"We use a process that mixes vegetable oil with steam that eventually goes through a catalytic process to produce hydrogen. There are no carbon dioxide emissions and it's completely renewable," researcher Ian Hanley told Reuters by telephone.

Most methods of producing hydrogen - a key component in the fuel's production - involve the use of oil or gas, which themselves create environmental problems.

Hanley said other vegetable oil sources could also be used.

"We're currently using pure vegetable oil, but the idea is to use any kind of oil such as rapeseed or peanut oil.

"Eventually, we'll use waste oils - those thrown out by restaurants and the food processing sector," he said.

The U.K. researchers said that with soaring energy costs propelling interest in the bio-fuel sector globally, there could be great interest in its new power-generating system.

"We're producing hydrogen from vegetable oil, which represents to us a realistic renewable source of energy. With the development of biodiesel infrastructure, particularly in places like France or Germany, there's a lot of potential," he said.

POLLUTION-FREE POWER?

The English scientists also believe that fuel cells, which in principle act like a battery, could eventually be indispensable in providing pollution-free power, taking the place of increasingly expensive sources like oil and gas.

Fuel cells are already being used in many countries but growth in usage has been capped because the hydrogen needed to run them usually comes from burning fossil-based sources.

Environmentalists say investment in fuel-cell technology could eventually lead to dramatic cuts in air pollution.

However, the conventional wisdom has been it will take 10 to 20 years before fuel cells are widely used.