Hithane bridges the gap between petrol and fuels under development

A mixture of hydrogen and methane, the fuel produces less pollution than petrol, and has already been used in trials in Canada and the US.

Now the Irish-registered company which owns the rights to the fuel wants to make its European base in Wales

Scientists have identified a suitable site to produce the fuel at Port Talbot, south Wales.

Greg Egan, chief executive officer of the firm developing hithane Brehon Energy, said: "Hithane has been tested in small scale projects on buses in Montreal and California and had very significant emission reductions.

"What we would like to do is to distribute the fuel in Europe and Wales seems the perfect place to do that."

The challenge of alternative fuels is actually to get the consumer to accept it Professor Garel Rhys

Burning hithane produces a third less carbon dioxide than petrol and European governments are under pressure to reduce carbon dioxide emissions because of the Kyoto treaty on reducing greenhouse gases.

Hydrogen powered buses are already being used in London as part of a two-year trial, and the Welsh Development Agency wants to make Wales a pioneer in alternative fuels like hithane and hydrogen.

Experts from the Hydrogen Research Unit at the University of Glamorgan say hithane offers an exciting intermediate stage.

"I think hithane is a good transition step towards a hydrogen economy," said the unit's John Maddy.

"Removing carbon from the energy chain is always valuable. It reduces the carbon dioxide that's produced and therefore this is a great benefit to the environment".

Buses running on hydrogen are already in service in London

Despite rising oil prices, there is still a long way to go before the gas is accepted commercially - just 250,000 of the 50 million cars sold annually are powered on alternative fuels.

Car industry expert Professor Garel Rhys from Cardiff Business School said consumer resistance still has to be overcome.

"The challenge of alternative fuel is actually to get the consumer to accept it - in other words it has to be commercially viable.

"When a person buys a car they are already thinking of selling it in the used car market," said the professor.

"Therefore they have to be sure that other people are as keen about the attributes of the car as you are".