The California Air Resources Board said it wants to encourage a "hydrogen highway" and is making $7.7 million available to help roll out a hydrogen network.

The board said the funds are earmarked for the construction and improvement of hydrogen fueling stations in the Los Angeles and San Francisco areas.

"We are shifting California's economy to clean energy and hydrogen plays an important role," said Mary Nichols, chairwoman of the Air Resources Board.

"We have burgeoning technologies that use hydrogen to power vehicles and in the future could provide electricity for homes. The increased use of hydrogen in the transportation sector would diversify California's energy sources and reduce harmful smog-forming and climate-changing emissions."

The new funding follows the board's recent amendments to the Zero Emission Vehicle program, which reduced a zero emission vehicle quota for car makers doing business in the state (see California reduces zero-emission car quota).

The rules now require the companies to produce 7,500 zero emission vehicles, down from 25,000, for each year from 2012 to 2014.

To comply with the new rules, the automakers have to make 58,000 hybrid and fuel cell cars available in the same period.

The Air Resources Board said some of those fuel cell cars would be dependent on readily available sources of hydrogen.

The board said there are 24 hydrogen stations currently operating in California, with more planned, and roughly 209 hydrogen-powered vehicles operating throughout the state.

The application deadline for companies interested in the new funds is June 13.