The Hunter Region is poised to benefit from a $50 million state government investment in the emerging green hydrogen sector.
The commitment was contained in a Greens amendment to the NSW Electricity Infrastructure Investment Bill, which passed on Tuesday.
Green hydrogen uses renewable energy to split water molecules and extract the hydrogen atom, producing no carbon emissions in the process.
Under the law, NSW will guarantee a $50 million investment in the sector while also exempting the renewable energy it uses from infrastructure charges. The aim is to help green hydrogen to be economically viable.
Greens MP and energy spokesman David Shoebridge said early investment in green hydrogen was "critical to rebuilding our local manufacturing base while addressing climate change".
"Both the Hunter and the Illawarra are excellently positioned to take advantage of the green hydrogen revolution," he said.
"With its highly skilled industrial workforce, existing manufacturing base, rolled gold energy transmission infrastructure and export facilities the Hunter has a front row seat here.
"The Greens have for years been advocating for the new industries, the new jobs and the hope that comes with a renewable energy boom. Now we are making good on that promise."
Two government reports have identified the Hunter as an ideal location for a future hydrogen hub.
A recent report by NSW Chief Scientist Hugh Durrant-Whyte titled Opportunities for prosperity in a decarbonised and resilient NSW said the Hunter's existing transport infrastructure, current large industry gas users and availability of greenfield sites, made it well suited to becoming a centre for future hydrogen production.
The Hunter Valley was named as a possible location for a regional hydrogen export hub under a federal government plan to reduce carbon emissions.
Prime Minister Scott Morrison announced in September that the government would spend $70 million in this financial year on the development of a hub.