Researchers have reduced the high-volume cost of automotive fuel cells from $275 per kilowatt in 2002 to $110 per kilowatt in 2005 and lessened the cost of producing hydrogen from natural gas. But Garman said more research is required to meet the cost target of $30 per kilowatt, improve hydrogen storage capacity and lower the expense of producing hydrogen.

"We need time. More money doesn't necessarily help. There is a learning process that has to happen," he told a subcommittee of the Senate Energy and Natural Resources Committee.

Sen. Lamar Alexander, R-Tenn., said lawmakers are trying to work with industry to help develop the hydrogen economy, given the increase in fuel prices and the need for long-term energy solutions.

"Anything that has promise for reducing our dependence on oil from overseas is welcome," said Alexander, who is chairman of the Senate panel.

President Bush in his 2003 State of the Union address proposed a five-year, $1.2 billion program to develop hydrogen fuel technologies, including the production, storage and delivery of the fuel.

With gasoline prices surpassing $3 per gallon, automakers view the technology as a way to move away from a fossil-fuel based system, noting that hydrogen only emits water and can be made from a variety of sources such as natural gas, coal, water and biomass. But the research and fostering of the technology is extremely expensive, and the long-term needs have prompted automakers to seek incentives from the government to develop the industry.

"Since low volume equals high cost in the automotive business, early vehicles even at moderate volumes will still be expensive," said J. Byron McCormick, executive director of fuel cells activities for General Motors Corp. "So we face the proverbial 'valley of death' for new technologies as we attempt to grow the market."