Tuesday, October 23, 2007

The Hydrogen Bet

Preparing my slides for use in the upcoming webinar on future transportation fuels (see below) forced me to confront the difficulties of presenting a positive case for hydrogen without glossing over the numerous caveats that go along with it. As I Googled for data, I ran across an interesting debate that reflects the same conundrum. Although I don't feel compelled to choose a side in this particular debate, which has been blogged by Treehugger, it got me thinking about the introduction of fuel cell vehicles (FCVs) and whether they would be able to ramp up gradually, the way that hybrids have. My conclusion is that in 2015, when Dr. Romm and Mr. Blencoe must settle their bet, there's likely to be no ambiguity about who has won.

When you consider the barriers standing in the way of mass-market hydrogen cars, they really all need to be solved at once, or if not at once, then at least in a package that allows enough of these cars to get on the road quickly enough that their sales can rapidly climb to the 500,000 to 1 million level that manufacturers such GM and Ballard indicate would be necessary to reduce the cost of the fuel cell stack assembly and power electronics into the same range as an internal combustion engine powertrain. The Blencoe/Romm bet hinges on whether FCVs can reach 1% of new car sales by 2015. Allowing for a bit of growth between now and then, that works out to roughly 200,000 units. That level of sales couldn't be achieved without sufficient infrastructure for hydrogen production and distribution, in the form of magnesium hydride or simply compressed H2--infrastructure that is entirely new and incompatible with our current fuels distribution systems.

The best scenario for overcoming this critical interdependence involves a focused regional rollout. Southern California comes to mind as a likely venue. But with about 13 million cars in the entire L.A. Basin, and total car sales in California running at 2 million per year, FCVs would quickly have to attain a 20% local market share within five years from launch. (It has taken hybrids 10 years to capture roughly 5% of this key regional market.) The necessary infrastructure would have to roll out even faster, to prevent a refueling bottleneck from developing, and to assure consumers that they won't be buying orphan cars. If you've ever tried to get anything permitted in California, let alone built, you begin to grasp the magnitude of that challenge, and I haven't even mentioned the problem of producing enough hydrogen to supply a half million or so FCVs, and whether it would come from natural gas, as most of the H2 used in the fertilizer and chemical industries does, or be produced by electrolysis in a state that experienced serious electricity shortfalls only a few years ago.

My readers know I'm generally cautious about projections that depend on many things going just right, especially when fleet turnover and infrastructure are involved. But let's grant, for the sake of argument, that all the necessary preconditions could be met in Southern California between now and 2010, perhaps as a result of new legislation. But then things get tricky. Hydrogen cars will have to compete in a competitive landscape in which many new car models will be available as hybrids, high-efficiency European-style diesels, or in some cases as plug-in hybrids (PHEVs.) Dr. Romm is not alone in regarding the PHEV as a potential fuel cell killer, because it offers similar efficiency while requiring minimal new infrastructure.

The appropriate analogy here isn't to the 1980s' battle between VHS and Betamax, or even the current competition between Blu-ray and HD-DVD. In the case of FCVs vs. PHEVs, it's as if you didn't just need a new DVD player to play a Blu-ray disc, but also a different TV and an entirely re-wired home, while HD-DVD required only one new box. In order for Blu-ray to win under those circumstances, I think it would have to do a lot more than just display incredibly sharp images on your TV. Even 3-D might not be enough. (Note: I don't own a high-def DVD player and have no dog in that fight--this is just an analogy.) For the fuel cell car to win, it must be demonstrably so superior to anything else, including the PHEV, that consumers will yearn for it as though it were the latest iPod/iPhone with wheels, and energy companies must abandon caution--and their economic models--and race to build the infrastructure in advance of the demand, just to be in on the ground floor of the Next Big Thing.

Please understand that my heart is with Mr. Blencoe, here. An FCV running on clean hydrogen is a much more elegant concept than the PHEV, which for all its clever engineering seems a bit kludgy by comparison. But while I've never been as pessimistic about hydrogen's prospects as Dr. Romm, I'm afraid he has the surer side of this bet. 2015 is not much time, to complete all the necessary development, prototyping, certification, permitting and retooling necessary to sell 200,000 fuel cell cars per year.

On November 1, 2007 I'll be participating in a webcast discussion on "Fuels for Now and the Future" with Scott Sklar of The Stella Group, Ltd., hosted by Cleantech Collective. For more information and to register for the webcast, please follow this link.

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