The hydrogen economy is an envisioned future in which hydrogen is used as a fuel for heat and hydrogen vehicles, for energy storage, and for long distance transport of energy. In order to phase out fossil fuels and limit global warming, hydrogen can be created from water using intermittent renewal sources such as wind and solar, and its combustion only releases water vapor to the atmosphere.Hydrogen is a powerful fuel, and a frequent component in rocket fuel, but numerous technical challenges prevent the creation of a large-scale hydrogen economy. These include the difficulty of developing long-term storage, pipelines and engine equipment; a relative lack of off-the-shelf engine technology that can currently run safely on hydrogen; safety concerns due to the high reactivity of hydrogen fuel with environmental oxygen in the air; the expense of producing it by electrolysis; and a lack of efficient photochemical water splitting technology. Hydrogen can also be the fuel in a fuel cell, which produces electricity with high efficiency in a process which is the reverse of the electrolysis of water. The hydrogen economy is nevertheless slowly developing as a small part of the low-carbon economy.As of 2019, hydrogen is mainly used as an industrial feedstock, primarily for the production of ammonia and methanol, and in petroleum refining. Although initially hydrogen gas was thought not to occur naturally in convenient reservoirs, it is now demonstrated that this is not the case; a hydrogen system is currently being exploited in the region of Bourakebougou, Mali, producing electricity for the surrounding villages. More discoveries of naturally occurring hydrogen in continental, on-shore geological environments have been made in recent years and open the way to the novel field of natural or native hydrogen, supporting energy transition efforts. As of 2019, almost all (95%) of the world's 70 million tons of hydrogen consumed yearly in industrial processing are produced by steam methane reforming (SMR) that also releases the greenhouse gas carbon dioxide.A possible less-polluting alternative is the newer technology methane pyrolysis, though SMR with carbon capture also has much reduced carbon emissions.
Small amounts of hydrogen (5%) are produced by the dedicated production of hydrogen from water, usually as a byproduct of the process of generating chlorine from seawater. As of 2018 there is not enough cheap clean electricity (renewable and nuclear) for this hydrogen to become a significant part of the low-carbon economy, and carbon dioxide is a by-product of the SMR process, but it can be captured and stored.