As the biggest market in the world, China is a very favorable option for many companies, if they can stand to break into this Asian giant. Ballard Power Systems Inc. (NASDAQ: BLDP) has made steps in this direction using fuel cell technology and partnering up with the Chinese green initiative.

The company announced that it has signed definitive license and supply agreements with both Nantong Zehe New Energy Technology and Guangdong Synergy Hydrogen Power Technology. The agreements are to provide fuel cell power products and other technology solutions to support the planned deployment of an initial 33 fuel cell-powered buses in two Chinese cities.

The deal has an estimated value of roughly $10 million dollars, which is expected to be mostly recognized within 2015.

Randy MacEwen, President and CEO of Ballard, commented on the deal:

We continue to see strong growth opportunities in China’s mass transit market where fuel cells are increasingly being discussed as the next generation of clean propulsion. This demand is being driven by China’s growing need for clean urban mass transit and air quality policies.

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Just a few years ago, China’s carbon dioxide emissions from fossil fuels accounted for 29% of the global total, which was nearly double the 15% produced in the United States. As a result of air quality issues, a new energy program was launched in 2011. This program involved 48 Chinese cities with the goal of expanding public transit, while also reducing the number of vehicles in cities.

As part of this initiative, Ballard announced, back in April, that the world’s first hydrogen fuel cell powered, fixed-rail electric tram was successfully demonstrated at the production and testing facility of CSR Qingdao Sifang company.

Also in February, another contract worth about $80 million added about $140 million to the market cap of Ballard. The transaction with Volkswagen and Audi called for the transfer of some auto-related fuel cell intellectual property and a two-year extension to an existing engineering services contract that Ballard has with the companies.

One way that China is supporting this initiative toward a greener future is through subsidies of about $150,000 per bus (fuel cell or electric) through 2017. Additionally, hydrogen fueling stations are eligible for a further subsidy of roughly $650,000.

Shares of Ballard closed Friday down 0.5%, at $2.10 on a 52-week trading range of $1.41 to $4.52. In premarket trading Monday, shares were up 10.7% at $2.33. The stock has a consensus analyst price target of $2.66.

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