SEOUL, Dec. 13 (Yonhap) — South Korean steelmaker POSCO said Sunday it will expand hydrogen production capacity in the next three decades to meet growing demand for the clean energy source and foster new growth drivers.

POSCO, the world’s fifth-largest steelmaker by output, said it will produce up to 5 million tons of hydrogen by 2050 to reduce its reliance on fossil fuels and transition to renewable energy sources.

The company plans to launch a hydrogen business unit next month and collaborate with research agencies at home and abroad to develop related technologies.

POSCO has an annual hydrogen production capacity of 7,000 tons, mostly using natural gas and byproducts from its power plants, supplying hydrogen to its steel factories and fuel cell electric vehicles made by Hyundai Motor Co.

The company vowed to develop technologies for green hydrogen, produced by using renewable energy to split water, to get closer to zero-emission goals, setting a target of 2 million tons of annual production of green hydrogen by 2040.

POSCO said it will also make investments in hydrogen storage, distribution and related infrastructure to create new business opportunities in the emerging energy sector.

The demand for hydrogen is expected to rise from 1.94 million tons in 2030 to 5.26 million tons in 2040, as more industry players are seeking ways to reduce their carbon emissions under tighter environmental regulations, the company said.

The company’s business strategy is in line with the government’s move to reduce carbon emissions to zero by 2050 in an effort to transform the country’s fossil-fuel reliant economy into an eco-friendly one.