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Testimony of David K. Garman

Assistant Secretary
Energy Efficiency and Renewable Energy
Before the Committee on Science U.S. House of Representatives
Hearing on "The Path to a Hydrogen Economy"


March 5, 2003


Mr. Chairman, Members of the Committee, I appreciate the opportunity to testify before you today on "The Path to a Hydrogen Economy."

Energy is the life-blood of our Nation. It is the mainstay of our standard of living, our economy, and our national security. The President's National Energy Plan, entitled "Reliable, Affordable and Environmentally Sound Energy for America's Future," is the blueprint for the energy future we seek, and it makes several recommendations with regard to hydrogen. Specifically, it directs the Secretary to develop next generation energy technology, including hydrogen; it recommends that our research and development (R&D) programs related to hydrogen and fuel cells be integrated; and it recommends that legislation reauthorizing the Hydrogen Energy Act enjoy the support of the Administration.

Since the release of the President's energy plan in May 2001, the President and Secretary Abraham have unveiled several exciting new initiatives related to hydrogen. Most notable are the FreedomCAR partnership announced in January 2002; the President's Hydrogen Fuel Initiative announced during the State of the Union address in January 2003; and the "FutureGEN" zero-emission coal-fired electricity and hydrogen power plant initiative announced just last week. Each of these initiatives plays a particularly important role in a hydrogen energy future. Each will help make possible a future in which the principal "energy carriers" are hydrogen and electricity, eventually generated using technologies that do not emit any pollutants or carbon dioxide.

Our present energy picture is significantly different than a potential hydrogen energy future. A diagram developed by Lawrence Livermore National Laboratory [Figure 1 (PDF 347 KB) Download Adobe Reader ] represents the current "energy flows" in the U.S. economy. It should not be regarded as a highly precise representation of these flows, but it is extremely useful in helping policymakers visualize complex energy data.

The primary energy inputs, including coal, oil, natural gas, nuclear, and renewable energy are shown on the left. The relative sizes of the lines or "pipes" represent the relative contributions of the primary energy inputs, the impacts of energy conversion, and the end uses.

Using this it is easier to visualize how the energy flows move toward electricity generation or through the different sectors of our economy. The diagram makes clear some inescapable features of our current energy economy:

  • We enjoy a diversity of primary energy inputs, although there are imbalances;

  • We are heavily dependent on oil, coal, and natural gas;

  • The transportation sector is almost entirely dependent on oil, a majority of which is imported;

  • A large amount of energy is rejected or wasted, and transportation is the least efficient of the three sectors of our energy economy;

  • Looking more specifically at oil as we do in the next graph [Figure 2 (PDF 231 KB) Download Adobe Reader] we see that there is an imbalance between petroleum demand for transportation and domestic production, and that automobiles and light trucks are the dominant driver behind that demand.

In the early 1990s, the petroleum required just by our highway vehicles surpassed the amount produced domestically. The "gap" between production and transportation demand is growing-and is projected to keep growing. The current gap between total U.S. consumption and net production of oil is roughly 11 million barrels per day. Promoting efficiency in the use of oil, and finding new domestic sources of oil, are both important short-term undertakings. But over the long-term, a petroleum-free option is eventually required.

Our energy challenge is further complicated by another important factor-the pollutants and carbon dioxide emissions resulting from our use of energy. We have made tremendous progress in reducing pollutant emissions from our cars and trucks as well as our stationary power sources, and we will continue to make incremental gains through regulatory approaches such as the Tier II standards. But for true efficiency gains, we must reach to develop a wholly new approach to energy.

In his recent State of the Union address, President Bush announced a groundbreaking plan to transform our Nation's energy future from one dependent on foreign petroleum, to one that utilizes the most abundant element in the universe-hydrogen.

Hydrogen can be produced from diverse domestic sources, freeing us from a reliance on foreign imports for the energy we use at home. Hydrogen can fuel ultra-clean internal combustion engines, which would reduce auto emissions by more than 99 percent. And when hydrogen is used to power fuel cell vehicles, it will do so with more than twice the efficiency of today's gasoline engines-and with none of the harmful air emissions. In fact, fuel cells' only byproducts are pure water and some waste heat.

But ultimate success in the mass-market penetration of hydrogen fuel cell vehicles requires a hydrogen-based infrastructure that performs as well as the petroleum-based infrastructure we now have.

Our current gasoline/hydrocarbon infrastructure has been forged in a competitive market. It is ubiquitous and remarkably efficient. It can deliver refined petroleum products that began as crude oil half a world away to your neighborhood for less than the cost of milk, drinking water, or many other liquid products you can buy at the supermarket. We are currently bound to that infrastructure. We have no alternative. Eventually replacing it with something different will be extremely difficult. But that is what we must do if we expect to achieve success with the FreedomCAR partnership. Drivers must be able to go anywhere in America and to refuel their hydrogen-powered vehicle before they will be comfortable purchasing one.

That is why the President, in his State of the Union address, proposed that we in the federal government significantly increase our spending on hydrogen infrastructure R&D, including hydrogen production, storage, and delivery technologies, as well as fuel cells. Over the next five years, we plan to spend an estimated $1.7 billion on the FreedomCAR partnership and Hydrogen Fuel Initiative, $1.2 billion of which is for the Hydrogen Fuel Initiative, which includes resources for work on hydrogen and fuel cells. Of the $1.2 billion figure, $720 million is "new money."

We will not build the infrastructure. The private sector will do that as the business case becomes clear. But as we develop the technologies needed by the vehicles, we will also develop the technologies required by the infrastructure. In cooperation with DOT, we will convene the parties needed for technology partnerships, we will collaborate on the needed codes and standards, and we will promote international cooperation in this effort.

There is growing worldwide interest in hydrogen and fuel cell technology, as reflected in the dramatic increase in public and private spending since the mid-1990s in the U.S. and elsewhere. We estimate current investments across the U.S. government agencies to be well over $200 million, about $120 million of which is for hydrogen and polymer electrolyte membrane (PEM) R&D. In 2003, the Japanese government nearly doubled its fuel cell R&D budget to $268 million, and in March 2003 will launch a joint government/industry demonstration of hydrogen fuel cell vehicles, including the deployment of more than seven new hydrogen refueling stations. Governments and companies in Canada, Europe, and Asia are also investing heavily in hydrogen research, development and demonstration. For example, ten new hydrogen refueling stations will be built in Europe over the next few years to fuel hydrogen-powered buses. By comparison, the U.S. currently has approximately ten hydrogen refueling stations, and plans several more as appropriate to fund limited "learning" demonstrations to help identify R&D needs to make hydrogen and fuel cell technologies cost competitive and technologically viable.

Understandably, there is an aspect of economic competitiveness to all this as well. A recent report by PricewaterhouseCoopers projects global demand for all fuel cell products (in portable, stationary, and transportation power applications) to reach $46 billion per year by 2011 and to grow to more than $2.5 trillion per year in 2021. The United States should strive to be a leader in hydrogen and fuel cell technology development and commercialization in order to secure a competitive position for future energy technology innovations, new products, and service offerings. Without a change in direction, the more than 19 million barrels per day of petroleum projected to be imported to the U.S. by 2025 will cost our economy an estimated $188 billion per year (based on EIA projections) in real 2001 dollars.

Consistent with the questions posed by the Committee in its letter of February 20, 2003, I will now elaborate further on our approach, the benefits we expect, the technology challenges we face, the timing of the transition toward a hydrogen economy, and the budget we believe is needed to meet our goals.

Approach

In November 2001, about the time I was first testifying before this Committee on the subject of hydrogen, we began a formal hydrogen vision and "roadmapping" effort. Working with industry, stakeholders and academia, the Department developed a national approach for moving toward a hydrogen economy-a solution that holds the potential to provide virtually limitless clean, safe, secure, affordable, and reliable energy from domestic resources.

To realize this vision, the Nation must develop advanced technologies for hydrogen production, delivery, storage, conversion, and applications. The National Hydrogen Energy Technology Roadmap, which we released in November 2002, identifies the technological research, development, and demonstration steps required to make a successful transition to a hydrogen economy.

This past fall, the Department also developed an internal Hydrogen Posture Plan (Plan) to support the President's Hydrogen Fuel Initiative. The Plan identifies specific technology goals and milestones that would accelerate hydrogen and fuel cell development to enable an industry commercialization decision by 2015. My Office of Energy Efficiency and Renewable Energy led the development of the plan in collaboration with the Office of Fossil Energy, the Office of Nuclear Energy, the Office of Science and the DOE's Office of Management, Budget, and Evaluation.

The Plan integrates the Department's planning and budgeting for program activities that will help turn the concept of a hydrogen-based economy into reality. More specifically, the Plan outlines the Department's role in hydrogen energy R&D in accordance with the National Hydrogen Energy Roadmap. The Plan is currently in draft and under policy review. The development of the plan could not directly involve industry and other non-government stakeholders because of the inclusion of fiscal year 2004 through 2008 budget planning. Their input to other efforts such as the Hydrogen Roadmap, the Hydrogen Vision, the FreedomCAR Partnership Plan, and the Fuel Cell Report to Congress (which included four workshops with industry) has been considered in the development of the Posture Plan.

To ensure that the Department continues to conduct its hydrogen research in a coordinated, focused, and efficient manner, the DOE Hydrogen Working Group that developed the Posture Plan will continue to function. This Working Group will be chartered to meet regularly and perform the following functions:

  • Evaluate the progress of the Department's hydrogen and related activities with regard to milestones and performance goals;

  • Strengthen information exchange on technical developments;

  • Help ensure that the various activities (e.g., budgeting, execution, evaluation, and reporting) remain well coordinated;

  • Provide suggestions for management improvements and stronger technical performance; and,

  • Coordinate, through the Office of Science and Technology Policy, with other agencies (e.g., DoD, DOT, NASA, Commerce) conducting similar R&D activities to ensure our efforts our complementary and not duplicative.

In anticipation of an energy bill this year, the Department is also preparing to form a Hydrogen Technology Advisory Committee (HTAC). This advisory group, composed of a diverse group of experts from industry, academia, and other stakeholders, would provide input to the Secretary.

My testimony today draws heavily from DOE's planning efforts including the Posture Plan, the FreedomCAR Partnership Plan, the Hydrogen Roadmap, and the Fuel Cell Report to Congress. These documents describe how DOE will integrate its ongoing and future hydrogen R&D activities into a focused Hydrogen Program. The program will integrate technology for hydrogen production (from fossil, nuclear, and renewable resources), infrastructure development (including delivery and storage), fuel cells, and other technologies supporting future hydrogen fueled vehicles. Successful implementation of the Administration's integrated plans and activities is critical to the FreedomCAR partnership and Hydrogen Fuel Initiative. Coordinating hydrogen activities within DOE and among the federal agencies will improve the effectiveness of our research, development, and demonstration (RD&D) activities and strengthen its contribution to achieving the technical milestones on the road to a hydrogen economy.

Benefits

The Administration has committed to a large investment in hydrogen and fuel cells because it is convinced that the potential benefits of moving to a hydrogen economy are enormous. We can eventually eliminate our dependence on foreign energy sources. We can also maintain our transportation freedoms, the mobility that is so important to our quality of life and healthy economy. We can dramatically improve our air quality by eliminating polluting emissions from vehicles. Finally, hydrogen-powered vehicles can benefit our economy by reducing the financial drain associated with foreign energy purchases and by sustaining a strong international competitiveness in the transportation arena.

The development of hydrogen and fuel cells promises clear economic and environmental benefits to the United States. Diversifying our energy resources, particularly through the expansion of hydrogen in transportation, will stimulate new markets and strengthen U.S. flexibility and economic resiliency in many other sectors. Achievement of hydrogen technology goals, complemented by supportive regulations and policies, will pave the way for hydrogen's rapid growth as an energy carrier over the next several decades. The full extent of life-cycle cost and environmental benefits will become clearer as development and validation progresses with respect to the various production, conversion and distribution options.

To be successful we must make sure that we not only overcome the technical barriers, but also that these technologies are affordable and accessible to the average consumer. It will only be through a sweeping, market-driven replacement of current technologies that the desired societal benefits can be reached.

Essential to rapid success and full technology utilization is the involvement of those industries that will have critical roles in the decisions to commercialize and in the manufacture of the necessary products. The development effort is shared by industry, both the automotive manufacturers and the energy companies, through their participation in the FreedomCAR Partnership and in the Hydrogen Fuel Initiative.

Energy Diversity
Hydrogen can be supplied in large quantities from domestic fossil, nuclear and renewable resources. This mix of currently available and developing technology could provide a transition from traditional to next generation energy technologies benefiting society with reliable and affordable energy in the near and long terms. Hydrogen and fuel cells can catalyze the establishment and utilization of a viable transportation market for nuclear energy, domestic coal supplies, and renewables. [Carbon capture and sequestration can further reduce emissions from high carbon sources of hydrogen such as coal.] The fact remains, though, that our Nation possesses the necessary resources to produce large quantities of hydrogen.

Transportation
Every day, eight million barrels of oil are required to fuel the over 200 million vehicles that constitute our light duty transportation fleet. By 2025, the Nation's light vehicle energy consumption is projected to grow to as much as 14 million barrels per day of petroleum or its energy equivalent. Fuel cell vehicles could provide more than twice the efficiency of conventional vehicles. [Figure 3 (PDF 67 KB) Download Adobe Reader ] shows a projection of the possible effect of introducing hydrogen-fueled vehicles on our Nation's oil consumption. With the assumptions used in this scenario, hydrogen fueled fuel cell vehicles could make dramatic reductions in petroleum use. This scenario results in 11 million barrels per day savings by 2040 compared to what would otherwise be consumed in that year.

The federal government's role is to accelerate hydrogen and fuel cell development to enable industry to make a commercialization decision by 2015. But the manufacture and marketing of hybrid, fuel cell or other advanced vehicles will be industry's responsibility. The government's role, however, can be broader than the removal of technical barriers and the reduction of technology costs. In cooperation with DOT, we can also contribute to the pace of both industry and market acceptance by overcoming institutional barriers such as those associated with achieving common codes and standards necessary for safe use of hydrogen and fuel cell technologies.

Fuel Cells for Stationary Power
Hydrogen can also be used in stationary fuel cells, engines and turbines to produce power and heat. In order to meet our growing electrical demands, the Energy Information Administration estimated that electricity generation will have to increase by two percent per year (EIA Annual Energy Outlook 2002). At this rate, 1.5 trillion kWh of additional electricity generation capacity will be needed by 2020. Along with aging infrastructure, requirements for reliable premium power, and market deregulation, this increasing demand opens the door for hydrogen power systems and potential societal benefits. For example, using ten million tons of hydrogen per year to provide 150 billion kWh of the Nation's electricity (just ten percent of the added generation) could avoid 20 million tons per year of carbon dioxide emissions. DOE will also support work in the area of fuel cells for portable power. While not important to overall petroleum reduction, these units will provide early operating and manufacturing experience, and should contribute to the reduction of fuel cell cost for PEM fuel cells.

Technology Challenges

Let me now review the challenges to be faced and how these challenges are to be met. Achieving our vision will require a combination of technological breakthroughs, market acceptance, and large investments in a national hydrogen energy infrastructure. Success will not happen overnight, or even over years, but rather over decades; it will require an evolutionary process that phases hydrogen in as the technologies and their markets are ready. Success will also require that the technologies to utilize hydrogen fuel and the availability of hydrogen occur simultaneously.

Some of the significant hurdles to be cleared include:

  • Lower by a factor of four the cost of producing and delivering hydrogen;

  • Develop more compact, light weight, lower cost, safe, and efficient hydrogen storage systems that will enable a greater than 300 mile vehicle range;

  • Power by a factor of ten the cost of materials for advanced conversion technologies, especially fuel cells;

  • More effective and lower cost (by a factor of at least ten) carbon-capture and sequestration processes (a separate program critical to fossil-based production of hydrogen);

  • Designs and materials that maximize the safety of hydrogen use; and,

  • The development of needed codes and standards as well as the education of consumers relative to the use of hydrogen.

The Department has drafted a work breakdown structure associated with each of the critical areas identified in the Roadmap (production, delivery, storage, conversion, and end-use), and has identified milestones and decision points that are part of the effort. Examples of key program milestones that support FreedomCAR and achievement of a hydrogen economy include the following:

  • On-board hydrogen storage systems with a six percent capacity by weight by 2010; more aggressive goals are being established for 2015;

  • Hydrogen production at an untaxed price equivalent to $1.50 per gallon of gasoline at the pump by 2010;

  • Polymer electrolyte-membrane automotive fuel cells that cost $45 per kilowatt by 2010 and $30 per kilowatt by 2015 and meet 100,000 miles of service life; and,

  • Zero emission coal plants that produce hydrogen and power, with carbon capture and sequestration, at $0.79 per kilogram at the plant gate.

In the near future, we plan on partnering with energy companies to establish more specific goals related to technology and components needed to produce and distribute hydrogen using various fossil, nuclear and renewable pathways. In this exercise, we will be looking at the full range of hydrogen technology areas covered in the Roadmap.

Advances in other technologies will also be necessary for the ability of a hydrogen-fueled vehicle to realize its full potential. These include:

  • Improved energy storage, (e.g., batteries that are more durable, cheaper, and better performing);

  • More efficient and cost effective electric motors;

  • Inexpensive and more effective power electronics; and,

  • Better materials for lighter, but strong, structural members.

These technologies will enable hydrogen-fueled vehicles to be more efficient, and to help lower the vehicle cost to the consumer.

In the near- to mid-term, most hydrogen will likely be produced by technologies that do not require a new hydrogen delivery infrastructure (i.e., from distributed natural gas). As RD&D progresses along renewable, nuclear, and clean coal and natural gas production pathways (including techniques for carbon sequestration) a suite of technologies will become available in the mid- and long-term to produce hydrogen from a diverse array of domestic resources. The economic viability of these different production pathways will be strongly affected by regional factors, such as feedstock availability and cost, delivery approaches, and regulatory environment.

For hydrogen to become a viable fuel, advanced hydrogen storage technologies will be required, especially for automotive applications, where a driving range of at least 300 miles is needed. Current storage systems are too heavy, too large, and too costly. Technologies to convert hydrogen into useful energy - fuel cells and combustion technologies - must also be further improved to lower cost and improve performance.

Detailed analysis of life-cycle costs and benefits for alternative hydrogen production pathways, carbon sequestration, and other elements will continue. "Well-to-Wheels" analyses conclude that the energy and environmental benefits depend greatly on how hydrogen is manufactured, delivered and stored, and on the economic feasibility of sequestration for fossil feed stocks. The results of these studies will help in making down-select decisions and to ensure that the relative merits of specific hydrogen pathways are evaluated properly and in comparison with other energy alternatives. Out-year planning will identify needs for RD&D on production and storage technologies, delivery infrastructure, and education and safety/codes and standards. Public education of consumers and local code officials must also be pursued concurrently with the RD&D.

Finally, industry must develop and construct the infrastructure to deliver hydrogen where it is needed. We will work with the DOT to help industry develop a safe, efficient, nation-wide hydrogen infrastructure. The hydrogen distribution infrastructure can evolve along with the conversion and production technologies, since much of the infrastructure that is developed for fossil-based hydrogen will also be applicable to renewable- and nuclear-based hydrogen. We will partner with industry to develop infrastructure in pilot projects, and industry will expand locally, regionally, and ultimately nationally.

Transition to a Hydrogen Economy

We consider the transition to the hydrogen economy as occurring in four phases, each of which requires and builds on the success of its predecessor, as depicted in [Figure 4 (PDF 75 KB) Download Adobe Reader ]. The transition to a hydrogen-based energy system is expected to take several decades, and to require strong public and private partnership. In Phase 1, government and private organizations will research, develop, and demonstrate "critical path" technologies and safety assurance prior to investing heavily in infrastructure. This Phase is now underway and will enable industry to make a decision on commercialization in 2015.

The FY04 Budget currently before Congress is consistent with completion of the technology RD&D phase by 2015.

Phase II, Transition to the Marketplace, could begin as early as 2010 for applications such as portable power and some stationary applications, and as hydrogen-related technologies meet or exceed customer requirements. If an industry decision to commercialize hydrogen fuel cell vehicles is made in 2015, mass-market penetration can occur around 2020. Consumers will need compelling reasons to purchase these products; public benefits such as high fuel use efficiency and low emissions are not enough. The all-electronic car powered by hydrogen fuel cells (such as the General Motors Hy-wire) is one example of an approach to greater value delivery; it could offer the consumer improved performance through elimination of mechanical parts and greater design flexibility through the "skateboard" approach with "snap-on" bodies.

As these markets become established, government can foster their further growth by playing the role of "early adopter," and by creating policies that stimulate the market. As markets are established this leads to Phase III, Expansion of Markets and Infrastructure. The start of Phase III is consistent with a positive commercial decision for vehicles in 2015. A positive decision will attract investment in infrastructure for fuel cell manufacturing, and for hydrogen production and delivery. Government policies still may be required to nurture this infrastructure expansion phase.

Phase IV, which should begin about 2025, is Realization of the Hydrogen Vision, when consumer requirements will be met or exceeded; national benefits in terms of energy security and improved environmental quality are being achieved; and industry can receive adequate return on investment and compete globally. Phase IV provides the transition to a full hydrogen economy by 2040.

Budget Outlook

The Administration's FY 2004 Budget puts the program on track to meet the 2015 milestones. The Office of Energy Efficiency and Renewable Energy's (EERE) budget request of $256.6 million to support the President's FreedomCAR partnership and the Hydrogen Fuel Initiative breaks out as follows:

  • Hybrid Vehicle Technologies    $91.1 million
  • Fuel Cells       $77.5 million
  • Hydrogen       $88 million

Note that there is an additional $16.2 million requested by the DOE Offices of Fossil Energy ($11.5 million) and Nuclear Energy ($4 million), and the Department of Transportation ($0.7 million), for hydrogen production and delivery activities. Additionally, there is $47 million requested in DOE's Office of Fossil Energy for cross-cutting fuel cell systems and related technical issues.

The President outlined $1.2 billion over the next five years for hydrogen and fuel cells to advance a commercialization decision by 15 years, from approximately 2030 to 2015. This does not include amounts for carbon sequestration under the FutureGEN and related activities, nor does it include ongoing hydrogen and fuel cell R&D at other Federal agencies (except for a subset of DOT spending). While the bulk of the effort will be within my office, the DOE Offices of Fossil Energy and Nuclear Energy, and the Department of Transportation will undertake significant efforts. In addition, we will work with the DOE Office of Science to explore how fundamental science can be applied to solve hydrogen and fuel cell barriers, and will coordinate our infrastructure work with DOT.

Conclusion

Mr. Chairman, it will take a great deal to achieve this vision of a hydrogen energy future we are all talking about this morning. It will require careful planning and coordination, public education, technology development, and substantial public and private investments. It will require a broad political consensus and a bipartisan approach. Most of all, it will take leadership and resolve.

The President has demonstrated his leadership and resolve. "With a new national commitment," said the President during his State of the Union address, "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."

A few days later at an event on energy independence featuring new uses for fuel cells including automobiles, the President reiterated his commitment to his new Hydrogen Fuel Initiative stating, "The technology we have just seen is going to be seen on the roads of America. And it's important for our country to understand that by being bold and innovative, we can change the way we do business here in America; we can change our dependence upon foreign sources of energy; we can help with the quality of the air; and we can make a fundamental difference for the future of our children."

We believe that the benefits the President envisions are attainable within our lifetimes and will accrue to posterity, but they will require sustained work and investment of public and private financial resources. We at the Department of Energy welcome the challenge and opportunity to play a vital role in this Nation's energy future and to support our national security in such a fundamental way.

This completes my prepared statement. I would be happy to answer any questions you may have, either now or in the future.