Australia risks being left behind in the race for global investment in renewable energy which could unlock a manufacturing boom.
The warning has been sounded by the Australian Hydrogen Council, which says greater national co-ordination between governments is needed to incentivise production and open up export markets.
Chief executive Fiona Simon says current efforts are piecemeal and disconnected, and the investment required to transform Australia's economy will not happen without "clear and bankable incentives".
"Right now, we are falling behind in the competition for global private capital, which will have flow-on effects for Australia's ability to be near the front of the various queues for necessary assets," she said on Tuesday.
Addressing the Australian Hydrogen Conference in Perth, Dr Simon referenced US President Joe Biden's introduction of the $US430 billion ($A642 billion) Inflation Reduction Act which offers huge green energy subsidies for American-made products.
"This is going to be an enormous magnet for dollars, people and equipment for the hydrogen industry," she said.
"While it's great for the global industry that it exists, it is seen as a major threat for non-US developments."
Transitioning Australia's economy would require billions of dollars in government spending which would draw in private investment, she added.
The West Australian government on Tuesday announced it would seek to have hydrogen comprise one per cent of the state's main electricity grid.
A broader target will also be developed to consider all potential uses of renewable hydrogen including transport, industrial feedstock, electricity generation and pipeline blending.
Timelines for the targets are yet to be set.
The Australian Energy Council, which represents some of Australia's biggest energy companies, claims the target will impose unnecessary costs on generators, retailers and consumers.
"We all want hydrogen to succeed but it is some way off and needs to get over a number of significant technical hurdles to be economically viable," WA policy manager Graham Pearson said.
The McGowan government will also establish a new green energy assessment unit aimed at fast-tracking approvals for green energy projects and guidance for large-scale projects requiring access to crown land.
