Essar plans to produce large quantities of hydrogen at its Cheshire refinery in a boost to government efforts to increase uptake of the clean-burning fuel.
In a new joint venture backed by government support, the oil refiner and Progressive Energy will invest £750m to produce hydrogen for industrial users and potentially transport, heating and power generation.
Hydrogen does not produce carbon dioxide when burned and could be a key part of the drive to slash carbon emissions.
It is unlikely to be widely used in cars but is likely to play a role in decarbonising heavy industry and possibly aviation.
Essar’s hydrogen will be produced using natural gas and fuel gases from the refinery-a production process that does generate carbon emissions.
However, Essar said carbon will be captured and stored in reservoirs in Liverpool Bay, using technology developed by Johnson Matthew and SNC-Lavalin.
It said the hub will initially produce three terawatt-hours of hydrogen a year from 2025.
A spokesman said this would be “quickly followed” by a facility able to produce more than three times that amount of hydrogen a year-equivalent to the amount of energy needed to heat Liverpool.
The Government hopes there will by five gigawatts of low-carbon hydrogen production by 2030.
There is also a push to produce more hydrogen through electrolysis with water, rather than from natural gas, avoiding the need for carbon capture systems.
Essar said its joint venture should eventually be able to meet 80pc of the government’s 5GW target.
Stein Ivar Bye, Essar's UK chief executive, said: "Hydrogen production is integral to Stanlow’s strategy and will set it on a journey to be the UK’s first net zero emission refinery with the ambition to avoid emissions of over 2m tonnes of carbon dioxide to the atmosphere per year-the equivalent of taking nearly a million cars off the road."
He added: “With the support from government to establish the appropriate business incentives, together with Progressive Energy, we are committed to undertaking the development and the financing of its construction."
Justin Madders, MP for Ellesmere Port and Neston, said: “Hydrogen is going to play an incredibly important part in the future of our economy and I hope that Ellesmere Port will play a central role in the green jobs revolution we need to meet the challenge of climate change.
"Essar has had a presence in the area for the last decade and the signing of this agreement with Progressive Energy means that it will be here for many decades to come.”