August 2003

What a "hydrogen economy" means, and what it will take to make it happen

In 1961, John F. Kennedy had a problem. The Soviet Union was winning the race to space. Sputnik, the world's first satellite, had lifted into orbit in 1957, and in April 1961 the Soviet Union successfully launched the first astronaut, Yuri Gagarin, into the cosmos aboard Vostok 1.

The Soviets' space supremacy was more than just a competitive slap in the face for the United States - the satellites, after all, were glorified ballistic missiles, and control of space could potentially have meant victory in the nuclear arms race. Faced with this national peril, Kennedy stood before the nation in May 1961 and announced the formation of the Apollo Project, a 10-year-plan to put a man on the moon and bring him safely back to earth. He threw all the resources of the presidency behind the program - federal subsidies, federal installations, the nation's best physicists, engineers and pilots - and in 1969, after only eight years, Neil Armstrong took the first steps on the moon.

Forty years later, George W. Bush had problems of even greater magnitude. Vast swaths of the country had fallen victim to rolling blackouts and stratospheric natural gas prices. A task force designated to examine the nation's energy crisis had concluded that a predicted drop in global oil production over the next decades might presage disastrous fuel shortages. And on Sept. 11, 2001, 19 terrorists, all from the oil-rich Middle East, took down the World Trade Center towers and brought home our precarious dependence on petroleum from an unstable and often unfriendly area of the world.

Bush responded to these sobering events by declaring a global war on terrorism and preparing for battle in Iraq, which many believe to harbor the last major untapped and accessible oil reserves in the world. He also revisited his energy policies, and in January 2003, Bush stood before Congress and announced a "new national commitment" and $1.2 billion for research into the development of hydrogen-powered automobiles.

This was a turnaround for Bush: in early 2001, the administration had planned to cut the $27 million per year previously designated for hydrogen research. Now, a White House inhabited by oilmen had embraced the idea of a future free of petroleum.

But for those who have taken a good look at what's actually required to get hydrogen cars on the road, $1.2 billion, spread out over 10 years, is not nearly enough. While Bush's proposal represents a 400,000-fold increase in funding from previous levels, the budget for the Apollo Project, in 2003 dollars, was $189 billion. By those terms, Bush's hydrogen commitment, says Michael Shellenberger, co-founder of the Apollo Alliance, a grassroots group seeking a $300 billion, 10-year plan to catapult the nation to energy independence, is "an itsy-bitsy energy plan."

The Apollo Alliance's name refers to a bold and increasingly popular plan to support an Apollo-sized commitment to end the nation's dependency on fossil fuels. "When people think Apollo they think 'we need to get there fast,'" Shellenberger explains.

In a recent opinion survey, the group found that 72 percent of Americans support a massive "Hydrogen New Deal" to wean the nation off foreign oil, decrease fossil fuel emissions and revitalize the manufacturing industry, and that blue collar "swing voters" support the idea by an even higher margin. Thus far, 12 labor unions, including the United Steelworkers of America and the United Auto Workers, have endorsed the plan. The coalition expects that most of the major environmental and civil rights groups will also sign on.

But what, exactly, are they signing onto?

A Filling Station in Every Home

Hydrogen is the first and simplest element. It is colorless, odorless, and tasteless. It can be found in water, in fossil fuel, in animal and tissue, basically, everywhere - the fires of the sun, a Chicken McNugget, your left pinky, a coal seam deep under the earth. But while it is the most plentiful element in the galaxy, it is rarely found in its pure form. Once isolated, hydrogen stores and converts energy far more efficiently than the internal combustion engine. In addition, hydrogen, when burned, doesn't pollute, leaving water behind as its only by-product.

While hydrogen can also be used to fuel internal combustion engines, most people believe that hydrogen's most promising application is as a fuel to power fuel cells, which create electric current by stripping hydrogen of electrons as it crosses a charged membrane. Fuel cells are currently about ten times as expensive to produce as internal combustion engines, but they can convert nearly three times the energy of an engine running on gasoline.

What a fuel cell promises to do, in layman's terms, is make electric cars - a promising technology that ultimately foundered because the engines could not travel long distances without an inconvenient and time-consuming recharge - as reliable, powerful and easy-to-fuel as regular cars. Fuel cells allow electric motors to be powered by a fuel - hydrogen - which can be carried onboard, in much the same way gasoline powers internal combustion engines.

While cars may be the most compelling application, hydrogen fuel cells may ultimately be used to effect a much broader transformation in the economy. Because hydrogen can be used as a storage medium for energy, its mass commercialization could revolutionize the use of renewable technologies such as solar and wind energy. "Imagine in 20 years from now you have a solar panel on the roof of your home," says Gary Schmitz, spokesman for the Department of Energy's National Renewable Energy Laboratory, which helps coordinate federal hydrogen research. "It powers your house, but it also has a device that uses the excess power to frees hydrogen from water."

The hydrogen is stored in a tank. At night, when the sun goes down and the solar panels no longer produce energy, a fuel cell burns hydrogen to keep the lights on. That same tank of hydrogen could also fuel up your car the next day for the commute to work. And while you're at work, your car can be plugged into the power grid to provide extra during times of peak demand. Every American home would host a combination electric utility and filling station, and every American car could be a "power-station on wheels."

What's In the Way?

But before we install hydrogen pumps in our garages, a lot of hurdles must be overcome. The first of these is isolating hydrogen to be used as fuel. While there are a number of ways to extract hydrogen, all of them currently require the burning of fossil fuels to do so, and most produce greenhouse gases. (See sidebar.)

Assuming that hydrogen can be extracted in an economical and environmentally friendly manner, the next barrier is in storing and transporting it as fuel. Hydrogen, in its pure form, is a flammable, low-density gas, and engineers haven't figured out how to squeeze it into a gas tank that can safely carry enough fuel to drive 400 miles and still fit under the hood. Liquid hydrogen, while more compact, must to be cooled to -423 degrees to avoid evaporation, a requirement that the modern car would be hard-pressed to meet. Another option is to equip cars with on-board reformers that make hydrogen from natural gas on demand, but this, too creates thorny storage and engineering problems. The consensus is that the most viable solution is to put already-reformed hydrogen gas in our tanks, but the technology still has a long way to go.

Finally, there's the price. Hydrogen fuel, when produced from its most affordable source - natural gas - is now four times as expensive to produce as gasoline. Currently, the cost of a 75-kilowatt hydrogen-powered fuel cell, about the equivalent power of 18 gallons of gasoline, ranges from $75,000 to $150,000. There is also the considerable expense of creating an infrastructure to distribute the hydrogen. Mass-produced fuel cell cars would require that service stations be outfitted with natural gas reformers that turn methane into hydrogen on site and pumps to feed that hydrogen into the cars.

The assumption is that technological innovation and economies of scale will allow the costs of producing hydrogen and manufacturing fuel cells to drop dramatically. Some researchers, however, question whether hydrogen will ever be affordable. Carnegie Mellon University professor David Keith believes that while hydrogen cars may technically be able to solve the petroleum-economy problems of energy security, air pollution and global warming, there are far more cost-effective solutions. "Hydrogen is intrinsically a bad fuel. It's hard to compress and has low heating value," he says. "If, for example, we put $1.7 billion into solar photovoltaic research we might get somewhere and we'd have a much bigger impact on the climate change problem."

Tim Considine, professor of Natural Resource Economics at Penn State University, notes that one of the problems when evaluating the net costs of new technologies is anticipating improvements with the old ones. Even as fuel cells become more efficient and affordable, refinements to the internal combustion engine and new "interim" solutions such as gas-electric hybrids and clean diesel may eliminate some of the savings expected from hydrogen. "The classic case is wind," says Considine. "It was looking really good in the late 70s and early 80s and the cost per kilowatt hour really dropped. But the cost from coal and natural-gas powered generation dropped even more. That's likely to happen in the transportation area as hydrogen begins to make inroads. It's going to be competing with existing technologies."

Who Will Fill the Hydrogen Grail?

Despite these reservations, a lot of people are betting on hydrogen. The list of stakeholders runs from hydrogen fuel cell manufacturers such as Ballard Power Systems to the big energy companies such as BP and Royal Dutch Shell to Ford Motors to large manufacturers such as United Technologies, General Electric, and DuPont. And while their investments in hydrogen research represent just a small piece of the enormous energy and technology pie, it's a far larger portion than it used to be.

Some industry experts believe that hydrogen could revolutionize the energy sector and deliver stratospheric returns for those willing to invest early. Mary Tolan, head of the energy practice at Accenture Technologies, is calling on the large energy producers to embrace a long-term hydrogen strategy involving a one-time $280 billion industry investment into a new hydrogen infrastructure. This includes $130 billion for filling station retrofits, $70 billion to increase the natural gas and ethanol supply, $40 billion for new pipelines, and another $40 billion to transport fuel to filling stations. Her business model calls for 8 million fuel-cell vehicles on the road by 2009 and 115 million by 2015, supported by $10 billion in annual subsidies from the government to bring down the estimated $40,000 per vehicle cost. While this may seem expensive, Tolan notes that, at the height of the Apollo project, the U.S. government spent $17 billion per year in today's dollars. She also points out that those sorts of numbers are standard in the oil industry - ExxonMobil has budgeted $100 billion for petroleum exploration and production this decade alone.

Environmentalists fear that such enthusiasm from industry suggests a "giveaway" to the dirty industries hydrogen is supposed to replace. Erich Pica, a Senior Policy Analyst with Friends of the Earth, notes that when President Bush announced his hydrogen program, big energy interests from the Nuclear Energy Institute to the National Mining Association to the American Petroleum Institute issued press releases praising the program. "The hydrogen economy is kind of like the Holy Grail for the environment movement, but it depends on what the grail's full of," Pica notes. "If it's full of hydrogen produced from coal or nuclear power plants it's not going to help the environment because it's just shifting fuel waste from tailpipes to coal emissions or nuclear waste."

Green technology gurus like Amory Lovins of the Rocky Mountain Institute and Jeremy Rifkin, author of The Hydrogen Economy instead propose a decentralized, "small is profitable" model. Their vision is one based on widely dispersed renewable energy technologies that allow mass-produced "hydrogen appliances" to produce hydrogen fuel locally, which then is used to power ultra-efficient fuel cell cars, which can in turn feed back into the larger power grid. Even those scenarios, however, call for interim steps in which hydrogen is reformed from fossil fuels.

The one thing everyone agrees on is that the transition to hydrogen will require a large commitment by government. The National Hydrogen Association, a broad consortium of different hydrogen stakeholders, argues that government must intervene, at very least, to create uniform codes, standards and regulations. Ideally, the NHA would like to see government fund community market development programs, demonstration projects, tax incentives for mass commercialization, and a commitment to shift federal vehicle fleets to fuel cells as part of a broader partnership with industry. "Industry has the expertise and resources to bring new products to market, but … can't finance long-term societal goals such as clean air and oil independence; governments have …the long term staying power and mission to develop and promote new technology to achieve societal objectives."

Chicken or Egg?

As daunting as it must have been in 1961 to conceive of putting a man on the moon in ten years, the to-do list for the hydrogen economy may be even more intimidating. Produce and store hydrogen in an economical and ecologically sound manner. Build an infrastructure. Create an economic and regulatory climate in which this all can happen. And before anyone can commit major resources to a hydrogen future, there has to be a consensus as to what that future will look like. "Right now there's a chicken and egg problem," says Shellenberger. "The auto industry is reluctant to invest and commit to a particular kind of hydrogen vehicle because they don't know what the infrastructure will look like. The government is reluctant to invest in infrastructure because they don't know what kind of car the auto companies will produce."

It's not going to be easy, and it's not going to be cheap. But even if the final tally is $300 billion or more, the ultimate question may not be whether we can afford it, but if we can afford not to.

What is the cost of our continued reliance on petroleum? "More wars fought for oil. More childhood asthma," says Apollo Alliance's Shellenberger. "Lost jobs and increased trade deficits, because if we don't transition to a hydrogen economy Japan and Europe will, and we'll be buying their products."

Hydrogen 101

While hydrogen is a clean fuel, creating only water when it is burned, it takes energy to extract, or "reform" hydrogen into its pure state.

The main source of hydrogen fuel today is the hydrocarbon molecule found in fossil fuel. Currently, the most economical way to extract hydrogen is methane or propane "steam reforming." Natural gas is mixed with steam at high pressures and temperatures, stripping hydrogen from propane molecules. Unfortunately, the main by-product of this process is carbon dioxide, which is also considered the major culprit behind global warming. Other potential hydrogen feedstocks are coal and nuclear energy. Each have their drawbacks - the burning of coal creates CO2 and other pollutants; the nuclear industry continues to grapple with issues of safety and waste disposal.

The cleanest way to produce hydrogen is electrolysis, where an electric current is run through water to break its chemical bonds, releasing both hydrogen and oxygen. While there are no harmful emissions from this process, the electric current needed to separate the hydrogen comes from the power grid, over 90 percent of which runs on fossil fuels. This means that until renewable energy can shoulder a larger share of our power portfolio, the burden of greenhouse gas production in electrolysis is simply shifted from automobile tailpipes to power plants further afield.

Researchers are also exploring alternative hydrogen feedstocks such as agricultural and factory waste and wastewater, algae ponds, trash, even bacteria and other microbes. Unlike petroleum, which has one main source - drilling underground wells - we may end up relying on a variety of methods to produce hydrogen fuel. "We don't need a main way" explains Bruce Logan, director of the Penn State University Hydrogen Energy Center and Kappe professor of environmental engineering, "we need a lot of different ways."

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