Scientists have found an inexpensive way to produce hydrogen from water, a discovery that could lead to a plentiful source of environmentally friendly fuel to power homes and cars.

The technique, which mimics the way photosynthesis works in plants, also provides a highly efficient way to store energy, potentially paving the way to making solar power more economically viable.

Hydrogen is a clean, energy-rich fuel that many experts believe could become important as nations attempt to reduce their greenhouse gas emissions. The gas can be produced by splitting water but current techniques are expensive, use harsh chemicals and need carefully controlled environments in which to operate.

Daniel Nocera, a chemist at the Massachusetts Institute of Technology, has developed a catalyst made from cobalt and phosphorus that can split water at room temperature, a technique he describes in the journal Science. "I'm using cheap, Earth-abundant materials that you can mass-manufacture. As long as you can charge the surface, you can create the catalyst and it doesn't get any cheaper than that."

He said the discovery could have major implications for the uptake of solar photovoltaic technology. One of the reasons, he said, why solar panels have not penetrated the consumer market properly is that no one has found a way to store energy in a way that, when the Sun is not shining, people still have electricity. "You can't think about an energy economy or a global energy system only when the sun is out."

Batteries could do the job but they cannot store anywhere near as much energy per unit mass as chemical fuels. Nocera's technique would allow the storage of excess energy from sunlight during the daytime. "You could imagine, during the day you have a photovoltaic cell, you take some of that electricity and use it in your house, then take the other part of that electricity for my catalyst, feed the catalyst water and you get hydrogen and oxygen."

At night, the hydrogen and oxygen could be recombined in a fuel cell to produce an electrical current to power a home or recharge an electric car. "So I've made your house a gas station and a power station. It's all enabled because we can use light plus water to make a chemical fuel, which is hydrogen and oxygen."

Converting an Olympic swimming pool of water into hydrogen and oxygen per second would create 43 terawatts of power. "In the next 50 years, the world needs 16 terawatts. By the end of the century, we'll need around 30," said Nocera. "There's a heck of lot of energy stored in chemical bonds."

For a home, Nocera said that it would be enough to split a few litres of water per day into hydrogen and oxygen. The water would be reformed when the gases were put through the fuel cell.

There is much work to be done in converting Nocera's idea into a commercial product. At the moment, his catalyst can only accept small amounts of electrical current at once, meaning that it would be an inefficient way to quickly store large amounts of energy. But Nocera is certain that engineers will iron out the issues and produce commercial-scale products within a decade.

James Barber, a leading researcher in artificial photosynthesis at Imperial College London, said Nocera's work was a "giant leap" toward generating clean, carbon-free energy. "This is a major discovery with enormous implications for the future prosperity of humankind. The importance of their discovery cannot be overstated since it opens up the door for developing new technologies for energy production thus reducing our dependence for fossil fuels and addressing the global climate change problem."