Seven companies, including developer ACWA Power and Spanish utility Iberdrola, have formed a joint initiative to scale up production of 'green' hydrogen in the next six years and bring down costs, a media report said.

Reuters said the so-called Green Hydrogen Catapult initiative also included Italian gas group Snam, renewable energy investor CWP Renewables, low-carbon technology group Envision, renewable energy developer Orsted, and fertiliser company Yara.

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It aims to deploy 25 gigawatts (GW) of renewables based hydrogen production to 2026 and to halve the current cost of the fuel to below US$2 per kg.

Its goal will require investment of around $110bn – to be raised from a mix of debt and equity providers, with some public co-investment – and deliver more than 120,000 jobs, the group told Reuters.

Industry experts told the news agency a $2/kg price would make green hydrogen more competitive with other fuels and encourage more large scale projects.

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"From an industry perspective, we see no technical barriers to achieving this, so it's time to get on with the virtuous cycle of cost reduction through scale up," Paddy Padmanathan, chief executive of ACWA Power, told Reuters.

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The news agency said 'green' hydrogen is a zero carbon fuel made by electrolysis, using renewable power from wind and solar to split water into hydrogen and oxygen.

It is increasingly being touted as a way to decarbonise emissions intensive heavy industry and transport sectors, but currently costs of production are too high to be competitive with other fuels, Reuters noted.