Hydrogen’s place in Australia’s energy future appears set in stone amid a political debate over who came up with the idea first.

Labor on Tuesday announced a $1 billion plan to boost the emerging industry, which leader Bill Shorten spruiked as “LNG 2.0”.

The funding would go to the Clean Energy Finance Corporation to support clean hydrogen development.

Mr Shorten says the plan will create 16,000 regional jobs and prevent Australia from being left behind in the race to export hydrogen to Asia.

However, Australia’s chief scientist Alan Finkel last year flagged the potential of hydrogen for its environmental benefits, as well as its potential to be exported to Asia as an alternative to gas or coal.

Dr Finkel is leading a recently established working group to develop a national hydrogen strategy for 2020-2030, which is set to be complete by the end of the year.

Hydrogen produces water vapour and heat when burned, and is close to a zero-emissions fuel when produced from water using renewable electricity, or from coal or methane combined with carbon capture and storage.

Labor’s plan also includes establishing a National Hydrogen Innovation Hub in Gladstone, about 550km north of Brisbane, making the city the “hydrogen capital of Australia”.

“Industrial powerhouses like Japan are gearing their whole economy to hydrogen,” Mr Shorten told reporters in Gladstone on Tuesday.

“This is not science fiction.”

Labor’s broader six-point plan would see $90 million of unallocated funding from the Australian Renewable Energy Agency go towards hydrogen technologies.

A Shorten-led Labor government would also establish a $10 million ARENA funding round for hydrogen refuelling infrastructure around Australia.

In August last year, ARENA directed $22 million towards 16 hydrogen projects, focusing on research and development.

The government has also put $50 million towards the Hydrogen Energy Supply Chain pilot project, which is jointly funded with the Victorian and Japanese governments and industry partners.

The project is trialling the safe and efficient production and transport of clean hydrogen from Victoria’s Latrobe Valley to Japan

Resources Minister Matt Canavan says Labor is using hydrogen to distract Queenslanders from the party’s lack of support for the coal industry.

The government is being “realistic” that the commercial use of hydrogen is decades away, he says.

“In contrast, coal is Australia’s biggest export, it employs thousands of people and thousands more could get jobs if Labor ended its unholy alliance with radical green activists and backed jobs.”

Labor’s announcement was broadly welcomed by industry and environmental groups.

But only hydrogen produced from clean energy sources is acceptable, the Australian Conservation Foundation says.