Issue 11.04 | April 2003
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How Hydrogen Can Save America (continued)
The major oil companies are already extracting hydrogen from gasoline for industrial uses at nine refinery complexes throughout the United States. With a little push, these plants could serve as hubs for a nascent hydrogen-distribution network.
Converting filling stations is bound to cost billions of dollars over several decades. But it should cost relatively little to retrofit clusters of stations in proximity to both a hydrogen-producing refinery and a population center where fuel cell vehicles are sold. Oil companies could meet initial demand by trucking hydrogen from refineries to these stations. As the number of fuel cell vehicles on the road rises, stations that aren't served by refinery hubs could install processors, called reformers, that use electricity to extract hydrogen from gasoline or water. The White House should ask for $5 billion - roughly $30,000 for each of the nation's 176,000 filling stations - to get the ball rolling.
In the long run, a pipeline piggybacking on existing natural gas pipelines might deliver most of the fuel, either from high-volume plants or more widely distributed facilities. The administration should set aside $10 billion for incentives like interest-free loans to encourage oil companies to construct a national hydrogen pipeline. It might also grant five-to-ten-year monopoly rights to pipeline builders.
Hydrogen's fuel-efficiency offers immediate benefits to transportation companies that maintain their own vehicles and use them for limited, predictable distances. In fact, FedEx and UPS plan to phase in fuel-cell trucks over the next five years. The Bush administration should take advantage of this synergy between early adopters and the national interest by offering $10 billion in tax breaks to companies that invest in hydrogen-powered fleets. Also, in regions served by a refinery hub, $5 billion should be allocated for fuel cell police cars, ambulances, maintenance trucks, and other municipal vehicles. The military is another sensible target, since 60 percent of its logistics budget is devoted to transporting gasoline.
The critical need to build infrastructure along with vehicles brings to mind an earlier Apollo-like initiative: Eisenhower's National Defense Highway Act. As an officer during World War II, Ike struggled to move troops across the US and saw how Germany's highways conferred a military advantage. Once in the Oval Office, he called for $300 billion in today's dollars to build an interstate highway system. Funded by a gas tax, that program's dramatic success proved that national security can motivate federal infrastructure projects on a grand scale.
4. Ramp up hydrogen production
But where will the hydrogen come from? Ironically, while hydrogen is the most plentiful element in the universe, it rarely appears in its pure form. It must be extracted from substances that contain it, like fossil fuels and water. The problem is that the extraction itself requires power. Currently, the least expensive method is a process known as steam reforming, in which natural gas reacts chemically with steam to produce hydrogen and carbon dioxide, a greenhouse gas. Far preferable would be to use carbon-free resources like solar, wind, and hydropower to produce electricity for electrolysis, which splits water into hydrogen and oxygen. Hydrogen would make renewable energy practical, acting as a storage medium for the modest amounts of energy such resources produce. Wind power, especially, lends itself to this sort of use. This and other renewables should receive $10 billion as a seed for long-term development.
This suggests a role for a clean, efficient, and much neglected energy source: nuclear. Like the fuel cell, the nuclear generator is a technology ripe for exploitation. Unlike the solid-core reactors of the past, pebble-bed modular reactors such as the one at Koeberg, South Africa, don't get hot enough to risk melting down. Koeberg uses small graphite-covered uranium balls rather than plutonium rods, and the reactor's cooled by helium rather than water. This new design is so efficient, it might make nuclear competitive with coal and oil. In any event, the nuclear power industry is in dire need of research for everything, from generation to waste treatment. Thus, $10 billion should be allocated to developing and securing nuclear technology that can power the hydrogen revolution.
Nuclear power will serve as a stopgap, enabling the US to achieve energy independence while allowing wind, solar, and hydropower a chance to mature. Given the choice between powering the carbon-free hydrogen economy with fossil fuels or nuclear energy, even Greenpeace might embrace nuke plants as the lesser evil.
As all the various subsidies kindle a self-sustaining economy, they should be tapered and the money shunted to the other major power in the conversion from oil to hydrogen: electric utilities. Within a decade, outlays to power companies should be aimed at connecting hydrogen pipelines to the power stations.
5. Mount a Public Campaign To Sell the Hydrogen Economy
With a growing federal deficit and a stagnant economy, this might seem like a singularly bad time to unleash an immense tide of new subsidies. And let's be honest: Even framed as a national security issue, a $100 billion proposal won't go down easily on Capitol Hill or in Peoria. This is why the Bush administration's campaign to sell the hydrogen economy must be even more vigorous than its campaign to sell the war against Iraq.
Financially, the case is compelling. One hundred billion dollars is less than a quarter of what the federal government plans to spend annually on defense within five years. A 5 cent per gallon increase in the gasoline tax - less than the seasonal variation in gasoline prices - would pay for part of it. For the rest, the government could issue "H Bonds." Like Liberty Bonds during World Wars I and II, "securities for security" would give citizens a way to take part in the cause while providing an attractive investment. Like war bonds, they could be promoted by celebrities, sold by Boy and Girl Scouts, and paid for via payroll deduction plans.
Convincing Congress will take all the finesse the administration can muster, but some states are already pushing the hydrogen agenda with tax credits, research funding, and other policies to create jobs in fuel cell manufacture. "We want to collaborate with the federal government and industry to make California a leader in hydrogen," says Alan Lloyd, chair of California's Air Resources Board, an EPA suboffice in a state where SUVs sport SAVE THE EARTH bumper stickers. (The city of Los Angeles bought its first fuel-cell vehicle from Honda last December.) States that foster hydrogen technology companies will be rewarded with tax revenue from sales to Europe and Asia, which are also looking into it.