AGL will continue to pursue plans to develop green hydrogen at the former Liddell Power Station site despite its partner Fortescue backing away from the project.
Fortescue chairman Twiggy Forrest arrived at the coal generator to great applause in late 2021 to announce a feasibility study into the establishment of a green hydrogen production facility as part of a broader clean energy hub.
"The change we are going through will be bigger than anything we have ever seen; it will be a greater change than the industrial revolution. And we ladies and gentlemen here in the Hunter are at the heart of it," he said at the time.
Among the site's selling points is the fact that a two gigawatt electrolyser would consume a similar amount of water (9 gigalitres) as the former power station.
In 2022 two of Japan's biggest energy companies - Inpex Corporation and Osaka Gas joined the project as part of an expanded feasibility study.
However, work done since the 2021 announcement has concluded that large-scale hydrogen production is not presently financially viable in Australia.
The Newcastle Herald understands that Fortescue deprioritised the Liddell project in recent months.
On Wednesday the company announced that 700 people would be made redundant across its operations.
The company also acknowledged that it would not meet its stated goal of producing 15 million tonnes a year of green hydrogen by 2030.
An AGL spokesman said on Thursday that the company remained committed to exploring options to produce green hydrogen and future fuels at the Hunter site in the future if it became economically feasible.
"We continue to execute on our strategy to transform the Hunter site into a low carbon industrial energy hub with partner agreements signed across the renewables value chain such as solar panel manufacturing, solar panel recycling and battery recycling in the past 12 months," he said.
The Fortescue announcement also has implications for the federal government's emissions transition plan, which provides $8bn in investment and support for hydrogen production as part of a push for Australia to become a key player in global efforts to achieve net zero.
Mr Forrest said his company would continue to pursue its green hydrogen plan despite the job losses.
He said the job cuts would ensure the company remained "lean, impactful and agile".
"It's been taken as 'Twiggy is walking back from hydrogen'.
"Twiggy is not walking back from hydrogen. The world has to have it. We just have to work out how to produce it cheaply enough," he said.
The billionaire philanthropist said the uncertainty created by the wars in Ukraine and Gaza and high costs had made the operating environment tough.
"We need lower power prices, hydrogen is directly a function of the electricity cost - if the electricity cost is high, then we can't make hydrogen cheaply enough to compete with fossil fuels," he said.
He said the 700 jobs were being cut to reduce duplication of roles across the business and lower costs.
Dr Forrest said they included white-collar jobs in the communities, human resources and government relations departments.
"I'm a bloke who really likes to simplify things to keep things streamlined," he said.
"Our organisation had been simplified down into one, from having management layers everywhere, we're down to three."
He said the job losses had left him "gutted like a fish with a blunt knife, mate".
"We're up around 15,000 people ... 5000 contractors. We've let 700 people go. I just hate doing it."
