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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen 7 A Budget Roadmap As requested in the statement of task, this chapter estimates the required research, development, and demonstration (RD&D) funding, both by the federal government and by the private sector that would be required for a transition to hydrogen fuel cell vehicles (HCFVs). It also estimates the infrastructure and manufacturing costs to transition HFCVs into the market and considers whether a lack of skilled workers might inhibit development or deployment of the technologies required. RESEARCH, DEVELOPMENT, AND DEMONSTRATION COSTS Government RD&D Funding The Bush administration and Congress committed $1.16 billion over 5 years starting in 2004 for RD&D of technologies for hydrogen fuel cell vehicles. This government effort, undertaken by the Department of Energy (DOE), had actual annual appropriations totaling $879 million through 2007, with $309 million requested for FY 2008. If appropriated, this would bring the federal program to the total committed amount. DOE program funding by focus area is shown in Table 7.1. State governments do not play a large role in funding hydrogen fuel cell vehicle technology, although several states are involved in infrastructure demonstrations. Besides the obvious areas of focus, the DOE Nuclear Hydrogen Initiative is directed at using the high temperatures (about 900°C) of next-generation nuclear reactors in novel processes to free hydrogen from water. The DOE Science program is supporting basic research on novel membranes, catalysts at the nanoscale, novel materials for hydrogen storage, and new approaches for solar hydrogen production. The statement of task direct the committee to make an estimate of future government RD&D funding for the transition from petroleum to hydrogen in a significant percentage of the vehicles sold by 2020. No hard data are available because DOE cannot publicize future spending plans beyond the current fiscal budget year. A rough estimate is made here out to 2020 when the number of fuel cell vehicles based on technologies developed in the Hydrogen Success case is projected to be nearly 2 million. Spending beyond 2020 would likely continue further improvements in the longer term—for example, in pursuit of hydrogen from renewable sources. Such spending is estimated in less detail through 2023 when fuel cell vehicles are projected to break-even competitively and become self-supporting. Funding estimates for DOE R&D directed at hydrogen light-duty vehicles are shown in Table 7.2 and total $4.1 billion through 2020 (constant 2005 dollars) plus an additional $0.9 billion for 2021-2023, bringing the overall total to $5.0 billion from 2008 to 2023. Other programs at DOE and in other agencies are not included in Table 7.2. These figures should be considered approximations only. It is quite likely that additional research and demonstration programs will be required. Funding for distributed hydrogen production completes the work required to support initial hydrogen supplies during the transition, based on natural gas reforming and water electrolysis. Thus, the estimated budget includes demonstration projects (demos) of these technologies in service stations to foster technological and practical learning. The demos for each are 1,500 kg/d with capital and operating costs estimated based on DOE’s H2A model as noted in Chapter 6 (DOE, 2007). These costs are $8 million for water electrolysis and $5 million for natural gas reforming, and they are included in the distributed production demo line of Table 7.2. Centralized hydrogen production is the major source of hydrogen supply for larger fuel cell vehicle populations. Thus, the RD&D program comprises the development of hydrogen from coal gasification and biomass gasification, including demos to foster learning. Biomass estimates do not include crop research, which would be done anyway to support biofuels generally. Centralized production includes the hydrogen delivery infrastructure RD&D.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen TABLE 7.1 Recent R&D Funding by the U.S. Department of Energy for Fuel Cells and Hydrogen Production (millions of constant 2005 dollars) Program Area 2004 2005 2006 2007 Total Hydrogen production and delivery 29.9 39.9 31.5 65.9 167.2 Fuel cells and hydrogen storage 52.7 68.2 58.7 89.6 269.2 Technology validation (learning demonstrations) 15.6 26.1 33.3 39.6 114.6 Safety, codes and education 8.2 5.8 5.1 15.8 34.9 System analysis 1.4 3.2 4.8 9.9 19.3 Nuclear Hydrogen Initiative 6.2 8.7 24.1 18.7 57.7 Science 0.0 29.2 32.5 50.0 111.7 Congressionally directed 42.0 40.2 42.5 0.0 124.7 Total 156.0 221.3 232.5 289.5 899.3 TABLE 7.2 Estimated Future Government Funding for RD&D (millions of constant 2005 dollars) Program Area 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Distributed H2 production 12 15 8 8 3 0 0 0 0 0 0 0 0 46 Distributed H2 production demonstrations 0 8 3 2 0 0 0 0 0 0 0 0 0 13 Centralized H2 production 28 35 45 50 55 55 50 45 35 30 30 20 15 493 Centralized H2 production demonstrations 0 0 0 15 15 15 15 50 35 20 25 20 0 210 Fuel cells and H2 storage 112 115 115 115 115 110 110 110 110 110 110 110 110 1,452 Fuel cell demonstrations 30 40 40 50 40 30 30 20 20 20 15 10 10 355 Safety, codes, and education 21 21 25 25 25 25 15 10 10 5 5 5 5 197 Systems analysis 12 10 10 10 10 10 10 10 10 10 10 10 5 127 Science 60 60 60 60 60 60 60 60 60 60 60 60 60 780 Exploratory H2 from renewables 34 35 35 30 30 30 30 30 30 30 30 30 30 404 Total, 2008-2020 309 339 341 365 353 335 320 335 310 285 285 265 235 4,077 Additional, 2021-2023 900 Total, 2008-2023 4,977 NOTE: Non-DOE programs are not included here, and some numbers are estimates that might change significantly with further information. The learning demo for hydrogen from coal gasification is ancillary to a coal gasification plant under consideration by DOE and industry, with areas of responsibility and cost sharing to be determined. The plant, with carbon dioxide (CO2) sequestration, would have a major goal of clean power production and would proceed independently whether or not it optionally produces pure hydrogen for fuel cell vehicles. Therefore, the cost to demonstrate hydrogen from coal gasification in the budget roadmap of this report is only the cost to demonstrate the incremental hydrogen purification required to meet fuel cell vehicle specifications. A very rough estimate of this cost is $75 million. The biomass gasification demo is sized at 39,000 kg H2/d, about one-quarter the size of a projected commercial plant. Capital and operating costs are estimated at $135 million (constant 2005 dollars) based on the H2A model. The biomass and coal gasification demo costs are in the centralized production demo line of Table 7.2. Major R&D efforts continue on the fuel cell to meet cost and durability targets. Hydrogen onboard storage work is
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen directed at breakthroughs that would be much better than high-pressure hydrogen storage. Learning demos on fuel cells also are included in the budget roadmap. DOE’s Science program continues basic research to help meet hydrogen production and fuel cell vehicle goals and provides the basis for longer-term improvements. Work continues on improved fuel cell membrane materials for increased ion transport and membrane durability, catalyst design at the nanoscale for more efficient hydrogen production, and novel metal hydrides for hydrogen storage. Exploratory R&D on hydrogen from renewable energy sources includes the thermochemical splitting of water using high-temperature (900°C) energy from a new generation of nuclear reactors. This exploratory work also includes a photoelectrochemical process (in which photons absorb into an electrode and produce electrons for electrolysis) and a photobiochemical process (involving oxidative cleavage of water mediated by photosynthetic microorganisms). These approaches seek to liberate hydrogen from water with possible benefits compared to conventional water electrolysis, as well as longer-term benefits that would enhance the value of a transition to hydrogen-powered vehicles. From 2021 to 2023 (the breakeven year for transition to HFCVs in the Hydrogen Success scenario), RD&D would follow on leads from the results of exploratory work on hydrogen from renewables and other areas of improvement that might surface as the transition proceeds. As for any major commercial venture, RD&D would be ongoing and continue beyond the 2023 breakeven point. It is likely that government support would still be involved, but longer-term funding levels are not projected here. Private Sector RD&D Costs The statement of task also requested an estimate of U.S. private RD&D funding for the transition to hydrogen fuel cell vehicles. This is very difficult to determine because such information is mostly proprietary. Private U.S. companies prominent in hydrogen fuel cell RD&D are GM, Ford, Chevron/Texaco, United Technologies, GE and nine venture capital companies listed on stock exchanges. These nine companies are Fuel Cell Energy, Quantum Fuel Systems, Plug Power, Medis Technology, Distributed Energy Systems, Hoku Scientific, Mechanical Technology, PolyFuel, and Protonex. These companies are noted in the Chapter 2 discussion of the role of entrepreneurial companies in the hydrogen transition. Together they had a combined invested capital of $2.5 billion at the year end of 2006. At least 32 other U.S. entrepreneurial companies also are active, albeit at a more modest level. Some indications of the RD&D spending of private companies come from a 2005 worldwide hydrogen and fuel cell industry survey published in 2006. PricewaterhouseCoopers was the survey administrator that compiled and released the results in a pamphlet available on the Internet (PWC, 2007). This was a collaborative effort by the U.S. Fuel Cell Council, Hydrogen and Fuel Cells Canada, Fuel Cell Europe, and the Fuel Commercialization Conference of Japan. Unfortunately, the survey reported only total private and government spending, with no breakdown. However, those figures were used to estimate the private sector funding alone. The survey reported total worldwide RD&D spending of $800 million in 2005, and the United States is reported at 40 percent of this amount, or $320 million. However, the response rate to the survey was 37 percent. If nonrespondents spent at the same rate as respondents, a “ballpark” estimate of U.S. RD&D spending in 2005 for private sector and government would be $860 million. U.S. government spending in 2005 was $220 million (see Table 7.1), thus leaving $640 million for the private sector, which represents roughly $700 million spent in 2005. This rough estimate of $700 million per year was projected to continue from 2008 to 2023 for demonstrations, development of commercial-scale manufacturing, and addressing problems and opportunities that arise as the hydrogen transition proceeds. In total then, future U.S. private sector spending on RD&D for the hydrogen transition was estimated at roughly $9 billion through 2020 and $11 billion through the scenario breakeven year of 2023. Conclusion CONCLUSION: The committee estimates that total government-industry spending on RD&D needed to facilitate the transition to HFCVs is roughly $16 billion over the 16-year period from 2008 through 2023, of which about 30 percent (roughly $5 billion) would come from U.S. government sources. Government and private spending beyond 2023 also will likely be required to support longer-term needs, but such estimates were beyond the scope of this study. INFRASTRUCTURE AND VEHICLE COSTS As requested in the statement of task, this section estimates the total private and government funding that would be required to support a transition to hydrogen fuel cell vehicles, in addition to the RD&D funding estimated above. These budget estimates were prepared for activities that would be required for the Case 1 (Hydrogen Success) scenario described in Chapter 6. Cost Elements The major cost elements of a budget roadmap are summarized in Table 7.3. They include the capital requirements plus the annual operating and maintenance (O&M) costs for the two principal components of the system, namely (1) fuel cell vehicles and (2) hydrogen fuel supply for these vehicles. In the budget roadmap that follows, the committee assumed that
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen TABLE 7.3 Major Cost Elements in a Budget Roadmap Cost Element Capital Costs O&M Costs Vehicle production costs Production facilities Testing facilities Base vehicle costs Fuel cell power train costs Raw materials Labor costs (skilled, manual, supervisory) Facility operating costs (utilities, insurance, etc.) Facility maintenance costs Retailing costs Hydrogen supply costs Fueling station land and building costs H2 supply technology (SMRs; coal gasification) Delivery system hardware (local or remote) Feedstocks (natural gas, electricity, etc.) Labor costs Delivery costs Other operating costs Supply-related facility maintenance costs NOTE: SMR = steam methane reformer. TABLE 7.4 Projected Cumulative Infrastructure Requirements in 2020, 2035, and 2050 for the Hydrogen Success (Case 1) Scenario Infrastructure Items 2020 2035 2050 Capital Cost (billion 2005 dollars) Physical Units Capital Cost (billion 2005 dollars) Physical Units Capital cost (billions 2005 dollars) Physical Units Hydrogen production plants: Natural gas on-site SMR stations $2.6 2,110 $34 22,000 $122 79,000 Central coal plants with CO2 capture and sequestration 0 0 $18.2 20 $80 79 Central biomass plants 0 0 $13.5 93 $19 131 Central natural gas SMR 0 0 0 0 0 0 $2.6 $66 $221 Total production plant capital cost Refueling stations $2.6 2,110 $25 56,000 $74 180,000 Delivery system (dollars and pipeline miles) 0 0 $48 39,000 $120 80,000 H2 pipelines; 5,000 CO2 pipelines Total cumulative capital costs $2.6 $139 $415 some of these costs would be borne by government programs during the transition period required for fuel cell vehicles to become competitive in the marketplace. To estimate these costs, the results of the Case 1 scenario described in Chapter 6 were utilized. That scenario represents the committee’s best estimate of the maximum practicable number of HFCVs that could be deployed in the United States by 2020 (and beyond). The committee first estimated the annual expenditures required to deploy the number of vehicles specified per year in that scenario. The vehicle production costs of Table 7.3 are captured in the estimated retail price of HFCVs developed in Chapter 6, and used here in the budget roadmap. The annual capital expenditures for infrastructure to supply hydrogen to those vehicles also were estimated, as well as the O&M costs of the infrastructure each year. The analysis of transition costs for this case ends in 2023, which is the breakeven year, after which HFCVs compete economically with conventional vehicles Hydrogen Success scenario (see Chapter 6). Building the infrastructure needed to fuel HFCVs will be a substantial construction program in itself, aside from research and technology development. Table 7.4 shows the cumulative number of hydrogen production plants, refueling stations, and distribution pipelines, as well as their cumulative capital costs at several points in time. The committee’s projected cumulative investment for hydrogen infrastructure
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen TABLE 7.5 Quantities Related to Infrastructure Estimates for the Hydrogen Success (Case 1) Scenario Quantity 2020 2035 2050 Hydrogen demand (tonnes per day) 1,410 38,000 120,000 Hydrogen fuel cell vehicles served annually (% of total light-duty fleet) 1.8 million (0.7%) 61 million (18%) 219 million (60%) Consumption of feedstocks for hydrogen production (exajoules per year): Natural gas 0.08 0.8 2.2 Coal 0 1.4 3.8 Biomass 0 1.6 2.2 CO2 sequestered (million tonnes per year) 0 114 317 (Case 1) totals nearly $3 billion in 2020, and then climbs to $139 billion in 2035 and $415 billion in 2050. Although the estimated investment to build out the hydrogen infrastructure is clearly large, the committee’s analysis, as explained in the pages that follow, assumes that the vast majority of the investment required will be made by industry because it is economically attractive to do so, and only a modest fraction will require government support. Table 7.5 reports several additional quantities related to these infrastructure projections, including numbers of vehicles served, amounts of hydrogen produced, energy feedstocks used, and CO2 sequestered from central-station hydrogen production. Total Annual Expenditures Figure 7.1 shows the total annual expenditures involved for the purchase of fuel cell vehicles and the production of hydrogen. The deployment of HFCVs starts with 1,000 vehicles in 2012, increasing to commercial levels of 50,000 per year in 2015, 750,000 per year in 2020, and 1.5 million per year in 2023—the breakeven year, after which the HFCV market is self-sustaining in the Hydrogen Success scenario. During this period the unit price per vehicle falls from slightly more than $200,000 in 2012 to just over $27,000 in 2023, as indicated in Chapter 6. The resulting total annual expenditures for the 5.5 million vehicles deployed by 2023 are shown in Figure 7.1, along with the average per-vehicle price ($30,000), the additional capital expenditures for hydrogen supply infrastructure, and the annual O&M costs of hydrogen production (mainly for natural gas feedstock). The total annual expenditures for vehicles and hydrogen supply in Figure 7.1 increase from about $300 million in 2012 to $46 billion in 2023, with the cumulative expenditure over the transition period reaching $184 billion in 2023. Most of that amount (91 percent) is for the purchase of fuel cell vehicles. The remaining 9 percent ($16 billion) is for hydrogen supply, divided about equally between the capital costs of hydrogen infrastructure and the O&M costs for hydrogen production. The annual vehicle costs shown here reflect all of the capital and O&M cost elements shown in Table 7.3. Some of those elements, however (such as the capital investment for fuel cell production facilities), are reflected only implicitly as part of the per-vehicle price estimates used here. A more detailed budget roadmap showing the breakdown of estimated annual expenditures for all of the individual cost elements in Table 7.3 (e.g., production facilities, equipment, and raw materials over the transition period) is well beyond the scope of the present analysis. Note that since the budget roadmap of Figure 7.1 shows FIGURE 7.1 Total annual expenditures for vehicles and hydrogen supply for transition to the breakeven year for the Hydrogen Success case, excluding RD&D costs. The cumulative cost, shared by government and industry, totals $184 billion, of which 91 percent is the cost of fuel cell vehicles and 9 percent is the cost of hydrogen supply (about half for infrastructure costs and half for additional operating costs, mainly natural gas feedstock).
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen only the total private plus government expenditures needed to implement the Case 1 scenario, it does not reflect the $17 billion net savings in consumer expenditures for fuel from 2012 to 2023 (discussed in Chapter 6) as hydrogen-fueled vehicles become more competitive with gasoline vehicles. Nor does it reflect the roughly $5 billion loss of federal and state government tax revenues from gasoline sales displaced by hydrogen (which is assumed to be free of taxes in this analysis). Government Versus Industry Funding The question of how the total annual costs shown in Figure 7.1 should be shared between the federal government and private industry has no simple or single answer. Conceivably, the government could bear all of the $184 billion in vehicle and hydrogen supply costs through 2023 to accelerate the deployment of fuel cell vehicles. This situation might apply if the technical and market readiness of HFCVs was perceived by industry as still too risky to warrant private investments of the magnitude required over this time frame. Thus, government would have to bear all of the costs and risks as the de facto customer for all HFCVs. The committee believes that such a scenario is unrealistic since major auto companies would not likely be willing to commit facilities and personnel, or risk their reputation and current development plans, on a venture they perceive as too risky, even if government offered to pay the bill. As discussed below, however, the government might buy a substantial fraction of new HFCVs in the early years of the transition for use in its own fleet. In the committee’s judgment, a realistic estimate of the government share of total costs to facilitate the maximum practicable transition to HFCVs (based on the Hydrogen Success case) would be the incremental cost of purchasing fuel cell vehicles, plus about half the total cost of building and operating the infrastructure needed to supply hydrogen during the transition period (the remaining half is assumed to be provided by the private sector). In practice, it is desirable that industry share the costs of both constructing and operating the hydrogen supply system. However, since the cumulative costs for infrastructure construction and operation are approximately equal ($8 billion each over the transition period), the committee assumed for simplicity that all capital costs are borne by government and all operating costs by the private sector. These incremental costs are shown in Figure 7.2. In this case, the cumulative government expenditure for vehicles totals $40 billion over the transition period, as noted in Chapter 6, while hydrogen supply costs add another $8 billion, bringing the total to $48 billion. This amounts to 26 percent of the $184 billion in total expenditures for vehicles and hydrogen supply over the transition period in Case 1. To the extent that the Case 1 deployment schedule for HFCVs succeeds in meeting or exceeding the technical and cost targets assumed in this analysis, the government’s share of total costs could be reduced further relative to the budget roadmap of Figure 7.2. Some consumers also may be willing to pay a premium for this new type of vehicle. On the other hand, to the extent that early program goals are not fully achieved, or industry is reluctant to commit to the deployment schedule assumed in this analysis, greater government funding would be required to sustain the Case 1 scenario. For example, if government bore the full vehicle cost, rather than the incremental cost, during the first 5 years of production, it would add about $4 billion to the total cost for approximately 150,000 HFCVs. For reference, this is about half the number of new vehicles currently purchased FIGURE 7.2 Annual government expenditures through the transition to 2023. Estimated expenditures are based only on the incremental costs of fuel cell vehicles over conventional vehicles, plus the capital cost for hydrogen infrastructure, for the Hydrogen Success scenario (excluding RD&D costs). The cumulative cost is $48 billion, of which 83 percent is the cost of vehicles and 16 percent is the cost of hydrogen infrastructure. Government RD&D costs over this period total an additional $5 billion.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen FIGURE 7.3 Total annual costs of transition to the breakeven year for the Case 1 scenario, including RD&D costs plus total vehicle and hydrogen supply costs. by the federal government over a 5-year period.1 Allowing for some expenditures of this nature, the committee estimates the government share of total vehicle plus hydrogen costs to be approximately $50 billion (an average of $9,500 per vehicle) during the transition period. The committee’s analysis assumed (for simplicity) that all costs shown in Figures 7.1 and 7.2 are borne by U.S. companies and government. To the extent that participation by Japanese and other foreign manufacturers accelerates the introduction of HFCVs, and subsidizes the costs of a transition to fuel cell vehicles, the total U.S. costs shown here would be further reduced. For example, if early HFCV markets outside the United States were half as large as the assumed U.S. markets, the time for transition would be accelerated by 1-2 years, and the cumulative cost difference between HFCVs and gasoline vehicles would be reduced by $5 billion to 10 billion (from the $40 billion estimated here) assuming shared learning. Although the committee did not attempt to estimate the potential role of non-U.S. investments in HFCV technologies, it is aware that major efforts outside the United States are currently under way and could have a significant influence on the development and cost of a transition to HFCVs in this country. OVERALL BUDGET ROADMAP Figures 7.3 and 7.4 combine estimates of government and private sector RD&D costs with the estimated costs of vehicle deployment in Figures 7.1 and 7.2, respectively. The overall cost for the transition period (2008 to 2023, inclusive) then totals approximately $200 billion, shared between industry and government. The government portion of the total transition cost, including RD&D, is estimated to be roughly $55 billion (an average of $10,000 per vehicle), as summarized in the last line of Table 7.6 (which shows estimated transitions costs on a cumulative and average per-vehicle basis). As discussed above, these estimates are based on the committee’s Hydrogen Success scenario defining the maximum practicable number of HFCVs that could be on U.S. roads by 2020. This overall cost range translates to an average of roughly $3 billion per year over 16 years (2008-2023). To put these amounts in perspective, the U.S. government subsidy for ethanol fuel in 2006 was approximately $2.5 billion and, if extended at the current rate, could grow to $15 billion per year in 2020 as a result of the recent (December 2007) energy act.2 Note, too, that while the budget roadmaps presented here apply only to the transition period through 2023, the successful introduction of fuel cell vehicles would involve substantial additional expenditures—primarily by the private sector—for infrastructure, energy resources, and other requirements of a full-scale HFCV-based transportation system. For example, as seen in Table 7.4, the committee estimated that over more than $400 billion would be required by 2050 to fully build out the hydrogen supply system to fuel the HFCVs. However, the committee believes that follow- 1 The overall federal fleet is about 650,000 vehicles, with acquisitions of about 65,000 per year. While many of the newly acquired vehicles would not be appropriate for hydrogen or would not be in an area where hydrogen is available, the federal fleet could by itself account for a significant fraction of early HFCVs (GSA, 2007). 2 The Volumetric Ethanol Excise Tax Credit (VEETC) of 51 cents per gallon is provided to all ethanol blended with gasoline, which was about 5 billion gallons in 2006, according to DOE data. Although the VEETC is set to expire after 2010, Congress is debating various ways of extending it, as it has since the credit was first created in 1978. The Energy Independence and Security Act of 2007 established a renewable fuel standard that would reach 30 billion gallons by 2020, most of which is likely to be ethanol. A 51 cents per gallon credit applied to that amount would represent a subsidy in excess of $15 billion per year.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen FIGURE 7.4 Total annual costs of RD&D plus incremental costs of HFCVs over conventional vehicles up to the breakeven year for the Case 1 scenario. TABLE 7.6 Summary of Cumulative Budget Roadmap Costs for Transition to Hydrogen Fuel Cell Vehicles (maximum practicable number of vehicles by 2020) Cost Elements Total Cumulative Cost, 2008-2023 Average Cost per HFCV on Road 2008-2023a “Base vehicle” cost of conventional vehicles $128 billion $23,000 Average incremental fuel cell vehicle cost relative to conventional gasoline vehicles $40 billion $7,000b Total purchase cost of fuel cell vehicles $168 billion $30,000c Infrastructure capital cost for hydrogen supply $8 billion $1,500 Total operating cost for hydrogen supply $8 billion $1,500 Total cost of hydrogen supply $16 billion $3,000 Total cost for vehicles and hydrogen fuel supply $184 billion $33,000 Estimated government share of total vehicle and hydrogen fuel supply cost $50 billion $8,500 Government RD&D funding $5 billion $1,000 Private RD&D funding $11 billion $2,000 Total funding for government and private RD&D $16 billion $3,000 Total cost for vehicles, hydrogen, and all RD&D $200 billiond $36,000 Estimated government share of total cost for vehicles, hydrogen, and RD&D $55 billion $9,500 aRounded estimates based on 5.54 million HFCVs on the road in 2023. bThe final (learned-out) incremental cost per vehicle in 2023 is $3,600. cThe final (learned-out) cost per vehicle in 2023 is $27,000. dIncludes $128 billion “base vehicle” cost of conventional vehicles that would have been purchased instead of HFCVs. NOTE: All costs in constant 2005 U.S. dollars.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen ing a successful transition, there would be sufficient market incentives for industry to invest the needed capital without government support. Additional details of some of the longer-term resource needs to support the Hydrogen Success scenario are found in Chapter 6. Other factors besides technical progress and funding requirements could also affect the viability of achieving the Hydrogen Success scenario. While a comprehensive assessment of potential barriers to a transition to fuel cell vehicles was beyond the scope of this study, one of those factors—the availability of the requisite skilled workforce—was examined by the committee, as discussed below. SKILLS AVAILABILITY The question looms large as to whether there will be sufficient professional and skilled labor resources available to achieve the growth in fuel cell vehicles reflected in the scenarios developed by the committee. Numerous recent reports have highlighted concerns about the availability of critical skills and trained personnel resources, particularly in the energy arena. For example, a recent National Petroleum Council report declared that a demographic cliff is looming in all areas of energy industry employment (NPC, 2007). The U.S. Department of Labor recently released a report on the “graying” of workers in the nuclear industry that indicated around one-third of the workforce in that segment of the energy business will be eligible to retire in the next 5 years (EBiz, 2007). The committee also is aware that DOE has been conducting an employment study related to the hydrogen and fuel cell industry, but that study has not yet been released and was not available to the committee during the committee’s information-gathering efforts. To address the question of skills availability in the hydrogen and fuel cell industry, the committee constructed a simple flow diagram showing the elements of this emerging industry segment (Figure 7.5). Key industrial players in each element of the business model shown in Figure 7.5 were identified, and more than 20 “not-for-attribution” interviews were conducted with executives representing those companies (as well as with several academics and nongovernmental organization officials with expertise in the field). The companies ranged from early-stage entrepreneurial businesses to international giants with global reach. Uniformly, the feedback received in these interviews was that there was little or no concern about attracting the skills needed to achieve the growth trajectories envisioned from the initial commercial introduction of hydrogen vehicles until 2025—even in the most aggressive of the committee’s scenarios. It is possible that beyond 2025, when the committee’s projections envision the construction of large facilities for central generation of hydrogen, as well as pipeline delivery systems, labor force constraints may become more critical, but the committee is reluctant to speculate on that possibility at this time. It was also recognized by the committee that new skills and knowledge will have to be acquired by public sector agencies dealing with codes, standards, and safety matters related to the hydrogen transition. Planning and effort will be required well in advance to ensure that the skills and knowledge needed to permit, install, and operate hydrogen systems will be available when necessary. In summary, the committee found no evidence from the information gathered in its brief field research effort that there is any need to be concerned about the availability of critical skills to achieve a rapid ramp-up in the introduction of fuel cell vehicles and related fueling infrastructure, at least FIGURE 7.5 Diagram of the early structure of the hydrogen and fuel cell industries, identifying areas where skilled people will be needed. NOTE: SMR = steam methane reformers.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen in the period until 2025. Rather, the consensus among the sample of executives interviewed by the committee indicated that attracting the skills needed to achieve any foreseeable rate of growth in the hydrogen and fuel cell industry will not be a problem, particularly if the government sends a clear signal that its support for growing the industry will be substantial and enduring. It is also interesting to speculate on why this conclusion was found for hydrogen and fuel cell vehicles when other segments of the energy industry are expressing concern about skills availability. Three factors were suggested by the interviews conducted: First, the scale of the hydrogen and fuel cell industry in the early years, even at the most rapid pace of growth envisioned by the committee, is still relatively small compared to the world’s overall energy supply infrastructure. Much of the leading work being done in the hydrogen and fuel cell industry is coming from special task groups set up by divisions of major corporations (frequently referred to as “skunk works”) or from entrepreneurial companies. These environments typically draw the best and the brightest scientists, engineers, and skilled technicians for reasons such as challenge, excitement, and opportunity for substantial economic gain. A refrain frequently heard in interviews and contacts by committee members with professionals in the hydrogen and fuel cell field is that working in this field offers various intangible benefits to employees—a feeling of doing something good, helping to address a critical global problem, creating a new industry, and so on. These intangible benefits appear to be attracting many of “the best and the brightest” to the field. CONCLUSION CONCLUSION: The estimated government cost to support a transition to hydrogen fuel cell vehicles is roughly $50 billion over a 16-year period from 2008 to 2023, primarily for the production of fuel cell vehicles ($40 billion of incremental cost) and, to a lesser extent, for the initial deployment of hydrogen supply infrastructure (about $10 billion) and R&D (about $5 billion). No short-ages are foreseen in the critical workforce skills needed to accomplish the transition. However, further study is necessary to assess the longer-term costs, institutional issues, workforce issues, and impacts of undertaking the major hydrogen infrastructure development required to support widespread use of HFCVs. REFERENCES DOE (U.S. Department of Energy). 2007. Hydrogen Fuel Cells and Infrastructure Technologies Program. Available at www.eere.energy.gov/hydrogenandfuelcells/analysis/model.html. EBiz. 2007. Nuclear Jobs. energyBizinsider, September 14, 2007. Available at http://www.energycentral.com/site/newsletters/ebi.cfm?id=383. GSA (General Services Administration). 2007. Available at http://www.gas.gov/graphics/ogp/FFR2007_508.pdf. Accessed April 2008. NPC (National Petroleum Council). 2007. Facing the Hard Truths About Energy—A Comprehensive View to 2030 of Global Oil and Natural Gas. Washington, D.C. PWC (PricewaterhouseCoopers). 2007. 2006 Worldwide Fuel Cell Industry Survey. Available at http://www.pwc.com/servlet/pwcPrintPreview?LNLoc=/extweb/pwcpublications.nsf/docid/6F870010939851E0852570CA00179123.