(Bloomberg) -- Climate-friendly hydrogen was one of the most-hyped sectors in green energy. Now the reality of its high cost is taking its toll. 

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In recent months, some of the biggest would-be developers of the fuel have canceled projects, axed orders and scaled back investment plans. The low-carbon fuel is simply too expensive to stimulate demand in many sectors of the economy.

On Thursday, Origin Energy Ltd. canceled a project to produce the clean-burning fuel in an industrial area of eastern Australia. 

“It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome,” Origin’s Chief Executive Officer Frank Calabria said in a statement. “The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project.”

So-called green hydrogen is made by using renewable electricity to separate the hydrogen and oxygen atoms in water. The resulting product can replace fossil fuel-derived hydrogen currently used in the chemicals and oil refining industries and potentially for new applications like power storage, steel production and shipping fuel. 

Origin Energy is just the latest example of a company stepping back its plans. Earlier this week, Norway’s Nel ASA, which makes the machines that produce green hydrogen, said that Mississippi-based Hy Stor Energy canceled an order for 1 gigawatt of equipment. That would have been enough to build by far the biggest such project in the US.

Beyond the cancellations from publicly-listed companies, smaller players are likely axing many more projects without publicity, according to Michael Liebreich, chief executive officer of Liebreich Associates and managing partner of EcoPragma Capital. 

Still, Liebreich, who’s both an analyst and investor, said that could be a positive reset for the industry, allowing economically robust projects to go ahead. 

“A lot of people are just walking away and it’s healthy,” Liebreich said in an interview. “The more realism there is, the better, because we can focus time, capital and talent on things that will work rather than on things that won’t work.”

There are signs that hydrogen demand will grow this decade, but only a small part of that is being satisfied by clean fuel.

Production of clean hydrogen is set to jump more than 40% to reach 1 million tons in 2024, though that’s still only about 1% of current hydrogen demand globally, according to the International Energy Agency. Projects with a further 3.4 million tons of capacity have to reach a final investment decision, the IEA found. 

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