The twin boost for the emerging sector is contained in amendments to the Electricity Infrastructure Investment Bill, which passed parliament's lower house on Tuesday evening.

Green hydrogen uses renewable energy to split water molecules and extract the hydrogen atom, producing no carbon emissions in the process.

Under the law, NSW would guarantee a $50 million investment in the sector while also exempting the renewable energy it uses from infrastructure charges. The aim is to help green hydrogen to be economically viable.

Greens MP and energy spokesman David Shoebridge said early investment in green hydrogen was "critical to rebuilding our local manufacturing base while addressing climate change".

"If we are to get serious about the fundamental economic changes needed to deal with climate change then green hydrogen needs to be in the mix," he said in a statement on Wednesday.

The federal government has also emphasised the importance of hydrogen to Australia's energy future, but is backing gas-produced hydrogen as well as green hydrogen.

The government, Labor and the Greens agreed to the amendments.

The bill will come before the upper house on Thursday.

Australian Associated Press