The promise of using hydrogen as a next-generation, ultra-clean, high-energy-density fuel source has existed for decades. It sounds like a great idea, especially when you pin your hopes to projections that span decades into the future. If only the industry could hammer out some technological inefficiencies, the world could be powered by a cheap fuel that produces water vapor when combusted and offers similar driving ranges to current gasoline-powered vehicles. Automakers such as Toyota (TM 1.90%) and General Motors (GM 2.25%) have already poured large amounts of money into developing fuel cell technology. Surely they can't be wrong, right?

While successfully developing any disruptive new technology requires a hefty budget and interdisciplinary collaboration, consumers and investors shouldn't hold their breath while awaiting the arrival of the Hydrogen Economy. The day will surely come when hydrogen fueling stations dot the nation's highways in abundance, but if that day is decades away, it probably isn't a viable investing opportunity. It certainly isn't as great of an opportunity as other alternative fuel technologies being developed by Clean Energy Fuels (CLNE 6.15%) and Tesla Motors (TSLA 2.99%)

All of the optimism surrounding research into fuel cell development overlooks one giant obstacle preceding their utilization: production of hydrogen fuel.

Not your grandfather's production
Don't be mistaken: The world knows how to produce hydrogen directly and as a byproduct of several industrial chemical processes. The problem is producing enough to sustain a respectable automobile fleet that can travel freely throughout the country. Consider how daily domestic hydrogen production has fared over the past several decades.

Of course, introducing hydrogen vehicles would create an incentive to increase production -- and one technology is ready to capitalize on the opportunity. Steam reforming shows promise for producing large amounts of hydrogen from natural gas, which the National Renewable Energy Laboratory estimates could be produced, transported, and dispensed for nearly $4 per gasoline equivalent gallon. There is also the potential for natural gas to be transported directly to fueling stations and converted to hydrogen fuel onsite. The production process would still generate greenhouse gases -- albeit far fewer over the fuel's lifetime compared with petroleum fuels -- and require generous amounts of energy. There's also little incentive to introduce an additional step to manufacture hydrogen when natural gas serves as a viable alternative fuel itself.

In fact, in 2011 natural gas fuel provided by companies such as Clean Energy Fuels was 1,416 times more abundant than hydrogen fuel, while electric fuel (in gasoline equivalency) was 44 times more abundant. Heck, even propane and 85% ethanol fuels were 715 times and 788 times more abundant, respectively. When's the last time you read about the great Propane Economy?

The Department of Energy has invested heavily in developing fuel cells and the technologies needed to produce commercial quantities of hydrogen fuel. While advances have been made for a variety of innovations ranging from microbial production of hydrogen to pipeline technologies, there are still cost-prohibitive obstacles relating to transportation, storage, and, most importantly, production.

Don't take my word for it, though. In 2011, General Motors CEO Daniel Akerson commented on the long-term realities of hydrogen fuel cell vehicles:  

We're looking at hydrogen fuel cells, which have no carbon emissions, zero. They're very expensive now, but we've, just in the last two years, reduced the price of that technology by $100,000.

The car is still too expensive and probably won't be practical until the 2020-plus period. And then there's the issue of infrastructure.

Tesla Motors' Elon Musk has been a vocal critic of hydrogen fuel, too, although that is to be expected from the head of a company developing a competing alternative-fuel vehicle. Nonetheless, most cost projections for a viable hydrogen fuel market rely on a Catch-22 scenario. For instance, the Department of Energy estimates fuel cell technologies to be competitive by 2017 if 500,000 vehicles are produced each year to support them. A robust national infrastructure is required to justify those production levels, but investments in infrastructure require a large customer base. That presents a slight problem.

Fueling tomorrow, today?
I'm certainly a technological optimist and believe that hydrogen fuels could indeed fuel tomorrow, but investors must temper their expectations when defining "tomorrow." Will it arrive at the end of the decade, by the middle of the next decade, or sometime further into the future? The fact that automobile companies are exploring fuel cell technologies shouldn't convey that the opportunity is inevitable in the near term. Vehicle manufacturers are simply (and wisely) not gambling the future of their fleets away on any one technology. I suggest investors follow suit until more progress is made on key technological fronts for hydrogen fuel, especially production.