LONDON, England (CNN) -- London may be well known for its big red buses, but things are turning green on the city's streets.
The English capital is one of 10 European cities trialing environmentally friendly hydrogen-fueled buses.
The European Union has co-financed the two-year Clean Urban Transport for Europe (CUTE) project, with the support of the European Commission Directorate-General for Energy and Transport.
The buses are part of a scheme to reduce greenhouse gas emissions and noise pollution.
They run on hydrogen gas, which is contained in six cylinders in the roof of each bus.
The fuel-cell system turns the gas into electrical power and the only emission is water, which forms a cloud of steam as soon as it leaves the exhaust and enters the atmosphere.
The hydrogen-fueled buses have fewer seats than conventional models, are quieter and cost a lot more.
Colin Matthews, head of Transport Energy Programs for London's Energy Saving Trust, says the buses cost about $1.2 million.
A traditional bus costs roughly $150,000.
The Energy Trust has subsidized London's fleet of three fuel cell buses, which began operating in January.
Matthews believes that in the future, fuel cells will provide an answer to transportation energy problems.
The British Government wants 600 low-carbon buses introduced to UK roads every year until 2012.
Other cities participating in the CUTE project include Amsterdam, Barcelona, Hamburg, Luxembourg, Madrid, Porto, Stockholm and Stuttgart.
Australian city Perth will get its own hydrogen-fueled buses later this year as part of the trial.
Iceland, meanwhile, said earlier this year that it wants to be the world's first hydrogen-based economy, aiming to achieve the goal within the next 20 years.
It plans to convert cars, buses and fishing trawlers to run on hydrogen fuel.