The funds were originally granted by the 2005 Legislature in response to requests from hydrogen and fuel cell industry groups, but not awarded until this year, said Van Romero, New Mexico Tech Vice President of Research and Economic Development says.

Since the grant was recently made available, the money has been used for a variety of projects, ranging from distributing models of hydrogen fuel cell cars to schoolchildren to developing fuel cell education programs at the University of New Mexico.

The funds issued so far have been used to get matching grants from the Department of Energy and other agencies, Romero said.

"What we're looking for is to use that money to leverage federal resources," he said. "It's more of a matching fund resource as opposed to someone saying 'I have a new idea for a fuel cell, can I get some money to get it off the ground.'

"We're really trying to turn this $1 million into a lot more revenue for the state."

Romero said the initial $1 million earmarked for hydrogen fuel cell projects sparked some confusion in 2005 as it was unclear who would manage the funds. The state already has a four-yearold industry group, the Hydrogen Business Council, and a nonprofit promotional organization created by the Economic Development Department, called Hydrogen Technology Partnership, or HyTeP.

HyTeP has since come under the leadership of the northern New Mexico economic development group Regional Development Corp., which is working under a contract with the EDD to promote such industry in the state.

Hugo Hinojosa, executive director of the Regional Development Corp., said New Mexico Tech, which supports extensive research into fuel cell technology, seemed the best fit to manage the funds and distribute them to projects that could multiply the money with matching grants.

"We're trying to sort out the division of labor, as opposed to making redundant efforts," he said.

Some researchers believe hydrogen -- the universe's most abundant element -- ccould serve as a replacement for dwindling fossil fuel reserves. Fuel cells, which work like batteries, use hydrogen to make electricity, a technology that has been adapted to everything from motor vehicles to remote power stations.

Proponents say hydrogen stores energy more efficiently than conventional batteries, burns twice as efficiently in a fuel cell as gasoline does in a traditional internal combustion engine, and releases its energy without the fossil fuel emissions scientists say contribute to global warming.

But critics of the so-called "hydrogen economy" say the element will never replace fossil fuels, and consider the Bush administration's earmarking of some $1.7 billion in fuel cell research funds a red herring to draw attention away from the world's growing, and unsustainable, energy addiction.

Indeed, several technological hurdles remain. Fuel cell components require expensive precious metals, the safety of storing hydrogen remains a matter of debate, and an infrastructure for delivering hydrogen does not yet exist.

Furthermore, though there's no shortage of hydrogen, its atoms are typically bonded with something else, such as carbon or oxygen. Separating the atoms from a hydrogen source, such as natural gas, still requires more energy than would be spent if the natural gas were just burned to make electricity. It takes even more energy to get hydrogen out of water.

That's where New Mexico comes in.

The state boasts several institutions and national laboratories, as well as a handful of businesses such as Ares Corp., Intelligent Energy and Cabot Superior Micropowders, engaged in solving various parts of the hydrogen puzzle. And its booming oil and gas industry, for now anyway, creates a ready-made source of hydrogen.

"We see the need to develop technology that starts in the oil and gas industry and will eventually transition into a hydrogen-type energy environment," Tech's Romero said. "We can use hydrocarbon resources to further hydrogen research, with the ultimate goal, as those resources go away, of hydrogen as an alternative. We see that in 20 to 30 years, but we have to start now."

Projects funded by New Mexico Tech so far include:

About $120,000 to the University of New Mexico, which is seeking Department of Energy funding to promote undergraduate fuel cell education and graduate level research, and to support a public- private collaboration between UNM, Los Alamos National Laboratories, Albuquerque materials firm Cabot Superior Micropowders and New Mexico Tech.

About $42,000 to educational outreach programs, such as plans by Los Alamos-based Energy Related Devices to distribute functioning fuel cell-powered model cars to 200 middle schools around the state.

About $180,000 to a proposed City of Albuquerque project that would extract hydrogen from waste methane produced by decomposition at city landfills.

About $300,000 to install fuel cells and other alternative energy systems in some of the 256 homes in Playas, a former town owned by New Mexico Tech and used for various homeland security and defense research programs. The houses, though uninhabited, would be set up to use energy like a typical home, and researchers would observe how the extra energy could help fill in for unreliable power grids, Romero said.

"Development of advanced energy technologies and educational infrastructure to support hydrogen fuel and fuel cell interests will go a long way in promoting New Mexico as the Clean Energy State," said EMNRD Cabinet Secretary Joanna Prukop in a statement. "Furthermore, it will help New Mexico to meet renewable energy goals by providing alternatives to conventional fuels and ultimately reducing our dependence on foreign oil."

Funding for each program is dependent on them receiving matching funds from outside the state, he said.