On a typically warm January evening a large crowd gathers in the cavernous foyer of Sydney’s Carriageworks. The naturally impressive industrial space has played host to a collection of unforgettable installations in recent years, including Christian Boltanski’s whirring scaffolding structure Chance, Song Dong’s sprawling installation of home contents Waste Not and Ryoji Ikeda’s utterly hypnotic audiovisual barcode Test Pattern No 5.

This year’s spectacle is no less remarkable. Appearing for the Sydney Festival is Chinese artist Zhang Huan’s two-storey high Sydney Buddha – forged entirely from packed incense ash and sat tranquilly cross legged between the Carriageworks pillars.

A technical marvel, Huan’s ash Buddha resembles dark stone, but over time will crumble at the mercy of the elements. The figure is seated opposite the reassembled aluminum casing used to cast its shape, one hand waving in serene triumph at its shiny reflection. Zhang has exhibited the towering temporary deity previously in Florence and Taiwan, renaming each iteration for its host city.

At the opening of Sydney Buddha a thick fragrant fog billows upwards. The Carriageworks crowd lights long sticks of incense and pins them into the soft, powder-like thighs of Huan’s Buddha as part of a traditional Chinese prayer ritual. While the smiling face of the structure usually wears a steel mask for support for the duration of the installation, the artist prepares to ceremoniously unfasten the struts before his Sydney audience as an impromptu and experimental performance. Without knowing if the ash will collapse entirely or hold, the crowd sings an echoing “One, two, three!” Huan lets out a resounding “Wow!” as just a tiny portion of the Buddha’s ash nose crumbles into its lap.

Only one day earlier, Carriageworks’ installers hovered on scissor lifts and in ceiling harnesses, tirelessly beating and packing down the last of the ash into the aluminum Buddha casing. The piece took an entire week to install and uses some 20 tonnes of incense ash sourced from temples in Shanghai and throughout China’s Jiangsu and Zhejiang provinces. “This ash we collected over three years,” Huan explains. “Normally we go to the temples and introduce ourselves, we are artists and we are working with ash. For temples now treat the ash as waste. We collect this ash from temples and [donate] to the temples in return. We treat the ash as a precious gift from the temples and as blessings to our studio.”

Huan’s earlier work is substantially less joyous. The artist is well known for extreme and harrowing performance pieces, including 12 Square Metres, for which he perched for an hour, covered in honey and fish oil, in a Beijing outhouse. There was also the disturbing and chaotic Pilgrimage – Wind and Water at New York’s MoMA PS1 gallery for which he lay on an ice bed surrounded by dogs. The artist is philosophical about the change in the nature of his work, believing it is a part of the passage of time. “This change is natural and also is destiny. I’m doomed to change,” he says. “There is nothing that never changes.”

Not always a sincere follower of Buddhist practices, Huan says he was surrounded by Chinese rituals and traditions from an early age. “In my childhood I did the things from my ancestors, from my parents, people all did these things, they went to temples and the burnt incense. They prayed and it was a lifestyle,” he explains. “I did these things unconsciously until 10 years ago. I went to a temple and saw a teacher. From then on I became a Buddhist.”

By making the artwork out of collected ash the piece compiles the collective memories, hopes and prayers of the Chinese people – Huan’s recycled temple ash emits a gentle warmth and a deep sense of inclusiveness. “As we say about ash, it is a special thing for us and it is so significant for Chinese people’s blessings, souls and their memories,” he smiles. “We have such a splendid blessings for Australian people. When it falls down [I hope] the smashes will fly all over the corners of Australia and it will be like seas going back to the earth with soil, and they will grow up and bloom, blossom.”

Sydney Buddha is at Carriageworks until March 15, 2015.