"We worked closely with the government, helping to form a legal framework for hydrogen vehicles, including registration and infrastructure buildup," said Karl-Heinz Schmid, president of BMW China Automotive Trading Ltd.

Yesterday the world's biggest luxury car maker unveiled its BMW Hydrogen 7 sedan in China, with an internal combustion engine capable of running on either liquid hydrogen or gasoline.

With a 74-liter petrol tank and a fuel tank containing eight kilograms of liquid hydrogen, the BMW Hydrogen 7 can run 700 kilometers on one tank, including at least 200 kilometers powered by hydrogen. Top speed could reach 230 kilometers per hour.

The Munich-based car maker picked Shanghai and Beijing for the car's launch. China is an important stop for BMW Hydrogen 7's world tour, as the nation encourages new energy sources such as bio petroleum, hydrogen and electricity to reduce reliance on crude oil.

More than 3,000 hydrogen passenger cars and 100 buses will roll on Beijing streets during the 2008 Beijing Olympics. Shanghai also plans to use 1,000 hydrogen-fueled taxis or buses and build 20 hydrogen refueling stations by 2010, when the Shanghai World Expo will be held.

UK industrial gas maker BOC Group Plc announced plans to partner with Tongji University and Shell to build Shanghai's first hydrogen refueling station in 2005. Another one is also under construction in Beijing.

"We really think China will be a pacemaker in clean energy," said Bernd Hassenjuergen, BMW's general manager of new energy strategy China.

Although hydrogen-powered vehicles still face stumbling blocks such as fuel storage, high cost and the lack of refueling stations, BMW has so far rolled out 100 Hydrogen 7 cars, a step closer to commercialization.