Future 500 Forming Hydrogen Alliance
October 2003 OCTOBER 2003An unusual alignment of interests is emerging that could make California the world leader in moving toward a hydrogen economy. The Future 500 partnership of companies and stakeholders is seeking to bring together the corporate, environmental, government, and academic leadership needed to build a hydrogen fuel cell infrastructure in the state within about ten years. General Motors, a Future 500 member company, has provided anchor corporate support.
Hydrogen fuel cells unite an unusual network of advocates from across the political spectrum. Corporate futurist Peter Schwartz of the Global Business Network, liberal activist Jeremy Rifkin, environmental champion Randy Hayes, conservative industrial and technology leaders, and California's top automobile regulator, Air Resources Board chief Alan Lloyd, all believe hydrogen fuel cells, powered by renewables, can provide reliable power and help remove the automobile from the environmental debate in the state. Even more progressive oil companies, such as Shell, BP, and ChevronTexaco, tend toward this view.
The technology driver is rapid gains in fuel cell technology - including a 10-fold cost reduction in recent years, thanks in part to a huge R&D commitment by companies like GM, which devotes 40% of its R&D budget to hydrogen and wants to be the first company to profitably sell one million fuel cell vehicles. GM has developed an advanced fuel cell prototype called the "HyWire," as well as a variety of more traditional looking vehicles. The HyWire design places the cars propulsion system entirely beneath the passenger compartment, enabling much greater variety and flexibility among vehicle types. A sports car, station wagon, minivan, or SUV could each be built atop the same base; consumers could buy a new passenger compartment whenever they need one, rather than a whole new car, for example. This manufacturing platform could potentially revolutionize auto manufacturing by making it more easily customizable and responsive to individual consumer demands while making it simpler and hence more energy, environmentally, and more importantly, cost efficient efficient.
California is a priority market for fuel cells in part because the state has set ambitious goals for zero-emission vehicles to comply with air regulations and because of its recent energy crisis and fear of terrorism, which has politicians and citizen groups agitating for distributed generation to help secure a more reliable energy supply. By 2009, automakers must begin meeting tougher state targets for the sale of such vehicles.
Fuel cell vehicles can fill the bill. Fuel cells convert hydrogen into power, and emit only water out the tailpipe. Stationary fuel cell systems can help California expand its energy supply without increasing air emissions and help spur the market for fuel cell technology.
But whether a fuel cell based transportation and energy system is environmentally sustainable depends on how the hydrogen fuel is generated and transported. Hydrogen can be generated from traditional fossil fuels, or from renewable sources such as hydropower and wind, using electrolysis.
Leaders in California prefer a renewables base, thus flanking the federal program that tends to favor fossil fuels, and aligns California with European Union standards that favor renewables. That maintains the state's historical pattern of stronger environmental standards than the nation as a whole. But key barriers remain. Chief among those the state must grapple with:
- Secure Renewable Sources. Most California leaders see natural gas as the interim source for hydrogen. But virtually everyone hopes to see hydrogen generated from renewable sources as quickly as possible. Unfortunately, hope alone won't make it happen. Goals, incentives, and systems must be established by government and business, or the state could miss the renewables opportunity.
- Solve the Fuel Tank Problem. Three technologies are vying to be the first to dependably store hydrogen for on-board use. Federal and private R&D needs to complete the development of systems that store hydrogen in gaseous, liquid, or solid form.
- Build Fueling Stations. Already, California environmentalists are pressing for a bond act that would retrofit many of the state's gasoline stations to dispense hydrogen fuel. The 0 million proposal, sponsored by Environment Now, is currently on hold in a legislative committee. If enacted, the bond would be paid from hydrogen fuel sales.
- Encourage Mass Production. Other "green" cars, like Toyota's hybrid Prius, are popular but not big sellers - Toyota has only sold 100,000 hybrids since 1997and only recently were those sales profitable. To make the hydrogen transition a reality, millions of fuel cell cars will need to be profitably sold. Government and industry procurement can prime the pump. Tax incentives and rebates may be needed to stimulate initial consumer purchases until production surpasses sustainable volumes.
- Win the Public. The payback offered by hydrogen is an end to petroleum addiction, and all the associated health, environmental, military and terrorist implications. The total investment required nationally has been estimated at between 0 billion and 0 billion, about the range for the mission in Iraq. A public education campaign may be needed to convince voters to shift funding priorities away from fossil fuels.
Those barriers can't be overcome unless seasoned warriors from diverse interest groups find a way to work together. For years, automakers, energy companies, environmentalists, and regulators have grown accustomed to a highly combative relationship with one another. Litigation, regulation, and command-and-control tactics set the groups at odds, and prevented the emergence of a common vision for the future.
Those differences remain. But all sides realize that a hydrogen transportation system won't be possible unless these groups find a way to work together, and share their resources to get the job done. Any one of the groups individually can derail the hydrogen future.
That makes some nervous. Environmentalists don't want hopes about hydrogen to derail short and mid term efforts to improve fuel economy and emissions. Automakers don't want their good faith efforts turned into a new set of impractical mandates. Politicians don't want to pay for a system that forces them to pass unpopular tax and spending measures. Citizens don't want to pay for such taxes unless they see government along with oil and auto companies share the burden and demonstrate leadership. Ultimately, trust must be developed, and integrated solutions found, if the needs of all these stakeholders are to be met.
The Future 500 intends to develop the right mix of experts, advocates, technologies, and policies to make California the world leader in the transition to a hydrogen economy, and set a precedent for collaboration as a viable alternative to legislative combat in the years to come.
For more information on how Future 500's Hydrogen Alliance, contact Alison Wise at 415-294-7775.
