Hydrogen Pessimism
Last Friday's New York Times carried a story reporting the release of a study by the National Academy of Sciences on the prospect for a rapid transition to a hydrogen economy. The study concludes that such a transition is decades away, with minimal impact in the next 25 years.

Rather than seeing this as a pessimistic criticism of the Administration's hydrogen policy, or of countless hydrogen enthusiasts and entrepreneurs, I believe it is a useful reminder that huge uncertainties will influence the future evolution of our energy systems, and that it is impossible to conclude today how this will turn out. Those who posit a robust hydrogen economy in 2020, running on fuel cells powered by hydrogen generated by clean sources, are no more or less likely to be right than those who suggest that the status quo can survive unchallenged and unchanged.

In the Executive Summary of the NAS report--as far as I've read at this point--the authors skirt what I think is a more interesting policy question. If a hydrogen economy is indeed so distant and impeded by so many obstacles, should the government be moving the country in that direction now?

This is really the old "industrial policy" question writ large: should government be in the business of picking technology winners and losers? The view that it should was much in vogue in the 1980s, following the success of Japan's Ministry of International Trade and Industry (MITI), but went out of favor in the 1990s, when the "unguided" approach of the US seemed so manifestly superior and Japan drifted off into post-bubble doldrums.

If we start with a premise based on energy security concerns and a potential shortfall in future oil production (see my posting of 2/9/04), then perhaps what is needed--along with a certain amount of hydrogen-related federal R&D--is a more general approach that lowers the barriers for any new energy technology. This could include tax and accounting changes to make it easier to change out old infrastructure, expanded and non-technology-specific fleet mandates for alternative fuel vehicles, and a variety of other incentives to encourage business and industry to try out new energy technology.

The markets must play a role, too. One measure of success would be reaching a point at which "Technology Stocks" no longer referred just to IT and telecom stocks, but also to energy-related stocks. We are already beginning to see a blossoming of energy ventures, many of them wacky and bizarre, but some having real economic potential.

The outgrowth of all this activity could well be a hydrogen economy--and sooner than the pessimistic assessments would allow--or it could be something completely different and impossible to anticipate now, but that would achieve the same goals of enhanced energy security and environmental protection that have made the notion of a hydrogen future so alluring.