Ambitious plans to build a €2.5bn hydrogen pipeline under the sea between Spain and France are exposing divisions among businesses over the best way to transport energy from southern Europe to the continent’s northern industrial heartland.

The EU and some big energy companies are betting on “green” hydrogen — produced from water using renewable energy — as a long-term solution to natural gas shortages and a way to accelerate cuts in greenhouse gas emissions.

But while France, Spain and Portugal are backing the long-distance export of the clean-burning fuel via undersea pipeline, some business leaders argue that it is electricity that should be exported so it can be used to make hydrogen close to where it will be used, notably German industrial hubs.