The grant is one of four worth more than $8 million allocated to major research and development projects in sustainable energy.

The hydrogen project will be led by Melbourne University in partnership with the Ford Motor Company of Australia, Haskel Australia Pty Ltd and the Universities of North Florida, California ( Berkeley ) and Delaware.

Mr Batchelor said the research project, worth $2.92 million, would look at designing a more efficient hydrogen-fuelled car engine and also investigates new approaches to hydrogen storage.

“This project will increase local knowledge of the use of hydrogen in transportation and address the very current issue of low emission transport,” he said.

“It could lead to Victoria having the world’s most efficient hydrogen-fuelled internal combustion engine and providing higher-density, lower-pressure storage of hydrogen to minimise fuel tank size.”

The grant was one of two awarded to Melbourne University under the Sustainable Energy Research and Development grants program The other grants announced today are:

· A $6 million grant for a $12million project headed by Melbourne University to develop and increase the efficiency of organic solar cells as an alternative to silicon based cells in the generation of solar power. The project could lead to the establishment of a centre of excellence in Victoria. The grant partners include: Monash University, CSIRO, Securency ( including Innovia Films ), BP Solar, Merck, Bluescope Steel and NonoVic;
· A $650,000 grant for a $1.3 million project led by Monash University to research the recycling of waste plastics for the production of diesel fuel. Monash University will team with Ozmotech Pty to investigate the formation of aromatic compounds in the production of diesel and the stringent standards around their use in the fuel;

· A $250,000 grant for a $500,000 project led by Australian Sustainable Industry Research Centre Ltd ( ASIRC ), based in the Latrobe Valley, to investigate the energy efficiency of solvent based fuel derived from recycling industrial liquid wastes. This research by ASIRC and Geocycle Pty Ltd will seek to reduce the amount of industrial liquid wastes going to landfill and also partially substitute the fossil fuel requirements of the cement and other energy intensive industries.

The projects are due to be completed by July 2010.