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Amazon (AMZN 2.66% ) wants to build a greener future. The e-commerce colossus is turning to Plug Power (PLUG 2.75% ) to help make green hydrogen a major component of its clean energy strategy. 

Beginning in 2025, Plug Power will supply Amazon with 10,950 tons of green hydrogen annually to help power its long-haul trucking fleet and fulfillment center equipment. The two companies say the agreement will deliver enough power to operate 800 heavy-duty trucks and 30,000 forklifts.

"Amazon is proud to be an early adopter of green hydrogen given its potential to decarbonize hard-to-abate sectors like long-haul trucking, steel manufacturing, aviation, and ocean shipping," Kara Hurst, vice president of Worldwide Sustainability at Amazon, said in a press release.

Plug Power CEO Andy Marsh said the deal validates the energy solutions provider's ambitious growth strategy.

"Plug is fully committed to a green hydrogen future, and we are building a complete hydrogen ecosystem -- from molecule to applications combined with a resilient network of green hydrogen plants around the world -- to make hydrogen adoption easy for companies looking to reach net-zero carbon emissions," Marsh said. "Securing this major green hydrogen supply deal with a customer like Amazon affirms our multi-year investment and strategic expansion into green hydrogen."

Marsh also suggested that the two companies could expand their partnership to include other hydrogen applications, such as fuel-cell electric trucks and power generation stations.

As it stands, Plug Power said its new deal with Amazon will help it grow its revenue to $3 billion by 2025 -- up from nearly $600 million over the past 12 months. It will also support Plug Power's goal of producing 500 tons of liquid green hydrogen per day in North America by that time. 

Notably, Amazon received a warrant to purchase up to 16 million shares of Plug Power's stock. Amazon has the right to buy 9 million of those shares at an exercise price of $22.9841 per share, which is based on the stock's average closing price over the 30 trading days ending on Aug. 23.

The exercise price of the remaining shares will be determined based on future trading prices, should Amazon's warrant vest in full. To do so, Amazon will need to spend $2.1 billion over a seven-year period on Plug Power's offerings.

These warrants give Amazon a financial incentive to help Plug Power reach its ambitious expansion goals. Amazon's stake will likely also be seen by other potential customers as a vote of confidence for Plug Power's technology.

Amazon is the largest corporate purchaser of renewable energy. It also co-founded The Climate Pledge, a commitment to reaching net-zero carbon by 2040. More than 300 other companies have since made the same pledge, including corporate heavyweights like Microsoft and Verizon. 

"We are relentless in our pursuit to meet our Climate Pledge commitment to be net-zero carbon across our operations by 2040 and believe that scaling the supply and demand for green hydrogen, such as through this agreement with Plug Power, will play a key role in helping us achieve our goals," Hurst said. 

Amazon's support for green hydrogen will likely spur more companies to invest in the promising fuel source. That could lead to the build-out of hydrogen-related infrastructure, which, in turn, should make the fuel more economically viable for even more businesses.

These investments might also allow green hydrogen to become a more powerful tool in the battle against climate change. The carbon-free fuel source can be produced with renewable electricity and water -- a far cleaner and more environmentally friendly process than is used to produce traditional fossil fuels.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has the following options: long January 2024 $100 calls on Amazon. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

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