Renewable and emission-free, hydrogen is being hailed as the fuel of the future. From cars to power plants, hydrogen could be the key to unlock the world from its dependency on oil.

This week Earth Report travels to Iceland, which is already on its way to realising an oil-free future, and to California where auto companies are test-driving their new hydrogen powered cars. But how far away is our hydrogen future?

Out with the old:

Our dependency on oil is not just an economic problem, we've killed each other over it, destroyed our health and habitats.

Renewable sources such as geothermal or solar energy are the obvious solutions. But how do we harness this energy for everyday use - especially in the cars we drive?

A hydrogen future:

Thirty years ago, Professor Bragi Árnason dreamt of harnessing Iceland's geothermal energy to build an alternative, clean economy using hydrogen, not oil.

Thirty years later, Professor Bragi Árnason has almost realised his dream. Iceland has already tapped its renewable geothermal and hydroelectric power to produce electricity. It's distributed all over Iceland and even powers a hydrogen plant on the outskirt of Reykjavik, the capital.

At the plant, 3,300 amps of electrical current surge through tightly packed electrolytic cells splitting water into hydrogen and oxygen. The hydrogen is stored in a gasometer and used to make fertiliser - but it could also be used to power buses, cars and ships.

The power of hydrogen:

The key technological breakthrough is the hydrogen fuel cell. Although developed over 100 years ago, till now no one could make it small or powerful enough.

A fuel cell is a sandwich of two plates coated with a catalyst on either side of a plastic membrane. Hydrogen and oxygen are fed through channels in the plates - hydrogen on one side, oxygen on the other.

The hydrogen and the oxygen are attracted to one another, but only part of the hydrogen can pass through the membrane. The other part, the electron, has to take the long way around an external circuit - creating electricity.

When the oxygen joins with the hydrogen they produce the harmless by-products of pure water and heat.

By combining single cells to make a fuel cell stack, engineers can produce enough electricity to power a skyscraper or a large vehicle like a bus.

Emission-free cars?

The world's leading car manufacturers have already produced fuel cell cars - powered by compressed gaseous hydrogen. These cars may sound futuristic but they look and behave like any other car with one exception - they emit nothing but clean, distilled water.

Dual combustion engines:

An alternative is BMW's hydrogen car, which dispenses with the expensive fuel cell engine and instead burns hydrogen in a normal car engine. The downside is that while fuel cells run at 50% efficiency, internal combustion engines with hydrogen can only run at around 20% efficiency.

BMW's solution is to increase its efficiency by using liquid, rather than gaseous, hydrogen - concentrating the fuel. But this is more expensive which require different gas stations.

The hidden costs:

With mass production, manufacturers believe they can make hydrogen cars affordable. Even so, the major obstacle is providing enough outlets to buy hydrogen fuel to make it worth the consumers while.

Hydrogen producers have come up with a novel home re-fueling option. A night connected to the re-fueller will give a fuel cell car 60 to 70 miles worth of power and all for around $7US.

But until the infrastructure is in place, hydrogen cars may be a long way off for most cities and consumers.

Forcing a pollution-free future:

While car manufacturers slowly develop their pollution-free alternatives, the state of California has upped the stakes by introducing a zero-emission mandate.

California is insisting that major car companies produce 10% of their cars with low emissions by 2003 - or they don't sell any cars in their state. It's too tall an order for most of the auto companies. Only Ford has accepted the challenge. The rest are balking.

Although the California Air Resources Board has agreed some added flexibility to the mandate, they're keeping the pressure on the auto companies high.

And it seems to be working. Both big auto and big government are working together to develop partnerships and using forums like the World Business Council for Sustainable Development to resolve conflicts and hasten the development of renewable fuels.

The hydrogen age commeth:

While the rest of the world struggles with the day-to-day reality of hydrogen power, there's one place that's immune to these power struggles.

By the year 2030 Iceland will not only be using these fuel cell cars and buses - the whole country will be powered by hydrogen.

Thirty years on, Professor Bragi Árnason's a dream is becoming a reality.