May 30 (Bloomberg) -- The European Union approved a 940 million-euro ($1.5 billion) research initiative to spur the development of hydrogen-powered cars, seeking to reduce air pollution and reliance on imported oil.

The program is due to be 50 percent financed by companies including Royal Dutch Shell Plc and Bayerische Motoren Werke AG and 50 percent funded by the EU over six years. Hydrogen produces no pollutants such as carbon dioxide when used as fuel in combustion engines or fuel-cell systems, helping Europe cut emissions and diversify energy supplies.

The program, endorsed by EU research ministers today in Brussels, aims to accelerate the commercialization of hydrogen and fuel-cell technologies, allowing ``commercial takeoff'' between 2010 and 2020. Existing market barriers include the cost and durability of fuel cells, the sustainable production of hydrogen and the safe distribution and storage of hydrogen.

The EU is creating public-private partnerships in research and development to help raise R&D spending to 3 percent of gross domestic product from 1.8 percent and bridge the gap with the U.S. and Japan. The goal is to overcome fragmentation in Europe by concentrating EU funds and enticing companies to invest more.

EU governments have already approved research initiatives worth a total of 9.3 billion euros for electronics, computers, medicines and airplanes. These four programs and the hydrogen- car initiative were proposed by the European Commission, the 27- nation EU's executive arm.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

Last Updated: May 30, 2008 06:03 EDT