Pure hydrogen gas rarely occurs in nature. As there are no reserves of pure hydrogen on the planet, hydrogen must be extracted from other compounds if it is to be used a fuel source. For example, in the process of hydrolysis, electrical current is passed through water to break it down into hydrogen and oxygen according to the following reaction: 2H2O + electricity --> 2H2 + O2. The reverse reaction -- the combustion (oxidation) of hydrogen -- is the process by which energy is created in the H2R's engine: 2H2 + O2 --> 2H2O + energy.
As you can see, the only by-product of this reaction is water, which makes the combustion of liquid hydrogen a clean-burning alternative to the combustion of fossil fuels. Unfortunately, as hydrogen does not occur naturally in its pure state, an initial input of energy is required to separate pure hydrogen from other naturally occurring compounds. Essentially, we need to use "dirty" energy to produce "clean" energy. The BMW Group is researching ways to generate the initial energy input in environmentally friendly ways, such as through wind, solar or hydroelectric power.
The use of liquid hydrogen as a fuel source is not a new concept. The aerospace industry already uses liquid hydrogen in rockets and spacecraft, and liquid hydrogen is being considered for use in airplanes because of its low density. Hydrocarbon-based fuels are very heavy; an equal volume of liquid hydrogen weighs less and produces nearly three times more power than gasoline.