Answer to Question 1
There is certainly a limit imposed by thermodynamics, but actual efficiencies are
still considerably below the theoretical thermodynamic limit, so there is room for
improvement.
Answer to Question 2
Assuming that the hydrogen comes from renewable sources and not coal, the
combustion products are water (and some nitrogen oxides if it is burned in air). The levels
of pollutant are much, much lower than from any other combustion process.
