Check this out - Holy Grail of Fuel? Scientists Make Synthetic Gas from Air and Water. Pretty interesting, hopefully it takes off. Think this has real potential.
Some info on algae used for fuel.
I think what would be more interesting is using carbon monoxide and water, with on-board systems that break down the CO and H2O molecules so cars can essentially scavenge the CO produced by the combustion of fuel, break it down, and using that process, create some extra fuel. We'd be a long way from that, though. It takes too much energy to separate hydrogen from oxygen, and I'd assume the same for CO and CO2.
Just wait until mini reactors are created for vehicles. They'd have a nearly lifetime fuel supply with enough energy output to have a high performance electric vehicle with an almost unlimited driving range. The problems would be finding the source for fuel, and having a containment system safe and secure enough to use on a private, commercial scale. You could still eek out plenty of energy from spent fuel rods from regional reactors, though, so that could be a more readily available source. The chances of that ever happening? Probably slim to none, but one can still dream, right?
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