Sparc Technologies Ltd (ASX: SPN) shares are having a strong session on Tuesday.

At the time of writing, the ASX small cap stock is up 9% to 19 cents.

Why is this ASX small cap stock jumping?

Investors have been buying the environmental technology company's shares after it released some big news relating to mining giant Fortescue Ltd (ASX: FMG).

According to the release, Sparc Technologies, Fortescue, and the University of Adelaide (UoA) will proceed to Stage 2 of the Sparc Hydrogen joint venture.

The ASX small cap stock notes that the decision to proceed to Stage 2 reflects several key milestones achieved over recent months. Management believes it is a strong endorsement of the potential of Sparc Hydrogen's novel technology to unlock low-cost green hydrogen via photocatalytic water splitting (PWS).

What's next?

The company revealed that Stage 2 activities will be focused on pilot plant construction and reactor testing along with ongoing laboratory testing of PWS reactors under a range of conditions.

Management believes that the pilot plant will represent a globally leading facility for R&D and commercialisation of PWS reinforcing Sparc Hydrogen's first mover position in this emerging direct solar to hydrogen technology.

Commenting on the news, the ASX small cap stock's managing director, Nick O'Loughlin, said:

Sparc Technologies is very pleased to be pursuing Stage 2 of the Sparc Hydrogen joint venture alongside its supportive world class partners. A significant amount of work has gone into this positive investment decision which is a reflection on the R&D team, strong IP position and high potential of the technology to unlock low cost green hydrogen without relying on electrolysers, stretched electricity grids and related infrastructure.

This sentiment was echoed by Fortescue's director of research & development, Michael Dolan. He commented:

Fortescue is proud to continue its support of Sparc Hydrogen and its innovative photocatalytic water splitting technology. This Australian innovation has the potential to make green hydrogen an even more competitive energy resource by decoupling its cost from the cost of green power. The Phase 2 pilot plant will enable this promising technology to be evaluated at a meaningful scale ahead of potential commercial deployment in the future.

Based on the current schedule, the pilot plant construction completion is expected in mid-2025.

Once built, the plant will allow Sparc Hydrogen to independently and concurrently test different reactor designs and photocatalyst materials. It believes this will be the first of its kind.