May 7, 2003
Science, Technology, and Space subcommittee hearing scheduled for Wednesday, in room 253 of the Russell Senate Office Building. Members will discuss the future of the hydrogen fuel cell and its expected benefits. Senator Brownback will preside.
The Honorable David K. Garman
Mr. Chairman and members of the Subcommittee, I appreciate this opportunity to testify today. The President’s National Energy Plan, entitled “Reliable, Affordable and Environmentally Sound Energy for America’s Future,” is the blueprint for the energy future we seek, and it makes several recommendations with regard to hydrogen. Specifically, it directs the Secretary to develop next generation energy technology, including hydrogen; it recommends that our research and development (R&D) programs related to hydrogen and fuel cells be integrated; and it recommends that legislation reauthorizing the Hydrogen Energy Act enjoy the support of the Administration. Since the release of the President’s energy plan in May 2001, the President and Secretary Abraham have unveiled several exciting new initiatives related to hydrogen. Most notable are the FreedomCAR partnership announced in January 2002; the President’s Hydrogen Fuel Initiative announced during the State of the Union address in January 2003; and the “FutureGEN” zero-emission coal-fired electricity and hydrogen power plant initiative announced in February. Each of these initiatives plays a particularly important role in a hydrogen energy future. Each will help make possible a future in which the principal “energy carriers” are hydrogen and electricity, eventually generated using technologies that do not emit any pollutants or carbon dioxide. Today, we are highly dependent on coal, natural gas and nuclear energy for the majority of our electricity. We depend on oil, a growing percentage of which is imported, to power our transportation needs. In my testimony today I will focus on transportation, and the role that FreedomCAR could have in eventually building a light duty transportation system that requires no petroleum, and is comprised of vehicles that emit nothing other than water vapor. As illustrated in my first chart (Figure One) the “gap” between domestic production and transportation demand is growing—and is projected to keep growing. The current gap between total U.S. consumption and net production of oil is roughly 11 million barrels per day. Promoting efficiency in the use of oil, and finding new domestic sources of oil, are both important short-term undertakings. But over the long-term, a petroleum-free option is eventually required. Our energy challenge is further complicated by another important factor—the pollutants and carbon dioxide emissions resulting from our use of energy. We have made tremendous progress in reducing pollutant emissions from our cars and trucks as well as our stationary power sources, and we will continue to make incremental gains through regulatory approaches such as the Tier II standards. But for true efficiency gains, we must reach to develop a wholly new approach to energy. In his recent State of the Union address, President Bush announced a groundbreaking plan to transform our Nation’s energy future from one dependent on foreign petroleum, to one that utilizes the most abundant element in the universe—hydrogen. Hydrogen can be produced from diverse domestic sources, freeing us from a reliance on foreign imports for the energy we use at home. Hydrogen can fuel ultra-clean internal combustion engines, which would reduce auto emissions by more than 99 percent. And when hydrogen is used to power fuel cell vehicles, it will do so with more than twice the efficiency of today’s gasoline engines—and with none of the harmful air emissions. In fact, fuel cells’ only byproducts are pure water and some waste heat. But ultimate success in the mass-market penetration of hydrogen fuel cell vehicles requires a hydrogen-based infrastructure that performs as well as the petroleum-based infrastructure we now have. Our current gasoline/hydrocarbon infrastructure has been forged in a competitive market. It is ubiquitous and remarkably efficient. It can deliver refined petroleum products that began as crude oil half a world away to your neighborhood for less than the cost of milk, drinking water, or many other liquid products you can buy at the supermarket. We are currently bound to that infrastructure. We have no alternative. Eventually replacing it with something different will be extremely difficult. But that is what we must do if we expect to achieve success with the FreedomCAR partnership. Drivers must be able to go anywhere in America and to refuel their hydrogen-powered vehicle before they will be comfortable purchasing one. That is why the President, in his State of the Union address, proposed that we in the federal government significantly increase our spending on hydrogen infrastructure R&D, including hydrogen production, storage, and delivery technologies, as well as fuel cells. Over the next five years, we plan to spend an estimated $1.7 billion on the FreedomCAR partnership and Hydrogen Fuel Initiative, $1.2 billion of which is for the Hydrogen Fuel Initiative, which includes resources for work on hydrogen and fuel cells. Of the $1.2 billion figure, $720 million is “new money.” We will not build the infrastructure. The private sector will do that as the business case becomes clear. But as we develop the technologies needed by the vehicles, we will also develop the technologies required by the infrastructure. In cooperation with DOT, we will convene the parties needed for technology partnerships, we will collaborate on the needed codes and standards, and we will promote international cooperation in this effort. Just last week, during a presentation to the International Energy Agency, Secretary Abraham called for an “International Partnership for the Hydrogen Economy” to collaborate on research and deployment of hydrogen technologies. I will now elaborate further on some of these technology challenges we face and the timing of the transition toward a hydrogen economy. Technology Challenges Achieving our vision will require a combination of technological breakthroughs, market acceptance, and large investments in a national hydrogen energy infrastructure. Success will not happen overnight, or even over years, but rather over decades; it will require an evolutionary process that phases hydrogen in as the technologies and their markets are ready. Success will also require that the technologies to utilize hydrogen fuel and the availability of hydrogen occur simultaneously. Some of the significant hurdles to be cleared include: · Lower by a factor of four the cost of producing and delivering hydrogen; · Develop more compact, light weight, lower cost, safe, and efficient hydrogen storage systems that will enable a greater than 300 mile vehicle range; · Lower by a factor of ten the cost of materials for advanced conversion technologies, especially fuel cells; · More effective and lower cost (by a factor of at least ten) carbon-capture and sequestration processes (a separate program critical to fossil-based production of hydrogen); · Designs and materials that maximize the safety of hydrogen use; and, · Finally, we must solve the overarching infrastructure challenges to develop a hydrogen-based delivery and refueling infrastructure comparable to the petroleum-based one we have today. The development of needed codes and standards as well as the education of consumers relative to the use of hydrogen can help safely establish this hydrogen infrastructure. The Department has drafted a work breakdown structure associated with each of the critical areas (production, delivery, storage, conversion, and end-use) identified in the National Hydrogen Energy Roadmap unveiled by the Secretary last November. We have developed critical milestones and decision points that will help us gauge technology progress. Examples of key program milestones that support FreedomCAR and achievement of a hydrogen economy include the following: · On-board hydrogen storage systems with a six percent capacity by weight by 2010; more aggressive goals are being established for 2015; · Hydrogen production at an untaxed price equivalent to $1.50 per gallon of gasoline at the pump by 2010; · Polymer electrolyte-membrane automotive fuel cells that cost $45 per kilowatt by 2010 and $30 per kilowatt by 2015 and meet 100,000 miles of service life; and, · Zero emission coal plants that produce hydrogen and power, with carbon capture and sequestration, at $0.79 per kilogram at the plant gate. In the near future, we plan on partnering with energy companies to establish more specific goals related to technology and components needed to produce and distribute hydrogen using various fossil, nuclear and renewable pathways. In this exercise, we will be looking at the full range of hydrogen technology areas covered in the Roadmap. Advances in other technologies will also be necessary for the ability of a hydrogen-fueled vehicle to realize its full potential. These include: · Improved energy storage, (e.g., batteries that are more durable, cheaper, and better performing); · More efficient and cost effective electric motors; · Inexpensive and more effective power electronics; and, · Better materials for lighter, but strong, structural members. These technologies will enable hydrogen-fueled vehicles to be more efficient, and to help lower the vehicle cost to the consumer. In the near- to mid-term, most hydrogen will likely be produced by technologies that do not require a complete hydrogen distribution infrastructure (i.e., using existing distributed natural gas infrastructure). As RD&D progresses along renewable, nuclear, and clean coal and natural gas production pathways (including techniques for carbon sequestration) a suite of technologies will become available in the mid- and long-term to produce hydrogen from a diverse array of domestic resources. The economic viability of these different production pathways will be strongly affected by regional factors, such as feedstock availability and cost, delivery approaches, and regulatory environment. Detailed analysis of life-cycle costs and benefits for alternative hydrogen production pathways, carbon sequestration, and other elements will continue. “Well-to-Wheels” analyses conclude that the energy and environmental benefits depend greatly on how hydrogen is manufactured, delivered and stored, and on the economic feasibility of sequestration for fossil feed stocks. The results of these studies will help in making down-select decisions and to ensure that the relative merits of specific hydrogen pathways are evaluated properly and in comparison with other energy alternatives. In fact, we are now following up on a National Academy of Sciences recommendation to establish a more robust systems analyses effort so that we can optimally prioritize areas for R&D, as well as understand the ramifications of future R&D successes and disappointments. Out-year planning will identify needs for RD&D on production and storage technologies, delivery infrastructure, and education and safety/codes and standards. Public education of consumers and local code officials must also be pursued concurrently with the RD&D. Finally, industry must develop and construct the infrastructure to deliver hydrogen where it is needed. We will work with the DOT to help industry develop a safe, efficient, nation-wide hydrogen infrastructure. The hydrogen distribution infrastructure can evolve along with the conversion and production technologies, since much of the infrastructure that is developed for fossil-based hydrogen will also be applicable to renewable- and nuclear-based hydrogen. We will partner with industry to develop infrastructure in pilot projects, and industry will expand locally, regionally, and ultimately nationally. Interim Strategies As important as we believe hydrogen is for the long term, we are still working, in cooperation with other federal agencies, to maintain a robust, and in some areas growing, research and development program in non-hydrogen transportation technologies. Under the FreedomCAR partnership we have proposed a funding increase in fiscal year 2004 for our hybrid technology, as well as increases in materials technology. We believe many of these technologies will deliver fuel savings both prior to and after the introduction of fuel cell vehicles, since lightweight materials and hybrid technologies are expected to be incorporated into fuel cell vehicle designs. Therefore, these investments are expected to pay off in the interim, as well as over the long term. In addition, we had a number of interim strategies in mind as we established specific, measurable performance goals for our program. And our FY 2004 budget is aligned with these goals. For example: · We are working to develop technologies for heavy vehicles by 2006 that will enable reduction of parasitic energy losses, including losses from aerodynamic drag, from 39 percent of total engine output in 1998 to 24 percent; · The 2006 goal for Transportation Materials Technologies R&D activities is to reduce the production cost of carbon fiber from $12 per pound in 1998, to $3 per pound; and, · The 2010 goal for Hybrid and Electric Propulsion R&D activities is to reduce the production cost of a high power 25kW battery for use in light vehicles from $3,000 in 1998 to $500, with an intermediate goal of $750 in 2006, enabling more cost competitive market penetration of hybrid vehicles. Automakers are introducing technologies that have resulted in part from DOE’s work in this area. At the recent North American International Auto Show in Detroit, the major U.S. automakers announced that they will have a variety of new hybrid gasoline-electric models entering the market in the 2004-2008 timeframe. Of course, hybrid vehicles are more expensive compared to conventional vehicles, which is why the President proposed a tax credit for hybrid vehicles in his National Energy Plan, and subsequent to that in his 2004 budget submission. We urge that Congress adopt this important incentive for more efficient vehicles. And we will continue support for our Clean Cities program, a unique, voluntary approach supporting more than eighty local coalitions that deploy alternative fuel vehicles (AFVs) and promote supporting infrastructure. The Administration strongly supports a renewable fuels standard (RFS) that will increase the use of clean, domestically produced renewable fuels, especially ethanol, which will improve the Nation’s energy security, farm economy, and environment. As important as the RFS and the Clean Cities program are, their goals illustrate the daunting challenges we face. Taken together, the RFS and Clean Cities are expected to offset about four billion gallons of petroleum use per year by 2010. That sounds impressive until it is compared to the demand for petroleum for transportation uses. In the year 2000, we used approximately 130 billion gallons of gasoline and over 33 billion gallons of diesel (highway use only). With that realization, the critical importance of the FreedomCAR partnership and Hydrogen Fuel Initiative as a long-term strategy becomes clear. And, if we are to achieve real progress in the near term and our ultimate vision in the long term, we must continue to nurture productive partnerships with the private sector. It is the private sector that will make the major investments necessary for the transition to a radically different transportation future. Those investments will not be made in the absence of a clear-cut business case. Transition to a Hydrogen Economy We consider the transition to the hydrogen economy as occurring in four phases, each of which requires and builds on the success of its predecessor, as depicted in Chart 2. The transition to a hydrogen-based energy system is expected to take several decades, and to require strong public and private partnership. In Phase 1, government and private organizations will research, develop, and demonstrate “critical path” technologies and safety assurance prior to investing heavily in infrastructure. This Phase is now underway and will enable industry to make a decision on commercialization in 2015. The FY04 Budget currently before Congress is consistent with completion of the technology RD&D phase by 2015. Phase II, Transition to the Marketplace, could begin as early as 2010 for applications such as portable power and some stationary applications, and as hydrogen-related technologies meet or exceed customer requirements. If an industry decision to commercialize hydrogen fuel cell vehicles is made in 2015, mass-market penetration can begin to occur around 2020. Consumers need compelling reasons to purchase new products; public benefits such as high fuel use efficiency and low emissions are not enough to overcome the market advantages of the incumbent technology and infrastructure. The all-electronic car powered by hydrogen fuel cells is one example of an approach to greater value delivery; it could offer the consumer greater amenities, improved performance through elimination of mechanical parts and greater design flexibility. As these markets become established, government can foster their further growth by playing the role of “early adopter,” and by creating policies that stimulate the market. As markets are established this leads to Phase III, Expansion of Markets and Infrastructure. The start of Phase III is consistent with a positive commercial decision for vehicles in 2015. A positive decision will attract investment in infrastructure for fuel cell manufacturing, and for hydrogen production and delivery. Government policies still may be required to nurture this infrastructure expansion phase. Phase IV, which should begin about 2025, is Realization of the Hydrogen Vision, when consumer requirements will be met or exceeded; national benefits in terms of energy security and improved environmental quality are being achieved; and industry can receive adequate return on investment and compete globally. Phase IV provides the transition to a full hydrogen economy by 2040. Conclusion Mr. Chairman, it will take a great deal to achieve this vision of a hydrogen energy future we are all talking about this afternoon. It will require careful planning and coordination, public education, technology development, and substantial public and private investments. It will require a broad political consensus and a bipartisan approach. Most of all, it will take leadership and resolve. The President has demonstrated his leadership and resolve. “With a new national commitment,” said the President during his State of the Union address, “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.” A few days later at an event on energy independence featuring new uses for fuel cells including automobiles, the President reiterated his commitment to his new Hydrogen Fuel Initiative stating, “The technology we have just seen is going to be seen on the roads of America. And it’s important for our country to understand that by being bold and innovative, we can change the way we do business here in America; we can change our dependence upon foreign sources of energy; we can help with the quality of the air; and we can make a fundamental difference for the future of our children.” We believe that the benefits the President envisions are attainable within our lifetimes and will accrue to posterity, but they will require sustained work and investment of public and private financial resources. We at the Department of Energy welcome the challenge and opportunity to play a vital role in this Nation’s energy future and to support our national security in such a fundamental way. This completes my prepared statement. I would be happy to answer any questions you may have, either now or in the future.
Dr. John Marburger IIIDirectorOffice of Science and Technology Policy, Executive Office of the President
Mr. Chairman, Mr. Breaux, and Members of the Subcommittee, I appreciate the opportunity to appear before you today to discuss the President’s Hydrogen Fuel Initiative. America’s energy challenges must be met with revolutionary new technologies and dedicated leadership to improve the production, distribution, and use of energy. The President’s National Energy Policy Report, released in May 2001, establishes a clear path for our Nation to achieve a clean, secure, and affordable energy future. That vision includes hydrogen as an energy carrier in our automobiles, trucks, homes, and businesses. In the State of the Union address in January 2003, President Bush stated that one of his key domestic goals is “to promote energy independence for our country, while dramatically improving the environment.” The President then announced the Hydrogen Fuel Initiative to develop the technology to enable mass production of clean, hydrogen-powered automobiles, and the infrastructure to support them, by 2020. The Hydrogen Fuel Initiative complements the FreedomCAR partnership, which includes fuel-cell, hybrid-electric, and other advanced automotive technology research. Other new initiatives have followed from the President’s leadership. In February, the Secretary of Energy announced the Carbon Sequestration International Leadership Forum, along with the “FutureGEN” initiative to build a zero-emission, coal-fired electricity and hydrogen power plant. Additionally, on February 3 the President announced that the U.S. will join Canada, the European Union, Japan, Russia, and the United Kingdom in the creation of an international collaboration on fusion energy research. Most recently, the Administration announced that it will lead an International Partnership for the Hydrogen Economy. Through these initiatives, we will lead the effort, in concert with the private sector and other nations, to develop clean and secure energy supplies and energy systems. We envision a future in which hydrogen serves, along with electricity, as a primary energy carrier for the U.S. economy. Like electricity, hydrogen can be produced from a diversity of domestically available energy sources using technologies that do not emit pollutants or carbon dioxide. Furthermore, hydrogen-based transportation, power, and heating systems offer the promise of dramatic efficiency gains with greatly reduced noxious air pollutants and greenhouse gas emissions. These technologies, together with the other elements of the President’s energy plan, have the long-term potential to substantially reduce or eliminate our Nation’s dependence on foreign oil while improving the environment. While we have made significant progress in reducing pollutant emissions from our cars, trucks, and power plants, and we will continue to make progress in the near term through ongoing regulatory actions, our objective is to move beyond the command-and-control mechanisms of environmental policy. We can do this by developing and deploying transportation systems and power systems that are emission-free by design. For example, a hydrogen-based transportation sector would dramatically improve our Nation’s energy security. Our transportation sector runs almost exclusively on oil, and we are importing more than half of our oil needs every day. Although we will continue to strive for efficiency improvements in conventional vehicles, hydrogen-fueled vehicles can potentially remove petroleum from the equation altogether. Hydrogen can be produced from diverse domestic energy sources, including natural gas, coal, nuclear energy, biomass, wind, and solar power. Upon successful market penetration, hydrogen fuel cell vehicles would dramatically reduce our dependence on imported oil, with ultra-clean hydrogen internal combustion engines as a possible interim step. Hydrogen fuel cell vehicles offer the potential to achieve more than twice the efficiency of conventional cars and trucks. When considering the full energy cycle, including the efficiency of hydrogen production from natural gas, fuel cells are still more efficient – and produce less carbon dioxide – than conventional, diesel-powered, or hybrid-electric vehicles. Hydrogen fuel cell vehicles produce no emissions other than water. Widespread use of fuel-cell powered cars and trucks would thus yield significant air quality improvements, particularly in urban areas. As hydrogen production shifts more to renewable sources, nuclear power, and coal power with carbon sequestration, our transportation sector could reduce emissions of air pollutants and greenhouse gases to near zero. In the State of the Union address, the President said: “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.” In order to achieve this hydrogen vision, we must overcome some significant technical challenges. First, a hydrogen infrastructure must be built that will enable convenient and affordable refueling. The private sector will build the infrastructure only when the business case is attractive. Considering that our current gasoline infrastructure can deliver refined petroleum products to local stations for less than the price of bottled water, this represents a significant challenge. When produced from natural gas, hydrogen is currently four times as expensive to produce as gasoline. The President’s Hydrogen Fuel Initiative, therefore, proposes a large increase in the research and development funding for technologies that will enable cost-competitive production, storage, distribution, and delivery of hydrogen. This includes funding for renewable- and nuclear-based hydrogen production. As the infrastructure develops, hydrogen will likely be produced from a portfolio of energy sources and production methods, as determined by the marketplace. The optimal combination of energy sources will likely depend on regional factors such as the cost and availability of the feedstocks, environmental constraints, and state regulations. Similarly, hydrogen distribution and delivery systems will most likely involve a combination of centralized production facilities with pipelines, local production at neighborhood fueling stations, and truck delivery to rural areas. Second, fuel cell vehicles must be safe, reliable, and cost-competitive with the conventional vehicles that they replace. Even in mass production, fuel cells today would be ten times more expensive than comparable gasoline engines. High-performance fuel cells require relatively large amounts of precious metals (platinum) and highly engineered materials. Agency research and development efforts are focused on reducing these costs. Third, we must develop hydrogen storage systems with sufficient energy density to provide a 300-mile vehicle driving range without excessive size, weight, or cost. The President’s Initiative proposes funding increases for each of these vital research areas, along with the development of codes and standards that will help ensure the safe handling and operation of hydrogen-fueled systems. The hydrogen vision includes many other applications besides fuel cell vehicles. Stationary fuel cells can provide heating and power for buildings and reliable, distributed power generation. Portable power units, laptops, and cell phones can also be powered by hydrogen. Some of these applications could achieve commercial viability before fuel cell vehicles do. As the hydrogen infrastructure is developed, local hydrogen production will support distributed power generation, and pipeline networks could serve residential applications. In addition, as we work to achieve the hydrogen vision, we need interim strategies to address our Nation’s energy and environmental challenges. Therefore, the Administration has proposed a continuing research and development effort in non-hydrogen transportation technologies such as hybrid-electric systems, energy storage, and materials. These technologies are expected to provide fuel savings both in the near term, by application to conventional gasoline-fueled vehicles, and in the long term by enabling commercially viable fuel-cell vehicles, which will need lightweight materials, high-density power electronics, and cost-effective energy storage devices. Our ultimate goal is a petroleum-free, emission-free energy future. The President’s Hydrogen Fuel Initiative, led by the Department of Energy (DOE), proposes $1.2 billion for research over five years (including $181.7 million in the FY2004 budget request) to overcome the key technology hurdles to enable a hydrogen-based economy. Other agencies besides DOE, including the Department of Transportation (DOT), Environmental Protection Agency, Department of Defense, Department of Commerce, National Science Foundation, Department of Agriculture, National Aeronautics and Space Administration, and others, also conduct or plan to conduct significant research related to hydrogen and fuel cell technologies. For example, DOT will develop many of the codes and standards related to hydrogen technologies. In order to foster coordination across the federal government, and to improve the effectiveness of hydrogen research and development, my office is leading an interagency hydrogen R&D task force. The agencies have strongly supported this effort and have begun to establish collaborative activities. The task force will also provide an opportunity to reach out to the private sector and to expand coordination of research, where appropriate, to other nations through the International Partnership for the Hydrogen Economy. The hydrogen vision is ambitious, but through the President’s Hydrogen Fuel Initiative, together with related activities across the federal government, we can make substantial progress towards the vital, national goals of energy security and environmental stewardship. I would be happy to answer any questions you may have.
Witness Panel 2
Dr. Francis R. Preli, Jr.Vice President of EngineeringUTC Power, LLC
Good afternoon, Mr. Chairman. My name is Frank Preli. I am Vice President of Engineering for UTC Fuel Cells (UTCFC), a business of UTC Power, which is a unit of United Technologies Corporation (UTC). UTC is based in Hartford, Connecticut, and provides a broad range of high technology products and support services to the building systems and aerospace industries. UTC Power is focused on the growing market for distributed energy generation to provide clean, efficient and reliable power. One of UTC Power’s businesses is UTC Fuel Cells, a world leader in the production of fuel cells for commercial, space and transportation applications. I appreciate the opportunity to participate in today’s hearing on “The Future of the Hydrogen Fuel Cell.” UTC Fuel Cells employs a total of 850 individuals and I lead a team of 350 engineers focused solely on fuel cell research and technology development. Over the years our employees have amassed an impressive list of more than 550 US patents related to fuel cell technology. UTC Fuel Cells produced its first fuel cell in 1961 for the space application and since then we’ve supplied all the fuel cells for every US manned space mission. UTC Fuel Cells has also led the way with terrestrial fuel cell applications. We’ve sold 255 stationary 200-kilowatt size units known as the PC25ä to customers in 25 states and 19 countries on five continents. Our installed base of PC25s has generated six million hours of clean energy. We’re also a leader in the development of fuel cell systems for the transportation market. We count Nissan, Hyundai and BMW among our transportation fuel cell partners. In addition, California’s only hydrogen fuel cell transit bus in revenue service today is operated by SunLine Transit and is powered by one of our power plants. In 1839 Sir William Grove discovered that combining hydrogen and oxygen in the presence of a catalyst could generate electricity. For many years the potential of fuel cells was untapped. Its use in the space program to generate electricity and provide drinking water for the astronauts represented its first practical application. More recent technical advances plus the growing appreciation of the benefits of fuel cells including their clean, efficient, quiet operation and ability to reduce our dependence on foreign oil have captured the interest of not just the President of the United States, but also auto manufacturers, Fortune 500 companies, small business entrepreneurs, Wall Street, Congress, foreign governments and the general public. The automotive application is the most daunting challenge and therefore it will take longer for fuel cells to successfully compete in this market. It’s the most demanding in terms of cost, durability and performance. On the other hand, the auto market offers the largest payoff in terms of reducing toxic air emissions and greenhouse gas emissions related to global warming, achieving oil import independence and providing incentives for supplier investment due to the huge volume of cars produced each year. The vision of an economy fueled by hydrogen generated from renewable energy sources is a revolutionary concept that will require evolutionary, incremental progress. We believe fuel cells will be deployed first in stationary devices and fleet vehicles such as transit buses and only later in the personal auto market. Transit buses are a strategic enabler on the pathway to autos powered by fuel cells. Hydrogen-fueling stations can be made available more readily given the relatively small number of inner city bus stations and the power plant size and weight requirements are less demanding than those associated with autos. We need to walk before we run and gain experience in real world operating conditions. Fleet vehicles represent a perfect candidate for this type of practical experience since they offer an opportunity to enhance the range of operation for the vehicle, gain experience with heavy-duty cycles and train a core group of technicians. As the industry gains experience in deploying fuel cells for stationary, inner city buses and fleet applications, these successes can pave the way for zero emission fuel cell cars and serve as benchmarks to measure progress towards the goals of the Administration’s FreedomCAR and Fuel initiative. Similarly, we believe it is wise to continue the investments being made in electric drive train technology for hybrid cars and buses since fuel cell vehicles will incorporate this same technology and benefit from the technical advances and experience gained from these earlier vehicles. Fuel cells must meet certain technical and performance criteria if they are going to be commercially viable and accepted in the marketplace. These metrics vary depending on the application, but automobiles represent the most daunting challenge. We believe consumers will demand that fuel cell power plants deliver cost, durability and performance equivalent to the internal combustion engine. From a technical perspective, we’ve made tremendous strides in reducing the cost, size, and weight of fuel cells while increasing efficiency, and substantially improving durability. But we still have a long way to go. For example, in the past five years we’ve seen extraordinary improvements in the life of the fuel cell stack, which is where the electricity is produced and represents the heart of the power plant. In 1998, proton exchange membrane (PEM) fuel cell stacks had a life of 100 hours. By 2001, our fuel cell stacks experienced a tenfold improvement to 1,000 hours and just recently UTC Fuel Cells demonstrated close to 10,000 hours of durability in laboratory tests. Perhaps the most remarkable aspect of this significant progress is that it’s been accomplished not in decades, but in a matter of years. Building on fuel cell experience from the 1960s, 70s and 80s, the use of sophisticated computer simulations, custom designed testing equipment and the extraordinary talent of dedicated and experienced engineers has made this possible. We’re very optimistic that with continued investment in public private partnerships and focused demonstration programs to verify and validate our laboratory findings, we’ll meet our durability target by 2010. Fuel cell costs have also seen a dramatic decline. Fuel cells used in the space application cost $600,000 per kW; our 200 kW PC25 stationary unit introduced in 1992 costs $4,500 per kW; and our next generation stationary product that will be introduced next year is targeted at an initial cost of around $2,000 per kW. We’ve achieved similar dramatic reductions in size and weight that also have contributed to the reduction in costs. For example, fuel cell stack size has been reduced by 50 percent since 1997 and weight has decreased by approximately the same. So while we’ve made substantial progress, we still have some challenges ahead if we are going to be competitive with the one hundred year old internal combustion engine technology that is produced in high volume. The cost improvements made to date have been achieved through a variety of strategies including improved use and performance of exotic materials, reduced number of parts, and enhanced manufacturing processes, but further development is required. Ultimately, we need to couple these technical successes with higher volumes to reduce unit costs. At UTC Fuel Cells we’re confident about meeting the technical challenges that lie ahead. Our forty years of experience in this business has taught us that there will be surprises (both good and bad) along the way and that the best way to learn is by doing. We’re encouraged by progress to date, but we also know that the last percentage points of improvement are sometimes the most difficult to achieve and the most costly. But there are other factors beyond our control that can influence the future of the hydrogen fuel cell. For example, we must ensure that similar progress is made in the development of the necessary hydrogen infrastructure including hydrogen production, storage and distribution. Codes and standards and safety procedures must be developed and uniformly adopted. Consumer confidence and acceptance must be won. The supplier base must be developed and must meet demanding specifications. A team effort that involves original equipment manufacturers, component and raw material suppliers, energy companies and governments will be required with substantial, sustained global investment by public and private partners. Our recipe for successful fuel cell commercialization includes the following key ingredients: 1. Articulation of a comprehensive, long term national strategy that addresses stationary, portable and transportation applications; 2. Sustained national commitment and leadership; 3. Robust investment by the private and public sector; 4. Public private partnerships for research, development and demonstration programs for both fuel cells and hydrogen infrastructure with a focus on renewable sources of hydrogen; 5. Development and deployment of hydrogen production, storage and distribution infrastructure; 6. Financial incentives and government purchases; 7. Elimination of regulatory barriers; 8. Harmonized codes and standards in the US and globally; 9. Global involvement with open access to markets; and 10.Education and outreach to ensure consumer acceptance. We’ve covered a lot of distance in the past few years, but we are engaged in a marathon not a 100-yard dash. Fuel cell technology has experienced a long gestation period and will not reach its full maturity for some time. We anticipate the early adopter vehicle fleets will result in 10,000 fuel cell cars, trucks and buses on the road by 2010 and a substantial amount of stationary fuel cell generation capacity deployed. This assumes that the technical challenges are met, the private and public sector make robust investments, suppliers perform as predicted, consumer acceptance is won and the necessary infrastructure develops as required. If all these efforts come together successfully, we can see mass production of fuel cell vehicles starting in the 2012-2015 timeframe. We envision a bright future for fuel cells, but recognize the challenges and uncertainties that we must address collectively. My testimony today has focused on the progress made to date and the challenges facing the automotive market since this is both the most challenging and rewarding application. But UTC Fuel Cells believes that in order to meet the automotive challenge, a national strategy for fuel cell commercialization must focus on stationary and fleet vehicles to ensure our success in the automotive market and get us there sooner. At UTC Fuel Cells we’re proud of our past accomplishments and excited about meeting the challenges and opportunities that lie ahead so the many benefits of fuel cells can be enjoyed not just by a lucky few, but on a global scale. We look forward to working with you, Mr. Chairman and other Members of Congress, to ensure the fuel cell agenda noted above becomes a reality and the full promise of fuel cell technology is realized. Thank you Mr. Chairman for the opportunity to testify.
Mr. Byron McCormick
I appreciate the opportunity to be here today to testify on behalf of General Motors. I am Byron McCormick, Executive Director of GM’s Global Fuel Cell Activities. I head the team that is developing hydrogen-powered fuel cell vehicles that people will want to drive and buy. This is an exciting time in the automotive industry and for General Motors. Technology is clearly changing the way we live our lives for the better, and there’s more to come. This year, we announced a three-phase advanced technology plan focused on reducing fuel consumption and vehicle emissions. This plan includes advanced internal combustion engine initiatives – such as Displacement on Demand cylinder deactivation – for the near term; a suite of high-volume hybrid offerings for the mid-term, and the introduction of hydrogen fuel cell vehicles early next decade. The subjects today are hydrogen fuel and fuel cells. These technologies, when fully developed and deployed, will not only deliver revolutionary vehicles, but will change the way we think about the automobile and our environment. We are on the threshold of an historic opportunity. Instead of the historical evolution of automotive technology by incremental improvements, we now see our way to bold technology advances that will fundamentally change personal transportation for the new century. These advances have the potential to lead to the creation of commercially viable zero-emission, fuel-efficient fuel cell vehicles with the functionality that Americans expect. This vision is based on hydrogen fuel, which can be made from many non-petroleum energy sources. Not only will fuel cells essentially remove the auto from the environmental equation by reducing tailpipe emissions to only water vapor and potentially shifting vehicles to renewable fuels – they will also offer the performance required for every type of vehicle: heavy duty commercial, sport utilities, trucks, mass transit or cars. Fuel cell vehicles running on hydrogen fuel are the ultimate environmentally friendly vehicles because the only emission is water. The fuel cell supplies electricity to an electric motor that powers the wheels. The fuel cell produces electricity by stripping electrons from hydrogen that travels through a membrane to combine with oxygen to form water. Fuel cell vehicles are more than twice as energy efficient as the internal combustion engine, have no pollutant emissions, and are quiet. Beyond the advantages for vehicles, fuel cells in vehicles promise two additional benefits. First, once fully integrated into our daily lives, fuel cell vehicles will be supported by a broadly available, cost-effective hydrogen-refueling infrastructure. Such an infrastructure by its very nature would provide an evolutionary shift of personal transportation from petroleum to a mix of energy sources including renewables. Secondly, the development of this technology will create new, more environmentally compatible distributed electric power generation possibilities. The automobile will have the potential to provide electrical power to homes and worksites. Power on today’s electrical grid could be supplemented by the generating capacity of cars in every driveway. For example, if only one out of every 25 cars in California today was a fuel cell vehicle, their generating capacity would exceed that of the utility grid. A typical midsize fuel cell vehicle would produce 50 to 75 kilowatts of electrical power, where a typical household may use 7 to 10 kilowatts at peak load. Like any advancement that has the promise to completely change the dominant technology, fuel cell development is a major, costly, technical endeavor, which – if aggressively undertaken and sustained – should allow significant implementation in the 10-to-20 year timeframe. Our rate of progress today is very rapid. With an uninterrupted focus, our technological momentum should make this fuel cell vision possible. It is clear that we are in an intense global competition for leadership in this race to establish and commercialize fuel cell technologies. Toyota, Honda, Daimler, Ford, Volkswagen, Nissan, PSA, Hyundai, GM and others all have large programs. In Japan, the kyogikai, which are companies operating under government auspices, are developing a program for the implementation of fuel cell technology. Now is the time for the U.S. government and U.S. industry to create a partnership that can lead the world in the charge to achieve this vision. Recognizing this potential, approximately six years ago at General Motors fuel cell activities were consolidated and accelerated. We were given one mandate by our management: Take the automobile out of the environmental debate. Regardless of whether the environmental debate is focused on air quality, climate, or overall sustainability, GM leadership recognizes that global conditions inspire bold, thoughtful action. 1. There are over 6 billion people in the world today with over 10 billion expected later this century. Most of these people are young, globally aware, web-connected, and residing in emerging economies with escalating demand for personal transportation. 2. Only 12 percent of the world’s population have automobiles today. Therefore, a breakthrough in energy efficiency and emissions will be required to meet the demands of the future in a sustainable high-quality environment. Our vision is as follows: 1. We see fuel cells as the long-term power source. The GM global fuel cell program seeks to create affordable, full-performance, fuel cell-powered vehicles that meet customer preferences and demands and emit only water vapor from their tailpipes. 2. We see hydrogen as the long-term fuel. The creation of a robust, readily available hydrogen-refueling network for those vehicles will be accessible through refueling stations, as gasoline is dispensed today. Hydrogen in the infrastructure could be derived from a mix of sources including: 1) hydrocarbons, and 2) from any source of electricity. In the first case, hydrogen is extracted from petroleum, natural gas and renewable hydrocarbons, such as ethanol, via “reformers” or fuel processors, which catalytically decompose the hydrocarbons into hydrogen and carbon dioxide. Hydrogen can also be extracted from water using electrolysis, which uses electricity to dissociate water. Electricity would come from conventional power plants or renewable power such as hydro, solar, wind, and geothermal sources. In this way, hydrogen fuel allows a transition of transportation from reliance on petroleum to a robust diversity of energy sources including renewable energy. The blending of these energy sources is seamless to the driver of a vehicle; he sees only hydrogen fuel, not whether it came from petroleum, natural gas, nuclear or renewable energy. Hydrogen created directly from nuclear energy is also a future option. There are three major challenges that we need to overcome to make this hydrogen economy a reality: First, we need continued development of on-board hydrogen storage. Using hydrogen in a vehicle requires a completely new type of fuel tank. The challenge is to find a lightweight, compact tank that stores enough hydrogen at modest pressure for a lengthy drive. Liquid hydrogen stored cryogenically or compressed hydrogen stored at high pressures will suffice for early market introduction, but, over the long term, we should seek “solid” storage techniques such as chemical hydrides, which will more efficiently and cost-effectively store significant amounts of hydrogen on board the vehicle. We need the government to partner with us on fundamental, long-term research and development on hydrogen storage as well as a full portfolio of technologies. And that includes our second major challenge to a hydrogen economy – developing and commercializing clean and efficient methods of producing hydrogen. Eventually, we want to use methods that are renewable and have no adverse environmental impact. We’re working closely with energy suppliers to investigate the best solutions. A few weeks ago, we announced that we are partnering with Shell to demonstrate our fuel cell vehicles and an operational hydrogen fueling station here in Washington, D.C. The demonstration vehicles went into service today and the fueling station will be operational in late fall. The third challenge we have to overcome is developing business models for the deployment of a hydrogen infrastructure and piloting technologies to support it. As for the reality of this vision, we at General Motors have invested aggressively in what are called “enabling” technologies: fuel cells, reformers, electrolyzers and automotive electric propulsion. Our commitment is clear in the significance of our investment – over $100 million annually for several years to date, and growing. The acceleration has been spurred on by rapid technical progress. To give you an idea of that rate of progress, in the last four years the size and weight of our fuel cell stack for a given power has decreased by a factor of 10. And we have also achieved a cost reduction with each new generation of stack technology. Like today’s gasoline cars, fuel cell vehicles must be able to handle a tremendous range of environmental conditions. We are now able to start fuel cells from freezing – minus 40°C – in substantially less than a minute. Also at the vehicle level, we have developed and demonstrated full-performance vehicles like our HydroGen3 demonstration vehicles that you will be able to drive here in Washington. And we have developed revolutionary designs, such as our AUTOnomy concept and Hy-wire prototype vehicles, which combine a fuel cell, by-wire electronics, and other advanced technologies in new and unique ways. These designs could make fuel cell vehicles both more affordable and more compelling for our customers. Additionally, we have demonstrated numerous stationary, distributed electrical-generation systems based on our fuel cell technologies. These milestones represent remarkable progress. Our rate of progress encourages us, but it is crucial to recognize that the race for fuel cell development is a marathon, not a sprint. No one should overlook that there remain major technical obstacles that must be conquered before these vehicles can be brought to market and can become commercially successful. Let me be clear about the progress represented by our fuel cell demonstration vehicles. The progress is rapid and encouraging, but we are not there yet. Although we are well on the way to achieving automotive performance levels required for reliability, durability, safety and full capability in harsh weather extremes, including the ability to withstand all environment and in-use abuse that automobiles and trucks worldwide are subjected to every day. We must achieve these goals and, more importantly, affordability before this technology will be considered an option by our customers. Achieving full automotive performance and affordability targets is key to customer acceptance and enthusiasm. These targets require huge investments that can only be responsibly made if we believe the infrastructure will be there to allow us to introduce fuel cell vehicles to the public. Government policy today must drive the development of the hydrogen economy by accelerated R&D in hydrogen storage, pilot-scale distribution networks, and refueling stations and incentives for their proliferation. Selective demonstration vehicles or captive fleet tests will not suffice to encourage major timely investment by the energy producers and the full automotive supply base before a hydrogen infrastructure is seen to be evolving. Nor will potential creators of the hydrogen infrastructure invest until they see a rapid expansion of hydrogen fuel cell vehicles and even then, there is the economic burden of supporting that infrastructure during the long period of transition from today’s gasoline-powered fleet. Stewardship of this transition requires a carefully thought out plan which allows the automotive manufacturers, their material and component suppliers, the hydrogen fuel providers and governmental regulatory bodies to progress hand-in-hand. This careful coordination must also take into account the technical, financial and environmental realities that a successful transition requires. This is the basis on which a government-industry partnership must be based. Within General Motors, the magnitude of our fuel cell investment creates an intense business dilemma–the choice between using our resources to meet the expanding funding needs to achieve a revolutionary vision at the expense of short-term focused initiatives, or to fund the aggressive pursuit of more incrementally focused initiatives. To a large degree, the outcome of that internal debate will depend on the development of a long-term, stable set of governmental policies and initiatives upon which we can properly balance the investment of our finite financial and technical resources. As a closing thought, I believe that fuel cells and hydrogen-based transportation are the future. The pace of technical progress is accelerating. We cannot be left behind or sitting on the sidelines. Now is the time for the U.S. government and U.S. industry to create a partnership that can lead the world in the charge to achieve this vision. General Motors and our partners are driving to bring first-generation fuel cell technology to market as rapidly as possible. To a large degree, this initiative was made possible by pioneering R&D work sponsored by NASA and later extended by the Department of Energy. We now look forward to not only realizing the full benefits of that pioneering work in automobiles, but, additionally, working together with government to create new generations of breakthrough technologies in advanced hydrogen storage and fuel cell materials. Thank you. I look forward to responding to your questions.