Shell and Hydro plan to identify which European locations are best suited to produce renewable hydrogen for the companies’ own consumption as well as for the broader market, and expand into other locations at a later stage.

“We are looking at potential locations where we both have operations and we have potential to use hydrogen in our existing facilities,” Per Christian Eriksen, head of Hydro Havrand, said.

Hydrogen production could be located in areas where Shell and Hydro both have relatively high gas consumption, and where there is potential to deliver to a third-party market, such as refineries or other process industries that already use “grey” hydrogen made from non-renewable power, Mr Eriksen said.

“Hydro Havrand and Shell can work toward a shared goal of establishing integrated hydrogen value chains and ultimately a strong global market for hydrogen,” Elisabeth Brinton, Shell’s executive vice president for renewables and energy solutions, said.

Shell and Hydro will spend the next nine months exploring the opportunities for collaboration, according to Arvid Moss, head of Hydro’s Energy unit.

“What is important for the decarbonisation of society is that large industrial players work together to find solutions quicker, because what we need is scale,” he told Reuters.

Green hydrogen is a zero-carbon gas made by electrolysis using renewable power to split water into hydrogen and oxygen, and has been heralded as a way to decarbonise emissions-intensive industry and transport sectors relying on fossil fuel.