Fusion is the physical process in stars which generates energy. Incomprehensible amounts of pressure and heat covert hydrogen into helium. It is the engine which drives the universe, but it does create a fair bit of nasty radiation.
Cold fusion is based on the theory that energy may be created in a more controlled fashion. The goal is to generate a smaller amount of heat without all the dangerous behavior which occurs inside a star. Unfortunately, the field of study was ruined in 1989 by some irresponsible geniuses and a lot of crackpots.
Since then, a small number of respectable scientists at NASA, NRL and the DOE have studied these types of reactions. To avoid crackpots, they have termed their research as Low Energy Nuclear Reactions (LENR). Although they have not discovered any magical formulas, there has been enough progress to justify continued funding.
In early 2011 an Italian physicist, Andrea Rossi, announced that he had created a functioning device. It generates a good deal of heat by converting nickel into copper. This heat may be used directly as a furnace or to generate electricity through steam turbines (the same way coal and nuclear power plants operate). There have been a number of demonstrations for technical audiences and a major trial will be run on October 28th. If Rossi’s Energy Catalyzer (e-cat) device is real, energy will become more-or-less free.