Five questions about Bell Bay's $70 million hydrogen hub

But what is a green hydrogen hub? And why is the state keen to have one?

Here's everything you need to know so far.

Hydrogen is a clean energy source produced by splitting water molecules via electricity.

Green hydrogen refers to hydrogen produced via renewable electricity, whereas brown hydrogen is produced with coal, which gives off emissions.

Green hydrogen is expensive to produce, but demand is expected to rise.

Speaking from Bell Bay on Thursday, federal Energy Minister Chris Bowen said green hydrogen was key to de-carbonising transport, including ships and heavy vehicles.

"If shipping was a country it would be the seventh biggest emitter in the world," Mr Bowen said.

"It's one of the hardest nuts to crack when it comes to finding ways of reducing emissions around the world [but] we know it'll rely in some form or another on green hydrogen."

The hydrogen hub consists of shared facilities and infrastructure, mainly port infrastructure, access to water and firming power.

Similar hubs are being set up across other regional areas in Australia.

Mr Bowen and Bell Bay Advanced Manufacturing Zone chief executive Susie Bower said the infrastructure was "vital" to attracting new hydrogen projects to the state.

"This is definitely, the start of some serious investment to signal to those proponents that we are ready," Ms Bower said.

It's unlikely.

At this stage, hydrogen produced in Bell Bay is earmarked for shipping and heavy vehicles.

The site will produce 45,000 tonnes of hydrogen a year, which could power more than 2000 heavy vehicles across the same period.

Hydrogen production takes a lot of electricity, but producers won't be sapping Tasmania's existing energy pool.

Save for 400mW of firming power - used as back-up in times of low renewable energy production - hydrogen companies will have to "source their own" power.

This is expected to come from new wind and solar farms.

"This hub will unlikely have great impact on domestic power prices ... it will require proponents or bring their energy with them," Energy Minister Nick Duigan said.

"There's likely to be no impact on Tasmanian power prices, with the caveat that this hub will drive more generation on-island and [that] has the effect of driving power prices in Tasmania down."

Green hydrogen produced at Bell Bay is expected to be used within Australia and abroad.

Countrywide Hydrogen, one of the companies who has expressed interest in setting up at Bell Bay, has already secured an agreement to provide hydrogen to statewide transport company 7R Logistics.

State and federal governments hope the new hubs will produce enough hydrogen to supply markets across the globe.

"What we've got to do is build a domestic hydrogen industry which will then grow into an export industry ... that's certainly what we'll be doing here in Bell Bay and across the country," Mr Bowen said.

"We have an agreement with Germany for example where they're very keen to buy Australian green hydrogen, and we have an MOU with the Port of Rotterdam where they're keen to be the import terminal for green hydrogen into Europe.

"So it has enormous potential going forward."

The state government will continue to liaise with prospective hydrogen companies, with Mr Duigan adding he was hopeful of announcing the first anchor tenants "in the not-too-distant future".

Ms Bower said BBAMZ was focused on three key areas - building industry capability, growing a workforce, and community engagement.

"[We need to] make sure industry not just in Bell Bay, but all over Tasmania, is part of that supply chain for the hydrogen industry," she said.

"Workforce development and skills is going to be a really critical component.

"[We'll be] working both within the higher education sector - university plus TAFE and registered training organisations - but also working with schools and getting young people excited about a renewables future and the careers that are possible."