Just a day after confirming it is to expand its grant scheme for electric cars and vans, the government has today stepped up support for a rival green vehicle technology: hydrogen fuel cells.

The Department for Business (BIS) today announced the launch of a new joint government-industry programme dubbed UKH2Mobility, which aims to assess the viability of hydrogen-powered vehicles before developing an action plan to the support the roll out of hydrogen cars and trucks from 2014 onwards.

The initiative is backed by a memorandum of understanding between the government and leading hydrogen technology developers, including Daimler, Hyundai, Johnson Matthey, Nissan, Toyota and Vauxhall, that will see all signatories commit to sharing their knowledge and expertise to support the project.

Specifically, the research programme will analyse the suitability of hydrogen vehicles for the UK, assess the investments required to commercialise the technology, and investigate measures that could help establish the UK as a manufacturing hub for hydrogen technologies.

The group is expected to report back on its initial conclusions on the viability of hydrogen vehicles by the end of this year. If the results are positive it will then begin work on an action plan for supporting the roll out of new hydrogen technologies to be launched around 2014/15.

Supporters of hydrogen vehicle technologies argue that more affordable hydrogen cars, buses and vans are likely to emerge around the middle of the decade while, at the same time, city-wide refuelling networks are also expected to expand over the next few years, making the technology more viable.

Speaking at the launch of UKH2Mobility initiative, business minister Mark Prisk said the project highlighted the government's commitment to a range of different low carbon vehicle technologies.

"The UK is proving itself to be a key early market for ultra-low emission vehicles with growing numbers of electric and plug-in hybrids appearing on our roads," he said. "The government is supporting this market by investing £400m to support the development, demonstration and deployment of these vehicles."

He added that there was a strong case for the government to support hydrogen as well as plug-in electric vehicles.

"Hydrogen fuel cell electric vehicles are increasingly being recognised as one of the viable options as we move to a lower carbon motoring future," he said. "They are highly efficient, can be fuelled in minutes, travel an equivalent range to a conventional combustion engine, and have zero tail-pipe emissions.

"UKH2Mobility will bring together industry expertise to establish the UK as a serious global player in the manufacture and use of hydrogen fuel cell electric vehicles and the supporting infrastructure."

The launch was broadly welcomed by the automotive industry with manufacturers touting the initiative as an opportunity to demonstrate the technical viability of hydrogen technologies.

"This is an important step for the automotive sector towards the development of clean vehicle technologies and zero emission mobility," said Jerry Hardcastle, vice-president for vehicle design and development at Nissan. "It will lay many of the foundations for the commercial deployment of hydrogen-powered fuel cell electric vehicles which could represent a large segment of the UK market in the coming years."

His comments were echoed by Dr Henri Winand, chief executive of fuel cell specialist Intelligent Energy, who argued the industry must now turn its attention to the development of hydrogen refuelling networks.

"Fuel cell vehicles, storage and refuelling technology are here today, [and] they work," he said. "We now need to look at how we can make these elements, together with the hydrogen refuelling infrastructure, work most effectively to enable the UK to take full advantage of hydrogen as a transport fuel; stimulating inward investment, GDP growth and securing and creating new jobs."