Orica - operator of the Kooragang Island ammonium nitrate plant, and Origin, owner of Eraring power station, are signing a memorandum of understanding to conduct a feasibility study into the viability of a green hydrogen production facility, or 'Hunter Valley Hydrogen Hub', and the potential uses of the fuel.

Origin said in a statement this morning that the feasibility study would look at how an industrial hydrogen hub could be part of a "meaningful green hydrogen industry in the Hunter Valley and beyond".

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"This includes the supply of hydrogen for heavy industry and transport, conversion into green ammonia at Orica's existing Kooragang Island manufacturing facility, blending hydrogen into natural gas pipelines, and the potential to stimulate Australia's hydrogen export industry," Orica said.

In its statement, Origin Energy said a hydrogen hub - the object of the feasibility study - could "transform industrial and manufacturing processes" and drive hydrogen progress in the vehicle industry. Support for the project was coming from Red Bus Services, Aluminium Revolutionary Chassis Company (ARCC) and bus maker ComfortDelGro Corporation Australia (CDC).

Origin said the state government had a target of 10,000 fuel-cell electric vehicles by the end of this decade.

"Reducing emissions from Australia's manufacturing sector will be key to achieving the nation's ambition to be net zero emissions by 2050, and this will only be achieved if the energy industry, customers and governments work together to support the development of hydrogen as a future energy source," Origin chief executive Frank Calabria said.

Orica says green hydrogen, produced via electrolysis using renewable electricity sources, has emerged as a "potentially significant" technology in the transition to a lower carbon economy.

It says the proposed hub would produce green hydrogen from recycled water sources and renewable electricity, using a grid connected 55MW electrolyser.

Sceptics point out that commercially viable green hydrogen is some years away because it uses considerable amounts of electricity in order to split away pure hydrogen from water molecules.

Origin said the feasibility study would look at expanding a hydrogen production plant to export capacity.

"Future stages will also include investigating the feasibility of converting the local gas distribution network to 100 per cent hdrogen to further support a hydrogen supply chain in the area," Origin said.

Orica Chief Executive Officer Sanjeev Gandhi said today that the partnership aligned with its efforts to reduce its Scope 1 and 2 emissions by 40 per cent by the end of the decade.

"We've been operating our Kooragang Island site for over 50 years, and are committed to ensuring both our manufacturing facility and the Newcastle region remain competitive in a low carbon economy, while also strengthening Australia's domestic manufacturing capability," Mr Sanjeev said.

"We support both the federal and NSW hydrogen strategies and this partnership will allow us to define opportunities and ways we can contribute to a more sustainable future for the region."

Mr Sanjeev described the feasibility study as an important step in lowering Orica's emissions and said the company was committed to ensuring the Kooragang plant remained competitive.

He said it followed several other sustainability moves including the recently announced Kooragang decarbonisation project and plans for a catalytic decarboniser on the nitric acid plant, with a $37 million price tag and a key to cutting Koorangang's greenhouse emissions by up to half.

He said prill tower emissions were being reduced, a new ammonia flaring system had been installed and the plant was using recycled water, saving up to 2.9 billion litres of drinking water annually.

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