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Hydrogen fuel is potentially an alternative to gasoline, creating a hydrogen economy. Car manufacturers such as General Motors, BMW, Ford, Honda, Toyota, etc. are researching potential usefulness of hydrogen to power cars. Because hydrogen in its gaseous state takes up a very large volume when compared to other fuels, hydrogen would be more useful as an energy source in its liquid state. One possible solution is to liberate the hydrogen from its associated carbon in a hydrogen reformer and feed the hydrogen into a fuel cell. Alternatively, some fuel cells (DEFC Direct-ethanol fuel cell) can be directly fed by ethanol or methanol.

In early 2004, researchers at the University of Minnesota announced the invention of a simple ethanol reactor that would feed ethanol through a stack of catalysts, and output hydrogen. The device uses a rhodium-cerium catalyst for the initial reaction, which occurs at a temperature of about 700 °C (1300 °F). This initial reaction mixes ethanol, water vapor, and oxygen and produces good quantities of hydrogen. Unfortunately, it also results in the formation of carbon monoxide, a substance that "chokes" most fuel cells and must be passed through another catalyst to be converted into carbon dioxide. (The odorless, colorless, and tasteless carbon monoxide is also a significant toxic hazard if it escapes through the fuel cell into the exhaust, or if the conduits between the catalytic sections leak.) The ultimate products of the simple device are roughly 50% hydrogen gas and 30% nitrogen, with the remaining 20% mostly composed of carbon dioxide. Both the nitrogen and carbon dioxide are fairly inert when the mixture is pumped into an appropriate fuel cell.

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