The company behind the proposed $589 million Newcastle Gas dock import terminal argues the Hunter is ideally placed to benefit from the federal government's push towards gas technology as a way of reducing greenhouse emissions.
The Technology Roadmap discussion paper, released on Thursday, identifies gas and pumped hydrogen as key technologies capable of shoring up the reliability of solar and wind as the economy shifts to cleaner power generation over the next decade.
The paper builds on a survey of more than 140 technologies including hydrogen, carbon capture and storage and soil carbon sequestration.
But opponents of the plan warn new gas projects will create huge investment losses, stranded assets and colossal environmental harm.
"Public investment in gas would be a disastrous waste, locking in more dangerous climate change and higher energy prices," Climate Council chief Amanda McKenzie said.
The Newcastle Gas Dock project, which is in the final stages of the planning approval process, is among several billion dollars worth of existing or proposed gas infrastructure projects in the Hunter.
James Markham-Hill, executive director of the Newcastle Gas Dock proponent EPIK, said natural gas had played a critical role in economies looking to reduce their emissions while growing their renewable sectors and lowering emissions.
"For these reasons, natural gas, via liquid natural gas imported at the proposed Newcastle GasDock terminal, provides a complementary solution to both NSW's energy and environmental needs, while also presenting a lower-cost alternative to existing supply," he said.
"While it is likely that a significant amount of new generation capacity will be provided via increased renewables, such as wind and solar, the state will need to find a balanced solution between adding renewable energy, which is typically intermittent, and maintaining baseload power and grid stability in the long-term."
Hunter Business Chamber chief executive Bob Hawes said many Hunter industries and businesses already relied on gas as a form of energy.
"They are not in a position to go 'cold turkey' on gas technology and the concept of a 'bridge' is entirely sensible and supported," he said.
"Energy is a sector that has enormous potential and one where the Hunter can play a big part. It's a sector crying out for certainty so investment is stimulated and it is hoped the Roadmap can greatly assist in delivering that.
"We have already seen the Hunter being identified as an energy hub with capability and capacity to play a huge part in the development and expansion of existing renewable and new technology, while continuing to support our traditional sectors and industries."
The report also highlights the potential for Australia to develop a major hydrogen export sector and reinforced a previously announced goal of producing it at below $2 per kilogram, the point at which it said it would become competitive.
The University of Newcastle Vice Chancellor Alex Zelinsky previously endorsed the role that hydrogen can play as the Hunter transitions to a clean energy-based economy.
The university presently has 14 hydrogen research projects, which have been broadly grouped into production, storage and utilisation, and cross-cutting fields.
In addition, the university's Priority Research Centre for Frontier Energy Technology and Utilisation is an Australian leader in low emissions and abatement technology research.
Significantly the discussion paper casts doubt over the future of coal-fired electricity in favour of growth the gas sector.
Hunter MP Joel Fitzgibbon, whose electorate is dominated by coal industry jobs said the government had unnecessarily 'run up the white flag on coal generation' by it's failure to develop coherent energy policy.
"The focus on gas and hydro is welcome but also amusing given that's exactly what we are trying to achieve in the Hunter as Liddell creeps nearer to decommissioning, a process the government has frustrated by constantly threatening AGL with intervention. Gas is a great energy source and the Hunter has a wonderful opportunity to be a key beneficiary of an energy system in which gas plays a greater role," he said.
"I agree that technology is key to achieving our goals on greenhouse gas emissions reductions and coal seam gas must be in the tool kit."
Minerals council chief executive Stephen Galilee argued it would be premature to pronounce the death of coal.
He said the report focused on domestic energy policy, while the Hunter coal sector was increasingly export focused.
"Strong long term growth in electricity demand forecast in our export markets across South East Asia and other places like India will be met by a broad range of technologies including coal, gas and renewables, providing opportunities for our mining sector including for coal producers and a range of other commodities,' he said.
"In relation to our smaller but still important domestic coal market, demand for coal for power generation in NSW will continue given the capacity and needs of the existing generator fleet."
But environmental groups have slammed the roadmap arguing that the government's plan would sideline investment in renewables and would lead to more fires, higher power bills and ultimately job losses.
"The federal government is trying to bulldoze communities across NSW and the country who have spent more than a decade fighting environmentally destructive gasfields, and holding back the jobs we could be creating in renewable energy and storage," Lock the Gate Alliance NSW spokesperson Georgina Woods said.
"What's needed now is investment in solar, wind, pumped hydro and batteries and for the government to get out of the way of the new jobs and opportunities clean energy can bring.
Dominique Hes, principal researcher, Beyond Zero Emissions, said electrification, powered by renewable energy and storage, was better option for making Australian manufacturing more competitive and cost-effective.
"As the Grattan Institute finds, it could help the Hunter become a green steel-making hub. But new gas projects would kill this bright future. Our research shows that not only is gas more polluting, it employs only 10 per cent of the people that diversified, renewable industry could," she said.
Tristan Edis, director,analysis and advisory, Green Energy Markets, said the paper's focus on carbon capture and storage was the equivalent of backing a losing horse.
"CCS isn't going to save NSW's coal-fired power stations, which lack suitable geology nearby for underground storage of carbon dioxide," he said.
"In addition CCS probably won't be of much help in maintaining coal export markets because its extra cost leaves coal uncompetitive against wind and solar with battery energy storage or pumped hydro.
"While coal is an important industry to the country we really need to diversify rather than double-down on a technology with limited chance of success."