Tens of billions of pounds of investment into Britain could be jeopardised if the government limits its ambitions for hydrogen development, ministers have been warned.

A government hydrogen strategy, due in weeks, will be “a make-or-break moment for our fledgling hydrogen industry”, according to a letter signed by gas and hydrogen lobby groups.

The Conservative government set a target for 10 gigawatts of low-carbon hydrogen production by 2030, which looks highly unlikely to be achieved after setbacks including BP scrapping its planned 1 gigawatt plant on Teesside.

Signatories are concerned by comments from Michael Shanks, the energy minister, who said he envisaged a “more focused and essential role for hydrogen”.

It is understood the government has been discussing sectors where it believes hydrogen is most needed, such as chemicals, metals and glass. Some in the industry fear this means other potential hydrogen users will be excluded from government support schemes.

“If the government downgrades its ambitions in this area, it risks deterring tens of billions of pounds of international investment,” the letter says.

“Narrowing hydrogen’s role and scope ... before the evidence is fully developed and costs of production reduced, is premature … Prescribing where hydrogen ‘can and cannot’ be used, and only specific processes for its production, risks choking off further investment. Private capital will otherwise refocus their attention on the growing hydrogen economics in Europe and the US, offshoring skills and innovation.”

The letter is signed by Future Energy Networks, representing Britain’s gas transmission and distribution networks, and the Hydrogen Energy Association, a trade group, as well as the GMB union.

A government source insisted it did not intend “to prescribe where hydrogen can and cannot be used”.

The Department for Energy Security and Net Zero said: “Our ambitious hydrogen strategy will set out our vision and clear intentions for the UK’s industry, driving clean energy investment and unlocking thousands of skilled jobs up and down the country.”