Utilities giant Centrica is preparing to press the button on a £1.6bn overhaul of its Rough gas storage site in the North Sea so it can store hydrogen instead of methane.

The FTSE 250 owner of British Gas says repurposing the site roughly 18 miles off the coast of Yorkshire could create 3-4,000 jobs during construction and help develop the market for hydrogen to help meet climate goals.

Greg McKenna, managing director of Centrica Business Solutions, said the company is waiting for clarity on the Government’s strategy around hydrogen and what subsidy guarantees will be given to help the hydrogen industry scale up, before knowing whether to progress.

He said: “If we could get a decision this year, I think we could be up and running by 2025/26.

“You’re talking about a £1.6bn investment which will create thousands of jobs and help roles in the oil and gas industry move into the green economy.”

Hydrogen does not produce carbon emissions when burned so it is expected to be used more widely as the UK overhauls its energy system to try and meet its legally binding target of cutting carbon emissions to net zero by 2050.

However, the extent of its role is unclear as hydrogen is expensive and difficult to produce as well as being inefficient. There is particular debate over how widely it should be used to heat people’s homes instead of electric heat pumps. It is likely to have a larger role in industry and heavy duty vehicles.

Centrica decided to close Rough, the UK’s largest gas storage site, in 2017 due to problems with its ageing infrastructure, although it has continued to produce what is left in the field.

Chief executive Chris O’Shea is trying to reshape the company following a 70pc slide in Centrica’s share price under his predecessor Iain Conn.