Jo Bamford, the heir to JCB, is setting up a £1bn fund aimed at putting the UK ahead in the global race to manufacture environmentally friendly hydrogen.
The owner of Ryze Hydrogen and Wrightbus has joined forces with investment company Vedra Partners to develop the fund, Hycap, which has already raised £200m.
It will focus on so-called green hydrogen made in the UK using water and renewable electricity, as opposed to more polluting “blue” hydrogen extracted from natural gas. Mr Bamford says that 40 potential investments have already been identified.
The Government wants to ramp up production of hydrogen to try and meet climate targets, and is consulting on a new subsidy scheme to encourage producers.
Mr Bamford, 43, grandson of the JCB founder Joseph Cyril Bamford, said the fund will split investments between hydrogen production; infrastructure such as electrolysers, which break down water molecules; and equipment that can run on hydrogen such as trucks.
He said: “Ultimately we are trying to drive the whole value chain of hydrogen so that it costs the same as diesel or the same as natural gas,” he said.
The fund is expected to generate returns of 20pc over the next decade, Mr Bamford said.
He said money had been raised so far from a mix of backers including family, pension funds, and energy companies.
Hydrogen does not produce carbon emissions when burned, so it is hoped the gas could be an alternative to fossil fuels in applications such as heavy transport and shipping as the UK seeks to slash carbon emissions to net zero by 2050.
Debate is continuing about how widely it could or should be used, however, with tests ongoing to see whether it is suitable for home heating.
At least 75pc of the Hycap fund will be invested in the UK. Bamford added: “As a family, we are very big backers of Britain, very big backers of manufacturing.
“Our view is this is the way the energy transition goes and we are prepared to do our bit and stand up.”
Mr Bamford’s firm Ryze Hydrogen produces and distributes green hydrogenm while Wrightbus has designed what it says is the world’s first hydrogen double-decker bus.
JCB, chaired by Mr Bamford’s father Lord Bamford, is developing a hydrogen-fuelled combustion engine which can be used to power heavy machinery instead of fossil fuels, fuel cells or batteries.
Mr Bamford added: “The UK has missed the boat on batteries, a sector dominated by China and the Far East, but we can be global leaders in the production and supply of hydrogen.”
Hydrogen culd generate $2.5 trillion (£1.8trn) of global revenues by 2050, he said.