Hythane – a mix of methane and hydrogen can cut carbon dioxide emissions by 30% and nitrous oxide by 50%. A hythane mix of 7% hydrogen by energy to 93% methane gives the best combination of cost efficiency and energy reductions, according to Eden Energy.

The fuel can run in existing CNG engines and be delivered from existing fuelling stations, making it fully developed and immediately marketable, the company said.

Eden Energy, a fully owned subsidiary of Tasman Resources, has taken a 20% stake in British company Brehon Energy, which bought the rights to hythane from its US developer.

Brehon Far East Pty Ltd, a partnership between Brehon (51%) and Eden (49%), has established a Hong Kong-based wholly owned subsidiary, Hydrogen China (BVI) Ltd, which has entered into a conditional agreement with China Railway Construction Company to establish a joint venture company to demonstrate, market and roll-out Hythane in China.

China has recently announced a Clean Air program to improve air quality in 15 major cities.

This follows the signing by Brehon Far East Pty Ltd of non-binding memoranda of understanding with several cities in China to undertake a demonstration project prior to undertaking large scale conversions in these cities of public buses to Hythane.

Under the terms of the agreement, China Rail will contribute the first US$1m in working capital, after which both parties will contribute equally.

The agreement is conditional upon board approval of China Rail and to formal agreements acceptable to both parties being executed which the parties have agreed they will try to conclude before 30 April.

China Rail has also agreed, subject to Tasman shareholder approval, to take $2m in Tasman stocks.