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Corporate Stakeholder Engagement, Metrics, and Reporting:
Maximizing Return to Stakeholders at the World’s Leading Companies
Newsletter July 2004, Volume 1, Number 2
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This Month’s Article:
Jumpstarting California’s Hydrogen Economy
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By Erik Wohlgemuth
Director, Stakeholder Engagement
Governor Schwarzenegger’s recent announcement to commit 0 million to create a California hydrogen highway by 2010 positions the State as leading this technological transformation in the U.S. But several states – Ohio, Michigan, New York, Texas -- are competing for this title.
This competition is understandable given hydrogen technology’s tremendous economic and environmental potential; concerns with clean air and oil dependency globally in countries like China and India reflect huge potential demand for more sustainable alternatives to fossil fuel powered transportation.
With clean air problems and tremendous projected infrastructure needs to meet demands of a burgeoning population combined with its technological leadership, California is more motivated and better positioned than other states to win this competition. Governor Scharzennegger understands this: "Californians invent the future and we are about to do it again… by investing in a clean hydrogen future, thus bringing jobs, investment, and continued economic prosperity to the state."
Why strive for a hydrogen economy?
A renewables-based hydrogen economy offers economic and environmental promise by addressing California’s power supply needs without requiring new plant and grid construction as they are replaced by stationary and mobile FCs and other renewable sources, reducing costs for protecting power stations from terrorism, cleaning our air and treating associated health related problems such as asthma, and reducing reliance on oil.
A hydrogen economy will provide an alternative revenue source for consumers and businesses that supply electricity into the grid through their cars, and create new software and technological growth market opportunities for Silicon Valley to address a net metering distributed generation challenge that will have global implications.
Recent studies suggest that hydrogen fueling stations may cost less to maintain than gasoline fueling stations, offer a higher return to station owners, and may not pose the same potential environmental liability as leaking underground gasoline storage tanks.
How do we get there?
To help jumpstart the transition to a renewables-based hydrogen economy in California, key California stakeholders must do their part.
Early Premium Power Market Adopters
Leading California industries – telecom, financial services, information technology – are highly sensitive to disruptions in the power supply. Such industries need premium quality back-up power to run technologies such as microwave relay stations and computer trading systems if the power grid fails. That sensitivity is driving demand for Premium Power, which is roughly a -10 billion year U.S. and growing. Fuel cells are an excellent source of Premium Power – cost-effective and reliable right now.
Companies like SBC and Schwab should lead their industries by purchasing dozens of these units from companies like UTC, BOC, FuelCell Energy, and GM. Further, SBC could explore installation of FC powered mobile base stations to extend network coverage to hard-to-reach areas, as BOC and FDT Associates is doing in England. Heavy industries might find suitable uses for stationary FCs as Dow Chemical has done in collaboration with GM in Freeport, Texas.
When using fuel cells for premium power, California industries earn two dividends: they obtain the energy security they need while helping their community and state obtain the energy security we all need.
Petroleum and Utility Industries
The petrochemical industry, notably ChevronTexaco Texaco and BP Amoco, has large California commitments and should commit to producing hydrogen solely from renewable electricity sources by 2013. Natural gas, less polluting than coal, can serve as a bridge source of hydrogen until renewables are more abundant. For example, ChevronTexaco Texaco joined forces with UTC and Hyundai on a five-year project that includes placing hydrogen fueling stations primarily in California to fuel a fleet of Hyundai Tucson vehicles equipped with UTC FCs.
The utility industry must meet California’s goal of achieving a 20% renewables portfolio standard by 2020. It takes power to produce hydrogen via electrolysis and some sources are cleaner (wind, hydro, solar) than others (coal, nuclear and natural gas). California recently expanded its wind power production and already has large hydropower production. Natural gas, the cleanest of fossil fuel sources, can be an interim source while Coal and nuclear should be avoided due to their negative environmental costs.
The Auto Industry
The auto industry, a key player to supply the vehicles to ply the hydrogen highway, has committed to providing 250 FC vehicles (FCVs) to California by 2008, which riles environmentalists as a token gesture. Auto industry leaders Toyota and GM can tip the balance in demand and begin mollifying environmentalist by taking the lead in challenging the auto industry to supply not hundreds but thousands of hydrogen and fuel cell (FC) powered vehicles by 2013. Concurrently, auto makers must address fuel economy in the short-term until FCVs are abundant.
Government and Real Estate Development Industry
California Governor's Executive Order D-16-00 established a sustainable building goal for state buildings. California state government should leverage its buyer power to install stationary FCs to power its new green facilities as well as purchase FC powered vehicles for its fleet. The State should also leverage influence to procure federal funds for hydrogen related pilot programs.
Local municipal governments should follow San Francisco’s lead and commit to buying FCVs and stationary FCs to help spur consumer awareness and overcome fears of Hindenburg style disaster, as BP has discovered in seeking to install a hydrogen fueling station to fuel London’s FC powered buses.
Demand for developments with renewable, off-grid power sources is earning premium pricing. For new demonstration developments, the real estate development industry should consider installing 50kw – 250 kw stationary FCs to power 40 to 200 homes. Local and state government might work with the industry to includes FC power generation in a small percentage of new developments.
Silicon Valley and the Entertainment Industries
Silicon Valley and the venture capital industry has been seeking the next growth opportunity since the dot come bust; clean power offers ample opportunities. FCVs could offer decentralized, distributed power generation, supplying power to the grid when parked. Software and metering technology will be needed to manage these proliferating power sources (cars and stationary FCs) for the grid and track payments for this power.
Large companies like Motorola, NEC, and Samsung have announced plans to introduce micro FC powered products in 2005. Silicon Valley companies like Intel and HP should leverage their technological leadership positions to commit to buying stationary, mobile FCs, to foster early adoption and develop complementary technologies to support emerging FC powered technologies.
The Entertainment Industry embraced the Prius, helping foster a mass market image that hybrids are cool and acceptable. Celebrities should show similar support for hydrogen FCVs, as Dennis Weaver seeks to do this year with his Hydrogen Drive.
Environmental Groups, Academia and Voters
Environmental groups and academic institutions should support various consumer and business incentives for purchasing stationary and mobile FCs in return for production commitments from industry and buyer commitments from corporate customers. Environmentalists should consider supporting ideas like a trading system allowing emissions credits to mobile and stationary FC manufacturers. Environmentalists should continue pressuring the auto industry to improve fuel economy of their fleets in the near term but should concurrently encourage hydrogen infrastructure development.
Similarly, academics and environmentalists should maintain pressure on the Utility industry to meet its legislated renewable generation commitments. Finally, voters must let their representatives know that California must focus its limited financial and human resources on prioritizing the implementation of a renewables-based hydrogen economy.
Future 500’s Role
Informally, a diverse set of California leaders – in industry, politics, and the activist community – are working to advance California’s hydrogen infrastructure development. Through facilitated roundtable discussions and informal meetings between key interests, Future 500 is seeking to align these interests, and help them work together successfully, to achieve their common purpose. Future 500 will also launch an email newsletter beginning in July to update interested parties on progress from our facilitated meetings and other relevant news about California’s progress toward a hydrogen economy (to subscribe, see below). Through facilitating meetings and serving as a conduit of information between myriad stakeholders, Future 500 will help foster the informal and formal collaborative partnership and policy commitments needed to jumpstart the transition to a hydrogen economy.
The governor has taken a crucial first step. But it will take the collaboration and cooperation of all California stakeholders to make a renewables-based hydrogen economy in California by 2010 and beyond a reality.
For more information on Future 500's California Roadmap to Hydrogen, go to www.future500.org/hydrogen/.
To subscribe to Future 500’s California Hydrogen email newsletter, click on the link on the left side of this page.
Useful California hydrogen sources:
California Hydrogen Business Council: www.ch2bc.org
California Fuel Cell Partnership: www.fuelcellpartnership.org
California Stationary Fuel Cell Collaborative: www.stationaryfuelcells.org
UC Davis Fuel Cell Modeling Program: fcv.ucdavis.edu
San Francisco Hydrogen Demonstration Project: www.ci.sf.ca.us/sfenvironment/aboutus/air/fuelcell.htm
ChevronTexaco, Hyundai, UTC Demonstration Project: www.chevrontexaco.com/news/press/2004/2004-04-27_1.asp
Energy Independence Now: www.energyindependencenow.org/
UC Irvine National Fuel Cell Research Center: www.nfcrc.uci.edu/
NRDC April 2004 Report on Hydrogen: www.nrdc.org/air/transportation/phydrofuel.asp
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What You Can Do:
Free Webinar on CSR Standards and the CAP Gap Audit
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What We Learned In The Rainforest Now Available in Six Languages
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The highly acclaimed book by Bill Shireman and Tachi Kiuchi, “What We Learned In The Raniforest” is enjoying international success. Now available in Hebrew, Korean, Chinese (Simplified and Complex), Portugese and Japanese.
The book has also served as an inspiration for the Universiti Sains Malayasia as they implemented their “University in A Garden” theme to embrace and promote corporate sustainability. The idea is to demonstrate the links between “the roles and functions of an institution of higher learning, which is located within a garden-like environment. Says Professor Datuk Dzulkifli Abdul Razak, the University’s Vice Chancellor, “Like the book, which presents new ways of understanding business, we need to apply the core principles from observations of life in either rainforests or in our case, USM’s garden campus, for us to excel in what we seek to conquer.” Using the rainforest as a reference point, the professor has encouraged the entire campus community to use nature as source from which to learn innovations.
You can purchase “What We Learned In The Rainforest” now for 40% off the list price at Wal-Mart.com. And readers are encouraged to urge Wal-Mart to not just carry the book or “talk the talk”, but to engage in more sustainable practices, or rather, “walk the walk”. The book is also available at Amazon.com and all major book retailers.
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Quick Links
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The Future 500 provides powerful tools in Corporate Stakeholder Engagement, Metrics, and Reporting. Here are quick links to our most popular offerings, to Maximize Return to Stakeholders at the World’s Leading Companies:
To End “Survey Fatigue” and “Headline Headache” – The CAP Gap Audit
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What is The Future 500? Click for our Home Page
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Save The Date
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Eco-Products Fair 2004 – September 2 – 4, 2004, Kuala Lumpur, Malaysia Produced by The Asian Productivity Organization, The Federation of Malaysian Manufacturers, and the National Productivity Corporation of Malaysia. Admittance is free. To purchase exhibit space, or for more information, please contact webmaster@fmm.org.my
Don’t miss our upcoming conference presented in cooperation with NBIS/NW!
Sept. 26-29, 2004:” IE 2004: Profitable Sustainability – The Future of Business”. Seattle, WA. Register today. Be a Sponsor or Exhibitor. For more information or to register, visit IE 2004: Profitable Sustainability – The Future of Business
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