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The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs ( National Academy Press) The National Academies' National Research Council ap­pointed the Committee on Alternatives and Strategies for Future Hydrogen Production and Use in the fall of 2002 to address the complex subject of the "hydrogen economy." In particular, the committee carried out these tasks:

  •  Assessed the current state of technology for producing hydrogen from a variety of energy sources;

  • Made estimates on a consistent basis of current and fu­ture projected costs, carbon dioxide (CO2) emissions, and energy efficiencies for hydrogen technologies;

  • Considered scenarios for the potential penetration of hydrogen into the economy and associated impacts on oil imports and CO2 gas emissions;

  • Addressed the problem of how hydrogen might be dis­tributed, stored, and dispensed to end uses—together with associated infrastructure issues—with particular emphasis on light-duty vehicles in the transportation sector;

  • Reviewed the U.S. Department of Energy's (DOE's) research, development, and demonstration (RD&D) plan for hydrogen; and

  • Made recommendations to the DOE on RD&D, includ­ing directions, priorities, and strategies.

The vision of the hydrogen economy is based on two expectations: (1) that hydrogen can be produced from do­mestic energy sources in a manner that is affordable and environmentally benign, and (2) that applications using hy­drogen—fuel cell vehicles, for example—can gain market share in competition with the alternatives. To the extent that these expectations can be met, the United States, and indeed the world, would benefit from reduced vulnerability to en­ergy disruptions and improved environmental quality, espe­cially through lower carbon emissions. However, before this vision can become a reality, many technical, social, and policy challenges must be overcome. This report focuses on the steps that should be taken to move toward the hydrogen vision and to achieve the sought-after benefits. The reportfocuses exclusively on hydrogen, although it notes that al­ternative or complementary strategies might also serve these same goals well.

The Executive Summary presents the basic conclusions of the report and the major recommendations of the committee. The report's chapters present additional findings and recommendations related to specific technologies and issues that the committee considered.

As described below, the committee's basic conclusions address four topics: implications for national goals, priori-ties for research and development (R&D), the challenge of transition, and the impacts of hydrogen-fueled light-duty ve­hicles on energy security and CO2 emissions.

Implications for National Goals

A transition to hydrogen as a major fuel in the next 50 years could fundamentally transform the U.S. energy system, creating opportunities to increase energy security through the use of a variety of domestic energy sources for hydrogen production while reducing environmental impacts, including atmospheric CO2 emissions and criteria pollut­ants.) In his State of the Union address of January 28, 2003, President Bush moved energy, and especially hydrogen for vehicles, to the forefront of the U.S. political and technical debate. The President noted: "A simple chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car producing only water, not exhaust fumes. With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from

laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen, and pollution-free." This committee believes that investigating and con-ducting RD&D activities to determine whether a hydrogen economy might be realized are important to the nation. There is a potential for replacing essentially all gasoline with hydrogen over the next half century using only domestic resources. And there is a potential for eliminating almost all CO2 and criteria pollutants from vehicular emissions. How-ever, there are currently many barriers to be overcome be-fore that potential can be realized.

Of course there are other strategies for reducing oil imports and CO2 emissions, and thus the DOE should keep a balanced portfolio of R&D efforts and continue to explore supply-and-demand alternatives that do not depend upon hy­drogen. If battery technology improved dramatically, for example, all-electric vehicles might become the preferred alternative. Furthermore, hybrid electric vehicle technology is commercially available today, and benefits from this tech­nology can therefore be realized immediately. Fossil-fuelbased or biomass-based synthetic fuels could also be used in place of gasoline.

Research and Development Priorities

There are major hurdles on the path to achieving the vi­sion of the hydrogen economy; the path will not be simple or straightforward. Many of the committee's observations gen­eralize across the entire hydrogen economy: the hydrogen system must be cost-competitive, it must be safe and appeal­ing to the consumer, and it would preferably offer advan­tages from the perspectives of energy security and CO2 emis­sions. Specifically for the transportation sector, dramatic progress in the development of fuel cells, storage devices, and distribution systems is especially critical. Widespread success is not certain.

The committee believes that for hydrogen-fueled trans­portation, the four most fundamental technological and eco­nomic challenges are these:

1. To develop and introduce cost-effective, durable, safe, and environmentally desirable fuel cell systems and hydrogen storage systems. Current fuel cell lifetimes are much too short and fuel cell costs are at least an order of magnitude too high. An on-board vehicular hydrogen storage system that has an energy density approaching that of gasoline sys­tems has not been developed. Thus, the resulting range of vehicles with existing hydrogen storage systems is much too short.

2. To develop the infrastructure to provide hydrogen for the light-duty-vehicle user. Hydrogen is currently producedin large quantities at reasonable costs for industrial purposes. The committee's analysis indicates that at a future, mature stage of development, hydrogen (H2) can be produced and used in fuel cell vehicles at reasonable cost. The challenge, with today's industrial hydrogen as well as tomorrow's hy­drogen, is the high cost of distributing H2 to dispersed locations. This challenge is especially severe during the early years of a transition, when demand is even more dispersed. The costs of a mature hydrogen pipeline system would be spread over many users, as the cost of the natural gas system is today. But the transition is difficult to imagine in detail. It requires many technological innovations related to the de­velopment of small-scale production units. Also, nontechni­cal factors such as financing, siting, security, environmental impact, and the perceived safety of hydrogen pipelines and dispensing systems will play a significant role. All of these hurdles must be overcome before there can be widespread use. An initial stage during which hydrogen is produced at small scale near the small user seems likely. In this case, production costs for small production units must be sharply reduced, which may be possible with expanded research.

3. To reduce sharply the costs of hydrogen production from renewable energy sources, over a time frame of decades. Tremendous progress has been made in reducing the cost of making electricity from renewable energy sources. But making hydrogen from renewable energy through the intermediate step of making electricity, a premium energy source, requires further breakthroughs in order to be com­petitive. Basically, these technology pathways for hydrogen production make electricity, which is converted to hydrogen, which is later converted by a fuel cell back to electricity. These steps add costs and energy losses that are particularly significant when the hydrogen competes as a commodity transportation fuel—leading the committee to believe that most current approaches—except possibly that of wind en­ergy—need to be redirected. The committee believes that the required cost reductions can be achieved only by tar­geted fundamental and exploratory research on hydrogen production by photobiological, photochemical, and thin-film solar processes.

4. To capture and store ("sequester") the carbon dioxide by-product of hydrogen production from coal. Coal is a mas­sive domestic U.S. energy resource that has the potential for producing cost-competitive hydrogen. However, coal pro­cessing generates large amounts of CO2. In order to reduce CO2 emissions from coal processing in a carbon-constrained future, massive amounts of CO2 would have to be captured and safely and reliably sequestered for hundreds of years. Key to the commercialization of a large-scale, coal-based hydrogen production option (and also for natural-gas-based options) is achieving broad public acceptance, along with additional technical development, for CO2 sequestration.

For a viable hydrogen transportation system to emerge, all four of these challenges must be addressed.

There will likely be a lengthy transition period during which fuel cell vehicles and hydrogen are not competitive with internal combustion engine vehicles, including conven­tional gasoline and diesel fuel vehicles, and hybrid gasoline electric vehicles. The committee believes that the transition to a hydrogen fuel system will best be accomplished initially through distributed production of hydrogen, because distrib­uted generation avoids many of the substantial infrastructure barriers faced by centralized generation. Small hydrogen-production units located at dispensing stations can produce hydrogen through natural gas reforming or electrolysis. Natural gas pipelines and electricity transmission and distri­bution systems already exist; for distributed generation of hydrogen, these systems would need to be expanded only moderately in the early years of the transition. During this transition period, distributed renewable energy (e.g., wind or solar energy) might provide electricity to onsite hydrogen production systems, particularly in areas of the country where electricity costs from wind or solar energy are par­ticularly low. A transition emphasizing distributed produc­tion allows time for the development of new technologies and concepts capable of potentially overcoming the chal­lenges facing the widespread use of hydrogen. The distrib­uted transition approach allows time for the market to de­velop before too much fixed investment is set in place. While this approach allows time for the ultimate hydrogen infra-structure to emerge, the committee believes that it cannot yet be fully identified and defined.

Impacts of Hydrogen-Fueled Light-Duty Vehicles

Several findings from the committee's analysis (see Chapter 6) show the impact on the U.S. energy system if successful market penetration of hydrogen fuel cell vehicles is achieved. In order to analyze these impacts, the committee posited that fuel cell vehicle technology would be developed successfully and that hydrogen would be available to fuel light-duty vehicles (cars and light trucks). These findings are as follows: 

  • The committee's upper-bound market penetration case for fuel cell vehicles, premised on hybrid vehicle experi­ence, assumes that fuel cell vehicles enter the U.S. light-duty vehicle market in 2015 in competition with conventional and hybrid electric vehicles, reaching 25 percent of light-duty vehicle sales around 2027. The demand for hydrogen in about 2027 would be about equal to the current production of 9 million short tons (tons) per year, which would be only a small fraction of the 110 million tons required for full re-placement of gasoline light-duty vehicles with hydrogen ve­hicles, posited to take place in 2050.

  • If coal, renewable energy, or nuclear energy is used to produce hydrogen, a transition to a light-duty fleet of ve-hides fueled entirely by hydrogen would reduce total energy imports by the amount of oil consumption displaced. How-ever, if natural gas is used to produce hydrogen, and if, on the margin, natural gas is imported, there would be little if any reduction in total energy imports, because natural gas for hydrogen would displace petroleum for gasoline.

  • CO2 emissions from vehicles can be cut significantly if the hydrogen is produced entirely from renewables or nuclear energy, or from fossil fuels with sequestration of CO2. The use of a combination of natural gas without sequestration and renewable energy can also significantly reduce CO2 emissions. However, emissions of CO2 associated with light-duty vehicles contribute only a portion of projected CO2 emissions; thus, sharply reducing overall CO2 releases will require carbon reductions in other parts of the economy, par­ticularly in electricity production.

  • Overall, although a transition to hydrogen could greatly transform the U.S. energy system in the long run, the impacts on oil imports and CO2 emissions are likely to be minor during the next 25 years. However, thereafter, if R&D is successful and large investments are made in hydrogen and fuel cells, the impact on the U.S. energy system could be great.

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