At the Salzgitter Flachstahl steelworks in the south-east German city of Salzgitter, engineers have been installing the “world’s largest” high-temperature electrolyser as they try to make their mark on global efforts to cut carbon emissions.

By the end of 2022, the equipment is expected to have produced around 100 tonnes of hydrogen, to be piped into steelworks instead of hydrogen produced from natural gas, slashing carbon emissions.

The €5.5m EU-backed demonstration project is being watched by more than just the steel industry; nuclear bosses are also looking at the project for lessons as they consider different methods for producing hydrogen from their plants.

Making hydrogen at scale from nuclear plants is yet to be done. But the prospect is attracting growing attention amid pressure to develop lower carbon sources of energy, and as the nuclear industry seeks to head off doubters and secure its place in a rapidly evolving energy system.

Global demand for hydrogen is predicted to soar over the coming decades due to its role as a clean-burning energy source that can replace fossil fuels in areas where doing so with electricity will not work, such as some plane journeys, heating and heavy industry. It is also backed by gas and power producers for whom it presents a market.

It is currently produced mainly from natural gas, emitting vast amounts of carbon dioxide. That can be mitigated using carbon-capture systems (CSS). But there is a major push to produce more of it via electrolysis using low-carbon energy, and to do so more cheaply. With development and depending on the reactor type, there is the possibility of nuclear power plants eventually helping to do so, using excess heat and electricity to efficiently produce hydrogen directly.

“The nuclear sector over the last 12 to 18 months has really cottoned onto the prospect of hydrogen from nuclear,” says Michelle Davies, head of clean energy and sustainability at Eversheds Sutherland, the law firm. “I think the general consensus is that ‘blue hydrogen’ [from gas or gas with CCS] will be a temporary solution during the energy transition, so then the question is: where do you want to get ‘green hydrogen’ from?

“At a time of debate around the benefits and costs of large-scale nuclear and how that will fit into a future energy system that is moving towards greater flexibility and smaller-scale generation, hydrogen has in some ways come to the rescue of the nuclear sector, giving it further reason to exist.”

In the US, the Department of Energy is providing funding to help nuclear owners Exelon, Energy Harbor and Xcel Energy explore producing hydrogen. Officials fear 10pc of nuclear capacity could shut down over the decade due to competitive pressures including cheap gas.

They reckon ten nuclear reactors could produce about 2m tonnes of hydrogen per year (one-fifth of current US demand), which could be sold to local manufacturers, adding to the plants’ core role of providing clean electricity to the grid.

“This new revenue stream could also help build an economic case to keep the nation’s at-risk reactors up and running,” officials from the US Office of Nuclear Energy wrote in the summer.

Amid growing interest over the prospects for nuclear and hydrogen in the UK, a report by The Royal Society in October explored how future nuclear power stations could use excess heat and power to provide local heating systems, hydrogen and remove carbon dioxide from the atmosphere (direct air capture). That would have the added benefit of making nuclear plants a more flexible source of energy, which is key when it is hoped they will support a growing proportion of intermittent sources of power, such as wind turbines and solar panels.

“The future of nuclear is in its ability to address the intermittency challenge of renewables – that is clear to me,” says Professor Robin Grimes,  Imperial College professor and nuclear chief scientific advisor to the Ministry of Defence, who led the study, which heard from dozens of experts.

The country is at a “really important moment” in deciding how to build a low carbon future, he adds. “That last 20pc of decarbonisation is incredibly expensive and incredibly difficult to deal with; you have to look at the whole system.”

EDF, which is building Hinkley Point C in Somerset, the UK’s first nuclear power plant in 20 years, last week called for partners to develop hydrogen and direct air capture demonstration projects alongside construction of its next planned plant, Sizewell C in Suffolk, potentially using electricity from the existing Sizewell B.

“A permanent facility supplied with low-carbon heat and power by Sizewell C could produce hydrogen at scale,” said the company, which is also involved in plans for a “clean energy hub” in Moorside, Cumbria that would produce power and hydrogen.

Such plans are likely to play well with politicians who are keen to develop a much larger hydrogen industry in the UK as part of the Government’s plan for a “green industrial revolution”. It would also help to position the country as a green energy leader ahead of the Cop26 UN climate change conference it is hosting in Glasgow next year.

EDF and its Chinese state partner CGN are waiting for a decision on how the Government will financially support Sizewell C as well as the wider industry. The UK’s ageing nuclear fleet is mostly set to shut down within the next 15 years. The Government generally backs replacing nuclear capacity, but attracting investment is difficult and critics warn of its costs, nuclear waste and the inflexibility of large plants.

In recent weeks, ministers have announced up to £170m funding to help develop next-generation advanced modular reactors that could operate at 800 degrees centigrade, producing hydrogen more efficiently, as well as funding for small-modular reactors (SMRs), an emerging technology that is being developed by Rolls-Royce and others.

Tom Greatrex, chief executive of the Nuclear Industry Association, says interest in nuclear’s role beyond just feeding low-carbon power to the grid has increased in recent months as the “reality of the wider challenge” around eliminating carbon emissions starts to sink in.

“There is a lot to do and it is quite difficult,” he says. “There are all sorts of areas where, when we think about it, nuclear can make a contribution. There are not that many ways to produce hydrogen, so it becomes an obvious option.”

Paul Stein, chief technology officer for Rolls-Royce, says SMRs could also be particularly effective in developing synthetic fuels to replace fossil fuels in aviation.

“The first thing we have to do is we have to decarbonise the grid and increase grid capacity for electric vehicles,” he says. “So that in itself is a big challenge and a solid business case for SMRs. Once we have the base case done, SMRs are a brilliant unit of zero-carbon energy for a number of different applications, and export markets as well.”

As for hydrogen, he adds: “I think the amount we are going to need as we decarbonise is going to open up markets for a variety of different ways of producing it.

“Mankind’s ability to innovate is often under-estimated.”