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The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs 1 Introduction The January 2003 announcement by President Bush of the Hydrogen Fuel Initiative stimulated the interest of both the technical community and the broader public in the “hydrogen economy.” As it is frequently envisioned, the hydrogen economy comprises the production of molecular hydrogen using coal, natural gas, nuclear energy, or renewable energy (e.g., biomass, wind, solar);1 the transport and storage of hydrogen in some fashion; and the end use of hydrogen in fuel cells, which combine oxygen with the hydrogen to produce electricity (and some heat).2 Fuel cells are under development for powering vehicles or to produce electricity and heat for residential, commercial, and industrial buildings. Many of the technologies for realizing such extensive use of hydrogen in the economy face significant barriers to development and successful commercialization. The challenges range from fundamental research and development (R&D) needs to overcoming infrastructure barriers and achieving social acceptance. ORIGIN OF THE STUDY In response to a request from the U.S. Department of Energy (DOE), the National Research Council (NRC) formed the Committee on Alternatives and Strategies for Future Hydrogen Production and Use (see Appendix A for biographical information). Formed by the NRC’s Board on Energy and Environmental Systems and the National Academy of Engineering Program Office, the committee evaluated the cost and status of technologies for the production, transportation, storage, and end use of hydrogen and reviewed DOE’s hydrogen research, development, and demonstration (RD&D) strategy. In April 2003, the committee submitted an interim letter report to the Department of Energy. The letter report was prepared to provide early feedback and recommendations for assisting the DOE in preparations for its Fiscal Year (FY) 2005 hydrogen R&D programs. (The complete text of the letter report is presented in Appendix B.) In the present report, the committee expands on the four recommendations in the letter report and further develops its views. DEPARTMENT OF ENERGY OFFICES INVOLVED IN WORK ON HYDROGEN Within the DOE, and reporting to the Undersecretary for Energy, Science, and Environment, are three applied energy offices: the Office of Energy Efficiency and Renewable Energy (EERE), the Office of Fossil Energy (FE), and the Office of Nuclear Energy, Science, and Technology (NE). The Office of Science (SC) also has a role to play in that its support of basic science, especially in areas such as fundamental materials science, could lead to key breakthroughs needed for widespread use of hydrogen in the U.S. economy. All four of these offices are involved to one degree or another in hydrogen-related work, although their respective overall missions are much broader and total budgets larger than the segments focused on hydrogen-related work. Summed across all four offices (EERE, FE, NE, SC), the President’s budget request for FY 2004 for the hydrogen program3 was $181 million for direct programs and $301 million for associated programs (DOE, 2003a; see Appendix C regarding the hy- 1 Hydrogen in the lithosphere is, with few exceptions, bound to other elements (e.g., as in water) and must be separated by using other sources of energy to produce molecular hydrogen. Properly considered, hydrogen fuel is not a primary energy source in the context of a hydrogen economy. 2 Hydrogen can also be burned in internal combustion engines or in turbines, but fuel cells have the advantage of high efficiencies and virtually zero emissions except for water. 3 The words “hydrogen program” refer collectively to the programs concerned with hydrogen production, distribution, and use within DOE’s Office of Energy Efficiency and Renewable Energy, Office of Fossil Energy, Office of Science, and Office of Nuclear Energy, Science, and Technology. There is no single program with this title.
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The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs drogen program budget).4 The funding level for direct programs would represent a near doubling of budget authority (appropriated funds) over funding for FY 2003, during which direct programs received $96.6 million. SCOPE, ORGANIZATION, AND FOCUS OF THIS REPORT Statement of Task The committee 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 for hydrogen; considered potential scenarios for the penetration of hydrogen technologies into the economy and the associated impacts on oil imports and carbon dioxide (CO2) gas emissions; addressed the problems and associated infrastructure issues of how hydrogen might be distributed, stored, and dispensed to end uses, such as cars; reviewed the DOE’s RD&D plan for hydrogen; and made recommendations to the DOE on RD&D, including directions, priorities, and strategies. The current study is modeled after an NRC study that resulted in the 1990 report Fuels to Drive Our Future (NRC, 1990), which analyzed the status of technologies for producing liquid transportation fuels from domestic resources, such as biomass, coal, natural gas, oil shale, and tar sands. That study evaluated the cost of producing various liquid transportation fuels from these resources on a consistent basis, estimated opportunities for reducing costs, and identified R&D needs to improve technologies and reduce costs. Fuels to Drive Our Future did not include the production and use of hydrogen, which is the subject of this committee’s report. The statement of task for the committee was as follows: This study is similar in intent to a 1990 report by the National Research Council (NRC), Fuels to Drive Our Future, which evaluated the options for producing liquid fuels for transportation use. The use of that comprehensive study was proposed by DOE as the model for this one on hydrogen. With revisions to account for the different end use applications, process technologies, and current concerns about climate change and energy security, it will be used as a general guide for the report to be produced in this work. In particular, the NRC will appoint a committee that will address the following tasks: Identify and evaluate the current status of the major alternative technologies and sources for producing hydrogen, for transmitting and storing hydrogen, and for using hydrogen to provide energy services especially in the transportation, but also the utility, residential, industrial and commercial sectors of the economy. Assess the feasibility of operating each of these conversion technologies both at a small scale appropriate for a building or vehicle and at a large scale typical of current centralized energy conversion systems such as refineries or power plants. This question is important because it is not currently known whether it will be better to produce hydrogen at a central facility for distribution or to produce it locally near the points of end-use. This assessment will include factors such as societal acceptability (the NIMBY problem), operating difficulties, environmental issues including CO2 emission, security concerns, and the possible advantages of each technology in special markets such as remote locations or particularly hot or cold climates. Estimate current costs of the identified technologies and the cost reductions that the committee judges would be required to make the technologies competitive in the market place. As part of this assessment, the committee will consider the future prospects for hydrogen production and end-use technologies (e.g., in the 2010 to 2020, 2020–2050, and beyond 2050 time frames). This assessment may include scenarios for the introduction and subsequent commercial development of a hydrogen economy based on the use of predominantly domestic resources (e.g., natural gas, coal, biomass, renewables [e.g., solar, geothermal, wind], nuclear, municipal and industrial wastes, petroleum coke, and other potential resources), and consider constraints to their use. Based on the technical and cost assessments, and considering potential problems with making the “chicken and egg” transition to a widespread hydrogen economy using each technology, review DOE’s current RD&D programs and plans, and suggest an RD&D strategy with recommendations to DOE on the R&D priority needs within each technology area and on the priority for work in each area. Provide a letter report on the committee’s interim findings no later than February 2003 so this information can be used in DOE’s budget and program planning for Fiscal Year 2005. Publish a written final report on its work, approximately 13 months from contract initiation. The committee’s interim letter report and final report will be reviewed in accordance with National Research Council (NRC) report review procedures before release to the sponsor and the public. Structure of This Report Chapter 2 describes the U.S. energy system as it exists today and explains how energy infrastructure is built up and how production technologies mature. The chapter also describes key, overarching issues that will be treated in later chapters. Chapter 3 discusses the demand side—describing the categories of technologies, such as automotive and stationary fuel cells, that use hydrogen and postulating the future demand for these units should hydrogen become a com- 4 “Direct funding” is defined by the DOE as funding that would not be requested if there were no hydrogen-related activities. “Associated” efforts are those necessary for a hydrogen pathway, such as hybrid electric components in the DOE’s budget within the FreedomCAR Partnership, a cooperative research effort between the DOE and the United States Council for Automotive Research (USCAR).
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The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs mercial fuel. Chapter 4 explains the barriers to be overcome in establishing an economic and reliable infrastructure for the transmission and storage of hydrogen, including on-board vehicle storage in the discussion. Chapter 5 presents the committee’s analysis of the total supply chain costs of hydrogen involved in the methods for producing hydrogen using various feedstocks at different scales. From a baseline of the cost to produce hydrogen using currently available technology, the analysis postulates future cases for the various technologies on the basis of the committee’s judgment about possible cost reduction. Chapter 6 builds on the results presented in the previous chapter to consider potential scenarios for the penetration of hydrogen technologies into the economy and associated impacts on oil imports and CO2 gas emissions. Chapter 7 addresses the issue of capture and storage of CO2 from fossil-fuel-based hydrogen production processes. Chapter 8 discusses the supply side—treating in greater detail the hydrogen feedstock technologies that were analyzed in Chapters 5 and 6. (Appendix G presents extensive additional discussion of these technologies.) Chapter 9 discusses several crosscutting issues, such as systems analysis, hydrogen safety, and environmental issues. Lastly, Chapter 10 includes the committee’s major findings and recommendations on the programs of the DOE applied energy offices (EERE, FE, NE) on hydrogen. Sources of Information The committee held four meetings with sessions that were open to the public, hearing presentations from more than 30 outside speakers—including persons from industry (involved with both hydrogen production and use), nongovernmental organizations, and academia. Appendix D provides a listing of all of the committee’s meetings and the speakers and topics at the open sessions. The committee reviewed several documents in connection with this study. First (see item 4 of the statement of task, above) was the Office of Energy Efficiency and Renewable Energy’s “Hydrogen, Fuel Cells & Infrastructure Technologies Program: Multi-Year Research, Development and Demonstration Plan” (DOE, 2003b), or multi-year program plan (MYPP). This plan identifies “critical path” barriers that the DOE believes must be overcome if a hydrogen economy is to be realized. The MYPP includes milestones and measures of progress with respect to these barriers, all leading to a commercialization decision in 2015. Most of the focus of the MYPP is on replacing gasoline use in light-duty vehicles (automobiles and light trucks) with hydrogen; some attention is directed to stationary applications of hydrogen. The committee also reviewed the Office of Fossil Energy’s Hydrogen Program Plan, Hydrogen from Natural Gas and Coal: The Road to a Sustainable Energy Future (DOE, 2003c), which concentrates on stationary applications of hydrogen (e.g., distributed power, industry, buildings). (The Office of Fossil Energy does not necessarily address the use of fuel cells for industry or building applications. These applications are mostly addressed in EERE.) Other documents reviewed by the committee include the Hydrogen Posture Plan: An Integrated Research, Development, and Demonstration Plan (DOE, 2003a). This plan integrates program activities across EERE, FE, NE, and SC that relate to hydrogen, in accordance with the National Hydrogen Energy Roadmap (DOE, 2002a), also reviewed. Two strategic goals common to the DOE plans referred to above are energy security and environmental quality—the latter including reduction of CO2 from the combustion of fossil fuels with the implications of such reductions for climate change. This report includes discussion and analysis of these two strategic goals, in particular in Chapters 5 and 6, in which the results of the committee’s analysis of current and future hydrogen technologies are presented. Focus of This Report This report does not offer a prediction of whether the transition to a hydrogen-fueled transportation system will be attempted or whether the hydrogen economy will be realized. Instead, the committee offers an assessment of the current status of technologies for the production, storage, distribution, and use of hydrogen and, with that as a baseline, posits potential future cases for the cost of the hydrogen supply chain and its implications for oil dependence, CO2 emissions, and market penetration of fuel cell vehicles. In presenting these future cost reductions, the committee also estimates what might be achieved with concerted research and development. The committee is not predicting that this research will occur, nor is it predicting that such research would necessarily bring the posited cost reductions. Finally, liquid carriers of hydrogen such as methanol and ethanol were not considered in this study.
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