Clean Hydrogen Industry Hub program proponents say a Bell Bay facility would provide jobs and economic growth for the state, but experts warn it could harm the state's long-term green energy goals.
Business Council of Australia chief executive Jennifer Westacott welcomed the extra $150 million federal government investment and said the national hubs would position Australia as an energy superpower at home and in overseas markets.
She said the proposed hubs would see more jobs created, particularly in regional locations while driving exports and reducing carbon emissions.
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Bell Bay Advanced Manufacturing Zone is one of the locations recommended for a hub, with chief executive Susie Bower confirming she would be applying for a maximum grant of $70 million in the first round of funding.
She said with four energy producers at various stages of development the grant funds would be used to develop the site, including upgrades to port infrastructure and building transmission lines.
Energy producers Origin Energy, Woodside Energy, ABLE Energy and Fortescue Future Industries have all expressed interest in developing production facilities at Bell Bay.
Ms Bower confirmed Fortescue was expected to make an investment decision by November, while Origin was looking to finalise a feasibility study by December.
She said the if both facilities went ahead the construction phase would see 600 jobs created with 200 positions ongoing once the facilities were built.
Woodside and ABLE were also completing feasibility reports for the Bell Bay site.
Independent economist Saul Eslake said there was a real concern about how the proposed facilities would secure enough power to produce the hydrogen without impacting Tasmania's 200 per cent renewable energy goals.
"The first question is can Tasmania provide - with certainty - the quantity of electricity that a hydrogen plant would require without compromising the state's other objectives," he said.
He said in the event the state was unable to meet the increased demand for electricity, energy would need to be imported from the mainland via the bass link, or generated by the Tamar Valley Power Station which could compromise Tasmania's goal of hitting 200 per cent renewable energy production.
"If we are running the Tamar Valley Power Station or importing coal-fired electricity from the mainland, how can we claim to be 100 per cent renewable - let alone 200 per cent," he said.
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Energy and Emissions Reduction Minister Guy Barnett supported the hydrogen hub and said Tasmania had already achieved 100 per cent renewable electricity generation and had a nation-leading target of reaching 200 per cent by 2040.
"Bell Bay is a perfect location for a nation-leading renewable hydrogen hub as an advanced manufacturing zone with renewable energy availability, appropriate infrastructure, water availability and deep water port access," he said.
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