A future hydrogen economy may be technologically possible but is unlikely to be developed on a global scale because of its inherent inefficiencies and capital costs. Hydrogen use may become widespread in some countries, however, and excel for limited uses.

Hydrogen is not, strictly speaking, a primary energy source like coal or oil, since there are no hydrogen reserves to drill or mine. Thus any energy system involving hydrogen will have the added cost of first forming the hydrogen.

On Earth, hydrogen is found only in combination with other elements. The familiar H2O water molecule, for example, has two hydrogen atoms bound to a single oxygen atom. To acquire hydrogen in a useable form, it has to be split from other substances. The most common method is to split hydrogen off of the methane molecule, CH4. The vast majority of hydrogen currently produced in the United States comes from a process known as steam reforming, in which steam is reacted with methane at high temperatures and in the presence of a catalyst, releasing carbon dioxide and hydrogen. Another method is electrolysis—ideally using electricity from a renewable source—which strips hydrogen from oxygen in water molecules.

Hydrogen can be burned to power machines such as cars and trucks, to heat homes, or to generate electricity in fuel cells. Its only waste product is water, formed by the reaction with oxygen. Hydrogen fuel cells can be either large centralized facilities or small enough to power a single home. It is a proven, workable fuel: Liquid hydrogen boosts the space shuttle into orbit and hydrogen fuel cells power its electrical systems. A hydrogen economy, however, would be difficult to scale up globally. Fuel cells currently are expensive to build, though once in place, they can provide greenhouse gas–free electricity, especially if the initial electricity used in electrolysis is derived from a renewable energy source such as solar or wind.

Currently, hydrogen use is very modest, but interest in hydrogen is growing because there are no greenhouse gas emissions from burning hydrogen (although greenhouse gas pollution may result from hydrogen production), and the only “waste” product is water. The main barriers to expanded hydrogen use are the huge capital outlays required to develop a national-scale hydrogen production and distribution system, and the low energy return on energy invested.