The Lib Dem MP told the Commons the Government needed to overcome "fragmentation and poor communication" to create a hydrogen energy strategy.

He said: "In comparison to countries such as the US, Canada, Germany and Japan, the Government commitment to developing a hydrogen economy has so far been lukewarm and public investment in it has been minimal," he said.

"Quite simply, at the moment we are behind other countries in developing a hydrogen economy." His comments come as a group of consultants backed a hydrogen energy centre to be built in Britain's most northerly island of Unst.

The Pure project starts in Unst in April 2005 when it will begin pioneering the storage of electricity generated by windmills into hydrogen fuel cell batteries.

Shetland is looking at hydrogen as a key, alternative fuel for the future.

The project could set an example to remote communities who could generate and store their own energy.

The report, by consultants IPA Energy, says more ambitious plans for a hydrogen- energy study centre would be feasible as long as it provided a broad range of engineering and other practical experience for students in this growing field.

Sandy Macaulay, of Pure, said: "The report suggested that the hydrogen centre for Unst could work, but it had to be much broader than a study centre.

"It ought to be built on real-time demonstrations, which is what we wanted to do anyway." The Robert Gordon Institute in Aberdeen, has already pledged its support for the Unst centre and two other colleges are also expressing an interest in getting involved.

But before it can proceed, Pure must prepare a business plan to raise enough money to get the project off the ground.

"What we want to do is develop research projects with the colleges and they would pay for it as they used it - a 'pay as you go' system," Mr Macaulay said.

Meanwhile, Mr Carmichael called on the Government to make it easier for projects like Pure to get going.

"Interviews with 14 senior civil servants involved in hydrogen policy revealed that there is a need for a clear, credible, strategic framework for hydrogen energy in the UK, with Government facilitating the development of the strategy," Mr Carmichael said.

He added: "It was also made clear that UK resource availability is a limiting factor and that fragmentation and poor communication cur- rently hinder Government action."