Currently the most cost effective means of producing hydrogen is through steam reformation of natural gas. While this process is efficient, it does produce CO2. Electrolysis of water produces only oxygen and hydrogen but takes more electricity than the energy you can get from the hydrogen produced and is at best 50-70 percent efficient.Bruce Logan and Shaoan Cheng of Penn State University may have devised a mechanism that can produce more hydrogen energy than the energy that must be added to the process. They have developed a bacterial electrolysis cell that can consume a variety of organic compounds and produce hydrogen with only a small amount of electricity added to the process. The total efficiency of hydrogen production ranges from 63 percent for cellulose to 82 percent for acetic acid (vinegar) when both the electricity and the energy in the feedstock are factored in. The process produces 144 percent more hydrogen energy than the amount of electricity added. If the process can be scaled up it could be a major breakthrough in carbon-free hydrogen production.
[Source: PhysOrg, thanks to Jason for the tip]
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