Labor will provide Snowy Hydro Limited with an extra $700 million in equity to make the Kurri peaking plant operate on green hydrogen by 2030.
The government has already invested $600 million into a gas-fired version of the project, which is intended to be operational by the end of 2023.
As Australian Community Media reported on Tuesday, a Labor government would instruct Snowy Hydro to operate the plant on 30 per cent green hydrogen as soon as possible.
It would also direct Snowy Hydro to upgrade the plant to use 100 per cent green hydrogen by the end of the decade.
Labor believes some of the green hydrogen fuel could be produced on site.
Speaking at Kurri on Tuesday, Opposition Leader Anthony Albanese argued that the cost of green hydrogen production would fall significantly in coming years.
"What today's announcement is doing is taking a flawed approach and making it work by ensuring the Kurri plant can stay open run by gas but with 30 per cent green hydrogen from the beginning but working up to being fully powered by green hydrogen in the future," he said.
"This is a practical plan; it's one that ensures we don't have a stranded asset with workers losing their jobs down the track."
Labor's climate spokesman Chris Bowen said the 2023 timetable for the plant, which was signed off by the NSW government in December, would remain unchanged.
"Snowy Hydro's own documents say the plant could do 30 per cent hydrogen, but they're not planning to," Mr Bowen said.
"We'll take up the government's own documents which say 30 per cent hydrogen immediately is possible and we'll ensure, working positively with Snowy Hydro, that will be the case."
Energy Minister Angus Taylor accused Labor of shifting the project's goal posts in an effort to disguise its backflip on the project.
"After issuing a media release opposing this project on day one, Labor has now backflipped," he said.
"One after another on Albanese's frontbench opposed this project. It's now for each one, including Pat Conroy, to explain to the Australian people why they misled the Hunter," he said.
"Unlike Labor, the Morrison Government has all along backed the Kurri Kurri gas project. We know it is good for jobs, it's good for business and importantly it's good for securing affordable, reliable power for the people and workers of the Hunter and NSW."
Similarly, Liberal candidate for Paterson Brooke Vitnell attacked Labor's proposal as a 'con job'.
"They called it 'a fraud', 'a dog', 'bananas', a 'white elephant' and 'nonsense'," Ms Vitnell said.
"This is the kind of stunt that turns people off politics.
"The Liberal National Government have a plan to keep the lights on and the costs low for families and workers across the Hunter.
"Labor are anti-gas and anti-coal. This is a con job to get them to the other side of the election. It's Hunter families and businesses that will lose."
But Hunter Jobs Alliance spokesman Warrick Jordan applauded Labor's plan and said it would help create much-needed demand for green hydrogen.
"There are people in the Hunter working hard to make sure we get a foothold in the hydrogen industry. We don't want to miss that boat while other countries are sending boats full of green hydrogen to markets like Japan and South Korea," he said.
"To really kickstart the hydrogen industry we need to scale up quickly and the best way for that to happen is a big source of contracted demand with a specific timeline. That's what a Kurri station using large amounts then switching fully to hydrogen provides."
"Hydrogen is not price competitive as yet, but like other energy technologies that price will come down with scale. Creating demand to establish a new growth industry is a good reason for public investment, and a firm timeframe for hydrogen uptake at Kurri gives local industry a target that will spur investment."
Gas Free Hunter Alliance spokeswoman Fiona Lee said while the group welcomed Labor's commitment to renewables and future-focused jobs, no public money should be spent subsidising a new fossil fuel project.
"Any power station that burns more fossil fuels like gas is just worsening climate change," she said.
"You don't get to transition away from fossil fuels by spending more money on them. We want to see the $600 million of public money spent supporting and retraining workers, not a dirty gas plant that will need expensive upgrades in a few short years."
Institute for Energy Economics and Financial Analysis gas market analyst Bruce Robertson said Labor's plan would inevitably result in higher energy costs.
"The Labor Party's announcement is a cynical political decision that is not based on economics or the delivery of electricity to the Australian people at the cheapest possible cost," he said.
"This project is poorly located on a gas line that cannot even supply it with sufficient gas and is now proposed to be powered by hydrogen, a technology that's unproven and whose costs are unknown."
"The electricity market doesn't even need the Kurri Kurri gas-fired power station, as sufficient capacity has already been added to replace the closure of the Liddell coal power station."
"If the Labor Party wants to support the nascent hydrogen industry, it would be better to do so first on a smaller scale, to see if it works and can be scaled up."
Matthew Kelly
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
