DETROIT (AP) - The federal government plans to dole out $52.5 million over three years in research grants to advance hydrogen fuel cell technology, U.S. Energy Secretary Samuel Bodman said yesterday.

In a speech at the Society of Automotive Engineers' annual conference in Detroit, Bodman also said ethanol is key to curbing the nation's dependence on foreign oil.

Universities, national laboratories and private companies will compete for the hydrogen grants starting later this month. They are part of the Bush administration's goal of making fuel cells a viable technology by 2020.

Bodman said two major issues are preventing widespread use of hydrogen fuel cells, which emit no pollutants from vehicles. Fuel cells need more development, and engineers need to figure out ways to store enough hydrogen in vehicles to get the range that drivers need.

Bodman said a third issue - making hydrogen available to the public - likely will be solved by the market once fuel-cell vehicles are on the road.

"I'm a great believer in the free-market system," Bodman told The Associated Press in an interview before his speech. "If we've got vehicles that will use hydrogen and perform in an effective fashion and have range, I believe that we will find effective ways to deliver hydrogen."

Bodman said producing hydrogen from nuclear energy, rather than coal or renewable energy, appears to be the best strategy, but the country will need far more nuclear capacity. No new nuclear plants have been built in the United States in 30 years, he said. Four are expected to come on line by 2015, but the country needs more, he said.

Bodman also said he was pleased last month when General Motors Corp. and Toyota Motor Corp. said they were ending a partnership on hydrogen fuel cell vehicles because the technology was moving into the proprietary stage. Bodman said the end of the partnership is a good sign and shouldn't hinder fuel cell development.

"The closer companies are coming to developing real products that are going to be available in the marketplace, the more reluctant they're going to be to share that information with their competitors," he said.

While fuel cells are in development, Bodman said the government will heavily promote E85, a blend of ethanol that contains 15 percent gasoline. The Department of Energy plans to form a public-private team that will figure out ways to make ethanol more available.

There are about 6 million ethanol-capable vehicles on U.S. roads today, according to the National Ethanol Vehicle Coalition, but many people may not realize their vehicles can run on ethanol and regular fuel. Only 605 fueling stations offer ethanol out of an estimated 170,000 stations nationally, according to the coalition.