Australia’s government has cancelled funding for a 400 MW clean coal project after developer HRL failed to meet conditions set out in a funding agreement.

The proposed A$100 million grant was awarded under Australia’s Low Emissions Technology Demonstration Fund (LETDF), which is also supporting projects such as the Callide oxyfuel project.

Australia’s ninister for Resources and Energy, Martin Ferguson, said that HRL had failed to meet the conditions of the funding requirement in spite of being granted an extension in February 2012.

“The government made it clear in February this year that it would grant one final extension until 30 June 2012 for HRL to meet the conditions,” Minister Ferguson said. “It has not done so and, accordingly, the funding agreement between HRL and the Australian government will be terminated.

“I emphasise that the Australian government has treated all projects under the Low Emissions Technology Demonstration Fund equitably by granting projects extensions as required and administering the grants in a consistent manner that gives projects every opportunity to succeed.”

The LETDF is designed to help companies demonstrate the commercial potential of new energy technologies that deliver reductions in carbon emissions. It is also supporting initiatives like the Silex-Solar Systems project and carbon capture and storage at Chevron’s Gorgon liquefied natural gas plant.

HRL’s Dual Gas project was awarded the A$100 million grant in 2007 by the former Howard government to support its construction and the demonstration of brown coal integrated drying and gasification combined cycle technology. A funding agreement was signed between the Commonwealth and HRL in 2008. Four extensions were subsequently granted to HRL.

No funds have been paid to HRL by the Australian government for the Dual Gas project under the LETDF funding deed.

Of the projects selected by the Howard government under the LETDF, the Chevron Gorgon project and the Callide oxyfuel project are underway. The Silex-Solar Systems project continues to be administered by the Australian Renewable Energy Agency.