OSLO (Reuters) – Norway’s Equinor and U.S. Steel Corp will examine the potential for developing clean hydrogen production in Ohio, Pennsylvania and West Virginia, the two companies said on Tuesday.

The companies have signed a memorandum of understanding to assess the technological and commercial possibilities for hydrogen and carbon capture and storage (CCS) and screen potential customers and suppliers.

Hydrogen, long used as rocket fuel, in oil refining and to produce ammonia, is an opportunity for the oil and gas sector to reduce greenhouse gas emissions, U.S. Energy Secretary Jennifer Granholm said in May.

The Biden administration wants the United States to advance lower-carbon fuels and achieve net zero emissions by 2050.

Hydrogen, a clean-burning gas, produced from water, or produced from natural gas in combination with CCS technology, could decarbonize some industries, such as steel or chemicals.

“Hydrogen-based steel processes and CCS are among the more promising and sustainable technologies currently being developed,” U.S. Steel said in a statement.

Equinor is producing natural gas in the Appalachian Basin. It is planning to produce clean hydrogen from natural gas in the United Kingdom and is developing an offshore CO2 storage in Norway.

Hydrogen production from natural gas in the Appalachian Basin while capturing and storing associated carbon dioxide emissions could help the United States achieve its climate goals, Equinor’s U.S. Country Manager Chris Golden said.

“The U.S. faces a challenge to ensure that energy-intensive industries remain competitive within a net-zero scenario,” he added.

Today, most of the hydrogen in the world is produced from natural gas or coal, while associated CO2 is released into the atmosphere.

Production costs of clean hydrogen, however, are higher, with renewable hydrogen costing about $5 per kilogram, according to the U.S. Department of Energy.

The Biden administration has set a goal of reducing the cost clean hydrogen by 80% to $1 per kilogram in decade.

The costs of producing hydrogen from natural gas or coal in combination with CCS were around $2 per kilogram, according to a recent report https://bit.ly/3qMgga5 by the Global CCS Institute.

(Reporting by Nerijus Adomaitis; Editing by Lisa Shumaker)

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