AUTOS:

Toyota's plan rekindles hopes for the hydrogen car

Don't look now, but hydrogen cars are making a comeback.

Though they're not getting as much attention as they did a decade ago, when President George W. Bush proclaimed during his State of the Union address that hydrogen fuel cells would power the vehicles of the future, the idea popped up again last week as Toyota unveiled a plan to start selling the cars in three years.

It started with an understated remark by Jim Lentz, the president and CEO of Toyota's U.S. division, during a closely watched auto industry conference in Traverse City, Mich.

"Specifically, we're developing a lineup that includes a hydrogen fuel cell sedan in 2015," Lentz reportedly told the audience at the Center for Automotive Research event last Wednesday.

That same day in Death Valley, Calif., automotive paparazzi snapped a few photos of an otherwise unremarkable silver sedan filling its tank from a truck bearing the logo of the hydrogen supplier Air Products and Chemicals Inc. and the words "hydrogen, compressed." It marked the first time that one of Toyota's early prototypes had been spotted on the road.

Carmakers have already put hundreds of these fuel cell vehicles on the road for testing in recent years, mostly in California, New York and Connecticut, where there are a few dozen hydrogen fueling stations. Some companies -- among them Hyundai, Mercedes and Nissan -- have already said they intend to start selling them sometime between 2014 and 2016.

But the news last week from Toyota, the world's largest automaker, was seen as the clearest sign to date that hydrogen cars will actually be available to the public within a few years, letting them compete with electric cars as another way to lessen America's reliance on gasoline and shrink the carbon footprint of day-to-day driving.

Fuel cell supporters have made plenty of big promises in the past, insisting from time to time that the hydrogen car is just a few more years away, but "it's totally different this time," said Catherine Dunwoody, executive director of the California Fuel Cell Partnership, during an interview yesterday.

"The vehicles have made tremendous strides," she said. "The vehicles are ready."

Carmakers have told the partnership that they expect to put about 50,000 hydrogen fuel cell vehicles on the road by 2017, though Dunwoody said the exact projections made by individual companies are secret.

As is often the case for cleaner cars, California is the testing ground. The state currently has eight public hydrogen fueling stations, but Dunwoody's public-private coalition, which includes carmakers, government agencies and hydrogen suppliers, aims to get the market ready for 2015 by bringing that number to 68 at a cost of about $65 million.

She said that money would be well spent. If companies such as Toyota manage to start selling hydrogen cars to customers a few years from now, it would be one of the auto industry's boldest steps away from gasoline since Toyota introduced the Prius in 1997, clearing the way for fuel-sipping hybrids and the electric vehicles (EVs) that are already hitting the market today.

Toyota spokeswoman Cindy Knight said Monday that hydrogen fuel cells have recently become more attractive because of technological breakthroughs and a decline in the cost of producing hydrogen.

"Some momentum is coming around again for fuel cells," she said. "We've always been working on them, but they seemed to have been eclipsed a little bit by EVs." Forgetting about fuel cells was a somewhat natural reaction, she added, because unlike hydrogen cars, electric vehicles "are actually on the market now, and people are starting to buy them."

Second chance for Bush-era program

Though the Obama administration came into office focused on electric cars and tried to slash the budget for Bush's signature fuel cell program, at least one top official has recently changed his tune on hydrogen.

Energy Secretary Steven Chu, who previously expressed skepticism that hydrogen would be a suitable fuel for cars, subtly recanted this spring behind closed doors and made the position public during an interview with a news program geared toward the auto industry.

Researchers funded by the Energy Department have also been vocal in their support of fuel cells. Just two days after Toyota made its announcement, the National Renewable Energy Laboratory (NREL) released a report on a seven-year, $350 million project conducted with Mercedes, Hyundai, General Motors Co. and Ford Motor Co., along with three of the world's four largest publicly traded oil companies. Its conclusion? Hydrogen vehicles have "advanced rapidly in the last seven years."

During the project, 183 hydrogen-powered vehicles logged 3.6 million miles and used 152,000 kilograms of hydrogen.

Keith Wipke, a senior engineer at NREL and lead author of the report, said yesterday the new hydrogen fuel cells are twice as durable as their predecessors from 2004, lasting as long as 2,500 hours and 75,000 miles before they need to be replaced. He said newer hydrogen cars can also travel hundreds of miles between trips to the pump -- more than most electric cars sold today -- and their tanks can be refilled in a matter of minutes rather than hours.

"We are optimistic that improvements will result in a manageable incremental cost for fuel cell technology," the researchers wrote in the report. "We therefore expect continued progress to lead to several vehicle manufacturers introducing thousands of vehicles to the market in the 2014-2016 timeframe, at which time the hydrogen community will have its first true test of whether the technology will be embraced by the public."

Toyota didn't join the NREL program, but in 2009, Wipke and his fellow researchers got a chance to ride two Toyota SUVs modified to run on hydrogen. They drove from San Diego to Los Angeles, stopped for lunch and drove back to San Diego.

It was a 320-mile round trip, and the vehicles still had enough hydrogen in their tanks to go another 100 miles.

"They're great," Wipke said during an interview yesterday, referring to the various hydrogen cars he has driven during his time working on the NREL project. "The experience for the consumer is going to be out of this world."

'It's just a matter of when'

Fuel cell-powered cars still face the same old obstacles in the marketplace.

Hydrogen is still more expensive than oil. Fuel cells are still more expensive than internal-combustion engines. There are still fewer hydrogen fueling stations in the entire country than there are ordinary gas stations in a large U.S. city.

Experts say that last challenge presents a "chicken and egg" question, because most consumers won't buy hydrogen cars without places to fill them up, and investors won't build hydrogen stations if customers aren't already demanding the fuel.

"The key is creating the infrastructure," Gary Smyth, the executive director of global research and development at GM, told the Detroit Free Press last week. He said Korea and Japan "are more aggressive in their commitment to infrastructure than the U.S." (Greenwire, Aug. 8).

Experts don't expect fuel cells to be a big seller or a moneymaker anytime soon, but hydrogen cars do have the benefit of debuting at a time when Americans are sensitive to the price they're paying at the pump.

Roland Hwang, director of the transportation program at the Natural Resources Defense Council, said the marketplace is now more prepared for a clean alternative to gasoline, whether it's batteries or biofuels or hydrogen.

"The risk with the Prius was that they launched that vehicle during a period of very low oil prices and low interest in the issue of global warming," he said. "The advantage for the launch of the fuel cell vehicles now is that oil prices are persistently high and volatile, which has reshaped consumers' interest in fuel efficiency and getting off oil altogether."

The Prius has become profitable since its launch, with more than 400,000 cars sold last year, but that has never been the goal of the product line, said Jeffrey Liker, an engineering professor at the University of Michigan who is close to Toyota and has written books such as "The Toyota Way" about its management style.

The real plan was to steadily improve Toyota's technology for the long run and position the company for market success later. Toyota will take the same approach with fuel cells even if the cost and the small number of hydrogen fueling stations stunt sales, said Liker, who has also driven one of the Highlander SUVs Toyota has modified to run on hydrogen fuel cells.

The goal of bringing the fuel cell sedan to market in 2015 follows the plan crafted by newly retired Vice Chairman Takeshi Uchiyamada to get the public used to hydrogen cars. Uchiyamada, who led the team that developed the Prius, has concluded that fuel cells offer the best way to power the environmentally friendly cars of the future, Liker said.

"That was his dream, hydrogen fuel cells. It's just a question of when that can be achieved. In 2015, it's not going to be achievable," at least not in a cost-effective way, he said. "Is it 2020? Is it 2030? They don't know when it's going to happen, but they know that they want to be ready when it does."

The company has remained somewhat tight-lipped about its plans for 2015, but the company has already been conducting quiet public tests of the Highlanders. There are already about 100 of them on the road today.

Liker said the Highlander he drove ran exactly like a Prius, switching seamlessly between fuel and an electric motor, but with a major catch: It cost about $250,000 for Toyota to make.

Costs should go down drastically as production scales up, but Toyota will probably still lose money on its fuel cell sedan for the foreseeable future. Liker said many of the people looking at the company's bottom line don't understand that.

"The analysts are trying to figure out how they'll make a profit on it, but they won't make a profit for a long time, and they don't care," he said.

Shale gas does it again

Hydrogen cars will be relatively expensive, just like electric vehicles, but they have their benefits.

The only byproduct of a hydrogen fuel cell is pure water -- no soot, no smog. The fuel wouldn't need to be imported from abroad. It can also come from a variety of sources, just like electricity, and that eliminates the reliance on a single source.

Hydrogen cars have virtually no greenhouse gas emissions when the hydrogen fuel is extracted from water using solar power or another renewable source. For now, the fuel can also be made more cheaply from natural gas, which results in a carbon footprint roughly half as large of that of gasoline.

This approach may not be enough for environmentalists who have deep qualms about any use of fossil fuels because of their link to the danger of climate change. However, as with the use of natural gas for electricity, some leading voices would accept it as a bridge between gasoline and hydrogen made from renewable sources.

"Natural gas is a great transition fuel," Hwang of the Natural Resources Defense Council said.

Not too long ago, the possibility that hydrogen would come from fossil fuels had people casting doubts on Bush's program.

Richard Muller, a physicist at the University of California, Berkeley, who recently made headlines for reversing a previous stand and concluding that rising global temperatures are the result of man-made carbon emissions, said in 2003 that the hydrogen push would continue to pollute the air by relying on fossil fuels rather than cleaner energy sources such as solar power.

"The known U.S. reserves of natural gas will be gone in a few decades, or sooner if we start using it for automobiles," he wrote in the Massachusetts Institute of Technology's Technology Review. "The key assumption behind the push for a hydrogen economy appears to be the belief that there exist vast, undiscovered reserves of natural gas in the United States and around the world. But even if that belief proves wrong, we can always go back to making hydrogen from coal; we have enough of that for a century, if we don't mind open pit mines."

As it turns out, those vast reserves of natural gas do exist, in the form of shale formations. Meanwhile, the techniques to make hydrogen from renewable electricity or landfill gas have gotten cheaper, as well.

With shale production soaring and gas prices lower than they have been in decades, the idea of using the fuel to make hydrogen has the Obama administration paying attention.

Hydrogen now costs about $10 per kilogram, equivalent to paying roughly $3.50 to $5 for a gallon of gasoline. Outside experts told the NREL researchers that the price should fall to the equivalent of $1.50 or $2 per gallon as the technology gets better and production grows to scale, but those estimates are already out of date -- they were done before the price of gas plummeted.

That was apparently what made a convert of Chu, who tried to chip away at his department's hydrogen fuel cell program in 2009 only to have Congress restore its $204 million annual budget.

Chu signaled his new position during a June interview with the news program "Autoline Daily." Fuel cells have gotten better, too, but "the most important thing that changed my mind was the fact that we have now natural gas in abundance," he said.

Hype and reality

Hwang said the Obama administration may show its change of heart through the fuel economy standards for the years 2017 to 2025, which are under final review at the White House and are expected to be released to the public any day now.

The rules could be written so that either vehicles using hydrogen fuel cells or electric cars would get extra credit under the standards for adopting new technology.

Toyota has long pushed for fuel cell vehicles to be put on the same footing as electric vehicles.

Robert Wimmer, a national manager based in the company's Washington, D.C., office, said today's government policies put electric vehicles ahead of fuel cell vehicles. Battery-powered cars get a $7,500 tax credit, but the tax break for fuel cell vehicles is $4,000, and it expires at the end of 2014, before Toyota plans to launch its hydrogen-powered sedan.

"The different alternative fuel technologies need to be looked at for their attributes and be incentivized equally so we're letting the marketplace decide," Wimmer said. At the same time, "energy policy is not consistent, and we need to roll with those inconsistencies. That's why we carry on pursuing a broad portfolio of technologies so we're ready whatever way the market goes."

Several people interviewed for this article used the same word to describe the rise and fall in support for hydrogen fuel cells.

That word was "cyclical," a nod to the cycle of hype and disappointment that seems to follow every alternative to oil, whether electric cars, cellulosic ethanol or natural gas. In each case, government funding has bounced up and down through the years.

"All of them will be hyped, but then reality will set in," Hwang said. "And then everyone will get to work -- hopefully -- on making their promise come true."

Wipke used that word, too, though the team at NREL kept working through the ups and downs. A smaller second phase of the project began in 2009 even as President Obama took office and appointed officials who shifted resources toward electric cars.

When asked what he meant by "cyclical," Wipke paused.

"I'm trying to not get in trouble here," he said.

Wipke then said that as the recession arrived, car companies cut back on their spending, yet they never wavered in their support for fuel cell programs. They saw hydrogen cars had the same inherent attributes of battery-electric vehicles, and other benefits: a longer range -- at least for now -- and the capability to refuel in minutes at stations similar to the ones that exist today.

That's why they're not just trying to work on electric vehicles, Wipke said, and "it didn't make sense to me to not be pursuing fuel cells just as rigorously."

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.