California Hydrogen

	Torrance

Will Hydrogen Cost Less than Gasoline?

There is uproar over the cost of gasoline. Congress is threatening a windfall tax on oil companies. State governments are suing. Even former oilman President George Bush announced that “we are addicted to oil.”

The IRS now lets us deduct 44.5 cents per mile for our business driving. Odds are that you are not making money on that, unless you drive a hybrid like the Toyota Prius that I own.

A hydrogen future is being promoted as a way to end our dependency on oil, but will hydrogen ever be less expensive than gasoline? The long-term answer is yes. Cheap hydrogen has the same theme as buying the right house – “location, location, location.” In Torrance, the major oil refiners use hydrogen to make our gasoline cleaner and high octane. In Torrance, there is a hydrogen pipeline that is being extended to a nearby hydrogen fueling station, where hydrogen will cost under $3 per gasoline gallon equivalent at the pump. In Torrance hydrogen will cost less than gasoline.

More vehicles fleets will discover that they are in the right location. In Vancouver, Canada, hydrogen fleets are expanding in anticipation of the 2010 Winter Olympics. 200 kg/hour of hydrogen that is now being vented from a sodium chlorate manufacturing in North Vancouver. The hydrogen will be captured and used to fuel vehicles. GE Power has announced plans to use GE wind turbines and GE electrolyzers, delivering renewable hydrogen to the pump for $3.50 per gasoline gallon equivalent.

O.K., gasoline prices are rising and hydrogen fuel costs are falling. What about the cost of hydrogen vehicles? Two years ago, the South Coast Air Quality Management District invited bids for 30 hydrogen vehicles. The winner was Quantum Technologies selling Toyota Priuses modified to run hydrogen in their engines. The cost per vehicle averaged about $75,000, more than three times the cost of a gasoline hybrid. These hydrogen cars are now being driven daily in cities like Santa Ana, Diamond Bar and Burbank. If manufacturers could build 300,000 hydrogen internal combustion engine (HICE) cars instead of 30, prices would be much lower. It is less expensive to manufacture in volume, rather than one at a time.

Greater than the interest in HICE is the excitement about hydrogen fuel cell vehicles (HFCV). There are about 100 hydrogen fuel cell vehicles being driven daily in California. Fuel cells promise double the efficiency of engines. Fuel cells extend driving range, produce electricity for all electronics inside the vehicle, and produce no health damaging emissions. The problem is that each current HFCV cost approximately $1,000,000 to build. The manufacturers and government have funded these pilot demonstration vehicles.

In Torrance, near that inexpensive hydrogen pipeline, is the U.S. headquarters of Honda and Toyota. Honda is leasing its FCX fuel cell vehicle for $500 per month including maintenance. Those driving the FCX 1,000 miles per month are paying 50 cents per mile for vehicle costs and will pay another six cents per mile for fuel if they get it from the pipeline. At 56 cents per mile, the IRS is coming out ahead, but this is close to the cost of a conventional vehicle. The problem is that Honda is losing a bundle each time it leases and must therefore be very selective about the number of FCXs that it puts on the road. Currently, there are 21 in use in California.

Vehicle manufacturers will need to cut costs to less than 5% of the current HFCV cost to compete with gasoline cars, light trucks and SUVs. The manufacturers appear committed to getting there. They are investing billions in hydrogen vehicle research and development. A number of factors will cut costs. Volume manufacturing is far less expensive than the current one-at-a-time build by engineers. Scientists and engineers are reducing cost and complexity. Hydrogen PEM fuel cells now use less than 5% of the platinum of early designs. A Toyota engineer bragged that their fuel cell uses 70% fewer components than an earlier version they had used from Ballard.

Hybrid technology lowers the cost of hydrogen vehicles. It costs less to capture braking energy in batteries than to use a larger fuel cell. Battery prices are falling. General Motors will use a single chassis for a wide range of hydrogen vehicles including sedans, light trucks and SUVs. Range is being extended with light aerodynamic vehicles like the new Honda FCX Concept which will start limited commercial production around 2010. With new hydrogen storage it will have a cruising range of up to 350 miles. This excellent range is with hydrogen stored at 5,000 psi. Other vehicle makers are considering 10,000 psi.

A sage said that we tend to over estimate success in the short term and under estimate it in the long term. Disruptive technology has always shown this pattern. It took Alexander Graham Bell over 20 years to get a few hundred people to lease telephones. IBM's initial forecast for the global computer market was seven. Over time, they increased their forecast. The same growth will happen with hydrogen transportation. As fleets expand and as the hydrogen stations expand in capacity, costs will diminish and ridership will grow. When successful, disruptive technology often drops in cost by over 95%. This has been the case with photovoltaics, wind power, telephones, telephone minutes, and most computer technology. Expect the same with hydrogen transportation.