Fuel cell technology is making rapid progress, but still costs far too much and lacks the infrastructure that motorists will need to tank up, senior researchers told a conference this week hosted by Germany's Handelsblatt newspaper.

DaimlerChrysler's Christian Mohrdieck said the world's number five carmaker's goal was to make petrol engines as efficient as diesels and to make diesels as clean as petrol engines in a constant process to tweak existing technology.

"This will be an important subject for us for at least the next two decades," he said.

Eventually the two most common types of engines will converge into one that taps the best features of both, he said.

Volkswagen's Wolfgang Steiger agreed, forecasting the emergence of a combined combustion system by the middle of the next decade which will sharply reduce emissions of the soot and nitrogen oxides that diesels now create.

Petrol engines -- long ceding market share in Europe to fuel-sipping diesels -- are getting a new lease on life from performance-boosting technologies such as direct fuel injection.

This was keeping them relevant even while hybrids -- which combine a standard engine with electric motors and batteries that in full-blown form let a car run on battery power alone at low speeds -- gain popularity.

HYBRIDS ARISE

German automotive supplier Continental AG suggested sales of hybrids could rise to nearly 2 million vehicles a year by 2012, while Robert Bosch saw sales at 2.4 million units by 2015, mostly in North America and Asia.

Toyota Motor Corp, the hybrid market leader, sees its annual hybrid sales topping 1 million units soon after 2010.

Barring a breakthrough in battery technology that would make electric cars attractive, fuel cells are the ultimate goal for researchers keen to limit the environmental impact of transport.

As an abundant, clean energy source, hydrogen is a natural choice for a world facing a limited supply of increasingly expensive fossil fuels. But estimates differ widely on when fuel cells will catch on after initial estimates were far too bold.

"Based on our better understanding of the technology now, we will have the start of commercialisation in 2012 at the earliest. By around 2015 we will have an overall fleet of up to 100,000 vehicles world-wide and, in my view, from around 2020 at the earliest fuel cell cars will make up a single-digit percentage of new car registrations," Daimler's Mohrdieck said.

VW's Steiger was more wary, suggesting fuel cell cars would start to appear in real numbers by 2020, but then take 10 years to get a market share of 1 percent, 10 more years to reach a 10 percent share and 10 more to reach half the market for new cars.

Gerhard Schmidt, Ford Motor Co research head, said forecasting a 50 percent market share by 2050 seemed optimistic.

On the other hand, governments could promote fuel cells by levying London-style congestion fees on polluting cars. "Immense pressure could suddenly build up to deliver zero-emission vehicles," Schmidt told Reuters.

Charles Stone, research head at Canadian fuel-cell company Ballard Power Systems Inc, acknowledged that cost and durability were the biggest challenges.

"If it had a market share of 50 percent by 2050, I would die a very happy man," he said.

Lawrence Burns, General Motors' head of research and development, gave an upbeat picture for fuel cells. The goal, he said, was to cut the cost of hydrogen to US$2-US$3 per kg, about the same cost of running a car at US$1-US$1.50 per gallon of petrol.