The Hydrogen Economy

August / September 2004 Volume 2 Number 4

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"The Hydrogen Economy: Opportunities, Costs, Barriers and R&D Needs" is a study released by the National Academy of Engineering and National Research Council and sponsored by the Department of Energy. Published in February 2004, the report notes that a transition to hydrogen as a major fuel in the next half-century could significantly change the U.S. economy. The study was prepared by the Committee on Alternatives and Strategies for Future Hydrogen Production and Use. Following are excerpts.

T he vision of the hydrogen economy is based on two expectations: (1) that hydrogen can be produced from domestic energy sources in a manner that is affordable and environmentally benign, and (2) that applications using hydrogen—€”fuel cell vehicles, for example—€”can gain market share in competition with the alternatives. To the extent that these expectations can be met, the United States, and indeed the world, would benefit from reduced vulnerability to energy disruptions and improved environmental quality, especially through lower carbon emissions. However, before this vision can become a reality, many technical, social, and policy challenges must be overcome.

The committee's basic conclusions address four topics: implications for national goals, priorities for research and development the challenge of transition, and the impacts of hydrogen-fueled light-duty vehicles on energy security and CO2 emissions.

A transition to hydrogen as a major fuel in the next 50 years could fundamentally transform the U.S. energy system, creating opportunities to increase energy security through the use of a variety of domestic energy sources for hydrogen production while reducing environmental impacts, including atmospheric CO2 emissions and criteria pollutants. In his State of the Union address of January 28, 2003, President Bush moved energy, and especially hydrogen for vehicles, to the forefront of the U.S. political and technical debate. The president noted: "A simple chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car producing only water, not exhaust fumes. With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen, and pollution-free." This committee believes that investigating and conducting R&D activities to determine whether a hydrogen economy might be realized are important to the nation. There is a potential for replacing essentially all gasoline with hydrogen over the next half century using only domestic resources. And there is a potential for eliminating almost all CO2 and criteria pollutants from vehicular emissions. However, there are currently many barriers to be overcome before that potential can be realized.

Of course there are other strategies for reducing oil imports and CO2 emissions, and thus the DOE should keep a balanced portfolio of R&D efforts and continue to explore supply-and-demand alternatives that do not depend upon hydrogen. If battery technology improved dramatically, for example, all-electric vehicles might become the preferred alternative. Furthermore, hybrid electric vehicle technology is commercially available today, and benefits from this technology can therefore be realized immediately. Fossil-fuel-based or biomass-based synthetic fuels could also be used in place of gasoline.

Research and Development Priorities

There are major hurdles on the path to achieving the vision of the hydrogen economy; the path will not be simple or straightforward. Many of the committee's observations generalize across the entire hydrogen economy: the hydrogen system must be cost-competitive, it must be safe and appealing to the consumer and it would preferably offer advantages from the perspectives of energy security and CO2 emissions.

The committee believes that for hydrogen-fueled transportation, the four most fundamental technological and economic challenges are these:

1. To develop and introduce cost-effective, durable, safe, and environmentally desirable fuel cell systems and hydrogen storage systems. Current fuel cell lifetimes are much too short and fuel cell costs are at least an order of magnitude too high. An on-board vehicular hydrogen storage system that has an energy density approaching that of gasoline systems has not been developed. Thus, the resulting range of vehicles with existing hydrogen storage systems is much too short.

2. To develop the infrastructure to provide hydrogen for the light-duty vehicle user. Hydrogen is currently produced in large quantities at reasonable costs for industrial purposes. The committee's analysis indicates that at a future, mature stage of development, hydrogen (H2) can be produced and used in fuel cell vehicles at reasonable cost. The challenge, with today's industrial hydrogen as well as tomorrow's hydrogen is the high cost of distributing H2 to dispersed locations.

3. To reduce sharply the costs of hydrogen production from renewable energy sources, over a time frame of decades. Tremendous progress has been made in reducing the cost of making electricity from renewable energy sources. But making hydrogen from renewable energy through the intermediate step of making electricity, a premium energy source, requires further breakthroughs in order to be competitive. Basically, these technology pathways for hydrogen production make electricity, which is converted to hydrogen, which is later converted by a fuel cell back to electricity. These steps add costs and energy losses that are particularly significant when the hydrogen competes as a commodity transportation fuel—€”leading the committee to believe most current approaches—€”except possibly that of wind energy—€”need to be redirected. The committee believes that the required cost reductions can be achieved only by targeted fundamental and exploratory research on hydrogen production by photobiological, photochemical, and thin-film solar processes.

4. To capture and store (sequester) the carbon dioxide byproduct of hydrogen production from coal. Coal is a massive domestic U.S. energy resource that has the potential for producing cost-competitive hydrogen. However, coal processing generates large amounts of CO2. In order to reduce CO2 emissions from coal processing in carbon-constrained future, massive amounts of CO2 would have to be captured and safely and reliably sequestered for hundreds of years. Key to the commercialization of a large-scale, coal-based hydrogen production option (and also for natural-gas-based options) is achieving broad public acceptance, along with additional technical development, for CO2 sequestration.

The Challenge of Transition

There will likely be a lengthy transition period during which fuel cell vehicles and hydrogen are not competitive with internal combustion engine vehicles, including conventional gasoline and diesel fuel vehicles, and hybrid gasoline electric vehicles. The committee believes that the transition to a hydrogen fuel system will best be accomplished initially through distributed production of hydrogen, because distributed generation avoids many of the substantial infrastructure barriers faced by centralized generation. Small hydrogen-production units located at dispensing stations can produce hydrogen through natural gas reforming or electrolysis. Natural gas pipelines and electricity transmission and distribution systems already exist; for distributed generation of hydrogen, these systems would need to be expanded only moderately in the early years of the transition. During this transition period, distributed renewable energy (e.g., wind or solar energy) might provide electricity to onsite hydrogen production systems, particularly in areas of the country where electricity costs from wind or solar energy are particularly low.

MAJOR RECOMMENDATIONS

Systems Analysis of U.S. Energy Options

The U.S. energy system will change in many ways over the next 50 years. Some of the drivers for such change are already recognized, including at present the geology and geopolitics of fossil fuels and, perhaps eventually, the rising CO2 concentration in the atmosphere. Other drivers will emerge from options made available by new technologies. The U.S. energy system can be expected to continue to have substantial diversity; one should expect the emergence of neither a single primary energy source nor a single energy carrier. Moreover, more-energy-efficient technologies for the household, office, factory, and vehicle will continue to be developed and introduced into the energy system. To help shape the DOE hydrogen program, the committee sees a critical role for systems analysis. Systems analysis will be needed both to coordinate the multiple parallel efforts within the hydrogen program and to integrate the program within a balanced, overall DOE national energy R&D effort.

Fuel Cell Vehicle Technology

The committee observes that the federal government has been active in fuel cell research for roughly 40 years, while proton exchange membrane (PEM) fuel cells applied to hydrogen vehicle systems are a relatively recent development (as of the late 1980s). In spite of substantial R&D spending by the DOE and industry, costs are still a factor of 10 to 20 times too expensive, are short of required durability, and energy efficiency is still too low for light-duty-vehicle applications. Accordingly, the challenges of developing PEM fuel cells for automotive applications are large, and the solutions to overcoming these challenges are uncertain.

The committee estimates that the fuel cell system, including on-board storage of hydrogen, will have to decrease in cost to less than $100 per kilowatt (kW) before fuel cell vehicles (FCVs) become a plausible commercial option, and it will take at least a decade for this to happen. In particular, if the cost of the fuel cell system for light-duty vehicles does not eventually decrease to the $50/kW range, fuel cells will not propel the hydrogen economy without some regulatory mandate or incentive.

Increased government funding on R&D should be dedicated to the research on breakthroughs in on-board storage systems, in fuel cell costs and in materials for durability in order to attack known inhibitors to the high volume production of fuel cell vehicles.

Infrastructure

A nationwide, high-quality, safe, and efficient hydrogen infrastructure will be required in order for hydrogen to be used widely in the consumer sector. While it will be many years before hydrogen use is significant enough to justify an integrated national infrastructure—€”as much as two decades in the scenario posited by the committee—€”regional infrastructures could evolve sooner.

In the area of infrastructure and delivery there seem to be significant opportunities for making major improvements. The DOE does not yet have a strong program on hydrogen infrastructures. DOE leadership is critical, because the current incentives for companies to make early investments in hydrogen infrastructure are relatively weak. The department should strive to create better linkages between its seemingly disconnected programs in large-scale and small-scale hydrogen production. The hydrogen infrastructure program should address issues such as storage requirements, hydrogen purity, pipeline materials, compressors, leak detection and permitting, with the objective of clarifying the conditions under which large-scale and small-scale hydrogen production will become competitive, complementary, or independent.

Transition

The transition to a hydrogen economy involves challenges that cannot be overcome by research and development and demonstrations alone. Unresolved issues of policy development, infrastructure development and safety will slow the penetration of hydrogen into the market even if the technical hurdles of production cost and energy efficiency are overcome. Significant industry investments in advance of market forces will not be made unless government creates a business environment that reflects societal priorities with respect to greenhouse gas emissions and oil imports.

Distributed hydrogen production systems deserve increased (R&D) investments. Increased R&D efforts and accelerated program timing could decrease the cost and increase the energy efficiency of small-scale natural gas reformers and water electrolysis systems. In addition, a program should be initiated to develop new concepts in distributed hydrogen production systems that have the potential to compete—€”in cost, energy efficiency, and safety—€”with centralized systems.

Safety

Safety will be a major issue from the standpoint of commercialization of hydrogen-powered vehicles. Much evidence suggests that hydrogen can be manufactured and used in professionally managed systems with acceptable safety, but experts differ markedly in their views of the safety of hydrogen in a consumer-centered transportation system. A particularly salient and underexplored issue is that of leakage in enclosed structures, such as garages in homes and commercial establishments. Hydrogen safety, from both a technological and a societal perspective, will be one of the major hurdles that must be overcome in order to achieve the hydrogen economy. The committee emphasizes the following:

—€ Safety policy goals should be proposed and discussed by Department of Energy with stakeholder groups early in the hydrogen technology development process.
—€ DOE should continue its work with standards development organizations and ensure increased emphasis on distributed production of hydrogen.
—€ DOE systems analysis should specifically include safety, and it should be understood to be an overriding criterion.
—€ The goal of the physical testing program should be to resolve safety issues in advance of commercial use.
—€ DOE's public education program should continue to focus on hydrogen safety, particularly the safe use of hydrogen in distributed production and in consumer environments.

Carbon Dioxide-Free Hydrogen

The long timescale associated with the development of viable hydrogen fuel cells and hydrogen storage provides a time window for a more intensive DOE program to develop hydrogen from electrolysis, which, if economic, has the potential to lead to major reductions in CO2 emissions and enhanced energy security. The committee believes that if the cost of fuel cells can be reduced to $50 per kilowatt (kW), with focused research a corresponding dramatic drop in the cost of electrolytic cells to electrolyze water can be expected to be less than $125/kW. If such a low electrolyzer cost is achieved, the cost of hydrogen produced by electrolysis will be dominated by the cost of the electricity, not by the cost of the electrolyzer. Thus, in conjunction with research to lower the cost of electrolyzers, research focused on reducing electricity costs from renewable energy and nuclear energy has the potential to reduce overall hydrogen production costs substantially.

(Copies of the complete report are available from the National Academies Press, www.nap.edu.)