Fuel cell buses for Delhi Going nowhere?

Grants have been approved to facilitate the use of fuel cell buses in the developing countries

Published: Sunday 15 July 2001

Fuel cell buses for Delhi Going nowhere?

-- T he Global Environmental Facility's ( gef ) governing council meeting held in Washington dc , in early May, has approved grants totalling us $12 million for the first phase of two projects in India and China to facilitate the use of fuel cell buses ( fcb s). Both projects are to be implemented by the United Nations Development Programme ( undp ) and are the last of the five fcb projects undertaken within the ambit of the Facility's Sustainable Transport programme. The mandate is to reduce air pollution by investing in pollution-free transportation. Earlier three fcb projects were granted clearance in Mexico, Egypt and Brazil.

GEF Strategy to Develop FCBs, the Facility's base document, drafted in 2000, defines fuel cell technology as a "low-emission technology that electro-chemically converts hydrogen into electricity." It argues that fuel cell-driven vehicles possess several advantages over conventional vehicles for urban transport system. First of all, fuel cell stacks work most efficiently at lower levels of power output in contrast to power trains of conventional vehicles. Secondly, it functions at maximum efficiency in urban transit operations where frequent stops are necessary.

Finally, fcbs are environment-friendly as compared to the conventional vehicles. Distilled water is the only emission from a fcb, and they produce no particulate emissions like sulphur dioxide, nitrogen oxide or carbon dioxide. In addition, they are much quieter than conventional diesel engines, reducing sound pollution. Hence, it is seen as a long-term solution to environmental problems, including climate change and general air pollution.

The rationale of the gef for basing the Indian project in New Delhi is that as one of the world's most polluted cities, where the issue of vehicular pollution is vitriolic and controversial, the efficacy of fcb could be tested fully and under the most trying conditions. Pushing fcb s as "the ultimate solution to urban transport in India", it argues that its efficiency is twice as high as diesel buses; needs minimum maintenance; is environment friendly; and with hydrogen gas tanks can achieve a driving range of 400 km, far above that of diesel buses.

The gef grant will support a five-year demonstration programme involving operation and testing of eight fuel cell buses for public transport in New Delhi. The grant is for us $6.28 million for the first three buses. The support from other donors is expected to top up the total investment to us $12.12 million, with a possible second phase of us $16.1 million. In China, the demonstration programmes will be held in Beijing and Shanghai and the initial grant of us $552 million will be followed up with an additional budget of us $16.4 million for the second phase.

The gef's role in India, as in the other four countries, is envisioned to be threefold. One, it is to act as a funder, helping to pay the incremental costs. The gef expects its support to be complemented by significant contributions by local governments, the transport industry and private investments. Two, it would serve as a facilitator for these activities, convening the various factors and providing the foundation for a continued dialogue to accelerate the process. And, finally, it will take on the role as an agent of information by keeping everyone abreast of the latest developments in the field.

In the implementation process, it has again set aside a triple role for itself. In the first stage, the gef will evaluate the conditions for successful fcb operation and commercialisation. This involves assessing the strength of the local bus market, verifying local and national policies for financial support, studying the conditions for operating the buses and also the availability of hydrogen fuel supply.

During the second, the demonstration stage, the Facility will assess the operational viability of fcb s through operational experience, providing feedback to manufacturers, firming training facilities and establishing steady hydrogen supply. The last stage is the commercialisation stage where the Facility's challenge will lie in ensuring that fcb costs become cost-competitive with conventional diesel buses.

Blueprint for operation

According to the Facility's spokesperson, the executing agencies for the fcb India Project are to be the Ministry of Non-Conventional Energy Sources ( mnes ) and the Delhi Transport Corporation ( dtc ). The prototypes are to be provided by Ballard Power at a cost of us $1.2 million and would be similar to those used in demonstration projects in Chicago and Vancouver, two years ago. In regular service, each bus runs on 16 hours on an average and 169 km a day, every day of the year. The first and second batches of buses will be operational in 2003 and 2004.

The best option to supply hydrogen for commercial deployment of fcb s in India will be a central natural gas reforming plant with hydrogen delivered to the bus depots by a gas pipeline. But for the demonstration project, it was not considered practical. It has been planned instead to purchase and install at the host bus depot a packaged electrolyser unit, including high-pressure hydrogen gas storage cylinders, hydrogen compressors, and dispensers to meet the hydrogen requirement.

The bus maintenance crew for the demonstration project would be sent to the bus supplier to understand the bus structure and engine function. After the buses are delivered, technical specialists from the bus manufacture would train the maintenance crew on the job.

If the demonstration stage goes well, the plan is to buy 20 additional buses and ensure hydrogen supply by purchasing an additional packaged electrolyser unit. The cost of the fcb s to be purchased in stage ii would still be more than 10 times that of diesel buses. But by the time the additional 20 buses are purchased by 2007, the fcb cost is expected to drop by three times of the diesel bus cost.

As the cost difference would still be too large for the project to proceed on a commercial basis, the gef proposes to request the Government of India to seek finance from various sources to fund the incremental cost. This expanded demonstration will operate for two to three years.

By 2009 or 2010, when stage iii is completed, a stage iv will be set in motion. This would involve the initial commercialisation of fcb s. By this time, the cost difference would be much less and the gef is certain a tax credit or soft loan provided by the government should be able to entice the local bus manufactures to launch commercial production. It would also allow dtc and other city bus authorities to convert diesel buses or cng buses on a depot-by-depot basis (on the average 70-100 buses per depot) without government's financial aid. The incentive for the bus manufactures could also be provided by the increase of diesel fuel cost, tighter air emission standard, tax on air-pollution emissions or carbon emission, or a tax credit for the operation of new, more efficient buses.

Devil is in the details

Critics within the organisation, who wish to remain unnamed, are sceptical about the Facility's overwhelming faith in fcb s. In their opinion, it would make better sense to sponsor a host of technologies rather than zero in on one as the 'ultimate saviour'.

The fcb projects in Chicago and Vancouver, each involving three buses, on which the Facility has depended for most of its assumptions, are still very much in their embryonic stages to yield sufficient, conclusive or definite evidence, they say. The projects need to be tested fully in order for it to pass the test of replication. Several new demonstration projects have just started or are in the planning stages in California and Europe. They probably do have the potential to become cost-competitive in the next decade with diesel buses on a lifecycle basis even with the additional costs of hydrogen production, transport, storage, compression, and dispensing. But it would be wise to 'wait and watch' before jumping to conclusions, caution critics.

There is also lack of experience in operating, fuelling, maintaining, and repairing hydrogen fcb s, which should act as a deterrent to hurried promotion of this technology, they add.

A major source of worry among dissenters is the issue of cost-efficacy. The cost gap between the current prototype hydrogen fcb ( us $1.2 million per bus) and the conventional diesel bus ( us $250,000/bus), all manufactured to North American standards, is still formidable. Also, fuel cell stacks, the heart of the fcb engines, at present have a life of only 4,000 hours versus 30,000 hours for diesel engines before a major overhaul is required. "One will need to have around 2,000 fcb s on the roads in developed countries to break even with the cost of North American diesel buses," calculates one critic. "In India, it would mean having about 5,000 fcb s to turn cost-competitive to the diesel and cng buses. The Facility should ideally wait till the prices fall and there is adequate experience in developed countries in deflecting or absorbing costs," he adds.

Further, the cost of fcb s in 2010 is expected by undp/gef to be 20 to 30 per cent more than that of diesel buses in North America. The cost of 5,000 fcb s in India will almost be Rs 5,000 crore or us $1 million in 2010.

Should India pay an additional us $1 billion for 660,000 tonnes of co 2 emission reduction -- an astonishing us $1,500 for each tonne of co 2 reduction!! In comparison, a tonne of co 2 emission reduction costs only us $15 from wind energy, and us $50 from solar energy.

Also, in its cost-calculation analysis for the project, the gef estimates that in the initial stage it will invest us $6.2 million and anticipates another us $6 million to flow from the Indian government and private investments. Similarly, in phase II, it is willing to invest us $6 million but expects the Indian government to plow in us $9 million; the dtc us $ 0.02 million and private investors 1.38 million. "This is a pipe dream," scorns the critic. "Nothing of this sort will actually happen."

One happy, cost-sharing family ?

In fact, the apprehensions of the German, Swiss and the French representatives of the governing Council on this very count have gone into the records. Their strong misgivings about government and private sector participation in the fcb project stem primarily from their doubts about the commitment of funds from the Government of India, the Surface transport ministry, the dtc , the mnes or private investors, even if the costs were to plummet sharply, which, according to them, is not going to happen in the near future.

The only concession these critics saw forthcoming from the Indian government was the exemption of duties. But this would happen even without government intervention because undp projects are exempt from taxes in the normal course of action.

It also highly doubtful if the dtc , which currently operates 40 per cent of the total bus fleets in Delhi, will turn into a major fcb user as the gef envisions. The state-owned corporation is notorious for backing out of its commitments, as its cavalier dismissal of the Supreme Court's deadline to end running polluting diesel vehicles shows. Its reluctance to gear up to the possibilities that cng offers is another glaring example. The gef is banking on the similarity between cng and hydrogen re-fuelling facilities for dtc to make the transition.

The gef' s faith in expanding the use of fcb s in all of India's metros is probably misplaced as well. Given the cost barriers, it is unlikely that Mumbai, Kolkata, or Chennai will accept it in the near future. Making a dent in the 600,000 diesel bus market and capturing a market for fcb s in this vast geographical region is not going to be so easy.

The gef' s plans of collaborating with the Government of India on incentive plans for fcb manufacturers and hydrogen facility suppliers so that they can venture into commercial production and marketing seems far fetched for this very reason. Import duty exemptions, tax credit for the products, soft loan guarantees, indirect incentives such as adding user tax to the diesel fuel and intensifying research in fuel cell vehicles are great ideas but will remain in that realm if the issue of price imbalance is not addressed.

A technical advisory committee, consisting of Bharat Heavy Electronics Ltd ( bhel ), Southern Petrochemical Industries Corporation ( spic ), Tata Energy Research Institute ( teri ), AF Ferguson and the Indian Institute of Technology ( iit ), Delhi, is also expected to provide back up and the cooperation of Indian Oil Corporation and Gas Authority of India has also been enlisted. But the Brazilian experience has earlier shown that both government and private parties do not cooperate very readily, which must serve as a lesson to other countries.

The tussle with the technology

The gef is lucid about why it is promoting fcb s. It is interested in this technology only because it reduces carbon emissions, which in turn lowers greenhouse gases. And this fulfils its objective of promoting clean fuel technology. But how environment friendly is the future hydrogen facility operation?

It proposes to set up the future hydrogen facility at Rajghat power project and will tie up supply to the fleet. "All very neatly argued and tied up but is the fuel as environment-friendly as it is made out to be?," demands an insider of the Facility. The technology used would be to split water with electricity, which is bound to generate carbon dioxide.

Carbon concerns

Also, the gef calculations of carbon dioxide emission are based on typical diesel fuel composition in India -- average bus daily driving a distance of 169 km at a fuel economy of 3.76 km/litre. It also takes into account that fuel oil production from crude in a refinery typically has 90 per cent conversion efficiency. It holds that for each kilometre driven, a diesel bus is estimated to emit about 815 grams of carbon dioxide. According to project estimates, the eight fcb s to be introduced in Delhi would lead to a reduction of 57 tonnes of carbon dioxide over three-and-a-half years. In other words, an fcb , over a kilometre, would emit 57 grams less of carbon dioxide than a diesel bus -- a savings of only seven per cent.

As reservations pile up against the fcb project in India, the question uppermost in everyone's mind is: will fuel cell buses ply Delhi's roads and prove to be the ultimate saviour for its asphyxiating population or is the programme doomed to sputter into silent anonymity? Will the Facility's mission of reducing greenhouse gases be accomplished or is its eagerness misplaced? n

Reported by Chitra Gopalakrishnan from Washington DC

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