"Tonight I am proposing $1.2 billion in research funding so that America can lead the world in developing clean, hydrogen-powered automobiles," declared us President George Bush in his State of the Union Address to the congress in January 2003. The announcement is just one among a spate of recent developments worldwide which indicate that the journey towards a hydrogen economy is gathering speed. This, despite the possibility of hairpin bends ahead.
Predictably, the automobile industry has been at the forefront of the research and development initiative. It has spent at least us $2 billion during the past few years on studying hydrogen fuel cells. DaimlerChrysler alone has committed us $1 billion over a decade. On its part, General Motors (gm) has announced major investments in two companies specialising in hydrogen storage and delivery.
But the startling aspect of the hydrogen development drive is the active involvement of major oil firms. They, too, have forked out the big bucks. Shell established Shell Renewables in 1997 and Shell Hydrogen in 2000; bp/Amoco is investing us $500 million in renewables over the next three years and ChevronTexaco has purchased a 20 per cent stake in Energy Conversion Devices -- a Detroit-based photovoltaic battery and fuel cell company. Exxon also claims to be spending $100 million a year on research in a joint venture with gm and Toyota.
How long global oil reserves remain cheaply recoverable has, for some time, been an issue of debate. Now some of the world's leading petroleum geologists are suggesting that global oil production could reach saturation point and begin a steep decline much sooner than was expected. According to Jeremy Rifkin, fellow at the University of Pennsylvania's Wharton School executive education programme and author of The Hydrogen Economy , "There has been a battle going on in scientific journals, re-looking at the numbers, and they are saying oil production will peak at the end of the decade -- certainly no later than 2020. We are using two barrels for every one we find."
The European Union (eu) has just committed us $3.56 billion to prepare a plan to reduce the region's dependence on oil. European Commission (ec) president Romano Prodi describes it as a new "socio-economic model". Of course, the matter of business interest has not been lost sight of either. Fuel cells using hydrogen could replace not only internal combustion engines, but also central power plants and batteries in portable electronic gadgets such as laptop computers and cellphones.
While automobile manufacturers like gm claim that fuel cell vehicles (fcvs) will flood the market by the end of the decade, there is still considerable uncertainty regarding when the hydrogen economy would take off. Phil Watts, chairperson of oil conglomerate Royal Dutch/Shell, highlights the nebulosity: "The short, honest answer is I don't know. One projection shows 25 per cent penetration of hydrogen into the primary energy mix by 2050. That's the optimistic estimate. But fossil fuels -- oil and probably more gas -- would still be alive and well 50 years from now."
Jim Davis, president of Chevron Energy Solutions, feels that in the stationary power market the transformation is going to take place within the next 10 years, "but in the transportation market a 20-year horizon would be more realistic". Chevron Energy is a wholly owned subsidiary of ChevronTexaco, the world's fourth largest oil company in terms of reserves.
Seth Dunn, research associate at the us-based Worldwatch Institute, points out: "Just as the aggressive tapping of oil enabled the us ... to become the economic and political power of the 20th century, nations that move first to harness hydrogen could potentially erode us competitiveness."
In Europe, the fuel cell market is projected to reach us $55 billion by 2040. In October 2002, the ec founded a group to keep Europe's hydrogen firms abreast of its rivals. Herbert Kohler, head of environmental affairs in top automaker DaimlerChrysler, which is one of the 18 companies that are a part of the venture, exudes confidence: "Hopefully, it will bring us to a situation in 2010 or 2012, when we can drive down the street in an electric car."
Going by the current progress, European nation Iceland looks likely to become the first modern economy in the world that would run free of fossil fuels. A joint report brought out by the World Wide Fund for Nature and environmental advocacy group Iceland Nature Conservation Association mentions that Iceland can run up to 40 per cent of its cars and fishing vessels on hydrogen by 2020, and have a 100 per cent hydrogen-based transport system within 35 years. The ecofriendly gas would be produced from water -- using renewable energy drawn from the country's existing excess hydropower capacity and future offshore wind power.
Elsewhere, too, enormous strides are being made in the field. The National Fuel Cell Research and Innovation Initiative of Canada has invested more than us $20 million to strengthen the industry's research and development. In Japan, the government has set a target of 50,000 fuel cell cars by 2010 and 2.1 giga watts of stationary and residential fuel cell power over the same period. The country plans to spend us $4 billion by 2020.
Singapore's Economic Development Board (edb) is seeking to install hydrogen refuelling facilities, costing between us $500,000 and us $1.5 million each, in 2003. In May 2001, the edb unveiled a plan to launch an fcv demonstration and development project. With more than 20 institutes and enterprises specialising in fuel cells, China too intends investing us $120 million in research on fcvs.
Even in the oil-rich United Arab Emirates, Dubai has been cooperating with premier automaker Bavarian Motor Works (bmw) in a feasibility study on hydrogen production. Significantly, Saudi Arabia, too, entered into a decade-long hydrogen research pact with Germany in the late 1980s.
In the us, the 1999 government-initiated California Fuel Cell Partnership Programme now has partners like fuel cell developers Ballard Power Systems Inc and International Fuel Cells; automakers DaimlerChrysler, Ford, Honda, Volkswagen, Nissan and Hyundai; oil companies such as bp, Shell Hydrogen, ExxonMobil and Chevron Texaco, and transit agencies like SunLine and Santa Clara Valley Transportation Authority. During different phases of the programme, the us departments of energy and transportation as well as the us Environmental Protection Agency also joined in.
As the global energy market swerves towards hydrogen (see graph: Widening radius), the debate over how the shortest and least expensive path can be adopted assumes greater importance.
The issue of tapping hydrogen -- the most abundant element in the universe -- for fuel cells is surrounded by complexities. The biggest stumbling block: hydrogen does not occur naturally in the free state in large quantities. Manufacturers are trying out various methods to tide over this problem. While some vehicles carry a tank of pure hydrogen, others are equipped with a 'fuel reformer' that converts hydrocarbon fuels such as methanol, natural gas or gasoline into a hydrogen-rich gas. What is worrying policymakers is the production of greenhouse gases like carbon dioxide and methane as byproducts.
At present, 95 per cent of the nine million tonnes of hydrogen produced annually by the us is derived from steam methane reforming -- a catalytic process that involves reacting natural gas or other light hydrocarbons with steam to produce a mixture of hydrogen and carbon dioxide. Another process --partial oxidation of fossil fuels in large gasifiers -- also produces carbon dioxide. Similar emissions take place when electricity is used in electrolysers to extract hydrogen from water. Although using steam to reform natural gas has thus far proved to be the most economical way to produce commercial hydrogen, global production of natural gas is likely to peak sometime between 2020 and 2030. This, it is feared, would spawn a second energy crisis on the heels of the alarming situation caused by the oil shortage.
Meanwhile the greens have protested the us programme, dubbing it as a 'dirty energy plan'. They contend that a part of the project deals with finding ways to produce hydrogen using coal and nuclear power. Dan Becker, head of the Sierra Club Global Warming and Energy Programme, an environmental pressure group, believes that the plan obscures Bush's failure to seek stronger fuel-efficiency standards for today's cars and trucks which would provide quicker energy savings. "The whole thing's a fraud," he alleges, adding: "He's going to try to snatch defeat from the jaws of victory by creating hydrogen out of coal, nuclear (power) and gasoline."
Some scientists and policymakers are also taking a serious look at nuclear power as an option for large-scale hydrogen production. According to Leon Walters, former director of engineering at Argonne National Laboratory, nuclear power -- now just seven per cent of us power production -- could leap to 50 per cent if it were harnessed to produce hydrogen for transportation. He estimates that a transition to a hydrogen-nuclear economy would take 30 years. "This certainly explains one level of the Bush administration's sudden interest. But if we're looking to hydrogen to free us from old forms of energy, why would we suddenly go nuclear, with all the well-known problems?" protests Becker.
Japan is thinking of going the Iceland way. The country's ministry of environment is testing out technology to produce hydrogen by electrolysis of seawater, making use of its offshore wind power station. This is the most environment-friendly process. At the same time, it is also the costliest and may take time to fine-tune. Japan has decided to extract hydrogen from waste as well from this year onwards.
The economics of hydrogen fuel cell technology remains a major hurdle to its commercialisation. "The current cost of a fuel cell engine is in the region of us $800 per kilo watt (kW), compared to around us $20 per kW for an internal combustion engine," says Tif Awan, market analyst with international growth consultants Frost and Sullivan. However, Ballard claims that its fuel cell systems already have the potential to match a conventional engine on cost. The catch is that this requires an automotive production volume of more than 200,000 per year.
Japanese auto major Honda points out that high costs of research would force car firms to charge anything from us $1 million to us $2 million for every fcv initially. Moreover, according to gm's estimates, if a hydrogen-delivery system were built today, hydrogen would cost four to six times as much as gasoline. Much of this huge cost would be due to low demand.
But initiatives are beginning to bear fruit (see box: H-tech update ). The long-term vision, as Rifkin puts it, is that the real beneficiaries of the hydrogen economy will be developing countries. "They can really leapfrog, especially those which do not have oil reserves and cannot generate their own power. Then you would have re-globalisation from the ground up," he points out.
Jim Motavalli, editor of environmental magazine e, cautions that if hydrogen is captured by today's big energy interests, the dream of zero emission and local control will almost certainly never be realised. "A fair question to ask is whether the hydrogen future will be driven by big energy companies or reached over their dead bodies," remarks Jason Mark, director of the Union of Concerned Scientists' clean vehicle programme. He adds: "We don't want to wake up in the middle of the night and find that our dream of a clean hydrogen revolution has become a nightmare."