OSLO (Reuters) - European industry should develop hydrogen as a source of power to reduce their dependence on coal and other fossil fuels, Vattenfall CEO Magnus Hall and new president of utilities trade body Eurelectric told Reuters.

Hall, who was appointed on Monday to head Eurelectric, said he would promote lessons from Nordic power projects in electrifying industries such as steel, iron, mining and chemicals.

The ultimate goal for smelters and other industries should be to extract hydrogen by using renewable sources of electricity, but an intermediate solution could use natural gas, he said.

At Swedish state-owned utility Vattenfall Hall has championed investments in Hybrit, a pilot plant jointly owned with miner LKAB and metals maker SSAB which aims to use hydrogen from electrolysis to make fossil-free iron and steel by 2035.

“We are starting this now in Sweden and can see that it works,” Hall said in a telephone interview.

“From a Vattenfall perspective, and from the Eurelectric policy perspective, we should look into how we can take it further to other countries,” he said.

Larger scale and the rising cost of carbon emissions will help make hydrogen competitive over time but subsidies are required in the short term, Hall said.

“When you need new technology on a demonstration basis or on a research basis you might need to share your burden together with some research institutes or some state agencies but absolutely not on long-term subsidy systems,” he said.

District heating is another sector where electrification can be expanded, by using heat pumps and excess heat from data centres, said Hall, adding that Vattenfall plans to grow its own business in Britain.

“We are looking to partner up with big building projects and area projects for development,” he said.