1. Hydrogen does not occur free in nature in useful quantities. It has to be made, usually by splitting water H2O to get the hydrogen. This requires all the energy you are going to get from burning the hydrogen and a bit more on account of inefficiencies. Therefore, hydrogen is an energy transfer medium rather than a primary source of energy. Hydrogen is obtained by splitting water (H2O) into hydrogen and oxygen. The energy to split the water should be nuclear or solar. Nuclear is cheaper.
2. Hydrogen is the lightest of the elements with an atomic weight of 1.0. Liquid hydrogen has a density of 0.07 grams per cubic centimeter, whereas water has a density of 1.0 g/cc and gasoline about 0.75 g/cc. These facts give hydrogen both advantages and disadvantages. The advantage is that it stores approximately 2.6 times the energy per unit mass as gasoline, and the disadvantage is that it needs about 4 times the volume for a given amount of energy. A 15 gallon automobile gasoline tank contains 90 pounds of gasoline. The corresponding hydrogen tank would be 60 gallons, but the hydrogen would weigh only 34 pounds.
3. When hydrogen is burned in air the main product is water. Some nitrogen compounds may also be produced and may have to be controlled. Should greenhouse warming turn out to be an important problem, the key advantage of hydrogen is that carbon dioxide (CO2) is not produced when hydrogen is burned.
4. Since hydrogen is not available in significant quantities in nature in pure form, the main present way of getting hydrogen is steam methane reforming, and this will probably remain the most economical way as long as methane (natural gas) is available cheaply and in large quantities, and hydrogen is required only in small quantities. When the price of methane goes up to more than three times its present price because of scarcity, hydrogen will be obtained by splitting water H2O into hydrogen H2 and oxygen O2. The chemical reaction is written
2H2O + energy => 2H2 + O2.
The well developed way of splitting water is by electrolysis. If fossil fuels, e.g. coal, oil or natural gas, are used to generate the electricity, there is no advantage over using the fossil fuels directly. Indeed you still get all the CO2, and there is a considerable loss of energy. Therefore, the large scale use of hydrogen depends on using either nuclear or solar electricity. In both the nuclear and solar cases, there are possible but undeveloped technologies that don't use electricity as an intermediate form of energy. [2003 September: There is a thermochemical process for splitting water that is claimed to be twice as efficient as elactrolysis. Here's an article on the sulfur-iodine cycle by Ken Schultz of General Atomic given at a Stanford University Global Climate and Energy sponsored meeting in 2003 April. To get good efficiency it requires reactors operating at a higher termperature (950 C) than present power reactors. Schultz's article also discusses solar thermal production of hydrogen. (There are also proposals to combine getting heat for houses and chemical processes and electrolysis with some saving of energy.)
5. In either case, the law of conservation of energy tells us that all the energy to be obtained by burning the hydrogen must be supplied by the primary source, e.g. nuclear or solar. Of course, since these processes aren't 100 percent efficient, there is some loss of energy. Therefore, the use of hydrogen as an intermediate is justified only when there is some reason not to use the primary source directly. For vehicles the reason is that both nuclear nor solar power plants are too big to carry around, except that nuclear power is suitable for large ships.
6. If there is large scale use of solar energy, the energy is likely to be generated far from where it is used and at a different time. Hydrogen has been proposed as both a storage and transmission medium. It should work for these purposes. I don't know how hydrogen pipelines compare with high voltage electric transmission as means of long distance transmission of energy.
Hydrogen can be transported by pipelines similar to those used to transport natural gas. There are some addtional problems, because hydrogen tends to leak more and can embrittle some metals used for pipelines. The existence of a 240 km hydrogen pipeline in Germany operated by the company Air Liquide provides evidence that these difficulties can be overcome.
In 2004 December I was informed that there is an 879km hydrogen pipeline network in Belgium, France, and the Netherlands operated by Air Liquide.
However, the technology of efficient long distance transport of electric energy may be improved enough to obviate the advantages of hydrogen except for vehicles.