The federal government will join with its provincial counterpart and at least one private partner to announce Friday the creation of a hydrogen village near the community of Tignish on the Island's eastern tip. Sources told The Canadian Press on Thursday that the five-year project, estimated to cost about $10 million, will be a pioneering experiment using one of the oldest forms of energy to produce one of the newest.

"The deal with wind energy is that, for the most part, you have to use it while it is being generated," said a federal official.

"This project will test the concept of taking wind energy and storing it for future use through the creation of hydrogen fuel."

The hydrogen village will test whether the gas, which will be produced from electricity produced by a nearby wind farm in North Cape, P.E.I., can be used as a combustible fuel and an electrical power source.

Sources said that power created by the huge windmills at the North Cape farm will be used to convert water into hydrogen fuel.

Several cars and a fishing boat will run on hydrogen fuel in the early stages. The goal is to eventually have several homes in the area powered by hydrogen.

Hydrogen fuel cells run on the energy produced when hydrogen and oxygen are mixed, rather than using gasoline.

The only byproduct of a fuel cell is water.

The technology is already being used in experimental vehicles and as a power supply for some buildings, but widespread use is thought to be at least 15 years away.

U.S. President George Bush has launched a $1.7 billion research program to develop hydrogen as America's next energy source.

He has predicted Americans will drive cars operated by hydrogen-powered fuel cells in less than two decades.

Not all environmentalists embrace the concept of hydrogen fuel cells.

Sharon Labchuk, environmental critic for the Green Party on Prince Edward Island, said the big drawback to widescale hydrogen fuel production is that it takes a great deal of energy to produce it.

"Unless they come up with really good evidence that this is going to make a difference, I think it's just another make-work project for an economically deprived region," Labchuk said.

She said the federal government is seizing on small projects as a way to make it look like it is living up to conditions under the Kyoto agreement.

But Labchuk said radical and fundamental changes are needed to make a real difference in greenhouse gas emissions, including the removal of government subsidies from polluting industries.

In fuel-cell vehicles, hydrogen is used to make electricity to run a motor. Hydrogen also can be used to run modified internal combustion engines, but the pollution reduction is far less.

Hydrogen is very explosive, but experts say the risk can be controlled.