Hydrogen: Waiting For the Revolution
May 26 - Across the Board
Everybody agrees it's the future fuel of choice, Why hasn't the future arrived?
In the garage, you also have a suitcase-sized electrolyzer, or other
conversion device, plugged into the electrical system to pump a fresh batch of
hydrogen into your car. (The fuel cell uses hydrogen to produce electricity,
which powers the motor.) If you need a refill as you're driving along one of the
nation's highways, you pull up to a clean, quiet hydrogen fueling station to top
off in less time than it takes today to fill a car with gasoline.
The electricity in your home will also come from hydrogen, either via small
local fuel-cell power plants or residential fuel cells in your basement.
"Moreover," says Jeremy Rifkin, president of the Foundation on
Economic Trends and author of The Hydrogen Economy, "sensors attached to
every appliance or machine powered by electricity-refrigerators,
air-conditioners, washing machines, security alarmswill provide up-to-the-minute
information on energy prices, as well as on temperature, light, and other
environmental conditions, so that factories, offices, homes, neighborhoods, and
whole communities can continuously and automatically adjust their energy
consumption to one another's needs and to the energy load flowing through the
system."
Japan tests Urashima, the world's first deep-sea probe to use hydrogen-based
batteries.
The U.S. Department of Energy is only slightly less enthusiastic, maintaining
in a report that in the hydrogen economy, "America will enjoy a secure,
clean, and prosperous energy sector that will continue for generations to come.
It will be produced cleanly, with near-zero net carbon emissions, and it will be
transported and used safely. [Hydrogen] will be the fuel of choice for American
businesses and consumers."
The new energy regime will have economic and political ramifications as well.
Oil companies and utility companies will merge and morph into "energy
companies" with a focus on generating renewable energy and local power
distribution, including purchasing power from residential customers. Distributed
energy production will also result in a worldwide "democratization of
energy," bringing low- cost power to underdeveloped areas.
Oil and Hydrogen Don't Mix
Driving the interest in a hydrogen-based energy system: threats to the
economy, the environment, and national security. Oil production, by current
estimates, will likely peak sometime between 2020 and 2040. At this point, the
world's economies will have consumed half of the known oil reserves, with
two-thirds of the remaining oil in the volatile Middle East. As a result, prices
will rise dramatically, and global consumers will experience increasingly
frequent shortages.
Global warming is another significant threat that a shift to hydrogen might
ameliorate. The release of carbon dioxide into the atmosphere from the burning
of fossil fuels such as coal, oil, and natural gas makes up about 85 percent of
greenhouse-gas emissions in the United States. This increase has resulted in an
unprecedented rate of global warming, according to most scientific experts. The
thinning of the polar ice caps, the retreat of glaciers around the world, the
spread of tropical diseases to more temperate climates, and the rising of global
sea levels are all evidence of global warming. Says Rifkin: "Weaning the
world away from a fossil-fuel energy regime will limit carbon-dioxide emissions
to only twice their pre-industrial levels and mitigate the effects of global
warming on the Earth's already beleaguered biosphere. "
Add to these threats the burden of growing world populations, an increasingly
unstable political situation in the Middle East, and the likelihood of longer
and more frequent blackouts and brownouts resulting from an aging and vulnerable
power grid in the United States, and the promise of a safe, pollution-free, and
distributed power system based on hydrogen becomes increasingly attractive.
Pathways and Roadblocks
Does all this sound too good to be true? It is: The hydrogen economy faces
serious obstacles. More than 90 percent of the hydrogen produced today comes
from reformulated natural gas generated through a process that creates a
significant amount of carbon dioxide. Energy for this process, or for
electrolysis, a more expensive way of generating hydrogen (see "The
Mechanics of Hydrogen," left) would also come from power plants fueled by
oil or natural gas. So in the near term, a shift to hydrogen will not greatly
reduce the world's dependence on fossil fuels and, in fact, may well hasten the
greenhouse effect and global warming by increasing carbon-dioxide emissions.
Consequently, a lot of discussion about the hydrogen economy revolves around
the various "pathways," or means of producing hydrogen. Atakan Ozbek,
director of energy research at AIM Research, a technology-research think tank,
points out that while hydrogen can come from virtually any fuel, energy from oil
and gas is currently cheaper and more efficient than energy from renewable
resources such as wind, sun, or water. Then, too, in the event of an oil crisis
and resultant electricity shortage, coal will likely be pressed into service,
regardless of the environmental cost. Nuclear power plants can also provide
electricity to create hydrogen, but nuclear energy's high cost-plus the
still-hot controversy over waste disposal-make such a pathway less than certain.
"What we're trying to find out right now," Ozbek says, "is how
to get hydrogen to the fuel cell in a way that is economically feasible and
makes sense engineering-wise."
Environmental considerations are paramount: If coal is reintroduced in a
large way into our "energy portfolio"-whether to produce hydrogen or
as part of our existing energy plan to replace oil-carbon-dioxide emissions will
rise significantly.
The Department of Energy roadmap anticipates this, and the DOE is funding
research into the "sequestration" of carbon-dioxide gases created by
coal processing and natural-gas reformation. This would involve capturing these
gases at some point in the energy process and permanently storing them
underground or in the ocean.
To many, this is unrealistic. Jon Ebacher, vice president of powersystems
technology for GE Energy, won't say that sequestration is impossible, but his
comments fall short of an endorsement. Even a fairly efficient coal plant,
Ebacher says, produces millions of tons of carbon dioxide each year. "So if
you're going to sequester carbon dioxide from all of the plants that use
hydrocarbon fuels," he says, "that's a pretty massive
undertaking."
Only a hydrogen economy based 100 percent, un renewable puwer would result in
zero emissionsthe vision that has captured so many imaginations. And that vision
remains decades away. In the meantime, Ebacher says, "natural gas can see
us through a transition period until we get solar and other renewable-energy
efficiencies up to a much higher level." That transition period, he
suggests, might last twentyfive to fifty years.
President Bush peers at the future through a hydrogen-powered video camera at
an exhibit on alternative-energy products.
Another potential roadblock: transport and storage of hydrogen. Less dense
than other fuels, the gas must be compressed or liquefied to be stored or moved
efficiently, adding to costs and inconvenience. While the existing natural-gas
infrastructure would seem to offer a convenient pathway to hydrogen delivery,
this can't be clone without a major retrofit. Indeed, Rbacher says, almost all
of the country's existing natural-gas pipeline would have to be modified to
handle hydrogen.
Finally, fuel-cell researchers must make significant advances. The power
produced by a fuel cell is significantly more expensive per unit than that
produced by an internal-combustion engine. Fuel- cell vehicle development is
also beset by problems and costs related to type of fuel, storage, and
performance. A number of prototype and "concept car" fuel-cell
vehicles have been produced and displayed at auto shows and fuel-cell
conferences around the world-but at a development cost of about $250,000 or more
per vehicle. GM estimates that it spent between $1 million and $2 million to
develop its Hy- wire fuelcell concept car. A consumer version would cost far
less, obviously, but likely would still take sticker shock to a whole new
dimension. (See "Is GM's Hy-Wire the Car of the Future?", page 21.)
Putting a Brake on Hydrogen Cars
Linking the hydrogen age to cars could be a critical policy mistake,
according to Joseph Romm, former acting assistant secretary for the DOE's Office
of Energy Efficiency and Renewable Energy and author of The Hype About Hydrogen.
Despite carcompany promises to have fuel-cell vehicles in dealer showrooms by
2010, if not sooner, Romm argues that the cost of fuel cells, problems with
onboard storage of hydrogen in vehicles, and the issues related to creating a
hydrogen delivery infrastructure are likely to push the market for hydrogen
fuel-cell vehicles well into the future.
GeneralMotors' hydrogen-powered Hy-Wire concept vehicle promises zero adverse
impact on the environment.
The focus on hydrogen as an immediate goal in the transportation sector
amounts to confusing a means (hydrogen) with an end (greenhousegas reduction),
Romm explains. This could have harmful consequences, since, he estimates, it
will take thirty to fifty years for hydrogen vehicles to have a significant
impact on greenhouse gases. A recent National Academy of Sciences study seconds
this point, stating, "In the best-case scenario, the transition to a
hydrogen economy would take many decades, and any reductions in oil imports and
carbon-dioxide emissions are likely to be minor during the next twentyfive
years."
"If the goal is to reduce greenhouse gases," Romm argues,
"then there are technologies available right now that can have a more
immediate effect"-hybrid vehicles, for instance. And diverting existing
(and limited) natural-gas supplies to create hydrogen for vehicles "would
make that fuel less available where its use could result in a more immediate
reduction in greenhouse-gas emissions-in replacing existing oil and coal-burning
electric-power plants in the nation's energy grid with cleaner natural-gas power
plants."
In fact, some hydrogen-technology companies have back-burnered research and
development on transportation applications. "The horizons for fuel-cell
vehicles keep getting pushed out further and further, and it's unlikely that
somebody's going to license and commit to a uniform, standardized hydrogen
technology for at least ten to fifteen years," says Stephen Tang, an
industry consultant and former president and CEU of Eatontown, N.J.-based
Millennium Cell, which makes a system called Hydrogen on Demand that supplies
hydrogen to fuel cells.
To pay the bills in the meantime, Tang says, "Millennium Cell has
targeted markets that it believes can tolerate the price of hydrogen and fuel
cells, such as consumer electronic devices, standby power, and military
portables. In all of those markets, you're competing with an incumbent
technology that is rather expensive in its own right and also has some
limitations in performance. In these markets, then, we can focus on hydrogen as
a performance fuel and not focus so much on the environmental benefits or the
energyindependence benefits-attributes that buyers have difficulty valuing. It's
simply a better mousetrap: Hydrogen allows you to run your cell phone much
longer, or your laptop much longer, without being a slave to the energy grid or
inferior batteries."
Who Will Lead?
Despite the limitations, there is growing momentum for hydrogen vehicles.
Hybrid vehicles may be a "bridging technology" toward the hydrogen
age, but it's one that "doesn't at all curb the nation's appetite for
oil," says Chris Borroni-Bird, GM's director of design- technology fusion.
Therefore, the automaker directs about a third of its R&D-over $1 billion
thus far and involving more than six hundred people-toward fuel cells. The
company insists that it will have a commercially viable fuel-cell vehicle
available by the end of the decade.
In other business sectors, investment in hydrogen technology is slowly
returning after the boom in hydrogen technology stocks in 19992000 and the
subsequent bust that lasted until last year. "Behind a lot of the hype,
there was tremendous capital inflow in the mid-1990s going into 2000," Tang
says. Unfortunately, the number of commercial products-and the resulting
revenue-in the industry have been "underwhelming" relative to
investment dollars. That has made the investment community more cautious so far,
but things are changing. "Right now there is a much more realistic view of
the possibilities," Tang says. "The investor today is looking more
toward interesting niche strategies and early market penetration rather than the
hope of the mass market, the home run where fifty million cars are going to be
sold with your product in it."
With the investment community poised and the technology issues coming
together, says ABI Research's Ozbck, "Everything is feeding into this giant
equation-you can consider it a giant chemical reaction-and once everything has
been fed in and the equation solved, it's going to change the whole energy
infrastructure." Federal support and direction will be especially
important. While Ozbek considers President Bush's $1.7 billion State of the
Union pledge for energy research a good start, he would like the government to
provide such research incentives as Japan and the European Union have in recent
years.
And though the president disappointed many hydrogen proponents by making no
specific mention of hydrogen-energy R&D in his 2004 address, his proposed
2005 budget did increase funding for hydrogen research. The federal government,
Ozbek argues, should provide enhanced tax credits for buyers of fuel-cell
vehicles and fuel credits for energy companies and other investing in building a
hydrogen infrastructure. Jeremy Rifkin agrees, urging the federal government to
take the lead by establishing benchmarks-mandating tougher fuel-efficiency
standards and requiring a greater use of renewable energy sources by power
companies-as the European Union currently does.
California's Hydrogen Highway
One state isn't waiting for action from companies or the federal government.
In California, the new Schwarzenegger administration has committed to an energy
plan that aims to create a "hydrogen highway" in the state by 2010.
The ambitious plan proposes the construction of hydrogen fueling stations every
twenty miles along the state's twenty-one major interstate highways. By taking
this step to break the chicken-and-egg dilemma (which comes first, the vehicle
or the fueling infrastructure?) and by continuing to impose strict mandates on
automakers for fuel efficiencies, California could jumpstart the hydrogen
economy.
Ford Motor Co. tests a nozzle for a hydrogen-powered car that the company is
developing.
"The pieces are all on the table," says Terry Tamminen, secretary
of California's Environmental Protection Agency, "and there have been
demonstration projects, but they have not been pulled together into any kind of
unified vision, something that average people can use and where we ean more
fully commercialize the technology. So we're taking a lot of this work that's
already been done, bringing it together, adding some timetables and leadership,
and then of course asking for some federal money to help with the pieces that
aren't paid for by private industry or other investments."
California already has several hydrogen fueling stations, serving research
projects and some municipal fleets, and about a dozen more are in the works. For
instance, SunLine Transit Agency, a local public-transit company, now operates a
hydrogen fueling station that it uses to test its hydrogen-powered buses. And AC
Transit, which provides public transportation in the San Francisco Bay area,
expects to have three fuel-cell-powered buses later this year.
The state's goal is to provide an infrastructure of fueling stations to
support a consumer market for fuel-cell vehicles. "If we can deliver such a
network by a certain date," Tamminen explains, "we can then ask car
companies to deliver on their promises to start delivering cars to
showrooms."
One of the things driving California's plan is a California Energy Commission
report that, Tamminen says, "includes credible evidence that in three to
five years we are going to have serious shortages of refined fuels in the state.
Not because there's not enough petroleum under the sands of Iraq but, rather,
because we don't have enough refinery capacity in the state-or in the country-
to keep up with the demand created by longer commutes, poorer fuel economy, and
a growing population. The report predicts a likelihood of $3 to $5 per gallon
gasoline prices and periodic shortages.
"During the oil embargo of the mid1970s, we had twenty-four thousand
retail gasoline outlets in the state, compared to ten thousand today. If there
are shortages, not only will there be gas lines-they will be twice as
long."
Consequently, it's not a question of if but when we move toward a hydrogen
economy. Even Romm, who is dubious about short-term prospects for hydrogen,
concludes: "The longer we wait to act, and the more inefficient,
carbon-emitting infrastructure that we lock into place, the more expensive and
the more onerous will be the burden on all segments of society when we finally
do act."
The Mechanics Of Hydrogen
While still untested on a large scale, the promise of a hydrogen economy is
based on a number of undeniable realities. Hydrogen can be burned or converted
into electricity in a way that creates virtually no pollution. It is also
Earth's most abundant element, available everywhere in the world. While hydrogen
is scarce naturally in pure form, it can be generated easily by reforming
gasoline, methanol, natural gas, and other readily available resources. It can
also be created by electrolysis, a process by which electricity is run through
water to separate the oxygen and hydrogen molecules.
The fuel cell, which combines oxygen in the air with hydrogen to create
electricity and water, is the vital link in the hydrogen vision. It closes the
energy loop and allows electricity to be stored and transported via hydrogen and
then reconverted back into electricity.
In an ideal future, renewableenergy sources such as wind, solar, or water
power will be used to create hydrogen through electrolysis. The hydrogen can be
converted again to electricity locally by means of a fuel cell to power a car,
provide energy for a home, power a laptop, or operate any number of other
products. -B.K.
As GE Goes, So Goes The Nation?
Fuel cells will probably not be a viable market until a company like General
Electric gets into the business in a big way, say critics of the hydrogen
economy.
GE is indeed researching fuel cells, albeit c\autiously, in keeping with its
approach to most other energy markets. "We do have an investment in fuel
cells,"says Jon Ebacher, the company's vice president of power-systems
technology. "I don't know if it will ever get to the dimensions where it
will work at the huge volumes that were once forecast, but I think it's quite
viable in niche markets." Right now, he sees a possible market in
"industrial facilities that have isolated power needs, where you have a
maintenance crew that deals with heating, ventilating, and
air-conditioning." But, he says,"there's a distance between where they
are today and the huge potential in consumer markets that was forecast at one
time."
GE has also invested substantially in researching a type of fuel- cell system
that would employ a gas turbine and hydrogen system working as a combined cycle.
Right now, Ebacher says, GE is considering creating a power plant based on this
system by 2013. It could be sooner, depending on external factors, including
political developments around both fuel and the environment, the price of fuel,
and the types of fuel that are available. But there are still unresolved
technical challenges that could push that back.
Natural-gas prices in particular are an important barometer. "During the
California energy crisis, the price of gas spiked up to $7 per million
BTUs," Ebacher says. Higher gas prices, he says," could spark some
other research efforts that may come in front of fuel cells-coal, for instance.
It's possible to run a combined- cycle system on coal. You put a chemical plant
beside a combined- cycle power plant to process the coal into a gaseous fuel to
run the electrical plant." But right now, Ebacher says,"the capital
cost of doing that doesn't cross the goal line. However, if the price of natural
gas or its availability gets in a bad place, all of a sudden the capital cost of
doing that might not look so bad.
"It all revolves around availability, economics, and the
environment-where the pressures are, what are the levers. But if you talk about
running out of hydrocarbon fuels, then you would have to say that hydrogen had
better be in the cards." -B.K.
As a fuel, hydrogen is "simply a better mousetrap."
Is GM's Hy-Wire The Car of the Future?
General Motors has had a reputation for being rather conservative when it
comes to both new technological developments and vehicle design, but it seems to
have leapt ahead of other carmakers with its concept car, the Hy-wire.
The idea, says Chris Borroni-Bird, director of design-technology fusion for
GM, is that "if you design a vehicle around the fuel cell and hydrogen
tanks, you might be able to create a better vehicle than if you just put those
same systems in a car designed for an internal-combustion engine."
The Hy-wire design puts the fuel cell and hydrogen storage tanks into a
skateboard-like chassis that allows for greater flexibility and
interchangeability of body types. Customized car bodies are then effectively
"docked into" the uniform chassis.
And because the fuel cell can provide much greater electrical output than
today's batteries, GM's designers have replaced mechanical and hydraulic systems
for steering and braking with an electronically controlled one. "This
system provides more design freedom, because those electrical wires can be
routed in numerous ways, replacing a fixed steering column," Borroni-Bird
says.
The Hy-wire prototype has no gas engine, no brake pedals, and no instrument
panel. The fuel cell enables you to operate everything by wire. The electronic
controls are included in a compact handgrip console that extends from the floor
from between the front seats of the vehicle. Drivers can steer, brake, or
accelerate with the controls built into the handgrips.
Because GM puts the hydrogen directly on board the vehicle, there is no need
for the car to convert fossil fuels or other renewable sources into hydrogen. As
a result, it can claim to offer a zero- emission vehicle and market the car to
be compatible with a network of hydrogen fueling stations.
To that end, GM "applauds any hydrogen infrastructure projects, anywhere
in the world," says Tim Vail, GM's director of business development for
fuel-cell activities. Yet it will take a lot of applause to get the government
to invest the estimated $11 billion to get a sufficient mass of hydrogen
refueling stations to support 1 million vehicles, in proximity to 70 percent of
the nation's population. "But," says the optimistic Vail,"$ 11
billion is nothing compared to past infrastructure projects such as the highways
or the railroads. So it's not that big an issue to overcome. You just have to
have the will to do it."
-B.K.
California could jumpstart the hydrogen economy.
BILL KEENAN is a freelance business writer and former editor of Selling
magazine.
Copyright Conference Board, Inc. May/Jun 2004