Friday, March 31, 2006


Welcome to Charge: the future of energy
The Hydrogen Report - Some Summary Findings and Some Unanswered Questions

BY Daniel C. Sweeney, Ph.D

We have just completed our report on hydrogen and it will soon go on sale. Visant Strategies with whom we are associated will publish it. The document is aimed at corporations involved in or contemplating involvement in the hydrogen business and at governmental bodies grappling with the implications of the hydrogen economy.

Much of the report deals with specific markets for hydrogen, and since the information is for sale and constitutes the primary value of the report we cannot provide that data here, except to say that the overall market for hydrogen is significantly smaller than the figure of 50 million tons that is bandied about with some frequency.

One thing that we can say is that the use of hydrogen in energy applications, the market that constitutes the “hydrogen economy”, is pretty close to nonexistent as yet, and its future is dependent upon a number of contingencies, some having to do with technology and others with private finance and governmental policies.

Any attempt to initiate a hydrogen economy with current technology would almost certainly fail for reasons given in the report. A number of technical breakthroughs rather than incremental improvements would have to occur in a number of key areas—fuel cell design, hydrogen storage, hydrogen generation (particularly in the design of electrolyzers), hydrogen transmission, the management of a largely or wholly renewables based electrical grid, and in the design of power conversion equipment.

Quite apart from technical feasibility, financing a move to a renewables based hydrogen economy would probably ultimately entail tens if not hundreds of trillions of dollars—in other words, the commitment of sizable fraction of U.S. industrial capacity and financial resources. This would of course involve some very hard choices. Consider that the current level of military funding in the U.S. is only about a half trillion dollars a year, and that that it is arguably an enormous drag on the rest of the economy.

Any attempt to construct a hydrogen economy quickly would starve other industries of credit and investment and would involve direct or indirect government subsidies that would impact basic government services.

A couple of weeks ago we attended a hydrogen investment conference in Long Beach, California, where such issues were conveniently ignored, or, to put it another way, assumed not to exist. Instead a hydrogen Rapture was proclaimed by all and sundry, just as it had been in several previous hydrogen shows and, doubtless, will be again over the course of the next several years.

All of which left us with troubling questions which we have difficulty in answering.

We should begin by saying that we are quite confident of our pessimistic analysis of the economics of a hydrogen economy. Maybe some day, but not with current technology or the current political climate. And yet damned near everyone seems to be lined up behind it—the major oil companies, the auto manufacturers, major chemical companies, leading academics, environmentalists, and government spokespersons from many nations including our own. Even staunchly anti-environmental George W. Bush endorses the idea.

Now we performed our analysis using data in the public domain. The pricing of hydrogen and hydrogen generating equipment, fuel cells, hydrogen powered internal combustion engines, and renewable electrical generation equipment is all readily available as are the operational costs associated with each. All we did was add and multiply, the same kind of tedious tabulations we used to perform when we did statistical studies for a government agency. Nothing that a mathematically challenged chimpanzee couldn’t do. We also made certain assumptions as to economies of scale which were based on observations that have generally true in other industries.

Surely all of these corporate executives and governmental bodies must know the same things we do. They’ve got guys that can add and multiply. Hell, they’ve got whole office buildings full of bean counters, and you really only need one and a few man weeks to dedicate to the task. All you need to do is tell somebody what it takes in the way of infrastructure to establish a hydrogen economy and then task that somebody with checking prices and running the numbers.

I wish we had an answer as to what is going on here, but we don’t. We are deeply and genuinely mystified.

Why would so many people get behind anything so uncertain, particularly when they’re gambling with our future, everyone’s future? We have an energy crisis looming in the middle distance, one that is going to determine the kind of lives our grandchildren have. We need to be planning coping strategies that can be accomplished with current technology, not technology that may exist ten, twenty, thirty years from now. In energy many expected breakthroughs never occur. No one has succeeded in building a fusion reactor after fifty years of trying. No one has ever made a room temperature superconductor after thirty years of intensive and expensive research. No one has demonstrated a cost effective, field proven ocean energy system after more than fifty years of experimentation. And no one has succeeded in perfecting a low cost fuel cell after decades of efforts and billions of dollars in funding.

Whatever we do, it has to be done with tools that are available today, not something predicated on untold man years of additional research. That research might never get done for any of a number of reasons, and even if it is, it might not pan out.

A final thought. At the hydrogen conference, one David Freeman, an energy official in the Carter Administration and later a manager of several large public utilities, addressed the attendees. Freeman is a man not noted for diplomacy or mincing words. What he told the audience was this. Quit undertaking pilot program and start launching products. Build markets now, not next year or the year after. We couldn’t agree more.

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