By Ken Silverstein
Director, Energy Industry Analysis

The hydrogen economy might remain a bit hazy. That's the findings of a new
report by the National Academy of Sciences, which says that clean-burning
hydrogen fuel cells may be decades away—a blow to President Bush's
notion that such technology would become commercialized en masse in the
automotive sector by 2020.

The United States has allocated nearly $2 billion over five years to develop
hydrogen fuel cells and has underscored its commitment to the concept. And
while the current administration has been sharply criticized for many of its
environmental positions, it must be given credit for standing up for new
technologies that could diminish dependence on foreign energy sources as well
as potentially help clean the environment. Toward that end, the message to the
president from the scientists might be, put the pedal to the metal and
allocate more resources to promoting the hydrogen economy.

“Real revolutions have to occur before this is going to become a
large-scale reality,” says Antonia Herzog, one of the report's authors,
as quoted in the New York Times. “It very possibly could happen, but
it's not a sure thing,” adds Herzog, also a staff scientist at the
Natural Resources Defense Council.

Hydrogen does not normally “stand alone” in nature. If it's in
water, for example, it must be separated from oxygen. The goal then is to
produce pure hydrogen—a process that requires other fuel sources to
break the elements apart. Electricity generated from nuclear or renewable
sources can be used to break water down into hydrogen and oxygen. The
conversion process is clean and silent.

In the long run, fuel cells that run on hydrogen have the potential to replace
current energy systems in all forms, from vehicle propulsion to stationary
power generation to mobile phone batteries. Electric Fuel is developing a
prototype that will power cars and buses with fuel cells for a whole shift
without having to refuel. Already, the New York City-based company has proved
it can run a bus for 101 miles without having to stop and juice up. With some
funding from the U.S. government, it's in full production now and hopes to
have as many as 1,000 buses running by 2005. Because the technology is just
beginning to gain momentum, it is much more costly than buses that run on
diesel fuel. But as it becomes increasingly prevalent, the fuel cell maker
says that it will eventually be about the same cost, plus or minus 10 percent,
of diesel engines.

“The major advantage we see in fuel cells is the ability to have
self-sustaining units that—when the technology becomes mature
enough—will provide clean and efficient power to automobiles and
manufacturing facilities,” says Nabil Nasr, director of the National
Center for Remanufacturing and Resource Recovery at the Rochester Institute of
Technology.

Strong Will

While the will exists to bring these products to market in an economically
feasible way, there are impediments. Some say that the amount of energy used
to make hydrogen is more than the amount of power produced by fuel cells. If
fossil fuels are extracted to make the hydrogen, then more pollutants would be
released.

Furthermore, until fuel cells are produced on a massive scale, it will be more
difficult to capture efficiencies and drive down costs. It's higher costs that
make conventional alternatives more attractive now. Meanwhile, the opportunity
costs of creating whole new energy initiatives and infrastructure could be
high. Consider the production of internal combustion engines—a process
where millions ply their daily trade. One study says that 170,000 and 50,000
of those jobs would be lost in Michigan and Ohio, respectively.

The challenges are daunting but must be overcome, says Robert Savinell, dean
of the school of engineering at Case Western Reserve University in Cleveland.
The government should increase its commitment to research and also buy some of
the early fuel cell car models, he says. That would allow manufacturing
enterprises to acquire the economies of scale that they need to bolster
productivity.

Still, progress is being made now, he adds. In the 1970s, for instance, fuel
cell parts were custom-made. Now more and more of them are pressed and molded,
which has lowered the cost of manufacturing, although the materials that go
into their making—platinum and membranes—are expensive. Similarly,
“We may be losing one set of jobs but we are creating a whole new
industry,” says Savinell—one that is environmentally benign and
extends our energy reserves.

The European Union is helping to lead the charge and has allocated about $2.36
billion over five years to the effort. It currently imports 50 percent of its
demand for oil, and, if nothing is done, this figure will rise to 70 percent
in 20-30 years time. Hydrogen and fuel cell technologies, it says, could form
an integral part of future sustainable energy programs. To turn the vision
into a reality, ministers from the EU say that Europe needs a concerted and
concentrated effort to produce more research, larger demonstration and
deployment projects, and regulations and standards appropriate to the future
of the hydrogen economy.

At the same time, every major automaker is investing in fuel cells, while the
major fuel cell makers, such as Ballard, FuelCell Energy, Siemens-Westinghouse
and International Fuel Cells, have been getting geared up for production. The
race is on as to whether fuel cells will first make their mark in cars or in
the production of power, where they have presently found a niche delivering
energy to businesses that can't ever afford to lose power.

Additional research is necessary to spur commercialization. It's a risk, and
even the National Academy of Scientists' report says that hybrid cars that run
on gasoline and electric motors may be a better gamble. But the dream of a
hydrogen economy is possible, although it will not likely ever be a panacea.
Still, political and financial support is paramount if this idea is to gain
increasing credence.