Monday’s announcement comes as Australia emerges as a front-runner among nations vying to become hydrogen-exporting powerhouses amid fresh projections showing demand for the fuel could increase six-fold by 2050.

The federal government has announced a policy to reach net zero emissions by 2050, a target that means it must heavily cut its greenhouse gases over the next three decades. Under its new plan, released shortly before Prime Minister Scott Morrison went to the Glasgow climate conference, 40 per cent of emissions reduction will come from lower-emissions technologies (such as hydrogen) becoming cheap enough to compete with carbon-intensive industries.

For decades, the region’s coal has been the basis of a huge export industry, but as Australia’s biggest coal export markets — Japan, South Korea and China — commit to net-zero carbon emissions and shift towards clean energy, the mines of the Hunter appear to be heading for a slow decline.

Mr Morrison said Australia would achieve its net-zero targets by reducing the costs of alternative technologies and said he would release the net zero modelling for the government’s plan “soon”.

“You don’t have to sell out your economy and the jobs in your economy to get your emissions down,” he said.

Energy and Emissions Reduction Minister 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 40 megawatt electrolyser, which would be four times bigger than the current largest electrolysers in the world,” he said.

An electrolyser is a device which splits water into hydrogen and oxygen using electrical energy to create hydrogen. The government press release referred to “clean” hydrogen, but did not specify if it would be green hydrogen, which is produced with renewable energy.

Mr Taylor predicted the hydrogen industry would support more than 16,000 jobs by 2050, plus an additional 13,000 jobs from the construction of related renewable energy infrastructure.

“Australian hydrogen production for export and domestic use could also generate more than $50 billion in additional GDP by 2050. It’s a win-win,” he said.

Lock the Gate Alliance spokesperson Georgina Wood welcomed the announcement and said it was an example of how investment in decarbonisation could transform the area’s industry, jobs and future.

“We need green hydrogen for the sake of farmers who are fighting polluting coal seam gas developments, for industry that is being gouged by fossil fuel gas companies, and for the future of the planet as we desperately fight to mitigate the climate crisis,” Ms Wood said.

“It is critical to Australia and NSW’s pathway to zero carbon pollution and to the economic future of the Hunter region that we phase out gas by replacing it with renewable hydrogen and green ammonia.

“This announcement clearly shows Newcastle can retain and transform its industrial heritage in preparation for a zero carbon world.”