The U.S. and Sweden announced the two countries will provide the Volvo Group $18 million for the development of hybrid driveline technology.

The grant, provided by the U.S. Dept. of Energy and the Swedish Energy Agency, is for three years, extending an existing one-year agreement originally signed in June 2007.

“The climate issue and increasing fuel prices make energy use and energy efficiency some of the most important societal issues of our time,” said Leif Johansson, CEO of the Volvo Group. “The transportation industry has a special responsibility and this research and development cooperation with the U.S. government is crucial in our efforts to develop the drivetrains and technology required by both our customers and society as a whole.”

Each country will invest $9 million and the Volvo Group will provide $18 million in additional funding, according to the deal.