Government Relief Needed for Hydrogen Infrastucture, Oil Recovery

The National Research Council says while recent hydrogen fuel-cell efforts by auto makers have been “impressive,” there needs to be more support from auto makers and government to make such vehicles competitive in the U.S.

In a new study, the NRC cites vehicle costs and insufficient hydrogen production and delivery infrastructure as the major stumbling blocks.

In what it describes as “best-case scenarios,” the NRC says government-backed consumer subsidies would be required to spark sales of hydrogen fuel-cell cars even if production “increased significantly” by 2015.

The NRC says 2 million is “the maximum practicable number” of hydrogen vehicles that could be on U.S. roads by 2020. But by 2023, the cost of FCVs could become competitive with conventional vehicles, enough so that their number could grow from 60 million in 2035, to 200 million by 2050.

The cost to the government to subsidize an infrastructure transition from oil to hydrogen fuel would be $55 billion between now and 2023, the NRC says. Meanwhile, private industry would need to chip in $145 billion during the same period.

Both far exceed the government subsidy for ethanol-related initiatives, which is expected to grow to $15 billion annually by 2020.

At least one auto maker is taken aback by the NRC’s calculations.

“On the surface, those numbers do sound a little aggressive,” says Dan Bonawitz, American Honda Motor Co. Inc. vice president.

While Honda is a big believer in hydrogen – “We think it is the ultimate fuel,” Bonawitz says – the auto maker still thinks it will be 10-15 years before there is sufficient vehicle-production capacity to achieve critical mass.

Bonawitz forecasts a similar time frame for widespread availability of affordable hydrogen.

“What’s the price of fuel going to be five years from now?” Bonawitz suggests, noting the size of the hydrogen market largely depends on how quickly consumers would be willing to move away from oil.

The NRC’s report is released as American Petroleum Institute President Red Cavaney calls for similar support for the U.S. oil industry.

“Despite significant growth of (alternative fuels) and improvements in energy efficiency, more than half of the world’s energy demand will be met by oil and natural gas in 2030, as is the case today,” Cavaney tells the U.S. Energy Assn. in Washington today.

The U.S. is “the world’s only oil and natural-gas producer whose government restricts access to its domestic energy resources,” he adds. “As a result, American consumers are being asked to bear a costly and unnecessary burden, as world energy demand skyrockets.”

Dismissing critics who claim the U.S. can’t “drill itself” out of a crisis, Cavaney notes the offshore Outer Continental Shelf that surrounds the 48 mainland states contains 18 billion barrels of oil, while public lands not devoted to recreation or wildlife hold an estimated 19 billion barrels of oil. And the federal government prohibits oil recovery from either resource.

“We need energy from all reasonable sources,” Cavaney says. “And, we need them to compete in as free a marketplace as possible.”

– with Eric Mayne

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