I personally dont know anything about the propulsion system. From further reading though they are diesel boats and just augmented with the air-independent propulsion system.
Well here is some more info on it.
Type 212
The German Type 212A is an advanced design of non-nuclear submarine developed by Howaldtswerke-Deutsche Werft AG (HDW). It features air-independent propulsion using nine 34-kilowatt Siemens hydrogen fuel cells, allowing the submarines to cruise under water for weeks without surfacing, silently, and with no exhaust heat. HDW is the first shipyard in the world to offer a fuel cell propulsion system ready for series production.
An initial order of four Type 212 submarines was placed by the German government in 1998. Because of significant updates to the design the designation was changed to Type 212A since then. They were built by the German Submarine Consortium at the shipyards of HDW and Thyssen Nordseewerke GmbH (TNSW) of Emden. Very similar to the way Airbus builds aircraft, different sections of the submarines were constructed at both sites at the same time and then half of them were shipped to the respective other yard so that both HDW and Thyssen Nordseewerke assembled two complete submarines each.
Salvatore Todaro, a Type 212A built by Fincantieri for the Marina Militare (Italian Navy), is scheduled to be commissioned in 2005, and her sister Sciré is under construction. Two more Italian Type 212s are planned.
Three Dolphin class submarines built for the Israeli Navy are of a similar design, but using conventional diesel-electric propulsion.
http://en.wikipedia.org/wiki/Type_212_submarine