India will take a giant step in using hydrogen as an automobile fuel when the first batch of buses running on a mix of hydrogen and compressed natural gas roll out in a year's time.

Indian Oil Corporation, which is preparing a 'Hydrogen blue print', will begin manufacturing hydrogen at either its Mathura or Panipat refineries and use the mixture of CNG and hydrogen initially in company-run buses.

"No engine modification is needed if 8-10 per cent of hydrogen is mixed with CNG. We plan to mix hydrogen and CNG in 1:10 ratio and use the doped fuel to run our buses at either of the refineries on an experimental basis," IOC chairman M S Ramachandran told PTI in New Delhi.

The Rs 100 crore (Rs 1 billion) hydrogen fuel initiative is to reverse India's growing dependence on foreign oil by developing the technology for commercially viable hydrogen-powered fuel cells to run cars, trucks, homes and businesses with no pollution or greenhouse gases.

"We are working on the technologies and infrastructure to produce, store and distribute hydrogen for use in fuel cell vehicles and electricity generation," he said.

Ramachandran said upto 30 per cent hydrogen can be doped with CNG with minor modification in vehicle engine but the most challenging aspect would be cutting the cost of production, its transportation and storage.

The cost involved in producing hydrogen is four times of that involved in diesel.

IOC is the lead partner in the hydrogen initiatives. The Oil Industry Development Board is providing Rs 50 crore (Rs 500 million) for the initiative while the remaining is being chipped in by oil companies, Ramachandran said.

"Hydrogen-powered fuel cells are currently very expensive and worldover research is being done to bring down the cost," he said.

If the experiment at Mathura or Panipat is successful, it would be replicated in Delhi and Mumbai where the entire transport fleet is run on CNG.

This would improve India's energy security by significantly reducing the need for imported oil, as well as help clean our air and reduce greenhouse gas emissions, he said.

Fuel cells are a proven technology with astronauts using them to generate electricity since the 1960s. But more work is needed to make them cost-effective for use in cars, trucks, homes or businesses.

Ramachandran said the hydrogen fuel initiative seeks to lower the cost to make fuel cell cars cost-competitive with conventional gasoline-powered vehicles by 2010.

Fuel cells are now ten times more expensive than internal combustion engines.

Hydrogen has the highest energy content per unit of weight of any known fuel. When burned in an engine, it produces effectively zero emissions. Hydrogen can be produced from abundant domestic resources including natural gas, coal, biomass and even water.