The Australian unit of Spanish utility Iberdrola and local developer Abel Energy have agreed to invest 1.1 billion euros ($1.17 billion) to build a green hydrogen and methanol production plant at Bell Bay on the island of Tasmania.

Iberdrola said the facility, known as the Bell Bay Powerfuels Project, also has the Australian government's backing.

The final decision to invest in delivering the full project will not be taken until 2024, an Iberdrola spokesperson said.

The scale of the plant, at 200,000 tonnes per year of green methanol for stage one, rising later to 300,000 tonnes per year, will make it one of the largest such projects in the world, Iberdrola said in a statement.

Green methanol is a fuel produced from carbon dioxide and hydrogen using renewable electricity or from sustainable biomass.

Green hydrogen, or hydrogen produced from water via electrolysis using renewable energy, is seen as a solution to decarbonizing heavy transport including commercial shipping and airlines and some other industries.

Iberdrola is pushing to remain one of the leaders in global renewable power as utilities face a challenging transition from fossil fuels, accelerated by the need to cut energy dependence on Russia.