NSW Environment Minister Matt Kean has declared hydrogen the "breakthrough that changes the world", comparing its impact on climate change to what a vaccine will do to COVID-19.
His speech to a sustainability summit, hosted by The Sydney Morning Herald, follows reports that NSW would pursue large scale hydrogen production as part of its response to the economic crisis caused by the pandemic, and that the federal government would call for expressions of interest in the creation of a "regional hydrogen export hub".
Mr Kean said he believed Newcastle and Port Kembla, with their existing infrastructure and heavy manufacturing economies, would be ideal candidates for hydrogen production.
Scientists and engineers around the world have increasingly focused on hydrogen as a replacement for fossil fuels because it can be created from water via a process called electrolysis and then burnt in individual engines, used to create energy in power plants or exported in gas or liquid form.
There is ongoing debate about whether public investment in the resource should be put into electrolysis plants powered by fossil fuels, such as coal or gas, and linked to carbon capture and storage technology (a process that creates what is known "blue hydrogen"); or whether the focus should be on hydrogen created with renewable energy alone to create "green hydrogen".
A leaked draft of the federal government's Technology Roadmap, seen by the Herald, suggests the government favours blue hydrogen as the cheapest and fastest option to help foster a hydrogen industry.
Australian National University's Centre for Climate Economics and Policy director Professor Frank Jotzo said he believed public funds should be directed towards green hydrogen, not only because of the benefits to emissions reductions but because potential customers of export hydrogen, such as Germany, are already stating a preference for it.
Grattan Institute energy program director Tony Wood said he believed governments should not only embrace hydrogen production at a location, like those mentioned by Mr Kean or in the Latrobe Valley in Victoria, but that they should commit to funding a green steel project powered and fed by hydrogen.
The world's first test green steel plant was opened in Sweden last week by Prime Minister Stefan Lofven, who said in a speech on Monday that "steel is jobs".
"Steel has built Sweden, and steel has built our welfare system. But steel – or rather the manufacture of steel – also threatens our way of life," he said,
In the green steel process being tested and refined in Sweden, by a government-private enterprise consortium called Hybrit, hydrogen is not only used to heat the blast furnaces, but replaces metallurgical steel inside them, providing the carbon that reduces and binds with the iron ore to create steel with no carbon emissions.