Discussed in this paper are current environmental problems, potential solutions to these problems, possible future hydrogen energy-utilization patterns for better environment and sustainable development through life cycle assessment (LCA), and how the principles of thermodynamics via exergy can be beneficially used to evaluate hydrogen and fuel cell systems and their role in sustainable development. Throughout the paper current and future perspectives of hydrogen and fuel cell systems based on exergetic, LCA and sustainability aspects development are considered. The results will likely be useful to scientists, researchers and engineers as well as policy and decision makers. Two case studies on the LCA aspects of hydrogen and fuel cell systems are presented to highlight the importance of the hydrogen and fuel cell systems and show that these can help achieve better environment and sustainability. Copyright (c) 2006 John Wiley & Sons, Ltd.