Houchen said the authority had a responsibility to make sure the Teesworks site was being used to “deliver the biggest possible benefit for local people”.
He said: “BP’s hydrogen project faced a number of challenges, and while I know this won’t have been an easy decision, I welcome their pragmatism.”
The mayor said land on the former steelworks site was “limited” and “investor interest is high”.
“This is absolutely the right move for Teesside.”
Teesworks is run as a joint venture between the publicly owned and funded South Tees Development Corporation, led by the Tees Valley Combined Authority (TVCA), and Teesside businessmen Martin Corney and Chris Musgrave.
The men initially owned 50% of the shares in Teesworks, but that increased to 90% in 2021 with the remaining 10% staying in public hands.