2. HYDROGEN: Shell exec says 'hydrogen highway' decades away (Greenwire, 04/16/2008)

Colin Sullivan, Greenwire West Coast reporter

SACRAMENTO, Calif. -- The subtle war of words between automakers and oil companies over the future of hydrogen technology escalated this week when the president of Shell Oil Co. said infrastructure problems could stifle the fuel's development for decades to come.

Mainstream use of the fuel in the transportation sector is anywhere from 10 to 25 years away because of the difficulty associated with converting retail gasoline stations to hydrogen, Shell President John Hofmeister said before a low-carbon fuels conference here.

"Building the hydrogen highway is going to be a long, drawn-out process," said Hofmeister, who has announced that he will retire July 1. "These infrastructure issues are going to continue getting in the way."

Hofmeister's comments Monday appeared to respond directly to remarks delivered earlier this month by Larry Burns, vice president for research, development and strategic planning at General Motors Corp. Burns, speaking before the National Hydrogen Association's annual conference, called on the energy industry to quickly equip filling stations with hydrogen infrastructure and said a vast network is "economically viable and doable" (Greenwire, April 3).

But Hofmeister appeared to contest that notion with a reality check about the retail conversion process. With more than 90 percent of the filling stations associated with the Shell brand name owned by independent operators, Hofmeister said the real challenge is convincing resistant small-business owners of hydrogen's viability.

The fuel, he added, is untested and not ready for full-scale deployment. Also unclear is who pays and assumes the risk for the massive retail investment, especially given the independent business owner's inability to sustain the experiment for long. And Americans are used to gas stations on every block and exit ramp.

"Americans are used to ubiquity," said Hofmeister, who heads U.S. operations for Shell. "The clean fuels movement has to deal with the ubiquity issue."

'Location matters'

Hofmeister also questioned some in the industry who favor a transitional phase that would have companies like Shell use industrial hydrogen operations as initial fueling stations for vehicles. Industrial sites that supply hydrogen to fertilizer operations and other industrial applications are not ideal, he said.

The sites, he explained, are rarely located in population centers where consumers traditionally fill up.

"When it comes to distributing fuels, location matters," Hofmeister said.

When informed of Hofmeister's remarks, an official at the National Hydrogen Association said the Shell executive had failed to acknowledge the importance of "emerging markets" as a means to break down the average consumer's hesitation to accept hydrogen as an alternative to gasoline.

Hydrogen has been used for decades to make ammonia for fertilizer, said NHA spokesman Patrick Serfass. More recently, Wal-Mart, Michelin, Bridgestone and the Defense Department have converted to hydrogen-powered fork lifts, he added.

"Saying it's going to be a long, drawn-out process is not the way I would put it," he said. "There are a lot of emerging markets that are helping to lower the cost of these technologies and helping to build other parts of the hydrogen infrastructure."

Serfass also points out that automakers are prepared to go to market with hundreds if not thousands of hydrogen-powered vehicles in the next five to eight years. These manufacturers, already reeling in a downturned economy, are looking for a sign from the fuel distribution companies that their investment is safe.

So can the automakers and oil companies work together to that end? Serfass thinks so, with NHA in the middle trying to broker a coordinated effort.

"What you have right now is a really, really candid discussion," he said, admitting "more tension" is coming to the surface recently. "They're just becoming more public about the conversations that have been happening for some time."

The hydrogen highway unraveling?

On the ground in California, Hofmeister's remarks tapped into a revived debate recently about the state's ailing hydrogen highway project.

California's long-term vision of a network of 100 hydrogen fueling stations by 2010 could be in trouble given the recent closure of some stations and the risk of future stations being lost, some critics say. Moreover, the state's Air Resources Board is having trouble financing the stations, bringing the total number of hydrogen outlets in the state down to 24, less than two years before the 2010 deadline.

Compounding this problem is a lag at the federal level, where the Energy Department's program to develop fuel cell and other advanced vehicles has not seen the major progress needed to advance a hydrogen-based transportation infrastructure, according to a review by the National Academies. In a report released last month on DOE's FreedomCAR and Fuel Partnership, the Academies' National Research Council said the fuel cell itself and in-car hydrogen storage continue to pose real difficulties (ClimateWire, March 20).

But Serfass said the system is far from falling apart. One of the closed stations, he said, was established to test the consumer experience and was expected to close. Others are on the way and the financing picture has improved, he argued.

Serfass cited a recent announcement by the California Energy Commission that it intends to spend $120 million annually to award grants and loans to develop and deploy hydrogen vehicle technologies. He also referenced data compiled by his group that found 75 hydrogen fueling stations in the United States and Canada.

Looking forward, the NHA is focused on coordinating with oil companies and automakers to "start a nucleus [of filling stations] in some metro areas around the world," Serfass said. The group, in collaboration with industry, wants to develop a network of 40 stations in Los Angeles, Munich, New York or Washington, D.C., in the near future, to show how a system could operate when located close to consumers.

"It makes sense to start with a nucleus approach because you need the fueling stations and the vehicles in the same place," he said.

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