Tough Cell

Following the State of the Union address in which President Bush laid out his new FreedomCAR and Fuel Initiative, which was cheered by automakers and jeered by environmentalists, hydrogen fever swept from the Beltway into the printing presses and airwaves of mainstream media. CNN, Business Week, the New York Times, and U.S. News and World Report, among others, ran stories that, although sometimes skeptical of the Bush plan, trumpeted the promise of a hydrogen economy, calling it the antidote to both our dependence on foreign oil and the mounting threat of global warming.

The response raised popular awareness about the need for an energy shift to unprecedented levels, and that enthusiasm alone seemed to compensate somewhat for Bush's deceptive and problematic proposal. But now, the issue has been all but forgotten and hydrogen-economy headlines have given way to war cries, snowstorms, and Michael Jackson's second coming.

None of this should deter us from trying to make something lasting and constructive out of Bush's half-baked hydrogen plan. It is, after all, the first time federal funds have been focused to such an extent on building the hydrogen economy -- from developing fuel cells to designing an infrastructure for producing, storing, and distributing hydrogen. The challenge now is to expose the deficiencies of the Bush plan while simultaneously affirming the revolutionary premise of a hydrogen economy and leveraging the awareness that the plan was able to ignite. Bush's initiative may be incomplete and politically misleading, but it can nonetheless help us define a broader plan of action -- one capable of addressing all the complexities of the shift away from fossil fuels, and determining how we can build a hydrogen-based energy system in an economically feasible way.

"Ask almost anybody in the clean energy industries and they'll tell you that a pollution-free, hydrogen-based energy system is not only a worthy goal, it is the consummate goal," says Joel Makower, founder of CleanEdge.com, which tracks the progress of the clean technology market. "All roads in the clean energy industry lead to a hydrogen economy in which we can use renewable energy to make hydrogen, and use hydrogen to power our cars, homes, and factories. The big question is how do we get there?"

How indeed? Like most paradigm shifts, this one will require decades of trial and error in which a variety of bridge technologies are phased in over time. Along the way, we will harvest hydrogen from both renewable sources and fossil fuels, with the idea that eventually renewable sources can replace fossil fuels as the former become ever more economically practical and ecologically imperative. One of the principal failures of the Bush plan is that the path it charts toward hydrogen does not lead simultaneously toward developing renewable energy sources; rather, it diverts funds away from them. According to the White House, only $720 million of the $1.2 billion Bush pledged for his hydrogen plan over the next five years is new money. The rest -- roughly 40 percent -- is comprised of funds redirected from the renewable-energy and energy-efficiency programs.

"President Bush is merely playing a shell game with these funds," says Patricia Monahan, a senior transportation analyst at the Union of Concerned Scientists. "The increases in the budget for hydrogen-related projects were very nearly matched by the decreases in the budget for energy efficiency and renewables." There are some legitimate reasons to invest in harvesting hydrogen from fossil fuels (as the Bush plan does), but an ambitious program, says Monahan, must also provide increased funding for efficiency and renewables development, both of which will provide the critical groundwork for the hydrogen economy.

Likewise, any plan geared toward a long-term energy shift must provide for short-term solutions along the way. Bush's plan does nothing of the sort. "The FreedomCAR is really about Bush's freedom to do nothing about cars today," says Ashok Gupta, the lead energy economist at the Natural Resources Defense Council. A plan that was serious about shifting toward hydrogen and protecting the environment would include provisions for stricter mileage standards for cars and trucks, as well as government procurement programs and improved tax incentives for green buildings, hybrid-engine cars, and other affordable innovations in energy efficiency. It would also significantly expand the use of renewable, nonpetroleum fuels such as ethanol.

These kind of affordable upgrades should be required by law. It's common sense that any plan that is looking to the future must factor in short-term solutions along the way, in order not to aggravate the very problem the plan is supposed to solve. That said, how do we begin defining the long-term strategy? How do we begin this immense, multi-decade process that is, according to most experts, the best chance we've got at putting the kibosh on global warming?

The Many-Headed Hydrogen

Hydrogen is the most abundant element on Earth. It is the basic component of water, not to mention virtually every fuel humankind has ever used -- wood, oil, coal, and natural gas, all of which are made of hydrocarbons. Pure hydrogen, however, does not occur naturally; it must be harvested using electrical or chemical processes, which have their own hidden environmental consequences. Obviously, using renewable resources to power those processes could vastly reduce the environmental footprint of hydrogen production, but today, using solar energy to produce hydrogen would cost about 10 times as much as using conventional fuels. Here's why:

The cheapest and most widely used method of harvesting hydrogen is called steam methane reformation, a process that involves extracting hydrogen atoms from natural gas molecules. (A similar process can be used to extract hydrogen from solid or liquid fuels.) The problem is, extracting hydrogen from fossil fuels leaves behind carbon, which can escape into the air, fueling global warming. Scientists have developed so-called carbon sequestrations techniques -- methods of capturing the carbon atoms at the same time the hydrogen is captured -- but that process adds cost.

It's possible to skirt this dilemma altogether if the hydrogen is harvested from a substance that has no carbon in it to begin with -- such as water. Electrolysis extracts hydrogen from water using an electric current, and if that current is derived from renewable resources such as solar or wind energy, the hydrogen-production process can be emissions-free. If, instead, the electrical current is derived from a traditional power plant, there are obviously associated carbon emissions. However, power plants produce considerably less pollution per unit of energy than cars do, so technically we're better off running cars on electricity produced by a power plant than burning gas directly, according to George Douglas of the National Renewable Energy Laboratory, based in Golden, Colo. In the short term, that may be a reasonable avenue to pursue -- as long as we optimize the electrolysis process and substitute ever-cleaner forms of electricity down the line.

At the moment, electrolysis is considerably more costly than steam methane reformation -- first, because of economies of scale, and second, because the cost of electrolysis is contingent on the cost of electricity. According to Jon Slangerup, president and CEO of the Toronto-based hydrogen company Stuart Energy, it costs between $1.20 and $1.50 to manufacture one kilogram of hydrogen (which is roughly the energy equivalent to one gallon of gas) using steam methane reformation. Using one of Stuart Energy's electrolysis machines, it costs about $1.65 to manufacture the same amount of hydrogen -- provided that electricity costs just 3 cents per kilowatt-hour (kWh).

Grid electricity in the U.S. typically runs between 6 and 8 cents per kWh. Wind energy can already be produced at around 5 cents per kWh, so it's feasible to have relatively cost-competitive hydrogen derived from wind power. But solar electricity costs roughly 20 cents per kWh, so today it would cost about 10 times more to produce hydrogen using solar as it would using natural gas.

An ambitious hydrogen plan would include much more aggressive spending on renewables across the board to get them to the point where they can be cost-competitive with traditional energy. Right now, the Bush 2004 budget proposes investing an additional $11.2 million in efforts to derive hydrogen from renewable sources, and an additional $15.5 million to derive hydrogen from fossil fuels, according to J.R. Drabick at Environmental and Energy Study Institute, which produced a report on the renewable energy and efficiency components of Bush's proposed FY2004 budget. That doesn't sound like a huge discrepancy -- but in fact, renewables are at a severe disadvantage because they are already far less competitive than fossil fuels.

It is possible, however, that even in the long term, renewables will not be the only answer. "There is no energy source that doesn't have environmental impacts," says Nathanael Greene, an alternative energy expert at NRDC. "You'd have to put up lots of solar and wind to provide hydrogen to power all vehicles and support all the electricity demand in this country." In other words, a purely renewable-powered hydrogen economy could require wind mills by the hundreds of thousands, if not millions, and solar panels covering millions of acres, a situation that could have adverse effects on the land.

"I'm not idealistic enough to believe electrolysis will be the only pathway for hydrogen production," says Slangerup. "Steam methane reformation may well be a dominant pathway as well, and there are other possibilities. But at this point, no method has the environmental performance [of electrolysis]" -- which means that unless someone figures out how to clean up the other methods, in the long run, electrolysis will have to win.

Priming the Pumps

Hydrogen distribution is another critical issue, and will depend on production methods. If hydrogen is produced on-site, at gas stations or in people's garages, for example, there will be no need to install pipelines to transport it to the point of distribution. The Alexandria, Va.-based company H2Gen plans to introduce its first on-site hydrogen generation station later this year. According to the company's president, Sandy Thomas, the station is a 6-by-7-foot fueling station that will hook up to existing natural gas lines and, using steam methane reformation, crank out hydrogen on location at a cost competitive with that of gasoline.

Other demonstration projects are already underway. Honda has licensed and leased a fleet of its fuel-cell cars to the city of Los Angeles, and Toyota has loaned others to the University of California at its Davis and Irvine campuses. Joe Irvin at the California Fuel Cell Partnership, which works with energy and car companies to test different hydrogen production, storage, and distribution methods, says he expects that Ford, General Motors, and DaimlerChrysler will soon release similar real-world demonstration projects.

"Innovators have spent decades in laboratories developing the technologies that will lay the groundwork for the future hydrogen economy. Now it's time to hit the streets," says Robert Stempel, the former CEO of General Motors and current chair of Energy Conversion Devices, a leading producer of solar and hydrogen technologies. "It's time to develop and commercialize [a variety] of these technologies so that we can determine, in real-world situations, which is the best way to go."

As more and more demonstration projects go forward, says Stempel, another critical concern is establishing codes and standards. If we can envision a future with hydrogen at the corner gas station, or even hydrogen production units at our homes and offices, we need to begin developing standards similar to those that ensure that all gas stations in the U.S. have the same kind of pump and nozzle. When these conveniences begin falling into place, car companies will have a stronger basis for aggressively developing fuel-cell technologies and driving down costs for mainstream applications.

The Bush plan is right to direct funds into both the fuel-cell and the infrastructure sides of this equation. Of the $165 million set aside by the plan for fiscal year 2004, about half ($87 million) is for hydrogen technology and the remainder ($78 million) is for fuel-cell technology. The plan is also right to pursue a broad portfolio of possible hydrogen sources (although doing so at the expense of funding for renewables is a mistake). In this regard, it seems to lay a reasonable groundwork for hydrogen development.

That's all very well and good -- but there's no getting around the reality that the plan is under-funded and fails to demonstrate a real and long-term commitment to weaning the nation off of its gasoline habit. "Very little real progress can be made given these funds," admits one insider at the National Renewable Energy Laboratory. A more genuine commitment and a more realistic funding plan characterized proposed legislation by Sen. Byron Dorgan (D-N.D.). That proposal, which was introduced the day before the State of the Union address, entails a $6.5 billion investment over 10 years (compared to Bush's proposed $1.2 billion over five years). Similarly, a few weeks after the address, Sen. Ron Wyden (D-Ore.) and Rep. Christopher Cox (R-Calif.) proposed a mix of tax incentives and tax holidays to dramatically improve the market for hydrogen and fuel-cell cars, including a tax credit of up to 25 percent of the sale price of a hydrogen-powered vehicle. While the Bush plan envisions mainstreaming fuel cells by 2020, the Wyden-Cox bill aims at getting enough affordable fuel-cell cars on the market in the next decade to save 30 million barrels of foreign oil per year.

These are the kinds of focused, aggressive programs that we need in order to mobilize an energy revolution. Or rather, the final stage of a revolution: Since the beginning of time, humanity has been deriving its energy from hydrogen in the form of fossil fuels -- and as we've transitioned from wood to coal to oil to natural gas, the carbon-to-hydrogen ratio of these fuels has progressively diminished. It seems inevitable that we will ultimately arrive at a system that eliminates the carbon altogether, fueling our world on pure, pollution-free, incomparably abundant hydrogen. But if we want to stem the tide of damage from carbon emissions to the natural world, the question of whether we get there sooner or later matters.