A catalyst based on the metals rhodium and ceria is said to be fundamental to the development of the first reactor capable of producing hydrogen from a renewable fuel source in a commercially viable manner.

When combined with a hydrogen fuel cell, the unit, which uses ethanol as the renewable fuel, can generate one kilowatt of power.

Invented by engineers based at the University of Minnesota, the technology overcomes the major barrier to the emergence of the hydrogen economy - the lack of free hydrogen.

Hydrogen is currently only produced by a process called steam reforming, which requires very high-temperatures and is therefore only economically viable in large-scale refineries.

Lanny Schmidt, Regents Professor of chemical engineering at the university elaborated: 'The hydrogen economy means cars and electricity powered by hydrogen. But hydrogen is hard to come by. You can't pipe it long distances.

'It's expensive, and because it uses fossil fuels, it increases carbon dioxide emissions, so this is only a short-term solution until renewable hydrogen is available.'

However, using ethanol, which is readily available and easy to use, to produce hydrogen is a much more efficient process.

Ethanol collected from corn is already used to power car engines but if it is broken down for use in a hydrogen fuel cell, much more of its latent energy is harnessed.

'We can potentially capture 50 per cent of the energy stored in sugar [in corn], whereas converting the sugar to ethanol and burning the ethanol in a car would harvest only 20 percent of the energy in sugar,' said Schmidt.

'Ethanol in car engines is burned with 20 percent efficiency, but if you used ethanol to make hydrogen for a fuel cell, you would get 60 per cent efficiency.'

He added that the invention is dependent upon two innovations - a catalyst using the metals rhodium and ceria and an automotive fuel injector that vaporizes and mixes the ethanol-water fuel.