updated 1/19/2011 3:57:11 PM ET 2011-01-19T20:57:11

Chrysler and the Environmental Protection Agency are trying to adapt an engine technology invented by the EPA to improve gas mileage in minivans.

The company and the government agency said Wednesday they're working to fit the EPA's hydraulic hybrid system into Chrysler minivans. If it works, the system could boost minivan mileage 35 percent to around 27 miles per gallon. Currently the top Chrysler minivan gets 20 mpg in combined city and highway driving.

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The agreement was announced as Chrysler and other auto companies seek new technologies to help to meet stricter government fuel economy regulations that call for a fleet average of 35.5 miles per gallon by 2016, nearly 10 miles per gallon more than now. The standards could go as high as 47 mpg to 62 mpg by 2025.

The system, patented by scientists at the EPA's laboratory in Ann Arbor, Mich., is now used in more than a dozen trash and package delivery trucks in Florida and Michigan. About 50 more trucks are on order from manufacturers that have licensed the system. It uses energy from the truck's conventional engines and brakes to pump fluid into a tank under high pressure. The fluid is released and runs hydraulic motors that power the truck, and the conventional engine is turned on only when needed to pressurize the tank.

"The technology has been very successful for stop-and-go type driving in large trucks," said David Haugen, manager of technology development at the EPA lab.

Chrysler, which is 10 percent owned by the U.S. government because of a $12.5 billion bailout in 2009, had the lowest fleet gas mileage of any major automaker in 2009 at 19.2 mpg.

The collaboration won't create any new jobs, at least not immediately. But the EPA will spend $2 million during the next 18 months to develop the technology and Chrysler will provide engineering from within its current ranks.

Once Chrysler and the EPA figure out whether the technology can work in a minivan, they'll discuss licensing the system for commercial use, said Gina McCarthy, assistant EPA administrator. Other companies also may be eligible to license the technology, McCarthy said.

The system is rather large and would have to be slimmed to work in a minivan, but the van has space to hold the system, Chrysler CEO Sergio Marchionne said.

Marchionne also said Chrysler is still working with the U.S. Department of Energy to get about $3 billion in loans to develop fuel-efficient technologies, but the EPA project would not be included in the loans. The Energy Department is trying to work out collateral from Chrysler to back the loans, Marchionne said.

He said he's concerned that it's taking longer than anticipated to get the money, which he expected to get by the end of last year. Chrysler has managed to pay for work on its own thus far, but Marchionne said he would still like the government loans to help develop engines, transmissions, frames and other components.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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