The Tasmanian Hydrogen Industry Alliance was launched in Launceston on Thursday.

It consists of government and industry stakeholders like Tas Gas and Bell Bay Advanced Manufacturing Zone members.

In a bid to boost domestic demand for hydrogen and ensure a production facility is built at Bell Bay, alliance member Geoffrey Drucker said the group would share knowledge, case studies and experiences

Mr Drucker, who is the managing director of a renewable energy projects developer called Countrywide Renewable Energy, said the alliance would also promote the benefits of hydrogen.

"We need to socialise hydrogen as a viable fuel for these industries [transport, gas] so that they will embrace what we're talking about and come on board as users of the hydrogen we'll be producing at Bell Bay," he said.

"The actual operational cost of hydrogen is going to be equivalent to diesel right now from Bell Bay, we can guarantee that.

"We can also guarantee the long term price of hydrogen, where as with diesel and petrol - who knows what the future prices are going to be?"

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Mr Drucker said investors and potential backers of a Bell Bay hydrogen production facility needed to see proof of increased domestic demand for hydrogen.

"The initial target for the domestic market is in diesel displacement in trucks, buses, ferries and cars, and in remote power applications like Flinders, King and Bruny Islands.

"Blending hydrogen in the natural gas networks is also possible."

Governments would need to help businesses with the costs of upgrading or replacing old equipment and infrastructure so hydrogen energy could be used as a source of power in the future, Mr Drucker suggested.

"We need to make it easy for businesses to switch," he said.

"That's because one of the barriers is the cost of buying the hydrogen fuel cell bus over a diesel bus, a hydrogen fuel cell truck over a diesel truck.

"We've been working closely with Australian Renewable Energy Agency and the state government to work towards getting government support for those operators who are prepared to make the switch to hydrogen, to make that cost impost disappear."

Mr Drucker said the alliance would seek to expand and collaborate with more stakeholders.

"We're keen to continue to work with everybody who is of relevance to what we're about to make this whole thing work," he said.

"We welcome others who might want to come in to this process."