| Above: The Honda FCX is one of several hydrogen fuel cell vehicles currently being tested in California. |
Environmental
Entrepreneurs Update
August 28, 2003
This August 2003 Environmental Entrepreneurs (E2)
newsletter is sent to all E2 members, people interested in joining E2 and friends
of E2. This
newsletter includes brief updates on E2 and NRDC activities. In addition, each
month we feature one topic in depth. This month we look at Hydrogen powered vehicles:
1. In Depth: Hydrogen - Is it the Answer for Clean Cars? Car makers are starting to road test emissions-free hydrogen powered vehicles. But are they economically viable? They will need to compete with "near zero" emission, fuel-efficient gasoline hybrids that are already commercially available. This article explores the business and environmental issues surrounding clean cars.
2. E2
New England Meets with Key Massachusetts Environmental Officials. Our New
England E2 chapter lays the groundwork for an on-going effort to work with Massachusetts
Environmental Affairs on marine fisheries management, clean water, mass transit,
and fighting federal rollbacks of environmental regulations.
3. E2 Meets with Representative Solis. California E2 met
with Representative Solis (D - CA) to discuss environmental heath, clean water
and clean air issues.
4. The McCain/Lieberman Climate Stewardship Bill. This Fall, the first law ever
to set a budget and economic market for US greenhouse gas pollution will be debated
in the Senate. E2 is working with the bill's sponsors to help get it passed.
5. Energy Update: Senate passes last year's Energy Bill.
Abandoning hope of passing a new, substantive and progressive energy bill, the
Senate instead turned to last year's bill, which is full of pork barrel projects,
industry subsidies and not enought funding for efficiency. The House (which
passed an even worse bill) and Senate will work to reconcile their two versions
later this session.
6. Administration Relaxes Clean Air Rules. The EPA announced rule change allowing
old, polluting power plants to avoid modern pollution controls.
7. Federal Court Restricts Global Deployment of Navy Sonar. NRDC was triumphant in its year-long court battle against the U.S. Navy over its deployment of high-intensity sonar across most of the world's oceans.
8. Lessons
from the Northeast Electricity Blackout. NRDC's Ralph Cavanagh says that the
solution is energy efficiency, new grid management technologies, and a Congress
that doesn't hold the grid hostage to pork barrel energy legislation.
9. NRDC's Drew Caputo Recognized for Work in California. California's
coast is perhaps the state's greatest asset and California Lawyer has
recognized NRDC's Drew Caputo as one of the top five environmental lawyers for
his work in preserving the coast.
10.
Calendar of Events. Upcoming E2 events include: September
4 in Santa Monica, September 13 in Marin, September
17 in Boston, September 17 in San Francisco, October
4 NRDC Benefit in Mountain View, and October 21 EcoSalon
in San Francisco. Thanks for your support and interest in Environmental Entrepreneurs.
E2 News
Hydrogen - Is it the Answer for Clean
Cars?
| The auto industry has begun delivering hydrogen fuel cell powered vehicles to test markets in very limited quantities. While the vehicles will not be commercially available for several more years, they do work and work well. President Bush's goal for hydrogen powered vehicles to be commonly available by 2018. This raises the question whether these vehicles are "THE" future (as General Motors emphasizes in their literature) or a just one of many future possibilities. This article explores the current status of hydrogen as a fuel for vehicles and concludes that other technologies will deliver the low pollution promised by hydrogen, sooner, and with significantly less business risk. |
|
E2 recently attended an invitation-only conference organized by the U.C. Davis
Institute of Transportation Studies on the topic of The Hydrogen Transition.
Attendance was 30% industry, 20% government and 50% a mixture of universities,
national labs, environmental groups (including NRDC) and consultants. The individual
facts contained in this article come from the presentations and from conversations
with the attendees. The conclusions are our own and we are happy to be proven
right or wrong. As Yogi Berra said, "It is difficult to make predictions - especially
about the future."
If Hydrogen is the
answer, what is the question?
There are three primary social problems caused by today's vehicles:
1. Air pollution;
2. Climate change caused by greenhouse gas pollution; and
3. Political issues caused by our dependency on imported oil used to power the
vehicles.
Taken in this light, the question should be:
"What is the fastest path with the least economic risk to a fleet of vehicles which is energy efficient, near zero emissions and runs on fuel that is near "carbon neutral"?
(Carbon
neutral means that there is no net increase in greenhouse gases emitted either
from the manufacturing of the fuel or by its use in powering the vehicle.)
Hydrogen is attractive because it can be produced from almost any energy source
and can be converted to electricity on the vehicle with zero pollution. However,
depending on the source of the hydrogen (i.e. using solar power to create electricity,
to split water creating hydrogen gas; reforming natural gas into hydrogen; or
gasifying coal and converting it to hydrogen with CO2 sequestration) the emissions
generated during production and distribution may be less than, equal to, or greater
than those produced by gasoline.
To be successful, hydrogen would have to:
1. Be price competitive with gasoline;
2. Produce lower levels of greenhouse gases compared to gasoline or renewable
fuels; and
3. Be used in vehicles similarly priced to conventional vehicles, and/or offer
some compelling advantage to conventional vehicles.
Fuel Cell Vehicles
Currently Honda, Mercedes, Toyota, Ford and GM have fuel cell vehicles in field tests with real users. Positive driver feedback includes the acceleration, quietness and comfort of the cars. However, the main barriers to acceptance are: (1) short range - 100 to 150 miles, (2) price, and (3) availability of fuel. Currently the power system is about ten times more expensive to manufacture than a gasoline equivalent. Gradual technological changes will help to improve range, fuel availability and cost of fuel cell vehicles.
Arguably, the most tireless and vocal champion of the hydrogen car is Larry Burns, Vice President of Research, Development and Planning for General Motors (see February newsletter). Mr. Burns points out that a fuel cell vehicle will have one tenth the moving parts of a gasoline vehicle and the vehicle system (engine, fuel, axles, etc.) can be packaged into a "flat pancake", 6 inches thick, allowing the design of radically different vehicles. GM expects the first commercial sales of fuel cell vehicles in 2010 and believes it is possible to profitably sell 1 million vehicles by 2015 if the fuel infrastructure is in place. The federal government's goal is commercial availability by 2017. There was no agreement at the conference concerning when or if hydrogen passenger vehicles will be a commercial success. The answer will depend on three main factors:
1. Vehicle range. Roughly speaking, one kilogram of hydrogen is equivalent to one gallon of gasoline. The fuel is currently stored in high-pressure tanks that are expensive and heavy. Space constraints limit current vehicles to 100 to 150 miles per tank. It is very unlikely that the efficiency of fuel cells can be improved enough to get vehicles to a 300-mile range; which is considered the minimum for market acceptance. Other hydrogen storage techniques currently have problems due to higher costs or energy lost in the transfer of the fuel.
2. Safety. As long as the public believes there is a safety problem associated with driving around with a tank of hydrogen, they will not buy the vehicles. One public accident will affect the market view even though it is not uncommon to see a gasoline vehicles burning with black smoke on the side of the road. There are no technical barriers to making hydrogen as "safe as gasoline". Yet, because of the increased scrutiny and the possibility that people may be making hydrogen from electricity or natural gas in their garages, hydrogen needs to be safer than gasoline.
3. Cost & Availability. Hydrogen fuel will need to cost about the same as gasoline and be available in 25% to 50% of the same locations as gasoline. Market research done by Synovate has shown that fuel availability is how consumers will know if the market is committed to hydrogen. With less than 25% availability, the consumers simply won't believe that hydrogen isn't just the next "8 track tape." Hydrogen powered vehicles will also need to be in the same price range as today's cars. The fuel cell is a major barrier to getting the cost down. Some people propose that hydrogen just be burned as a fuel in a modified internal combustion engine. It is likely that today's vehicles could be readily modified to burn hydrogen instead of gasoline. While this would produce some air pollutants that otherwise would not occur with fuel cells, it does substantially reduce the cost and complexity of using hydrogen and is an attractive alternative.
While fuel-cell passenger vehicles would require a large, nation-wide hydrogen fuel infrastructure, heavy trucks, ships and trains would not have the same need. They have more room to accommodate the fuel storage and they require a limited fueling system. If such transportation vehicles were located near inexpensive sources of hydrogen this could be an early, viable market.
Producing and Delivering Hydrogen
The commercial market for hydrogen power already exists. For example, BP produces 5000 tons of hydrogen per day worldwide. Their production cost for hydrogen is similar to gasoline. Much of the hydrogen is a by-product of oil refineries and is consumed locally in the region where it is produced. A great example of this is a recent announcement between Dow Chemical and General Motors. Dow will use up to 500 GM fuel cell systems, generating up to 35 Megawatts of electricity for Dow.
The problem is that hydrogen is very expensive to transport and to store. While it costs the average consumer about $1.50 per gallon to buy gasoline, just transmitting hydrogen gas in a pipeline costs $1.00 per gallon equivalent (kilogram). While gasoline is easy to store, hydrogen is expensive to store since using either high-pressure tanks or liquid hydrogen expends large amounts of energy to be expended to compress the gas.
The average gas station today does not have enough space to store a comparable amount of hydrogen. This leads many people to assume that the answer to hydrogen distribution will be to distribute natural gas or electricity to a distribution point and then convert it to hydrogen on site. Converting natural gas to hydrogen produces greenhouse gas pollution and air pollution. Electricity can convert water to hydrogen but is only cost effective if electricity can be purchased for about 7 cents per kilowatt hour (this would be similar to gasoline at $1.50 per gallon). While it might be possible to buy cheap electricity late at night, the problem of storing the hydrogen gas persists.
Gasoline/Electric Hybrids - Establishing a new standard
An average
vehicle sold in 1975 produced 4,000 pounds of air pollutants during its lifetime.
By comparison, the 2004 Toyota Prius hybrid is projected to produce only 20 pounds
of air pollutants. The California Air Resources Board (CARB) refers to this category
of vehicles as "Partial Zero Emission Vehicles (PZEV)". Rather than focus on Zero
Emission Vehicles, CARB changed its regulations this year providing incentives
for industry to produce more PZEVs with a goal of 50% of new vehicles sold in
California being PZEVs by 2010. In part, this is the reason GM and Daimler/Chrysler
dropped their law suit (see DaimlerChrysler,
GM drop suit) against CARB this month.
Hybrid vehicles are currently available from Toyota and Honda. Their sales peaked
to 5,000 vehicles in the month of February, partly because of gas price increases
and the Iraq war. The 2004 Prius is impressive because for the same price as the
original model, it is better in every way (disclosure - the author owns a 2001
Prius and has a 2004 on order):
* 20% more
power
* better fuel economy (55 combined mpg based on manufacturer's data)
* lower emissions
* 10% larger interior (qualifies as a mid-sized car)
* heavier
With 55 combined miles per gallon, the Prius has more than twice the fuel efficiency of the avergae vehicle in its class. There is a price premium of about $2,500 to $4,000 over cars with similar size and amenities (less any tax incentives which vary from $300 to $1000). Toyota's marketing approach is featuring the increased power of the Prius. They observe that customers commonly will pay extra for more engine power while giving up some fuel efficiency. Consequently, Toyota will feature the performance of the vehicle, with no sacrifice in fuel economy, while providing nearly zero emissions. (To see and drive the vehicle come to our September 17 event in San Francisco).
This marketing
approach is consistent with research presented at the conference. Customers
are interested in environmentally friendly cars and fuel efficiency but only if
all other attributes (size, power, price, etc) are equal to the alternatives.
Toyota claims that the 2004 Prius has environmental performance (including greenhouse
gas pollution) equal to current hydrogen fuel cell vehicles. This is because
hydrogen is typically produced from natural gas with greenhouse gas output produced
as a byproduct and because both the Prius and fuel-cell vehicles get similar
fuel economy.
A Solution
| NRDC proposes a scenario depicted to the left which shows US oil consumption based on business as usual. If nothing changes, we will increase from our current 8 million barrels per day to 15 million barrels per day by 2030 (top line on chart). If we increase fuel efficiency standards (CAFE) to 40 mpg beginning in 2012, we will see the reduction shown in yellow. Similarly, improving fuel efficiency to 55 mpg by 2020, starting to use renewable fuels and introducing fuel-cell vehicles and smart growth initiatives, we can reduce our use of oil to 4 million barrels per day by 2030. |
|
Summary
No one should underestimate the urgent need to solve the problems caused by our current vehicles: air pollution, greenhouse gas pollution and foreign oil dependency. Our most effective tools to date have been (1) regulations establishing air quality standards, (2) fuel efficiency standards and (3) innovation. When government imposes a technology-specific solution (i.e. MTBE in gasoline) it has generally not been successful. Such a move does not provide an incentive for the market to innovate or for the private sector to find the optimal combination of technology and energy sources, according to their business needs. On the other hand, standards that are not technology-specific, but rather set an emissions limit, have been effective in stimulating technology needed to meet the goal. Well-designed regulations can both reduce the cost of compliance over time (i.e. Low Emission Vehicle standards), and offer additional efficiencies and consumer benefits.
While hydrogen will play an important role (for example where the fuel is inexpensive and can be used locally, possibly in truck fleets or specialized vehicles), we think the public is best served by considering hydrogen as one of many possible fuels and fuel cells as one of many possible alternative vehicle technologies which can lead us to our emission reduction and petroleum dependence reduction goals. In addition, today's vehicles stay on the roads an average of 15 years, so waiting 10 to 15 years for hydrogen fuel cell or other alternative fuel technologies would mean locking ourselves into a path of increased oil dependence and environmental problems for the next 20 to 30 years. For now, investment in hybrid vehicles can mitigate the risk of delays in hydrogen fuel cell development and market success. They'll also help ensure the success of fuel cell vehicles by bringing down the costs of the technologies - motors, batteries, and power electronics - that the two share.
Our strategy to ensure we meet our goals should be to:
1. Use regulations
to continue to reduce the amount of air pollution and greenhouse gas pollution
from vehicles
2. Ramp-up fuel efficiency standards
3. Invest in carbon-neutral fuels produced in environmentally sound ways, with
air quality benefits.
E2
New England Meets with Key Massachusetts Environmental Officials
On August 11, a delegation from the New England chapter of E2 met with Ellen Roy
Herzfelder, the Massachusetts Secretary of Environmental Affairs and five members
of her staff. Since this was our first meeting with the Secretary, our goal was
to introduce E2 and lay the groundwork for an ongoing relationship as well as
to discuss substantive issues. Thanks to Sarah Chasis from NRDC who accompanied
us, we came armed with action items several important issues. Ms. Herzfelder responded
very positively to the group, and assigned members of her staff to review our
input and follow up with us.
Since Massachusetts is a coastal state, oceans and fisheries are issues on which
it can exert significant leverage. Despite years of regulations and limits on
fishing, New England fishermen consistently take more fish than regulations allow,
overshooting catch targets for some species by over 300%. We urged Secretary Herzfelder
to support the recommendations of the Pew Oceans Commission report, which includes
policies such as "hard" quotas, marine reserves and strong monitoring and record
keeping.
The Bush administration's attempts to narrow the scope of the Clean Water Act
could cause harm to Massachusetts, since the state's most important sources of
drinking water, the Quabbin and Wachusett reservoirs, could be directly affected.
We asked the Secretary to urge Governor Romney follow the lead of other governors
and write to President Bush opposing these regulations. With respect to mass transit
and DOD exemptions, Secretary Herzfelder assured us that Governor Romney was already
taking pro-active positions against the DOD exemptions and supporting renewed
funding for mass transit.
We look forward to continuing our conversations with the Secretary's Office, especially
with respect to oceans and fisheries issues and interests in developing public-private
partnerships around environmental and smart growth projects. We plan to meet with
additional state and regional officials soon. On September 17, Doug Foy, Chief
of Commonwealth Development whose responsibility includes housing, transportation
and environmental affairs, will be the keynote speaker at the New
England E2 Smart Growth Ecosalon.
E2 Meets with Representative Solis
E2 and NRDC were invited to meet with California Representative Hilda Solis (representing
the 32nd District, including the San Gabriel Valley and parts of East LA), in
her district offices in El Monte on August 7. Congresswoman Solis has been one
of the House's strongest proponents of environmental safeguards. In addition to
thanking the Congresswoman for her strong environmental advocacy on the House
Energy and Commerce Committee and discussing ways in which E2 might support her
work in the future, the meeting focused on the environmental concerns specific
to the Latino community both in California and nationally, and how to increase
the effectiveness and visibility of Latino voters on those issues of concern.
The Congresswoman described the disenfranchisement of a large number of her constituents,
many of whom are immigrants without a clear grasp of their legal rights or access
to information in Spanish about issues affecting their environmental health. She
also discussed some of the environmental threats that affect low-income communities
to a far greater degree than they do more affluent areas, especially air and water
pollution and industrial, agricultural and household exposure to toxic chemicals.
NRDC's Adrianna Quintero, Project Attorney with the Public Health Program, and
David Beckman, Senior Attorney for the Coastal Water Quality Program talked about
NRDC's outreach work to the Spanish speaking community and litigation on behalf
of environmental justice.
Congresswoman Solis also voiced her concern that both among her constituents and
the prominent unions in her district there is fear that measures to protect environmental
health could result in lost jobs. E2 is eager to assist in making the case that
safeguarding the environment promotes economic growth, and believes that this
argument would be most effective coming from leaders within the Latino business
community. With the Congresswoman's help, E2 will seek to establish more key ties
with Latino business leaders.
The McCain/Lieberman Climate Stewardship
Bill
Last May, 300 E2 members and friends signed a position
statement in support of the McCain/Lieberman global warming legislation. At
that time, Senators McCain (R - AZ) and Lieberman (D - CN) were planning to offer
this legislation as an amendment to the proposed Senate Energy Bill. Over the
summer, however, the Energy Bill foundered on the Senate floor (see "Senate
passes last year's energy bill"). At that point Senators McCain and Lieberman
secured the Senate leadership's agreement to have a separate stand alone vote
on the Climate Stewardship Bill this fall (late September or October).
E2 is working closely with NRDC and both Senator McCain and Lieberman's offices
to support this important piece of legislation and will be advocating for the
bill during a Washington DC trip on September 23. For background and a description
of the bill go to S.
139 - Climate Stewardship Act.
NRDC News
Energy Update: Senate passes last year's
Energy Bill
During the first week of August, in an unexpected, last ditch effort to pass energy legislation before the August recess, the Senate passed a version of last year's doomed energy bill, even though it had never made it out of conference in its first iteration. This development drastically changes the playing field for energy legislation. While last year's energy bill does not include huge subsidies for construction of new nuclear power plants, environmentalists opposed the bill for its failure to include oil savings and significant renewable energy measures, its tax breaks for polluting industries, exemptions for fuel additives from product liability claims, and funding for oil and gas production in fragile coastal and marine areas.
Although we will likely never know the exact sequence of events, the most widely corroborated version of the tale is that Senator Domenici (R - NM) (who introduced this year's Republican-sponsored energy bill) offered the Democratic leadership a deal to break the logjam by suggesting that the Senate simply vote on last year's Democrat-sponsored version.. They agreed, feeling they could not vote against their own legislation. The energy bill passed the Senate 84-14.
The House passed a damaging energy bill in April. The Senate began debating its version of the bill in May and then action stalled until late July. In the two weeks it was debated, only a few issues were resolved. The history of energy bill events in July - leading up to the last hours before recess - is outlined below:
When Congress returns in September, a conference committee will attempt to iron out differences between the House and Senate versions of the bill. Last year's energy bill died in conference when differences between the two versions could not be reconciled.