A 20 megawatt hydrogen electrolyzer described as “one of the world’s largest” has begun operations, energy major Shell said Friday.

Located in Zhangjiakou, Hebei Province, China, the electrolyzer will produce green hydrogen for fuel cell vehicles being used at Zhangjiakou’s competition zone during the Winter Olympics, which are due to open on Feb. 4. Once the Games finish, commercial and public transport will use the hydrogen.

In a statement, Wael Sawan, Shell’s integrated gas, renewable and energy solutions director, said the electrolyzer was “the largest in our portfolio to date.”

“We see opportunities across the hydrogen supply chain in China, including its production, storage and shipping,” Sawan said.

The facility in China is linked to a joint venture established in 2020 between Shell China and the Zhangjiakou City Transport Construction Investment Holding Group Co. Ltd.

Hydrogen, which has a diverse range of applications and can be deployed in a wide range of industries, can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in this process comes from a renewable source such as wind or solar then some call it green or renewable hydrogen. The electrolyzer in Zhangjiakou will use onshore wind power, Shell said.

While there is excitement in some quarters about green hydrogen’s potential, the vast majority of hydrogen generation is currently based on fossil fuels.

In recent times, some business leaders have spoken of the issues they felt were facing the emerging green hydrogen sector. In Oct. 2021, for example, the CEO of Siemens Energy told CNBC there was “no commercial case” for it at this moment in time.

Today, a variety of colors — including brown, blue, gray and pink, to name a few — are used to differentiate between various production methods for hydrogen.

Last December, the CEO of German energy company RWE explained to CNBC how it was important to be pragmatic about color codes.

“In the end, all hydrogen needs to be green, because green hydrogen is the only fuel which is … fully decarbonized,” Markus Krebber said. In the meantime, industries needed to take decisions to invest in new facilities and make them “H2 ready.”

“Of course, there is not enough green hydrogen available in the short term, so you need to allow them to run it first on natural gas then, maybe, on all other colors [of] hydrogen … especially blue,” he said. “But the moment green hydrogen is available, to the extent needed, they should switch to green hydrogen.”

Blue hydrogen refers to hydrogen produced using natural gas — a fossil fuel — with the CO2 emissions generated during the process captured and stored.

Earlier this month, it was reported that one of the only facilities in the world that uses carbon capture and storage technology (CCS) to reduce the emissions of hydrogen production had been found to emit far more greenhouse gas emissions than it captures.

The Quest plant in Alberta, Canada, owned by Shell and designed to capture carbon emissions from oil sands operations and safely store them underground, has previously been touted as a “thriving example” of how CCS is working to significantly reduce carbon emissions.

However, an investigation by watchdog group Global Witness, published last week, showed that while 5 million tons of carbon dioxide had been prevented from escaping into the atmosphere at the plant since 2015, it also released 7.5 million metric tons of greenhouse gases over the same period.

It means just 48% of the plant’s carbon emissions were captured, according to the report. In response to the report, a spokesperson for Shell told CNBC via email that Global Witness’ analysis was “simply wrong” and stressed that the Quest facility was designed to capture around a third of carbon dioxide emissions.

Shell’s Quest CCS facility opened in late 2015 and is part of the group’s Scotford complex, where hydrogen is produced for use in refining oil sands bitumen (a type of petroleum deposit). The Quest plant does not cover the emissions for the entire facility.

“Our Quest facility was designed some years ago as a demonstration project to prove the underlying CCS concept, while capturing around a third of CO2 emissions. It is not a hydrogen production facility,” the Shell spokesperson said.

—CNBC’s Sam Meredith contributed to this report