Ports of Auckland said it plans to build a hydrogen production and refuelling facility as it seeks to cut its carbon emissions to zero by 2040.

The port has partnered with KiwiRail, Auckland Council, and Auckland Transport who will invest in hydrogen fuel cells vehicles, port equipment, buses and cars as part of the project.

Ports of Auckland chief executive Tony Gibson said the project is in a planning phase.

The council-owned port company would start a stakeholder engagement process before applying for resource consent in early 2019.

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The facility is planned to be operational by the end of next year.

Gibson said the port had set an ambitious emission target.

"In order to meet that target we need a new renewable and resilient power source for heavy equipment like tugs and straddle carriers, which are difficult to power with batteries," he said in a statement.

"Hydrogen could be the solution for us as it can be produced and stored on site, allows rapid refueling, and provides greater range than batteries," he said.

Ports of Auckland will fund the construction of a facility which will produce hydrogen from tap water.

The process uses electrolysis to split water into hydrogen — which is then stored for later use — and oxygen, which is released into the air.

Demonstration vehicles will be able to fill up with hydrogen at the facility.

Hydrogen is used in the fuel cell to create electricity which powers the car. The only by-product of the process is water.

It could help Auckland and New Zealand towards energy self-sufficiency and emission reduction goals, Gibson said.

"Trucks, trains and ferries could also run on hydrogen, something which is already being done overseas, which would be a significant benefit for the community.

"Hydrogen powered vehicles are quieter and emit nothing more than clean water," he said.

The project partners will provide technical support and will purchase hydrogen fuel cell vehicles for the project.

Global hydrogen experts Arup are also helping support the project through the development, design and delivery phases.

KiwiRail acting chief executive Todd Moyle said KiwiRail aims to be carbon neutral by 2050.

Moyle said that while rail is an inherently sustainable form of transport with 66 per cent fewer carbon emissions than heavy road freight, new fuel sources like hydrogen had potential for the future of transport in New Zealand.

"If successful with passengers, there is no reason why the next development could not be hydrogen-powered freight trains," he said.

Auckland Transport chief executive Shane Ellison said the technology could be part of the answer for the city's fleet of buses and harbour ferries.