The Japanese government is planning to support companies that help develop hydrogen-fueled electric power plants, earmarking budget funds of ¥2.05 billion for such projects in the next fiscal year.

Companies that build hydrogen-tanker ships, those that convert gas turbines to hydrogen use, and those studying the production of hydrogen from low-quality lignite coal may benefit from the funds, officials said on Sunday.

The need to develop new technology and the high costs involved are significant hurdles to the development of this environmentally friendly power source. Nevertheless, the government wants companies to build a test reactor by 2020 and to begin power generation a decade or so later.

Prime Minister Shinzo Abe said in a policy speech to the Diet last Thursday that Japan is moving toward the “dream of a hydrogen-based society” and is accelerating the installation of hydrogen stations for fuel-cell vehicles, which run on electricity generated by burning hydrogen.

By commercializing hydrogen-powered electric power plants, the government expects the clean energy both to become more commonly used in society and to drive down power costs.

Unlike fossil fuels, hydrogen does not emit carbon dioxide when it is burned. However, power generation solely using hydrogen is currently more expensive than that using natural gas.

The government aims to help bring down hydrogen power generation to economically feasible prices in the latter half of the 2020s by conducting research on production and transportation technologies.

The amount of hydrogen in circulation also needs to be drastically increased from the current 300 million cubic meters per year through such means as producing hydrogen overseas.

An official of the Economy, Trade and Industry Ministry said the government has “yet to foresee” when hydrogen-produced electricity will be widely supplied to ordinary households.

As part of its efforts to promote the use of hydrogen energy, Toyota Motor Corp. launched sales of its Mirai hydrogen-powered vehicle in Japan in December, becoming the world’s first automaker to offer a fuel-cell vehicle to general consumers.