Hydrogen is often put forward in ignorance as an alternative to fossil fuels because when burned, the byproduct is water instead of carbon, nitrogen, and sulfur dioxides. Hydrogen is viewed as a potential replacement for diesel fuel and gasoline because it can be used in applications - most notably motor vehicles - where electricity alone cannot easily provide a similar level of functionality with existing technology.
Unfortunately, the process of producing hydrogen as currently performed requires large amounts of energy - usually obtained from burning fossil fuels, releasing large amounts of carbon dioxide. The most common feedstock for hydrogen production is also fossil fuels - usually natural gas - and that particular manufacturing process also releases large amounts of carbon dioxide independently of energy production.
However, there exists a method of producing hydrogen that need not involve fossil fuels at any point. The needed energy is obtained from the Sun, and the feedstock is water. And unlike in conventional hydrogen fuel cells, the reaction allows the water byproduct of burning hydrogen to be used to create hydrogen again - almost perfect recycling.
What's the secret ingredient? It's algae.
When certain species of photosynthetic algae and cyanobacteria are deprived of sulfur, their metabolisms change radically. The solar energy they absorb begins to be used to split water, and they no longer emit oxygen as a waste product, but instead begin to emit hydrogen.
These are not genetically engineered algae and bacteria - though scientists are working on creating strains that generate hydrogen in greater quantities - but species that can be found anywhere, and need only be raised in the necessary numbers.
The algae or cyanobacteria cannot be kept in a hydrogen-producing state indefinitely. They are of course mortal, and can only reproduce - necessary to maintain the population - if given sufficient time to perform normal, non-hydrogen-producing photosynthesis. This means that sulfur needs to be introduced to the algae's environment at regular intervals while also being supplied with sunlight. However, this solves the problem of the source of oxygen required to burn the hydrogen and create new water to be recycled in the system. Two or more ranks of bioreactors would be required in any application: one producing hydrogen, the other(s) photosynthesizing normally, supplying the system with oxygen, and where possible, perhaps also a surplus of oxygen.
Think of it: a closed cycle device that uses hydrogen-producing algae alongside algae photosynthesizing normally to split water into hydrogen and oxygen, which are burned to create water again, releasing useful energy in the form of heat. You now have the basis for a hydrogen infrastructure and economy which overcomes the principal objections to conventional sources of hydrogen: the massive amounts of energy required and the massive amounts of carbon dioxide released.
I know what you're thinking: I'm getting dangerously close to violating the Second Law of Thermodynamics and proposing a perpetual motion machine. You're right, this system does require a continuous input of energy from outside; however, in the case of photosynthetic algae, that energy comes from the Sun, both renewable and nonpolluting.
The principal disadvantage is that since the chemical reactions require sunlight, the bioreactors will not function at night, and so this technology cannot be used for applications that must operate at night, including base load electricity generation, unless of course the hydrogen and oxygen created are stored to be burned at night, generating electricity in a more conventional way through boiling water to create steam to turn a turbine and generator.
Links:
Biophotolysis
Photobiological Hydrogen Production