Jimmy Carter championed synfuels for energy independence. George H.W. Bush promoted methanol to solve air pollution. Not much came of either. Now George W. Bush, European Union President Romano Prodi, and California Governor Arnold Schwarzenegger are all advocating hydrogen. Even senior executives of Shell, British Petroleum, General Motors, Toyota, DaimlerChrysler, Ford, and Honda are issuing stirring calls to action for fuel cells and hydrogen. Is hydrogen different from previous alternative fuel experiences? Might hydrogen succeed on a grand scale, where others have not? This article draws from a forthcoming book, The Hydrogen Transition, based on the August 2003 Asilomar Conference.
Alternative Fuels Fall Short
First, a short history lesson. Despite 25 years of mandates, subsidies, and presidential calls to action, petroleum still serves over 97% of the U.S. transportation market. Initiatives to introduce compressed natural gas, biodiesel, methanol, battery-powered electric vehicles, and synthetic fuels from coal and shale have all fallen short. The only unequivocal success story in the entire world is oil sands in Canada, and in that case, the fuel is essentially identical to existing petroleum fuels. The remaining exceptions—ethanol from corn in the U.S., ethanol from sugarcane in Brazil, coal-derived fuels in South Africa, and compressed natural gas in Argentina and U.S. buses—enjoy substantial public subsidies and are unlikely to spread further.
All previous alternative fuels for transportation have failed largely because of unrealistic expectations leading to overstated claims. These claims were not intentionally deceptive. Rather, they reflected a poor state of knowledge of energy and environmental phenomena and related policy. Two errors stand out: understated forecasts of oil supply and gasoline quality, and overstated environmental and economic benefits of alternative fuels. Oil turned out to be cheap and abundant, gasoline and diesel fuel were reformulated to be cleaner, and internal combustion engines are now nearly zero-emitting.
What do these lessons imply for hydrogen? First, hydrogen is unlikely to succeed on the basis of environmental and energy advantages—at least for the foreseeable future. Hybrid electric vehicles, cleaner combustion engines, and cleaner fuels will provide almost as much energy and environmental benefit on a per vehicle basis for some time. They will be more widespread and deliver more benefits sooner than hydrogen and fuel cells ever could. Hydrogen is not the easiest or cheapest way to gain large near- and medium-term air quality benefits.
The Case for Hydrogen
The case for hydrogen comes from elsewhere: from the automotive industry’s embrace of fuel cells. The automotive industry, or at least an important slice of it, sees fuel cells as its inevitable and desired future. This was not true for any previous alternative fuel or vehicle technology. A 2004 National Academies report on hydrogen ("The Hydrogen Economy: Costs, Barriers, Technical Challenges, and R&D Needs") highlights the attractions of fuel cell vehicles. It notes that not only are fuel cells superior environmentally, but they also provide extra value to customers. They have the potential to provide most of the benefits of battery electric vehicles, without the short range and long recharge time. They offer quiet operation, rapid acceleration from a standstill due to the torque characteristics of electric motors, and potentially low maintenance requirements. They can provide remote electrical power (for construction sites, recreational uses, etc.) and even act as distributed electricity generators when parked at homes and offices. Importantly, they also provide additional attractions to automakers: By eliminating most mechanical and hydraulic subsystems, they provide greater design flexibility and the potential for using fewer vehicle platforms and therefore more efficient manufacturing approaches. Fuel cells are a logical extension of the technological pathway automakers are already following, and are a superior consumer product—if fuel cell costs become competitive and hydrogen fuel can be made widely available at reasonable cost.
Those last two "ifs" remain unresolved, and are central to the hydrogen debate. Fuel cell costs are on a steep downward slope, and are now perhaps a factor of 10 to 20 too high. Huge amounts of engineering are still needed to improve manufacturability, assure long life and reliability, and withstand extreme temperatures. While some engineers, such as Geoffrey Ballard, believe that entirely new fuel cell architectures are needed to achieve the last 10-fold cost reduction, a handful of automotive companies seem convinced that they are on track to achieve the necessary cost reductions and performance enhancements. On-site tours of facilities by myself (at Toyota and DaimlerChrysler) and others (elsewhere) confirm massive R&D investments at most of the major automakers.
The Challenge of Supply
The second "if" is hydrogen availability—-perhaps the greatest challenge of all. The problem is not production cost or sufficient resources. Hydrogen is already produced from natural gas and petroleum at costs similar to gasoline. With continuing R&D investment, the cost of producing hydrogen from a variety of fossil and renewable sources should prove to be not much greater than producing gasoline, according to the National Academies study of hydrogen.
The key supply challenges are as follows. First, because private investments will naturally gravitate toward fossil energy sources, government needs to accelerate R&D of renewable hydrogen production so that renewable hydrogen becomes a competitive option. There are many possible paths, and it is difficult at this time to know which will prevail. Second, carbon dioxide sequestration—a prerequisite if abundant coal in the U.S., China, and elsewhere is to be used—faces uncertain public acceptance. The cost of capturing carbon from large fossil plants and sequestering it is not a showstopper in a large range of locations and situations—unless carbon dioxide is viewed like nuclear waste, leading to permitting delays and extra costs. The third supply-related challenge, and perhaps most important of all, is the cost of delivering hydrogen from production sites to local fuel stations. Astoundingly, the cost of delivering hydrogen to small hydrogen users now costs roughly five times as much as producing the hydrogen. Even for major fossil-based hydrogen production facilities under study, distribution and delivery costs are estimated to be equal to costs of production. Most problematic, especially during the low-volume transition phase, is the "last mile"—delivering the very low-density gas to local fuel stations. Pipelines are the only plausible option for large volumes, but too costly to justify for small, short deliveries.
Today’s existing natural gas and petroleum distribution systems are not good models for future hydrogen distribution systems. If future hydrogen distribution systems mimic today’s energy systems, the hydrogen economy will never be competitive and will never happen. An entirely new approach is needed, one that serves both stationary and mobile users, serves small as well as large hydrogen production facilities, accesses a wide variety of energy feedstocks, incorporates carbon dioxide capture and sequestration, and is geographically diverse. Such a system won’t happen by itself. New ideas and approaches are needed. One part of the solution will necessarily be distributed generation, with production near or at the end use site. The National Academies report argues that the hydrogen economy will initially, and perhaps for a very long time, be based on distributed generation of hydrogen. Another solution, advocated by Honda and General Motors, is placement of small hydrogen refueling appliances at residences. Other innovative solutions would be needed, especially during the early phases when consumption is small and dispersed.
High Interest in Hydrogen
The challenges facing hydrogen are daunting. But interest in hydrogen remains strong, not only because of automaker enthusiasm and potential energy and environmental benefits, but also because of the absence of a more compelling long-term option. The only other serious long-term proposal is grid-supplied electricity. But that requires several-fold improvements in batteries or other electricity storage devices, or massive investments in "third rail" electricity infrastructure that requires substantial added cost for vehicles. Other plausible options include biomass, but supply would not be adequate in most regions of the world, and fossil-based synfuels, which would dump huge amounts of carbon into the atmosphere and require massive networks of pipes to deliver carbon dioxide to sequestration sites one hopes would be secure.
Interest remains high in hydrogen for still one more reason: Hydrogen is highly inclusive, capable of being made from virtually any energy feedstock, including coal, nuclear, natural gas, biomass, wind, and solar. There are no natural political or economic enemies to hydrogen. Even oil companies are ambivalent. Oil companies are, in actuality, massive energy companies. They are well prepared to supply any liquid or gaseous fuel consumers might desire, though of course they prefer a slow transition that allows them to protect sunk investments. Most, for instance, prefer that initial fuel cell vehicles carry reformers to convert gasoline into hydrogen. They have been disappointed to see all major car companies now focused strictly on delivered hydrogen.
A critical difference between automaker and oil company business realities is that some automakers see benefits from being first to market. Oil companies do not; they see a long, deep financial drain. They are unlikely to be early investors in a rapid buildup of hydrogen fuel stations. That early financial burden will fall on government.
A Mounting Debate
Much is at stake, and so it is not surprising that skepticism is already coming from many quarters. Academics question near-term environmental benefits, as they have in recent Science articles, and activists and environmental groups such as Jeremy Rifkin and Sierra Club question the social, environmental, and political implications of "black" hydrogen (made from coal and nuclear). Others say we are picking the wrong horse, as Paul MacCready does in Hydrogen Transitions, when he argues that improved battery technology will trump hydrogen and fuel cell vehicles. Many argue that the hydrogen transition is premature at best, as John DeCicco of Environmental Defense does also in Hydrogen Transitions.
The mounting hydrogen debate is being sucked into the larger debate over the Bush administration’s environmental record. The environmental community fears a pact between the administration and car and oil companies to greenwash industry efforts and camouflage eviscerated and stalled regulations. Where some see a progressive long-term strategy, others see greenwashing and bait and switch. A backlash is building against what many see as hydrogen hype.
Starting Down the Pathway
In summary, hydrogen is different from all previous experiences, largely related to the business attraction of fuel cells. Therein lies the source of the surprisingly strong interest in hydrogen. Because automakers are the interest group that sees the greatest payoff, hydrogen’s future appears to be tightly linked to automaker commitments to move fuel cells from the lab to the marketplace. The key question is whether and when they will ratchet up current investments of perhaps $100 million per year in the case of the more aggressive automakers to the much larger sums needed to tool factories and launch commercial products. Without automaker leadership, the transition will be slow, building on small entrepreneurial investments in niche opportunities, such as fuel cells in off-road industrial equipment, hydrogen blends in natural gas buses, and innovative low-cost delivery of hydrogen to small users.
In the end, the hydrogen situation is precarious. Beyond a few car companies and a scattering of entrepreneurs, academics, and environmental advocates, support for hydrogen is thin. While many rail against the hydrogen hype, the greater concern perhaps should be the fragile support for hydrogen. Politics aside, I applaud the U.S. and other governments for starting down a path toward a sustainable future. While I do not know when or even if the hydrogen economy will eventually dominate, I do believe that starting down the hydrogen pathway is good strategy.
The key is enhanced science and technology investments, both public and private, and a policy environment that encourages those investments. These investments are crucial if this country is to lead the world toward the next generation energy system. Fuel cells and hydrogen are a good marker to use in formulating policy and gaining public support. Of course, policy should remain focused on near-term opportunities. But good near-term policy, for instance, aimed at better fuel economy, is also good long-term policy. It sends signals to businesses and customers that guide them toward investments and market decisions that are beneficial to society, not only in the near term but also in the long term. It appears to me that hydrogen is a highly promising option that we should nurture as part of a broader science, technology, and policy initiative. The question is how, not if.
Sperling is Director of the Institute of Transportation Studies and a professor of engineering and environmental policy at the University of California at Davis. He is the author of several books on transportation and energy issues, member of the National Academies committee that authored the February 2004 hydrogen report, and co-editor with James Cannon of "The Hydrogen Transition," to be published by Elsevier Press in June 2004.
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