Fuel cell vehicles, which use hydrogen to create electricity and emit only water, may one day replace the internal combustion engine and major automakers are racing to put the first vehicles on the market by 2003 and 2004.

But with the technology so new, costs for the vehicle are too high for the ordinary consumer and the cars are not expected to go mainstream for a couple of decades.

In Japan, Toyota Motor Corp, the nation's largest automaker and second-ranked Honda Motor Co are leaders in the field.

"This is going to have a huge impact on the world because they are useful in terms of our environmental and energy measures as well as improving our industrial competitiveness," Koizumi said.

While fuel cells promise a pollution-free source of energy using renewable fuels, high costs, a lack of industry consensus on how to transport or store a hydrogen fuel as well as on the development of a hydrogen supply infrastructure, stand in the way.