The pilot project, which could be expanded to Scotland, is funded through the EST's PowerShift division, which helps to generate demand for alternative fuels.
It will part fund the installation of LPG storage tanks, pumps and dispensers for up to three rural petrol stations in the Gwynedd Council area. Environment minister Sue Essex launched the demonstration project on Friday in Trawsfynydd.
She said: 'While the clean fuel market is expanding, it is not yet fully sustainable in Wales. In line with the Assembly's commitment to develop a sustainable transport system, this project aims to help remove the barriers to the establishment of a market particularly in rural areas where access to clean fuels is less likely to be provided.'