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BP is teaming up with Danish wind power group Orsted to develop zero-carbon hydrogen.

BP’s Senior Vice President for hydrogen, Louise Jacobson Plutt.

"Today BP and Orsted are announcing an exciting new project to develop green hydrogen with a industrial scale 50 megawatt electrolyser at BP's Lingen refinery. This is significant because it would replace 20% of the fossil fuel-based hydrogen we use today at the refinery."

It’s the oil major’s first full-scale project in a sector that is expected to grow rapidly over the next few years.

Currently, hydrogen is mostly used in the industrial sector to manufacture petroleum products at refineries.

But the EU and countries around the world are promoting the use of hydrogen made from renewable sources to reduce greenhouse gas emissions.

The green hydrogen is produced via electrolysis. The electricity used in the process comes from renewable sources like wind and solar.

The BP-Orsted project will produce green hydrogen at a refinery in north-west Germany powered by an offshore wind farm in the North Sea.

In its statement, BP said it initially aims to build a 50 megawatt electrolyzer to replace 20% of natural gas-based hydrogen at the plant.

The zero-emission production is expected to start in 2024.

"The learning that we expect to gain from this will not only support with driving costs down for green hydrogen, but has a wider impact to the refinery and overall BP's business."

But green hydrogen remains much more expensive than natural gas-based, or gray, hydrogen.

Reducing the cost of production will be key to its expansion.