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Shell opens first hydrogen retail site in Iceland

LONDON, April 24 (Reuters) - Royal Dutch/Shell opened the world's first hydrogen gas retail station in Iceland's capital Reykjavik on Thursday, which will be used to power commercial buses, the energy major said.

Fuel cell buses made by DaimlerChrysler will use the compressed hydrogen to produce electricity with no emissions of greenhouse gases, which are blamed for global warming.

"Today's opening is an important stepping stone along the long road to a commercially viable hydrogen future," Jeroen van der Veer, president of Royal Dutch Petroleum Company, said in a statement.

Fuel cell cars are seen as an environmentally friendly future alternative to combustion engine vehicles, though its limitations so far include the high cost of producing them as well as problems in storing and distributing the hydrogen.

"I think it's the first commercial hydrogen site, with the few others out there in Germany, Japan and the United States supplying just to (fuel cell) users," said David Jollie, editor of the Fuel Cell Today website.

"But the high population density in Reykjavik and the relatively few routes mean you don't need many stations to supply the country, whereas in the U.S. you would need far more," he said.

The hydrogen plant, made by Norwegian energy company Norsk Hydro , will produce the fuel on site by electrolysis of water. All of Iceland's electricity is already generated from hydroelectric and geothermal sources.

Shell said it would open hydrogen dispensers at retail stations in Washington DC and in Tokyo later this year.