just months after Fortescue flagged it was abandoning its target to produce 15 million tonnes of green hydrogen a year.

Australian mining billionaire Andrew Forrest purchased three cattle stations across the Gascoyne and Pilbara in 2022 to further plans for a renewable energy hub.

Federal Energy Minister Chris Bowen said any suggestions of trouble in the green hydrogen industry were greatly exaggerated.

"We have a pipeline of green hydrogen projects across the country of more than $200 billion, 20 per cent of them are underway already," he said.

"Of course there are going to be some that have hurdles to overcome but whether its Western Australia or Queensland or anywhere else, green hydrogen has a very important role to play in our future."

Carnarvon resident Carlo Pollinelli, who is a minor shareholder in the ASX-listed company, said the Hyenergy project had the potential to transform Carnarvon.

"They were talking about up to 300 to 500 people engaged long-term, which is a massive increase," Mr Pollinelli said.

"The town is shrinking, so it needed a boost in some sort of industry to get things happening.

Dave Robinson, who owns Doorawarrah Station, 79 kilometres east of Carnarvon, said he was keen to see wind turbines built on a lower-quality part of his property.

"It's a low-intensity type area, it's not prime farmland," he said.

Mr Robinson said Province Resources could look to build in other states.

"If it doesn't have some light at the end of the tunnel, Province will go and look at other areas," he said.

"The Queensland government are very supportive and obliging to these types of projects and they'll find an area over there."

Carnarvon Shire President Eddie Smith said he believed the project would eventually go ahead.

"The government hasn't really got itself ready on exactly how to manage these sorts of projects and the associated requirements," he said.

"But we will promote any of the developers that are trying to get major projects off the ground here with the government."