Hydrogen Cars Will Need Multi-Billion Dollar Jumpstart, Experts Warn

WASHINGTON, DC, July 18, 2008 (ENS) - It will take massive subsidies from the U.S. government to make hydrogen fuel cell vehicles a significant part of the nation's transportation future, according to a National Research Council report released Thursday. The study finds that even under a best-case scenario only about two million hydrogen fuel cell vehicles will be on American roads by 2020, less than one percent of the nation's estimated total number of cars and trucks.

Achieving that goal would require the government to pump at least $55 billion in subsidies over the next 15 years to make hydrogen vehicles cost competitive with conventional cars and trucks, the report concluded. Current government spending has equaled some $879 million since 2004.

But the chair of the committee that wrote the report said the suggested government funding should be put in perspective with other subsidies.

Dr. Mike Ramage (Photo courtesy Purdue University)

If current funding and policies continue, the federal subsidy for corn-based ethanol over the same time period is on pace to reach $160 billion, said Mike Ramage, a former vice president for research and development at Exxon Mobil and chair of the 17-member panel.

"We need durable, substantial and sustainable government help to make this happen, just as there is for ethanol," he said.

The 249 page report, which was requested by the U.S. Energy Department, contends that the funding may well be worth it as it could set the stage for accelerated adoption of hydrogen vehicles by mid-century.

The allure of hydrogen fuel cells is their potential to help shift the U.S. transportation sector away from oil and to cut emissions linked to climate change. The only byproduct from a hydrogen fuel cell is water.

The environmental benefits of hydrogen would be "less in the early years but would be dominant" over a longer time period, Ramage told reporters on a telephone briefing.

The committee's best case scenario envisions that if the technical and economic obstacles are overcome in the next 15 years, the growth of the technology could accelerate dramatically.

The Honda FCX Clarity hydrogen car is available in California for limited leasing for the first time this summer. (Photo courtesy Honda American Motors)

It suggests the number of hydrogen vehicles on U.S. roads could jump to nearly 60 million in 2035 and to 200 million by 2050.

This shift could reduce the U.S. transportation sector's oil consumption some 60 to 70 percent by 2050.

But the obstacles blocking the technology are daunting, the committee acknowledged, and overcoming them would require continued technical improvements, cost reductions and government policies and funding to encourage adoption of the hydrogen vehicles.

There is little existing capacity for hydrogen production, which remains expensive, and although major automakers are dabbling with the technology, fuel cells still face challenges of storage, cost, reliability and safety.

And the most significant hurdle could be the high cost and logistical complexity of distributing hydrogen to fueling stations across the nation.

These challenges are why the government would need to spend billions of dollars just to get two million hydrogen cars and trucks on the road by 2020, according to the panel.

The report suggests that government funding be used to purchase hydrogen vehicles to replace about half of the government's fleet of cars and trucks and to help consumers keen on the technology afford the new vehicles.

The Toyota Fuel Cell Hydrogen Hybrid Vehicle was introduced in fall 2007. (Photo courtesy Hydrogen Cars Now)

"It is very important to get those hydrogen vehicles on the road and get real world experience with this," Ramage said.

The cost issue for consumers is "a much greater challenge" than the industry's ability to ramp up production, he added.

A sizeable chunk would need to be spent on subsidies for fuel stations, the committee said, to get round the "chicken and egg problem."

The report notes that companies are reluctant to spend much money on fueling stations until a significant numbers of hydrogen cars have been sold. Similarly, automakers are unlikely to sell many vehicles until an adequate number of fueling stations are available.

"A way around this quandary is to stage hydrogen fuel cell vehicle introduction in phases by region," the committee said.

The report also estimates about $5 billion in federal funds be spent on research and development and $10 billion be earmarked for hydrogen production.

The committee noted that a key to the environmental benefits of hydrogen cars is how the fuel is produced. Hydrogen produced from coal or other fossil fuels lessens the reductions in greenhouse gas emissions.

The report suggests policies are needed to promote low-carbon hydrogen production, including carbon capture and storage technology, and assumes advances in coal gasification under its "best-case" scenario.

The Ford Flexible Series Edge is a plug-in hybrid hydrogen vehicle, introduced in 2007. (Photo courtesy Hydrogen Cars Now)

Although the report centered on hydrogen technology, Ramage told reporters that the committee concluded the government should not focus solely on hydrogen fuel cells as the solution to reducing the environmental impact of the nation's transportation sector.

The greatest possible reductions in oil consumption and greenhouse gas emissions would occur if biofuels, fuel-efficient conventional vehicles and hydrogen vehicles are all pursued simultaneously, he explained.

"There are other technologies that fit in this mix that we did not look at," he added, noting the committee did not consider plug-in hybrids or electric vehicles - technologies that some environmentalists contend offer far more short-term environmental benefits than hydrogen cars.

"This study clearly indicates we don't think people should be picking winners and losers," Ramage said. "They probably will all be important in the long run."

To find the National Research Council report, "Transitions to Alternative Transportation Technologies: A Focus on Hydrogen," click here.

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