Electrolysis of black liquor, an effluent from paper industry, was carried out and compared with alkaline water electrolysis. Energy efficiency in terms of HHV of hydrogen was found in the range of 84-97% whereas under similar conditions alkaline water electrolysis could not give more than 66% efficiency. Hydrogen evolution in black liquor electrolysis was possible even at an inter electrode potential of 1.17V but in alkaline water electrolysis there was no hydrogen production below an inter electrode potential of 1.31V. In addition to this, alkali lignin, amounting to 28-46 mg/mg of hydrogen produced, was separated at anode during black liquor electrolysis, which, on account of its good calorific value, has the potential of significantly improving the overall energy efficiency of the process. (c) 2005 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.