The Hunter will be home to one of the state's first green hydrogen hubs after the state government committed $70 million to their development.
Energy Minister Matt Kean said the region's existing energy infrastructure, sustainable water sources, ports and logistics capabilities and a future supply of renewable energy made it a logical location for the project.
"This is a win-win for our state, by investing in hydrogen hubs we will kick-start jobs and infrastructure opportunities in NSW while simultaneously contributing to our net zero by 2050 goal," Mr Kean who unveiled the plan at the University of Newcastle's Institute for Energy and Resources on Thursday, said.
"The Hunter hydrogen hub will drive new low carbon jobs and help to set up the region for the future."
A second hub will be established in the Illawarra.
The hubs will provide groups of hydrogen users common infrastructure for the local production, use and distribution of hydrogen.
They will reduce costs by delivering hydrogen in a coordinated fashion.
So-called green hydrogen is created using low-emissions electricity, usually solar and wind, to power an 'electrolyser' that splits water into its constituent parts - hydrogen and oxygen.
Mr Kean said the development of green hydrogen hubs aligned with the NSW Renewable Energy Zones (REZs).
"By 2050, green hydrogen has the potential to drive $350 billion in investment across Australia in current dollars and up to $26 billion per year in additional GDP, supporting the emergence of new decarbonised industries such as green steel and ammonia," Mr Kean said.
Parliamentary Secretary for the Hunter Taylor Martin said the green hydrogen hub would provide significant opportunities for innovation and diversification.
"The Hunter is already an energy powerhouse and a hydrogen industry will mean new jobs and investment in the region as well as creating new markets for export," he said.
The recently announced Hunter hydrogen cluster is one of 13 clusters across Australia have been created as part of a push to support growth and industry collaboration within the emerging multi-billion dollar green fuel industry.
The cluster's partners include the University of Newcastle, TAFE, HunterNet, the Hunter Business Chamber, the Australian Industry Group, and the Hunter Hydrogen Taskforce.
The cluster has received $200,000 seed funding from National Energy Resources Australia to focus on key hydrogen projects both nationally and within the Hunter Region.
The federal government has committed $70 million to the hub's establishment.
The government will seek co-investment from industry and state governments for the establishment of an export hub with at least one key bilateral trading partner such as Korea, Japan or Germany.
Port of Newcastle chief executive Craig Carmody said the port had an important role to play in facilitating new and emerging markets such as hydrogen.
"This (hydrogen) remains an exciting project that will turbo-charge the local economy to the tune of $1.3 billion and create a more cost-competitive supply chain for NSW businesses that trade internationally," he said.
