Oil companies have used false claims over the cost of producing fossil fuel hydrogen to win over the Treasury and access billions in taxpayer subsidies, according to the outgoing hydrogen lobby boss.

Chris Jackson quit as the chair of a leading hydrogen industry association earlier this week ahead of a government strategy paper featuring support for “blue hydrogen”, which is derived from fossil gas and produces carbon emissions.

He told the Guardian he could no longer lead an industry association that includes oil companies backing blue hydrogen projects, because the schemes are “not sustainable” and “make no sense at all”.

The government’s strategy for the sector, announced this week, was criticised by environmental groups for taking a twin track approach, giving equal weight to blue hydrogen and “green hydrogen“, which has no negative climate impact because it uses renewable electricity to split water into hydrogen and oxygen.

By contrast, blue hydrogen is made from natural gas, which has to be extracted from gas fields and then purified by the removal of carbon dioxide and methane, which have to be stored back underground. The process typically fails to capture 10-15% of the greenhouse gas emissions, which would accumulate as production ramps up.

Both kinds of hydrogen are much more expensive to produce than conventional fuels, so the government is proposing subsidies. It has launched a consultation to fund the difference between what producers can sell hydrogen for and what it costs them to manufacture it – similar to a scheme already used to drive down costs of offshore wind power.

“The Treasury has been told that blue hydrogen is cheap and will take millions of tonnes of carbon emissions out of the economy, which is all they need to hear. It checks the boxes they’re worrying about,” Jackson said.

“If the false claims made by oil companies about the cost of blue hydrogen were true, their projects would make a profit by 2030, after starting up in 2027 or 2028, because carbon prices are forecast to rise to GBP80 a tonne.

“Instead, they’re asking taxpayers for billions in subsidies for the next 25 years. They should tell the government they don’t need it. The fact that they don’t tells you everything you need to know.”

Jackson said energy companies have made the case for “big, bold” multibillion-pound blue hydrogen projects, which have proved a draw for ministers who are “trying to find ways to show that they really are doing something” to support the green agenda.

“They’re desperate to find something to put their hat on. It’s been easy for big energy companies to make the case for blue hydrogen, but we need to show that there is another way. We need to be better at that,” he said.

The UK’s future blue hydrogen projects include plans for BP to develop a hydrogen plant in Teesside, and Norwegian state oil company Equinor and SSE to build the world’s biggest hydrogen production plant with carbon capture and storage technology near Hull.

Jackson resigned from the UK Hydrogen and Fuel Cell Association on Monday, saying he could “no longer in good conscience” remain in a role in which he would be expected to hold a neutral stance.

“I believe passionately that I would be betraying future generations by remaining silent on that fact that blue hydrogen is at best an expensive distraction, and at worst a lock-in for continued fossil fuel use that guarantees we will fail to meet our decarbonisation goals,” he wrote in a post on LinkedIn.

He is the chief executive of Protium Green Solutions, which plans to develop green hydrogen projects. These will be “an essential part of the UK story towards net zero emissions”.

“The UK has all the ingredients to be a world leader in green hydrogen, which is an essential net zero technology – we just need the will and support from government to make that happen,” he said.

Equinor declined to comment.

The government’s business department, BP and SSE have been contacted for comment.