Hydrogen is produced is from fossil fuels. It's done by taking methane and other hydrocarbons and pulling the hydrogen off and expelling the CO2 (ideally capturing it). This process is called steam reforming.
This is the sweet lie people aren't told when hydrogen is brought up. Japan happens to have extensive offshore methane clathrate deposits on the sea floor and if they can make a hydrogen economy happen then those clathrates may become economical to mine.
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