Scott Morrison has vowed to spend an extra $540 million on clean energy projects ahead of a climate summit hosted by US President Joe Biden.
The Prime Minister expects the projects to create more than 2500 jobs and drive down emissions across the country.
About half the money will be spent building hydrogen hubs in industry-exposed regional areas.
In the last budget, the government funded the establishment of a “hydrogen hub” – an area where users, producers and exporters will be located.
Wednesday’s announcement will fund four more and potential locations include: Bell Bay in Tasmania, the Pilbara region in Western Australia, Gladstone in Queensland, the La Trobe Valley in Victoria, Whyalla in South Australia, the Hunter Valley in NSW and Darwin in the Northern Territory.
The rest of the money will go towards carbon capture and storage facilities.
The choice of investments are guaranteed to fuel debate around whether the projects are the best way to spend money in the clean energy sector.
But the Prime Minister insisted the twin technologies would be crucial if Australia planned to achieve net zero emissions by 2050.
“We want to make clean energy more affordable and reliable while looking for ways our investments can get more people into work,” he said.
“We cannot pretend the world is not changing. If we do, we run the risk of stranding jobs in this country, especially in regional areas.”
The strategy forms part of the government’s plan to cut carbon emissions and comes ahead of a global Leaders Climate Summit, hosted by the US on Thursday to coincide with Earth Day.
Australia’s peak oil and gas industry body said the investment in new hydrogen and carbon capture and storage projects would be a massive boost for the sector.
But several scientists and climate lobby groups were disappointed with the spending and said it wouldn’t do enough to reduce emissions.
The Australia Institute said the government was using the guise of climate action to support fossil fuel companies.
“The announcements are a poor showing ahead of the Biden summit, when so many countries are making substantial increases to their climate action and targets in the next 10 years,” the institute’s Richie Merzian said.
“By 2030, the US will likely halve its emissions, the UK cut by over two-thirds and Australia is sitting on only 26 per cent cuts and more money for fossil fuels.”
Earlier this week, Mr Morrison pledged to protect industry on the road to net zero carbon emissions, which he wants to reach “preferably by 2050”.
But he also admitted Australia’s energy mix would have to change over the next 30 years to achieve that target.
At the virtual climate summit, US President Joe Biden plans to pledge to halve the country’s carbon emissions by 2030 from 2005 levels.
The commitment represents a doubling of carbon reduction target introduced by the Obama administration.
Britain will aim to cut carbon emissions by 78 per cent by 2035 from 1990 levels, extending its already ambitious carbon reduction targets.
Shipping and aviation emissions will be included in the British targets.
Australia is feeling the squeeze ahead of the virtual summit, having dragged the chain on climate change for many years.
The US and China – the world’s two biggest carbon polluters – have agreed to co-operate to curb climate change, leaving Australia increasingly isolated.