Prime Minister Scott Morrison says the Hunter Region will be crucial to the country's plan to reach net zero emissions by 2050 and jobs in "key industries" won't be sacrificed.
The Prime Minister's comments come ahead of a trip to the region on Monday, where he will announce a $3 million feasibility study into the potential of a "green hydrogen hub" at the Port of Newcastle.
Having returned from Glasgow for the COP26 climate summit, Mr Morrison's government will commit $1.5 million towards the study, with the Port of Newcastle and Macquarie Group's Green Investment Group to cover the other half.
The study will consider the best location for "the Port of Newcastle Hydrogen Hub".
More from the PM's Hunter visit: Morrison reveals Liberal candidates for Paterson and Shortland
Monday's visit to the Hunter is Mr Morrison's fourth this year, amid a strong Coalition push to win seats at the next federal election.
On his latest visit, he will announce the Liberal candidates for the seats of Paterson and Shortland - Brooke Vitnell and Nell McGill.
As for the feasibility study, Mr Morrison said it would pinpoint the region's potential as a hydrogen hub.
"Newcastle and the Hunter will be a key part of the $1.2 billion we're investing in Australia's hydrogen industry," Mr Morrison said.
"With continuing strong demand for baseload power fuels and the potential as a clean energy hub, Newcastle and the Hunter will be an important part of Australia's transition under our plan to reach net zero emissions by 2050," Mr Morrison said.
In an opinion piece published in the Newcastle Herald on Monday, the Prime Minister showed strong support for the region's industry.
"We don't have to shut down the Hunter's key industries in order to meet net zero emissions by 2050 under our plan. We don't have to sacrifice jobs and the economy. We can do both and we are already doing both."
Backing the Hunter's strengths and potential was "key to my government's plan to reach net zero by 2050".
"The Hunter is going to emerge as one of the strongest regions because of this."
The Morrison government will fund $1.5 million of the feasibility study for a hydrogen hub in Newcastle through the Australian Renewable Energy Agency.
Port of Newcastle chair, Professor Roy Green, said a green hydrogen hub in the Hunter would "support the development of new industries in the region".
Port of Newcastle chief executive Craig Carmody said the Port was "well placed to develop a hydrogen hub and export hydrogen as a tradable energy commodity".
Mr Carmody said the Port was "committed to future diversification", with the aim to "create thousands of low-carbon jobs in a new export industry".
Minister for Industry, Energy and Emissions Reduction Angus Taylor said the government was "determined to reach the goal of producing clean hydrogen at a competitive price".
"This feasibility study will investigate the deployment of a 40MW electrolyser, which would be four times bigger than the current largest electrolysers in the world," Mr Taylor said.
The study will consider deployment of the electrolyser to produce "renewable hydrogen" converted into "renewable ammonia" for "use in the domestic fertiliser supply chain".
This would help develop a "green fertiliser industry".
The study will also investigate boosting hydrogen production for export, with a 1GW-plus electrolyser.
The aim is to leverage existing supply chain routes from the Port to Japan and Korea.
Mr Morrison said the Port boosted Newcastle's cause to "become one of the seven clean hydrogen industrial hubs my government is delivering".
The feasibility study into the initial 40MW hub will "determine a broad and comprehensive range of potential use cases for green hydrogen in the Hunter, which build on the region's strong industrial heritage", a Port statement said.
"These include mobility, bunkering, energy production and industrial uses at the scale necessary to position the Hunter at the centre of the emerging global green hydrogen opportunity."
Port of Newcastle and Macquarie's Green Investment Group have signed memorandums of understanding with Idemitsu, Keolis Downer, Lake Macquarie City Council, Snowy Hydro and Jemena.
These organisations will participate in the feasibility study.
Macquarie's agriculture platform, which manages more than 4.5 million hectares of farmland across Australia, will focus on green ammonia for fertiliser production.
A memorandum of understanding has also been signed with the University of Newcastle, as the project's research and development partner.
Mr Carmody said it made sense for the Port of Newcastle to "play a substantial role in Australia's bid to become a significant renewable exporter".
The Port of Newcastle Hydrogen Project will "support the federal and NSW governments' ambitions to produce and export the cheapest clean hydrogen in the world".
"It will focus on the production of green hydrogen for domestic and export use, incorporating a green ammonia plant, green hydrogen plant and grid-connected energy solution that will support the region's abundant renewable resource."
Kate Vidgen, Macquarie's Green Investment Group head of industrial transition and clean fuels, said: "We are delighted to be partnering with Port of Newcastle to progress an internationally significant green hydrogen hub".
"Countries around the world are actively pursuing green hydrogen opportunities, but only a few of the projects we see have the Hunter's attributes: a strong industrial heritage, a number of domestic and export use cases, existing high-quality transport and energy infrastructure and a highly trained local workforce."
"We believe the Port of Newcastle has significant scope for producing green hydrogen at the scale required to make it price competitive internationally.
"To put it into context, a 40MW electrolyser can generate sufficient green hydrogen to power 900 buses for a year. An electrolyser with 40MW capacity at the Port of Newcastle Hydrogen Project would support a diversity of use cases."
Mr Carmody said the potential for the Port of Newcastle to "export hydrogen overseas as a tradable energy commodity is a huge coup for the region".
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