Renewable hydrogen will be produced on the Darling Downs in less than two years with the Palaszczuk Government announcing plans for a demonstration facility near Chinchilla.
Premier Annastacia Palaszczuk said the new hydrogen plant would be owned by the state government and produce 50,000kg of renewable hydrogen each year.
"We're investing in renewable energy to create long-term, sustainable jobs for Queenslanders," the Premier said.
"By acquiring more, public assets, we can ensure that these jobs stay in Queensland.
"Queensland will be a renewable hydrogen superpower.
"To position our state to capitalise on the renewables revolution, as a state, we must invest in new assets and partner with the private sector to create jobs. That's exactly what we're doing."
Minister for Energy, Renewables and Hydrogen Mick de Brenni said publicly-owned generator CS Energy had been met with strong interest from potential domestic off-takers after a successful feasibility study with Japanese industrial giant IHI Corporation Japan.
"Investment in renewable energy is a key component of Queensland's plan for economic recovery," Mr de Brenni said.
"The Kogan Creek project is an opportunity for publicly owned CS Energy to stake its territory in the hydrogen sector and expand Queenslanders' ownership of renewable energy assets.
"Better yet, CS Energy are looking to support the decarbonisation of the heavy transport and haulage market with their locally produced zero emission fuel and discussions are well advanced with multiple potential off-takers.
"Transport is Australia's second largest emitter after the electricity sector so making renewable hydrogen available offers enormous potential for transport sector innovation in Queensland."
Mr de Brenni said the project was unique because the hydrogen produced will use "behind the meter" renewable energy rather than power from the grid, in a demonstration that traditional sectors can innovate and expand their market offering.
"The plant will be built beside the highly efficient Kogan Creek Power Station and will include the co-location of a solar farm, battery, hydrogen electrolyser and hydrogen fuel cell."
CS Energy CEO Andrew Bills said the feasibility study had confirmed the optimum design of the renewable hydrogen plant and that Kogan Creek Power Station was a good location with existing assets and plenty of space for expansion opportunities.
"This project offers multiple benefits for CS Energy because of hydrogen's ability to be used as both a fuel and as a way to store energy," Mr Bills said.
"In addition to selling hydrogen into the domestic market, CS Energy can use the plant's battery to provide grid stability services in the Frequency Control Ancillary Services Market.
"We're also really excited about the skill development opportunities this project will provide our people."
Construction expected to commence in 2022 and commissioning in early 2023.
Today's announcement comes after the Palaszczuk Government this week partnered with Fortescue Future Industries to develop a $114 million factory to produce hydrogen electrolysers west of Gladstone.
