The methods of manufacture include electrolysis of water, "reforming" of natural gas in a chemical reaction, and partial oxidation of coal or oil. As natural gas, coal and oil have a carbon content, hydrogen produced from these sources is not emissions-free, nor is it sustainable. Hydrogen produced from electrolysis of water may or may not be carbon free, depending on the source of the electricity. If it is produced solely from renewables there are prospects for truly low carbon energy systems. But as the International Energy Agency points out, 98% of hydrogen today is derived from hydrocarbons.
If hydrogen is to be used for transport, it can be used in modified spark-ignition engines in motor vehicles, but the process is inefficient, requiring considerable fuel. Far higher efficiencies can be gained by running cars on hydrogen-fed fuel cells. It is this objective that is driving fuel cell research.
Fuel cells can be regarded as a form of battery, with two electrodes separated by an electrolyte. When fuelled by hydrogen and oxygen, an electrochemical reaction occurs which produces direct current electricity. Fuel cells are established and used successfully in a number of applications, including space vehicles, but they are expensive. There are various types and there is worldwide interest in the development of reliable and cost-effective designs.
Hydrogen research is also focused on solving the problem of safety, on investigating which form of the fuel -- liquid, gas, or as a hydride -- is most desirable for given uses, and on how to transport and store it. It is now being claimed that hydrogen could be transmitted in modified natural gas pipelines at lower costs than electricity transmission.
Claims are also being made that on-site electricity generation by small-scale fuel cell units is a desirable goal and that their low overall efficiency can be compensated for in combined heat and power production. The difficulty of matching the demands for heat and electricity, however, particularly in domestic systems, is not easily solved. Moreover, centralised electricity generation for direct use is both cheaper and more protective of the environment. Only when renewables are the dominant energy source does hydrogen provide environmental gains.