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Investing in Fuel Cells and the Hydrogen Economy

Hydrogen Economy

The Hydrogen Economy officially began on April 24, 2003 with the opening of the world's first retail hydrogen filling station in Reykjavik, Iceland. The station belongs to a joint venture company, Icelandic New Energy (INE), formed in 1999 by the Icelandic Holding Company VistOrka hf, Shell Hydrogen, Norsk Hydro and DaimlerChrysler. A Mercedes Benz prototype fuel cell vehicle (FCV) was the first customer.

Three Daimler/Chrysler fuel cell powered buses are fueled there to service the city for a trial period of two years. If all goes well, most city buses will be replaced with hydrogen-powered models, and eventually most private cars and boats and lawn mowers and most every other motorized product in Iceland as it becomes the first nation on earth to commit itself to hydrogen power, hoping to complete the transition by 2050. What has begun in Iceland will eventually spread all over the planet as the mechanics and logistics of the Hydrogen Economy are invented, developed, and outfitted to our world.

Fuel cells are the building blocks of the hydrogen economy. A fuel cell is essentially a battery that can be refueled. Everything from cities to buildings to vehicles to laptops and cell phones will be powered by fuel cells. The technology already exists. Houses, cars, buses, and even planes are currently powered by fuel cells in trials around the world. NEC recently unveiled a fuel cell powered laptop that will be available next year. President Bush demonstrated a fuel cell powered cell phone. All that remains is for the technology to mass produced and made cheap enough for mass distribution. That day is coming.

All fuel cells are environmentally perfect, exhausting only heat and water vapor. The problem is how to produce and distribute the hydrogen fuel. Hydrogen is the simplest and most abundant element in the Universe, but precious little of it exists on earth in pure form.. To produce hydrogen we must "reform" it from a hydrogen bearing compound.

Today, most hydrogen is produced from natural gas by a steam reformation process that produces hydrogen and leaves carbon dioxide (CO2) as a by product. Coal can also be reformed through gasification to produce hydrogen, but this is more expensive than using natural gas, and hydrogen can also be processed from gasoline or methanol. In all cases CO2 is an unwanted by product.

The Shell hydrogen station in Iceland offers the dream solution, using Norsk hydro electrolysis technology to produce hydrogen from water. The whole operation is powered by electricity generated by renewable geothermal and hydro energy. This is the future. Keep your eye on tiny, little Iceland, a nation of just 285,000 people. They mean to become the Saudi Arabia of the Hydrogen Economy.

In his State of the Union speech President Bush announced that the US will spend $1.2 billion over the next five years to develop viable fuel cell vehicles (FCVs) and promised that within 20 years FCVs will "make our air significantly cleaner, and our country much less dependent on foreign sources of oil." The Dept. of Energy (DOE) produced a "National Hydrogen Energy Roadmap" to accomplish this by refining up to 90% of the hydrogen from natural gas and other fossil fuels, with the remaining 10% to be "cracked" from water using nuclear energy. This insures that the oil, coal, and nuclear industries will profit from the transition to a hydrogen economy.

The Bush Administration dismisses hydrogen produced by renewable energy as too expensive. And whereas the DOE budgeted $17 million on renewables in the "Roadmap," the administration cut $86 million from other renewable energy programs. The US currently produces 9 million tons of hydrogen each year and transports it through hundreds of miles of pipelines to fuel the space shuttle and to remove sulfur from petroleum refineries. The administration plans to expand that infrastructure to serve the nation at large.

Japan and Europe have also initiated significant fuel cell development programs. Europe's effort is similar to that of the US, except Europe is focusing far more on renewable power as a means to produce the hydrogen. Japan has probably the most aggressive approach of any major economy. Japan will begin marketing micro fuel cells for portable devices and stationary fuel cells the size of dishwashers to power homes in 2004 and hopes to have 4.5% of its electricity generated by fuel cells by 2010.

Excepting Iceland, the current efforts of our world toward achieving the hydrogen economy may be termed significant, but not aggressive. Many argue that we need an all out pedal to the metal program comparable to the Apollo Program of the 1960's.

Jeremy Rifkin, in his book on the Hydrogen Economy, presents an enlightening statistic: the reserve-to-production ratio (RIP) for world oil reserves. This ratio estimates the number of years that known oil reserves in a particular country will last at current production rates. In the US, the R/P is 10:1. In Kuwait it is 116:1. Iraq tops the list at 526:1. This means that in just ten years the USA will exhaust it's domestic oil supply and become totally dependent on foreign imports, while Iraq can continue pumping oil at the present rate for 526 years!

The US is presently spends over $120 billion a year importing foreign oil, contributing to a total trade deficit projected to reach a record $492 billion for 2003, up from the previous record of $418 billion in 2002. These numbers cannot continue. The US cannot afford lose $500 billion a year from its economy for long. It must begin to wean itself from the imported oil nipple as soon as possible. The best path is the Hydrogen Economy.

Major questions still need to be resolved, principally, how will the hydrogen be delivered. Will giant corporations produce hydrogen and pipe it to us or will we produce our hydrogen on site in our homes and filling stations. Will there be interim steps. Perhaps you will have natural gas piped to your home where you can reform it into hydrogen until the day comes when it is cheap enough to produce the hydrogen from water.

Another factor me must consider is government. The US government, republican and democratic administrations alike, has repeatedly dropped the "energy crisis" ball. In the first oil crisis in 1974, with the US importing 6 million barrels of oil per day, President Richard Nixon announced "Project Independence" and promised "in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving." In 1974 policymakers predicted that US oil production "could increase to more than 17 million bbl. a day, which is more than sufficient to be at zero imports by 1985." After the energy crisis of 1979, President Jimmy Carter signed the "Energy Security Act" to "encourage production of 2 million barrels a day of synthetic fuels by the year 1992." Oil imports totaled 6.9 million barrels a day that year and no significant amount of synthetic fuel was ever produced. The Reagan Administration predicted zero oil imports by the year 2000.

The year 2000 dawned with the US importing more oil than ever, about 10 million barrels a day, 40% more than it imported in 1973, while it has all but exhausted its own oil reserves. Today the US consumes about 20 million barrels of oil per day, equaling about 26% of world consumption. In comparison Japan consumes about 4.5 million and China about 5.5 million barrels per day. What will happen when China comes of age? There is not enough oil presently being pumped in the world for the Chinese to live like Americans, if they took every drop of it!. And, believe me, the Chinese mean to live like Americans.

Meanwhile, experts say oil production may peak as soon as 2005 and decline every year thereafter. This, plus the the bulk of the untapped oil remaining in the unstable Middle East, plus the modernization of the third world (China and India alone = 2.5 billion people!) driving the price for oil sky-high, equals the death of the Oil Economy. The Hydrogen Economy will evolve because it is the only viable solution to the future of life on earth.

In the dream Hydrogen Economy, all power generation will be decentralized in what Rifkin calls the World Wide Energy Web. In this dream every thing is powered by hydrogen fuel cells. Every home, building, and vehicle is connected in an energy network the same way computers are connected to the World Wide Web. Every unit produces its own electricity. Excess production is fed into the network and sold to the world at large. Gone are the giant energy utilities. This is all possible. How much becomes reality remains to be seen. But, make no mistake about it, our future is hydrogen. And the future is coming fast.