Australian-made hydrogen will be exported to Japan under a world-first trial taking a big step forward for the emerging industry.
The Hydrogen Energy Supply Chain projects will see hydrogen made from coal in Victoria's Latrobe Valley.
This is not the 'green' hydrogen environmentalists have been calling for, but the project will aim to store its carbon dioxide emissions so they are not in the atmosphere.
The companies behind the project - a mix of Japanese and Australian businesses - say the emissions will be stored under rocks 1.5 kilometres beneath the Bass Strait.
Federal Energy Minister Angus Taylor and the Ambassador of Japan Shingo Yamagami will be among officials visiting the site on Friday to celebrate the start of the project.
"This project is a great example of how regional Australia can play a key role in developing Australia's hydrogen future on the world stage, with investment and job opportunities to flow through to communities," Mr Taylor said in a statement.
The project will export liquefied hydrogen to Kobe in Japan.
Experts are pinning their hopes on the industry as a future fuel, estimating it will create more than 8000 jobs in Australia and $11 billion a year in GDP by 2050.
It's hoped coal workers will be able to transition their skills to hydrogen.
The federal and Victorian governments have both invested $50 million to the project, which has a $500 million bill.
Hydrogen produces water vapour and heat when burned, and is close to a zero-emissions fuel when produced from water using renewable electricity, or from coal or methane combined with carbon capture and storage.
NSW Energy Minister Matt Kean has on Friday announced the Hunter region will be home to one of the state's first green hydrogen hubs.
Mr Kean says the Hunter area is suitable as it already has energy infrastructure, water sources, ports and logistics capabilities.
"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," he said.
The Illawarra, south of Sydney, will be another hydrogen hub for NSW.
The state government is putting $70 million into setting up the hubs.
Australian Associated Press