LONDON, England: As the governments of major economies are funding the development of green fuels to decarbonize, BP chief executive Bernard Looney said the company is betting on hydrogen to power future low-carbon businesses.

Low-carbon hydrogen is predicted to play a key role in reducing greenhouse gas emissions from heavy industries and transportation, but it is expensive to produce and requires government support to compete against fossil fuels.

For example, under President Joe Biden's $430 billion Inflation Reduction Act (IRA), the US is offering large incentives for producing hydrogen-based fuels.

In an interview with Reuters, Tomeka McLeod, BP's newly-appointed head of hydrogen in the US, said the company is in the early planning stages to develop a large, low-carbon hydrogen hub around its Whiting, Indiana, refinery.

Hydrogen will make a major contribution, along with offshore wind, Reuters reported the company as stating.

BP has made several investments in large hydrogen projects, including in Australia, Europe and the UK, and has overhauled its corporate structure to create a dedicated hydrogen division led by Felipe Arbelaez, which has 150 staff members.

While initially modest, BP's spending on low-carbon hydrogen is predicted to grow into the hundreds of millions by the end of the decade, amidst the launch of related projects.

Reuters calculations showed that in 2022, BP spent some one-quarter of its $15.5 billion budget on low-carbon businesses, considering the $4.1 billion acquisition of US biogas producer Archaea.

In February, Looney and BP's head of renewables Anja-Isabel Dotzenrath will announce a clean hydrogen production target for the first time, with the aim of gaining a 10 percent share of utilizing hydrogen in "core markets" by 2030.

Last month, the company's Chief Financial Officer, Murray Auchincloss, told Reuters, "Hydrogen will be a big focus and it is moving much faster than we ever thought it would."

Most hydrogen is currently made by heating natural gas, a highly polluting process, known as grey hydrogen, which is mainly used in oil refining and the fertilizer industry.

But grey hydrogen becomes "blue hydrogen" if the polluting emissions are captured, while "green hydrogen" is produced by splitting water using renewables-powered electrolysis.

To increase its blue hydrogen output, BP plans to build carbon capture and storage facilities, where carbon is injected into depleted reservoirs.