The interesting thing about the first option is that it is the core of the real hydrogen economy. To have a pure hydrogen economy, the hydrogen must be derived from renewable sources rather than fossil fuels so that we stop releasing carbon into the atmosphere. Having enough electricity to separate hydrogen from water, and generating that electricity without using fossil fuels, will be the biggest change that we see in creating the hydrogen economy.
How do you store and transport the hydrogen?
At this moment, the problem with putting pure-hydrogen vehicles on the road is the storage/transportation problem. Hydrogen is a bulky gas, and it is not nearly as easy to work with as gasoline. Compressing the gas requires energy, and compressed hydrogen contains far less energy than the same volume of gasoline. However, solutions to the hydrogen storage problem are surfacing.
For example, hydrogen can be stored in a solid form in a chemical called sodium borohydride , and this technology has appeared in the news recently because Chrysler is testing it. This chemical is created from borax . As sodium borohydride releases its hydrogen, it turns back into borax so it can be recycled.
Once the storage problem is solved and standardized, then a network of hydrogen stations and the transportation infrastructure will have to develop around it. The main barrier to this might be the technological sorting-out process. Stations will not develop quickly until there is a storage technology that clearly dominates the marketplace. For instance, if all hydrogen-powered cars from all manufacturers used sodium borohydride, then a station network could develop quickly; that sort of standardization is unlikely to happen rapidly, if history is any guide.
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