A project on developing hydrogen fuel cells was launched to build a "hydrogen city" in Jinan, east China's Shandong Province on Wednesday.

The project, launched by China's Ministry of Science and Technology, aims to advance research and development of core technology related to hydrogen, promote the application of hydrogen fuel cells in vehicles, and push forward the development of a hydrogen-powered vehicle industry.

Shandong Heavy Industry Group (SHIG) signed agreements with Ballard Power Systems and Westport Fuel Systems from Canada, leading companies in the industry, to develop engines fueled by hydrogen and natural gas, respectively.

The local government also initiated cooperation with SHIG, aiming to produce hydrogen-powered buses in the next three to five years.

With an investment of 1.98 billion yuan (290 million U.S. dollars), Weichai Power, an automotive and equipment manufacturing group under SHIG, will work with 12 other companies as well as universities and research institutes to improve the sustainability and adaptability of fuel cells, said Tan Xuguang, chairman of the board of SHIG and CEO of Weichai Power.

According to China's guideline on strategic emerging sectors in the 13th Five-Year Plan, the country will promote research and development of fuel cells, step up building hydrogen stations, and achieve the mass production of fuel cell vehicles by 2020.