In a submission to a Senate economics committee into Australia's domestic manufacturing, the AWU backed in the extraction of gas from new sources such as the Beetaloo Basin and Narrabri gas reserves.

The Australian Council of Trade Unions also lodged a submission to the committee, arguing gas supplies need to remain robust before green hydrogen is an active part of Australia's energy production.

Gas extraction in the Northern Territory's Beetaloo Basin and Narrabri reserves situated in northern NSW have been widely condemned by environmental scientist and conservation groups, however both major political parties back in gas as a transitional energy source to meet existing emissions targets.

The AWU in its submission said governments have cowered to minority stakeholders, which are threatening gas supplies, particularly in the south east of the country.

"Australian governments have allowed the narrow interests of landholders and environmental activists to outweigh the interests of industry and the broader community," the AWU said in its submission.

"Even as the energy transition takes place, gas will be necessary well into the future, to facilitate the decarbonisation of other energy sources and to provide feedstock and energy to industry."

The AWU also noted Australia's eroding manufacturing sector is a sovereign risk, flagging a more aggressive China that is willing to punish countries through trade sanctions and recent gas shortages in the UK, highlighted greater need on domestic reliance.

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Both the AWU and the ACTU in their respective submissions placed emphasis on the need to speed up the development of Australia's hydrogen sector.

The AWU said blue hydrogen methods should also be considered if carbon capture storage is feasible.

Blue hydrogen is hydrogen derived from fossil fuels and natural gas.

Approximately 40 per cent of domestic gas use is consumed by the manufacturing sector.

The ACTU claims domestic gas supplies also need to take precedent over the export market.

"[The] government needs to ensure that there is adequate and affordable gas for Australian businesses and households by ensuring that domestic gas requirements are met as a priority over export arrangements," the ACTU said.

"To encourage the establishment of a renewable hydrogen industry we should introduce targets for domestic hydrogen demand and where possible blend hydrogen into the gas network."

The ACTU also blamed the Morrison government for failing to coordinate "significant industry activity" to ensure the future energy market will see demand for hydrogen.

In its submission, the CSIRO said labour costs remain a disadvantage, however the nation's abundance of natural resources and land were attractive factors to establish the industry on a large scale.

The peak scientific body also flagged once hydrogen demand ramps up, automating technology would lessen the labour cost disadvantage and provide Australia the capability to be the major exporter to Asian markets.

The Department of Industry, Science, Energy and Resources said hydrogen would help the country to dramatically reduce emissions and could be blended through existing natural gas pipelines.

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