Fuel cells use an electrochemical process to create electricity by mixing hydrogen with oxygen, with water as the only byproduct, avoiding the greenhouse gases and pollutants that other power sources emit.

GM said the agreement, expected to be finalized this year, will help it cut costs of fuel cells as it develops units to power cars, expected to be widely available within a decade.

"While this is a milestone event, and it points to a growing interest among businesses in using fuel cells to power factories and buildings, the most compelling reason for GM to collaborate with Dow is ultimately to reduce the cost of fuel cells and improve their durability so that we may put them in cars by the end of the decade," said Larry Burns, GM vice president of research, development and planning, in a release.

GM, the world's largest automaker, has spent billions of dollars on fuel cell research. Last year, it said it would have a prototype stationary fuel cell ready by late this year.

The fuel cells, to be supplied next year, will be tested at Dow Chemical's Freeport, Texas, complex, Dow's largest manufacturing facility, about 65 miles east of Houston.

Terms of the deal were not released.

Dow Chemical and GM are also discussing the use of fuel cells to convert hydrogen to electricity in other Dow locations in the United States and Europe, they said in a joint release.