Warner Bros has confirmed that it will not be filming Green Lantern in Sydney as originally planned, because of the increasing cost of locating footloose productions in Australia due to the rising Australian dollar.

Screen NSW, the New South Wales Government’s film agency, issued a statement saying it had been advised by the studio that the production was being moved.

Green Lantern is to be directed by Martin Campbell (Casino Royale) and produced by Donald De Line (Body Of Lies). Mexico, Louisiana and Canada have all been named as front runners in the rumours about where the latest DC Comic superhero, to be played by Ryan Reynolds, will spring into action.

It is six months since the NSW Premier Nathan Rees proclaimed at a media conference at Fox Studios Australia in Sydney that securing the big-budget film was “a real coup” for his state that would create 500 jobs and provide a major boost for the economy.

He also used the announcement to get attention about a new package of screen industry incentives that would ensure NSW “was the most attractive destination in Australia for major film projects”.

What has happened since is a cautionary tale about trying to score political points using Hollywood and underlines how film policy makers can put financial and other incentives in place but can’t control currency fluctuations. Some financial commentators believe the Australian dollar may match the US dollar sometime soon.

Warner Bros. Entertainment Inc announced last month that it had created DC Entertainment, a new company run by Diane Nelson and aimed at realising the value of the DC Comics brand and its characters. At that time it said that Green Lantern had a projected release date in the second quarter of 2011.

De Line is an executive producer on Guardians Of Ga’Hoole, the first film from Animal Logic, which is based on the Fox lot in Sydney.

Director Michael Apted’s The Chronicles Of Narnia: The Voyage Of The Dawn Treader, from Walden Media and 20th Century Fox, is the only film with blockbuster status shooting in Australia. It is utilising the Warner Roadshow Studios and surrounds in Queensland.