Fuel cells produce electricity from hydrogen in a process that dates back to the 1830s, yet high costs have historically made the technology better suited for Apollo space missions and Soviet submarines.

In recent years, the technology has made big strides and prices are falling. And because the process produces little or no greenhouse gases, hydrogen power stands to get a boost in the wake of President Barack Obama's recent call for tighter controls on US carbon emissions.

It's still early days for hydrogen power and prominent sceptics, including former US energy secretary Steven Chu and Tesla Motors chief executive officer Elon Musk, have questioned whether the technology will catch on. Hydrogen currently provides less than 1 per cent of power worldwide, while coal and gas produced 67 per cent of US electricity in 2012, according to the Energy Information Administration. Chu, who was appointed by Obama, called for a 44 per cent reduction in funding for hydrogen research.

"People have been working to improve fuel cells for over 150 years and it's still not commercially viable," said Joseph Romm, a senior fellow at the Centre for American Progress, a Washington-based think tank.

There are only about 1,000 cars and buses in operation worldwide today using hydrogen technology. There are nine hydrogen filling stations in California, with 48 more under development. California promises to boost that number to about 100 over the next several years. By comparison, there are 160,000 traditional filling stations across the country.

AT&T is the largest non-utility fuel cell customer in the US. It has 17.1 megawatts of fuel cells operating at 28 sites in California and Connecticut. The systems offer cleaner power that's more consistent than electricity supplied by the grid, said John Schinter, the company's assistant vice-president of energy and smart buildings.

"For us, reliability is so critical and these help us ride through power disruptions," Schinter said. "We deploy fuel cells in our high-cost markets, so these actually reduce our operating costs. We're definitely planning to expand."

Proponents of hydrogen say all this activity will soon spill over to the car market, and it's already happening in southern California. Hyundai will begin deliveries of its fuel-cell Tucson SUV. Honda already offers one there and Toyota will follow next year.

"The shift to hydrogen is inevitable, and it's happening faster than we expected," said Amory Lovins, founder of the Rocky Mountain Institute, a non-profit clean energy research organisation based in Snowmass, in the US state of Colorado.

California is participating in an eight-state effort to get 3.3 million zero-emission cars on the road in the US by 2025, powered by either fuel cells or batteries. Also participating are Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island and Vermont, which together account for 25 per cent of US car sales.

Some analysts are predicting steady if modest growth. Carmakers may be selling 1.76 million fuel-cell vehicles a year worldwide by 2025, according to Deloitte Tohmastsu Consulting.

Cars that run on hydrogen can typically travel more than 400km on a tank of the gas and then must be refilled. They differ from battery electric vehicles like Tesla's Model S or the Nissan Leaf, which use lithium ion batteries to store electricity. Their batteries need recharging.

In the future, suppliers may tap excess power from wind and solar farms to make hydrogen, reducing the carbon emissions that come when it's derived from gas, said Michael Beckman, vicepresident of hydrogen fuelling at Linde, the world's largest industrial gas supplier.

"In three to five years you will see that become more prevalent," Beckman said. "Wind and solar can make hydrogen cheap when the grid doesn't need the power."