Nissan Motor (NSANY) chose the Olympic venue in Rio de Janeiro, Brazil, to display a fuel-cell powered van that uses ethanol as the vehicle's fuel, rather than hydrogen.

The solid oxide fuel cell, or SOFC, is developed by Nissan and processes ethanol fuel into hydrogen and then to electricity like a conventional fuel cell. The system emits water vapor and a small amount of carbon dioxide, roughly 40 grams per kilometer. The range exceeds 370 miles on a tank of ethanol, farther than most battery-powered vehicles.

Two months ago, Nissan first showed its SOFC. Nissan has now installed it in a vehicle to dramatize further the system's potential to deliver extremely low emissions and electric power. The fuel cell is a response to ever-tightening global pollution and fuel-efficiency standards. The automaker said it is developing the next generation of the SOFC, but has no current plan to offer it commercially in a vehicle.

"We don't see SOFC as the only answer, just one of many answers to the problems of sustainability and efficiency," said Kazuhiro Doi, the Nissan engineering executive in charge of the project.

Fuel cells have commanded a lot of attention, investment and research as a potential replacement for fossil fuel-burning internal combustion engines. The lack of a hydrogen infrastructure is a major roadblock; hence a fuel cell that can process ethanol represents a potential breakthrough for the technology. Another hurdle has been the need to safely store and contain hydrogen, which is highly explosive.

Doi calls the new type of fuel cell "carbon neutral" because it emits the same amount of carbon dioxide that vegetable matter must absorb to create the fuel. Nissan's bioethanol project lends further weight to fuel-cell technology as a potential answer to tougher governmental standards.

Toyota Motor (TM - Get Report) and Honda Motor (HMC - Get Report) have said they expect fuel cells ultimately to replace battery-powered electric vehicles in the race to create emission-free personal transportation. Elon Musk, chief executive of Tesla Motors (TSLA - Get Report) , which builds battery-powered cars, has been an outspoken critic of hydrogen.

Sam Abuelsamid, an analyst for Navigant Research, noting that SOFCs operate at high temperatures, said if Nissan has one that works "it could be very useful for large vehicles, where the weight of batteries poses a problem and eats into payload capabilities."

"If we can make cellulosic ethanol production viable, this could be an excellent solution, especially for larger vehicles like heavy duty trucks and buses," he said.

In markets like India and other developing nations, where the electricity supply often isn't reliable and needs coal-burning plants, the SOFC approach would be considerably cleaner, he said.

Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.