The fund has been created from existing money and will be steered by the Clean Energy Finance Corporation.

Projects using gas are eligible for funding if they reduce emissions for the activity undertaken.

Energy Minister Angus Taylor hopes to see Australia's hydrogen industry worth billions by 2050, and create jobs.

"If we can get hydrogen produced at under $2 a kilogram, it will be able to play a role in our domestic energy mix," he said.

"From cheaper energy bills and job creation in regional Australia, to playing a role in reducing global emissions both at home and in countries that buy Australian produced hydrogen, the industry's potential cannot be ignored."

Finance Minister Mathias Cormann says the fund will help hydrogen become a new major export industry.

"There are many innovative Australian organisations working to advance the hydrogen industry and this fund will support that work," he said.

CEFC chief Ian Learmonth says hydrogen will play an important part in the transition to clean energy.

"Renewable hydrogen can enable the deep decarbonisation of notoriously difficult-to-abate sectors, particularly in transport and manufacturing, while accelerating the contribution of renewable energy across the economy," he said.

The fund will back projects that align with priorities under the National Hydrogen Strategy.

This includes areas such as advancing hydrogen production, developing export and domestic supply chains, establishing hydrogen hubs and backing projects that build domestic demand for hydrogen.

Australian Associated Press