David Bamford BBC correspondent

Business was slow to start with - just a single prototype van

It is the first stage of a European Union-sponsored project that will see stations open in the next few months across Europe.

Iceland's industry minister called the Reykjavik opening a milestone in pollution-free transportation that would show the world that hydrogen was a real commercial possibility.

This first station is not expected to do a roaring trade just yet - there was only a single prototype van on hand in need of a refill.

But in the coming months, the first of Iceland's hydrogen-powered buses goes into service and under the EU programme similar stations will open in Britain, Germany, the Netherlands, Belgium, Spain and Sweden.

Minivan fleet

Even the petrol-hungry United States has recognised the potential for clean, hydrogen vehicles which emit nothing but water vapour.

President George W Bush, in his State of the Union address in January, announced his own $1.2bn development programme.

Nevertheless, it will be at least a decade before the industry starts to become viable.

General Motors is shortly to launch a fleet of six hydrogen minivans costing $1m each.

But, the optimists say, it is the way of the future and by 2013 one-third of all new cars sold could be hydrogen powered.