The U.S. Department of Energy moved forward Wednesday with an agreement to provide up to $1.2 billion in federal funding for projects in Houston that would produce hydrogen from water and from natural gas.

The Gulf Coast Hub, also known as the HyVelocity Hub, was one of seven hubs nationwide that the Energy Department tapped last year to potentially receive billions in funding. The hub would include projects to use electricity to extract hydrogen from water but would also derive it from natural gas, a process that has faced criticism for perpetuating the use of fossil fuels under the label of “clean” or “lower carbon” hydrogen.

Funding for the hubs was included in the Bipartisan Infrastructure Law that Congress passed in 2021. The funding is meant to generate a network of sites to produce hydrogen, transport it via pipelines, and make it available to use in fertilizer manufacturing, power plants, and heavy-duty vehicles.

The HyVelocity hub involves energy companies ExxonMobil, Chevron, AES, and GTI, along with industrial gas company Air Liquide and researchers with the University of Texas, Houston Advanced Research Center, and the Center for Houston’s Future, among other partners.