A Cheshire company has received a £1m grant to develop technology that could replace the traditional car engine.
ACAL Energy in Runcorn has developed a fuel cell system which runs on air and hydrogen to produce power with no petrol or emissions.
The award was made by the Carbon Trust with the aim of making fuel cells more affordable for the mass car market.
ACAL is already working with a car manufacturer and hopes to help produce a commercial car engine by 2015.
Fuel cells are a cross between a battery and an engine.
Like a battery, they generate electricity but like an engine, they require a fuel such as hydrogen to create energy but with no emissions, just water and heat.
Hydrogen is mainly produced from natural gas - a fossil fuel - but it is possible to produce it from renewable sources such as renewable electricity or biomass generators.
In the future, ACAL believes a car using fuel cell technology would never need charging up and would have a similar performance to the average family saloon.
Dr Andrew Creeth, from ACAL Energy, said their system used a platinum catalyst and a pump in the same way that we use blood and the heart to pump oxygen around the body.
"Our catalyst system takes the oxygen from our 'lung', it's pumped round by a pump to where it's needed - which is in the fuel cell - which is where it reacts with the fuel from the other side of the fuel cell to form the electricity that's needed to drive the car."
In 2009 the Carbon Trust, a not-for-profit company, launched the £1m Polymer Fuel Cell Challenge to accelerate the uptake of fuel cell technology as an alternative to electric cars powered by batteries.
It is estimated that the global industry for low-carbon transport will be worth over £180bn by 2050.
The trust said that while electric cars were likely to be widespread in the future, fuel cells could provide a convenient way of producing electricity on-board from a fuel such as hydrogen.
ACAL said it was working with car manufacturers about the technology which it believes could be made affordable for use in the mass car market.