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Future Wheels Interviews with 44 Global Experts On the Future of Fuel Cells for Transportation And Fuel Cell Infrastructure AND A Fuel Cell Primer Northeast Advanced Vehicle Consortium M.J. Bradley and Associates November 2000

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Future WheelsInterviews with 44 Global Experts

On the Future of

Fuel Cells for Transportation And

Fuel Cell Infrastructure

AND

A Fuel Cell Primer

Northeast Advanced Vehicle Consortium

M.J. Bradley and Associates

November 2000

Submitted to

Defense Advanced Research Projects Agency

By

Northeast Advanced Vehicle Consortium

112 South Street, Fourth Floor

Boston, MA 02111

November 1, 2000

Agreement No. NAVC1099-PG030044

Copyright 2000, NAVC, DARPA, All Rights Reserved

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About DARPA and NAVC

The Defense Advance Research Projects Agency (DARPA) was created in 1958 toensure technological superiority for U.S. military forces by fostering innovation andpursuing high-payoff, frequently high-risk projects. DARPA serves as the centralresearch and development organization for the Department of Defense (DOD). Itmanages and directs selected basic and applied research and development projects forDOD, and pursues research and technology where the payoff is both very high and wheresuccess may provide dramatic advances for traditional military roles and missions anddual-use applications.

The DARPA mission is to develop imaginative and innovative research ideas offering asignificant technological impact that will go well beyond normal evolutionarydevelopmental approaches; and, to pursue these ideas from the demonstration of technicalfeasibility through the development of prototype systems. The DARPA TacticalTechnology Office (TTO) fulfills this mission by engaging in the development ofaeronautic, space and land systems as well as embedded processors and control systems.The main goal of the TTO is to create highly capable systems that enable “order ofmagnitude” improvement in military capabilities.

This project was developed and funded under the TTO Electric and Hybrid VehicleTechnology Program. The DARPA Electric and Hybrid Vehicle Technology Program(E/HEV), under the direction of program manager Dr. Robert Rosenfeld, pursuesresearch, development, and demonstrations of technologies for electric and hybridvehicles that address military missions, modernization, and cost mitigation. Establishedby Congress in FY 1993, the program has pursued technology development andprototype demonstrations that are essential for future military systems, enhancingnational energy security, and facilitating compliance by the Armed Services with federalclean air legislation.

The DARPA E/HEV program has recently evolved into the Advanced VehicleTechnologies Program (AVP), administered by the U.S. Department of Transportation(DOT). The AVP combines the best in transportation technologies and innovativeprogram elements to produce new vehicles, components, and infrastructure for medium-and heavy-duty transportation needs.

The Northeast Advanced Vehicle Consortium (NAVC) is a public-private partnershipof companies, public agencies, and university and federal laboratories working togetherto promote advanced vehicle technologies in the Northeast United States. The NAVCBoard of Directors is appointed by the eight Northeast governors, the mayor of NewYork City, and includes the New England Governors' Conference. Our participants haveinitiated over 50 projects, spanning a wide range of technology areas including electric,hybrid-electric and fuel cell propulsion systems, electric and natural gas refueling, energystorage and management, and lightweight structural composites. The NAVC receivesfunding from the DARPA EV/HEV Program and the Department of Transportation'sAdvanced Vehicle Technologies Program, as well as other sources.

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Acknowledgements

The Northeast Advanced Vehicle Consortium would like to thank the Defense AdvancedResearch Projects Agency (DARPA) for its funding and support of this project. Thisproject was conducted under the DARPA Electric and Hybrid Electric Vehicle(EV/HEV) Program. We would especially like to thank Dr. Robert Rosenfeld, EV/HEVProgram Manager, for his support and advice throughout this project.

NAVC was the lead contractor on the project, with M.J. Bradley & Associates as a sub-contractor for the section entitled “Fuel Cell Technology and Infrastructure Primer”. Theinterview questions were developed by Sheila Lynch, Executive Director of NAVC. Theinterviews were conducted by Sheila Lynch, with assistance by Lisa Callaghan, PolicyAnalyst and Special Projects, NAVC, and Mary Parent, Intern, NAVC. The authors ofthe report are Sheila Lynch, Lisa Callaghan and Mary Parent of NAVC, and ThomasBalon, Amy Stillings and Paul Moynihan of M.J. Bradley & Associates. NAVC wouldespecially like to thank Amy Stillings for her excellent work on the technology section.

Finally, NAVC would like to thank the many experts who so graciously gave of theirtime to be interviewed on this subject. In particular, we would like to thank AlfredMeyer of International Fuel Cells for his assistance in establishing contacts in the fuelcell industry.

Northeast Advanced Vehicle Consortium

112 South Street

Boston, MA 02112

617-482-1770 phone

617-482-1777 fax

www.navc.org

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EXECUTIVE SUMMARY

The goal of this project was to ask a number of global experts on fuel cell infrastructurerelated to transportation if there was consensus or disagreement on major issues related tothe advancement of the technology and its introduction into the marketplace. A secondsection of this report gives the current technology status of fuel cells for transportationand their related infrastructure.

The major findings were from our interviews are listed below. (Note: These are not“consensus items”, they are simply the major themes that arose during the interviews.)

§ Direct hydrogen stored on board the vehicle is the fueling option that most expertsbelieve will be the long-term choice for both passenger and transit fuel cell vehicles.

§ Hydrogen for fuel cell cars may come from many feedstocks. Many expertsexpressed the opinion that there will not be one global “fuel” choice, as with gasolineand diesel for internal combustion engines today; rather, different geographicalregions will select the hydrogen feedstock that is most appropriate for that area (forexample, geothermal electrolysis in Iceland, ethanol in Iowa, CNG in Texas, etc.).The emissions associated with the “well to wheels” use of hydrogen depend on thefeedstock and process of reformation.

§ There was no consensus on which on-board reformation fuel would be the best optionor if on-board reformation should happen.

§ The viability of methanol as an on-board reformate was a divisive question. Whilethere were some experts who did not have strong opinions about methanol, themajority were either vigorously opposed to the use of methanol for a variety ofreasons – with health and safety concerns most often cited -- or favored its use as anon-board fuel or as a hydrogen feedstock. Overall, more of the experts weinterviewed were opposed to the use of methanol than were in favor of it.

§ The majority opinion was hydrogen storage technology should be the focus of R & Ddollars. Breakthroughs in storage technology would have the biggest impact inaccelerating the acceptance and commercialization of fuel cell vehicles.

§ Opinions were divided over the role hybrid electric vehicles will play in the future.Some experts believe that hybrids are strictly transitional technologies; others believethat hybrid electric vehicles are a threat to the fuel cell vehicles market; and yet othersfelt that hybrids will be complementary to fuel cell vehicles because advances inhybrid electric drive trains will have direct benefits to fuel cell vehicles.

§ According to our interviews, the fuel cell market for transportation will develop firstin the bus fleet market at government subsidized large prices, and that significantmarket share of the light duty transportation market is more than ten years out.

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§ Codes and standards related to hydrogen storage and transportation need significantwork in the near term before there can be any significant market share for fuel cells.

§ PEM (Proton Exchange Membrane), a low temperature fuel cell, was theoverwhelming choice of experts for the transportation market. (Not necessarily thestationary market).

§ Hundreds of millions of dollars are being spent on fuel cell research and developmentboth for stationary and mobile applications. The technology choices are advancingrapidly with new companies participating all the time, and a paradigm shift in thetechnology can happen at this stage with storage and infrastructure.

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TABLE OF CONTENTS

EXECUTIVE SUMMARY……………………………………………….………………………………..iv

INTERVIEW RESULTS:

1.0 INTRODUCTION TO INTERVIEWS: BACKGROUND AND APPROACH........................1

1.1 GROUND RULES FOR INTERVIEWS .................................................................................................1

1.2 EXPERTS INTERVIEWED .................................................................................................................21.3 INTERVIEW QUESTIONS..................................................................................................................4

2.0 FUEL CHOICE: THE BIGGEST CHALLENGE ......................................................................6

2.1 HYDROGEN IS THE ULTIMATE GOAL...............................................................................................6

2.2 RAMPING UP THE PASSENGER VEHICLE MARKET: NEAR-TERM AND MID-TERM FUELS ..................62.2.1 Methanol..............................................................................................................................7

2.2.2 Gasoline.............................................................................................................................13

2.2.3 Ethanol...............................................................................................................................15

2.2.4 Synthetic Fuels...................................................................................................................16

2.2.5 Diesel and Natural Gas .....................................................................................................17

2.2.6 Electrolysis ........................................................................................................................17

2.3 ON-BOARD REFORMATION: IS IT THE RIGHT DIRECTION?............................................................18

3.0 MARKET DEVELOPMENT .......................................................................................................20

3.1 TRANSIT MARKET WILL DEVELOP FIRST .......................................................................................203.1.1 The transit market will be easier to develop than the passenger market ..........................21

3.2 TIMEFRAME FOR PASSENGER MARKET PENETRATION ..................................................................233.3 WHAT IS DRIVING THE FUEL CELL MARKET?................................................................................243.4 IS HYBRID TECHNOLOGY A TRANSITIONAL OR LONG-TERM TECHNOLOGY? .................................26

4.0 INFRASTRUCTURE FOR A HYDROGEN ECONOMY ........................................................29

4.1 ONE FUEL, MANY SOURCES: HYDROGEN FROM MULTIPLE FEEDSTOCKS .....................................294.2 NEED FOR ADVANCED HYDROGEN STORAGE R&D ......................................................................304.3 SAFETY ISSUES AND THE NEED FOR CODES AND STANDARDS.......................................................30

4.4 SEQUESTRATION: VIABLE EMISSIONS REDUCTION STRATEGY?...................................................30

5.0 FUEL CELL TECHNOLOGY: READY FOR THE CONSUMER? .......................................32

5.1 WHICH FUEL CELL TECHNOLOGY WILL PREDOMINATE?...............................................................325.2 HOW WILL FUEL CELL VEHICLES DIFFER FROM GAS CARS? ..........................................................33

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FUEL CELL PRIMER

6.0 WHAT IS A FUEL CELL?...........................................................................................................35

6.1 TYPES OF FUEL CELLS .................................................................................................................356.1.1 Low Temperature Fuel Cells .............................................................................................36

6.1.2 High Temperature Fuel Cells ............................................................................................37

6.1.3 Future of Fuel Cells...........................................................................................................37

7.0 HYDROGEN PRODUCTION......................................................................................................40

7.1 REFORMATION ...............................................................................................................................407.1.1 Steam Reforming................................................................................................................41

7.1.2 Partial Oxidation...............................................................................................................41

2.1.1 Autothermal Reforming .....................................................................................................41

7.2 ELECTROLYSIS...............................................................................................................................43

7.3 DISTRIBUTION OPTIONS ...............................................................................................................43

FUEL OPTIONS FOR FUEL CELLS ......................................................................................................44

8.1 HYDROGEN ..................................................................................................................................448.1.1 Properties ..........................................................................................................................44

8.1.2 On-Board Storage..............................................................................................................453.1.3 Safety, Health and Environmental Concerns......................................................................47

8.1.4 Availability and Current Distribution Infrastructure........................................................48

8.2 NATURAL GAS .............................................................................................................................49

8.2.1 Natural Gas Production ....................................................................................................50

3.2.2 Properties.............................................................................................................................518.2.3 Safety, Health and Environmental Concerns ....................................................................51

8.2.4 Availability and Distribution Infrastructure......................................................................528.3 METHANOL....................................................................................................................................54

8.3.1 Methanol Production.........................................................................................................55

8.3.2 Properties ..........................................................................................................................55

8.3.3 Safety, Health and Environmental Concerns ....................................................................55

8.3.4 Availability and Distribution Infrastructure......................................................................56

8.4 ETHANOL .....................................................................................................................................578.4.1 Ethanol Production............................................................................................................58

3.4.2 Properties............................................................................................................................58

8.4.3 Safety, Health and Environmental Concerns ....................................................................59

8.4.4 Availability and Distribution Infrastructure......................................................................59

8.5 PETROLEUM DISTILLATES .............................................................................................................608.5.1 Petroleum Distillates Production ......................................................................................61

8.5.2 Properties ..........................................................................................................................62

8.5.3 Safety, Health and Environmental Issues ..........................................................................62

8.5.4 Availability and Distribution Infrastructure......................................................................62

8.6 GAS TO LIQUIDS...........................................................................................................................638.6.1 Gas to Liquids Production.................................................................................................64

8.6.2 Properties ..........................................................................................................................64

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8.6.3 Safety, Health and Environmental Issues ..........................................................................64

8.6.4 Availability and Distribution Infrastructure......................................................................64

8.7 TECHNOLOGY SNAPSHOT.............................................................................................................658.7.1 Hydrogen ...........................................................................................................................65

8.7.2 Fuel Processors .................................................................................................................65

8.8 FUEL CELL EFFICIENCY AND EMISSIONS .....................................................................................668.8.1 Fuel Cell Efficiency ...........................................................................................................66

3.3.2 Fuel Cell Emissions .............................................................................................................69

8.9 ECONOMICS OF FUEL CELLS ........................................................................................................71

8.9.1 Off-Board Production of Hydrogen...................................................................................71

8.9.2 Centralized Production and On-Board Reformation ........................................................74

Interview Results

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1.0 INTRODUCTION TO INTERVIEWS: BACKGROUNDAND APPROACH

The goal of this report was to ascertain whether there was consensus or disagreement onkey issues of fuel choice and infrastructure related to transportation fuel cells byinterviewing global fuel cell experts. Fuel cell technology has been receiving quite a bitof media attention in the past 12 months, and the fuel cell industry is progressing rapidlytoward the commercial market. As one industry analyst has noted, the questionsurrounding fuel cells seemed to have changed from “can fuel cells be done?” to “whenand how will they be done?”.

Although fuel cell stacks themselves are reaching maturity, the surrounding infrastructureissues are very early in development. There are many significant infrastructure issuesbeing explored by fuel cell industry stakeholders, and industry seems to be moving inmany different directions. When we originated this project, we thought there was not yetclear consensus on a number of key issues, and this belief was verified by our interviews.In reporting these expert views, we have not attempted to editorialize or draw conclusionsabout which view is right and which is wrong. We have simply related what the expertssaid, allowing readers to make their own judgments.

As we have said, transportation fuel cell infrastructure is still early in development and isripe for new technology advances. It may be like the early days of the automobile, at theturn of the last century, when there were several “fueling” options – gas, batteries, steam.Anyone trying to predict the market “winner” would have had a tough job. Likewise, thisreport does not attempt to predict the future. We hope this report serves as a “snapshot”of where the industry is in November 2000.

As an explanatory note, this report focuses only on fuel cells and infrastructure for thetransportation sector. We did not ask experts to comment on the stationary fuel cellmarket, and their responses should not be interpreted as speaking to that market.

1.1 Ground Rules for InterviewsThe ground rules of the interviews were that experts would be identified in the finalreport by their industry sector rather than by name. For example, experts are referred toas a representative of an auto company or of a governmental agency. This was to allowmore freedom of expression and participation by experts whom may not have wantedtheir company or organization aligned with certain views.

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1.2 Experts InterviewedWe would like to thank the many experts who agreed to be interviewed for this report.Many people put aside valuable time to participate.

Air Products: Venki Raman, Project Director, Hydrogen Fuel Cells

American Methanol Institute: Raymond Lewis, ConsultantBallard: Paul Lancaster, Vice President - FinanceBMW: Joachim Tachtler (Note: BMW provided previously published materials )

BP Amoco: Andrew Armstrong, Novel & Alt. Fuels Group, Fuels Technology GroupCalifornia Air Resources Board: Alan Lloyd, ChairmanCalifornia Fuel Cell Partnership: Catherine Lentz, Program Manager and Joe Irvin,

Communications ManagerCitibank: Jeffrey Ng, Autos and Industrials Analyst, Fuel Cell SpecialistDaimlerChrysler: Johannes Ebner, Director of Infrastructure, Fuel Cell Project

Directed Technologies Inc.: Sandy Thomas, Vice President, Energy and EnvironmentEnergy Conversion Devices: Stan and Iris Ovshinsky, FoundersEnergy Partners: Frano Barbir, Principal Research Engineer

Energy Ventures, Inc: Wayne Hartford, PresidentExxonMobil: Paul Berlowitz, Project Leader Fuel Cell Project, Corp. Strategic Researchand Jack Johnston, Section Head, Advanced Fuels and Engine Systems

Ford Motor Company’s TH!NK Group: Ron Sims, Principal Engineering Specialist;Michael McCabe, Marketing Manager; Frank Balog and Steve Fan, Project EngineersGeneral Motors Corporation: Greg Ruselowski, Director of Finance Planning and

Infrastructure – Fuel Cell ProgramHonda: Ben Knight, Vice President, Honda R&D Americas, Inc.Hydrogen Burner Technology: Steve Lelewer, Director of Marketing

Hyundai: Alfred Gloddeck, Manager, Government Affairs and Public RelationsImperial College: David Hart, Head of Fuel Cell and Hydrogen Research, Centre forEnergy Policy and Technology

International Fuel Cells: Alfred Meyer, Manager Transportation BusinessJohnson Matthey: Jonathan Frost, Director, Fuel Cell BusinessMethanex: Mark Allard, Director, Fuel Cell VehiclesPraxair: Ed Danieli, Hydrogen Product Manager

Proton Energy Systems: William Smith, Vice President, Business DevelopmentRenewable Fuels Association: Mary Giglio Director, Congressional & Public Affairs(Note: RFA provided previously published materials)

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South Coast Air Quality Management District: Chung Liu, Deputy Executive Officer,

Science and Technology AdvancementShell Hydrogen: Alastair Livesey, Shell Global SolutionsStuart Energy Systems: Kevin Casey, Mgr. Strategic Development

SunLine Services Group: Bill Clapper, Executive DirectorSyntroleum: Branch Russell, Business Development ManagerTechnology Consulting Group, Inc.: Craig M. Lang, President

U.S. Dept. of Energy ‘s Hydrogen Program: Sigmund Gronich, Team Leader,Hydrogen Program and Neil Rossmeisl, Hydrogen Prg. Mngr.US Department of Transportation’s AVP Program: Shang Hsiung, Program Manager

U.S. Fuel Cell Council: Greg Dolan, Deputy Executive DirectorUnion of Concerned Scientists: Jason Mark, Transportation AnalystXCELLSIS: Dr. Detlef zur Megede, Fuel Cell Program

We also invited about 15 other organizations to participate, some of whom chose not tobe interviewed and some of whom simply did not respond to our request. We recognizethere are more global fuel cell experts beyond those we interviewed, but due to timeconstraints and the length of interviews, it was necessary to limit the number of interviewsubjects.

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1.3 Interview Questions

MARKET:

1. When do you expect that fuel cells will be viable to capture a significant, initialmarket share (for example, 5%) of the ground transportation market for transitapplications? For passenger vehicles? Why?

2. Will hybrid electric vehicles be an interim step to fuel cell vehicles or a long-termtechnology?

3. In your opinion, what will be the difference, if any, in how the fuel cell marketdevelops for the transit industry vs. the passenger vehicle market and why?

4. What is the most important reason that fuel cells for transportation will happen:global warming, criteria air pollutants, global oil availability, oil price increase, orother?

FUEL CELL TECHNOLOGY:

5. Do you believe fuel cells for transportation applications will be primarily PEM, or doother fuel cell technologies -- solid oxide, molten carbonate, and others -- have somepotential?

6. Can fuel cells be manufactured to be cost competitive with other transportationtechnologies? When and in what volumes?

7. How will fuel cell vehicles be different than current internal combustion enginevehicles – both passenger and transit -- to owners and operators?

8. Are consumer issues such as start up time and ambient temperature ranges resolvedwith current fuel cell technology?

INFRASTRUCTURE:

9. What, in your opinion, is/are the greatest infrastructure challenge(s) for widespreaduse of fuel cells in transportation?

10. Will fuel cell reformation take place on board or off board the vehicles?

11. Will off-board production be done at retail stations or centrally, and by whom?

12. Is a hydrogen infrastructure that would meet the transportation market’s needs viable?

13. Are safety issues with current hydrogen storage and vehicle fuel cell technologiesresolved?

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14. Are advanced hydrogen storage technologies such as metal hydrides or carbonnanotubes viable, and, if so, when would they be ready for implementation?

15. Will sequestration of reformation emissions be a viable strategy?

FUEL CHOICE:

16. In your opinion, what fuel will most likely be used in the near term in fuel celltransportation applications? Why?

17. In your opinion, what will be the long-term fuel for fuel cell transportationapplications? Why?

18. What is your opinion of the following fuels for reformation? The types of issues tobe considered are emissions, efficiency of reformation, cost of the fuel and thereformation, technological challenges relating to the reformation, availability of thefuel, storage and delivery, and safety.

§ gasoline

§ natural gas

§ methanol

§ ethanol

§ diesel

§ synthetic fuels

§ electricity

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"The last many millennia were about fire andburning fuels for energy. This new millenniumwill be about what most of nature does --

chemical processing -- which is a much moregraceful and sustainable way to make energy"

Stan Ovshinsky, ECD

2.0 FUEL CHOICE: THE BIGGEST CHALLENGE

This report was developed around the idea that, as fuel cell technology has beendemonstrated and shown to be technologicallyviable, the next focal point for the fuel cellindustry is infrastructure. One of thequestions we asked the fuel cell experts was“What is the greatest infrastructure challengefor widespread use of fuel cells intransportation?” Time and again, ourinterview subjects said that the selection of afuel was the biggest challenge to thedevelopment of this market.

2.1 Hydrogen is the ultimate goalThe vast majority of the experts believe that pure hydrogen fuel cell vehicles are theultimate goal. This prediction came from experts in many different fields: automakers,fuel cell manufacturers, and others. Many noted that fuel cells simply “prefer” hydrogen,and that a pure hydrogen vehicle will be the simplest fuel cell system.

However, there were some dissenters on this issue. These experts often cited theproblems with on-board hydrogen storage, and indicated that it would be impossible tohave widespread consumer refueling of a gaseous fuel. For example, two methanolindustry experts noted that methanol offers fewer problems with storage and safety thanhydrogen does, making it a more viable long-term option for hydrogen fuel cells. Therewere also some experts who stated that there might not be just one fueling option for fuelcell vehicles; manufacturers may sell some fuel cell vehicles with on-board hydrogenstorage and some with liquid fuels, depending on the regional market.

Many experts who favored pure hydrogen fuel cell vehicles acknowledged the storagechallenge, but felt that the benefits of hydrogen – in terms of a simpler vehicle,significant technological hurdles with on-board reformation, and, most importantly, thegoal of creating a clean, sustainable “hydrogen economy” – make pure hydrogen theultimate goal.

2.2 Ramping up the passenger vehicle market: near-term andmid-term fuels

The biggest open question right now is what will be the “fuel” used in the near to mid-term for fuel cell passenger vehicles. As has already been noted, most respondents saidthat pure hydrogen would be the best and most likely, fueling option in the long-term forfuel cell vehicles in both the transit and passenger arena. In addition, most feel transitbuses will use on-board hydrogen storage in the initial “ramp up” to commercializationand widespread market penetration. And, many noted that on-board hydrogen storagewould be the very near-term option for passenger cars, especially in the early

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demonstration phase. However, there is no industry agreement on what option is best forramping up the passenger vehicle market. This timeframe is defined as the “mid-term”.

Right now, there are many different paths being pursued by the various players in thismarket: on board methanol reformation, on board gasoline reformation, on board ethanolreformation, hydrogen made from water electrolysis etc. Not surprisingly, therespondent’s opinions on which option is the best often mirrored their own activities.However, there were some respondents – especially from the fuel cell and automotiveindustries – who emphasized that they were open to all possibilities.

Interviewees were asked for their opinions on all of the following fuels: gasoline,natural gas, methanol, ethanol, diesel, and synthetic fuels, as well as electrolysis. Theywere free to speak to these fuels’ viability as either an on-board reformate or an off-boardhydrogen feedstock, and they could speak to the near-, mid-, or long-term viability. Thissection will primarily cover their responses with respect to the near- and mid-termviability of these fuels for on-board reformation (or, with electrolysis, for hydrogenproduction). This section will also cover any comments made about the long-termviability of these options, although, as a practical matter, most experts felt that on boardhydrogen storage was the best long-term option, so not much was said about long-termreformation. For a discussion of these fuels’ suitability as feedstocks, see Section 2.3.1.

This section starts with a discussion of methanol and gasoline, the two fuels most oftencited by respondents as the likely near- to mid-term fuel choice (other than hydrogen,which, as noted, was cited as a likely very near-term choice for passenger cars). As aresult, the sections on methanol and gasoline are significantly longer and more in-depththan the discussions of ethanol, diesel, synthetic fuels or natural gas. This should not betaken as a commentary on the potential these fuels have for meeting the needs of on-board reformation. It is simply a reflection of the greater public attention paid to gas andmethanol, and to the wider group of fuel cell interests who are pursuing those twooptions. In the case of the other fuels, the most extensive comments came from one ortwo entities promoting the particular fuel.

Finally, this section includes a brief discussion of hydrogen as a mid-term fuel, as anumber of experts expressed skepticism that on-board reformation would occur at allbeyond a few demonstration vehicles.

2.2.1 MethanolOne of the biggest areas of disagreement was over the use of methanol as a source ofhydrogen. A majority of experts interviewed stated strong opinions either in favor of oragainst methanol, although there were some respondents who were relatively neutral.Three of the automakers said they would not consider using methanol for their fuel cellvehicles; one auto manufacturer strongly favors methanol as both a near and long-termoption; and two said that they would consider methanol as one of the viable fuel options.The energy suppliers also had strong views on methanol. Two expressed strongreservations about selling methanol; the third company interviewed indicated someconcern over methanol. Nevertheless, all three energy companies did say they would

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provide the market chose. There were also some strong arguments made in favor of andagainst, methanol by representatives of the alternative energy supplier world, and fuelcell technology companies, and the industry consultants. Finally, a number of expertssimply did not think that on board reformation of any kind was viable, and therefore didnot support the use of methanol (see below for more on the experts’ opinions regardingon board vs. off board reformation).

Ease of reformation and status of reformer technology: All respondents whoexpressed an opinion about methanol agreed that it is the easiest liquid fuel to reform onboard the vehicle. It was also widely noted that the methanol reformer technology isseveral years ahead of other on board reformation technologies, particularly gasreformers. Several experts said that, as a result, commercial introduction of fuel cellvehicles would happen sooner with on-board methanol reformation than it would withother liquid fuels. One expert speculated whether the concerns raised over methanol’sviability is being driven by a competitiveness over being “first to market”.

One automaker noted that it is only pure methanol that is easy to reform. If there are anycontaminants in the methanol (a likely scenario if methanol becomes widely usedaccording to this automaker), the reforming temperature will need to be raised, whichmeans that the ultimate methanol reformer will require the use of technology not toodifferent from a gasoline reformer. The automaker also noted that the transient responsetime for a methanol reformer is "slower" than a gasoline reformer, which means that alarger battery will be required to handle the need for quick acceleration.

Health and safety to humans: This is one of the areas about which the experts felt moststrongly, and where there was much disagreement. Three automakers, two energysuppliers, and several experts from fuel cell technology, storage technology, or hydrogengeneration technology companies expressed concerns over how safe methanol would bewhen handled by the public.

Methanol industry representatives, two fuel cell companies, an automaker, and anindustry analyst expressed equally strong opinions that methanol can be handles safelyand that pending safety concerned will be resolved. In particular, one methanol industryrepresentative said that the Indy Racing League has been using methanol in their racecarsfor nearly 30 years and according to him Indy officials state that the reason they usemethanol is for safety. It greatly reduces the risk of fire. He also stated that methanolcan be obtained from any scientific laboratory supply company in the United States andthat model airplane enthusiasts use methanol to power the engines of these small planes.His opinion is that methanol is already widely available to the public and just because itis placed in a pump does not mean that the public will be exposed to exponentially higherrisk.

Toxicity: This issue was raised by many of the interviewees, with many expressingconcerns that methanol is a classified toxin. One energy company discussed methanol atlength. This expert noted that methanol is a classified poison and that only one milliliterper kilogram of weight is a fatal dose. He, along with several other experts, noted that

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someone who swallows methanol will not throw up, unlike with gasoline where it willautomatically induce vomiting, thereby keeping it out of your system. He also noted thatmethanol is odorless, unlike gasoline. This expert said that, to deal with these issues, itwould be necessary to add an odorant and bitterant to methanol, but that these additivesmight make methanol harder to reform. An auto representative also made this point.This energy company expert also noted that methanol can be absorbed through the skinand pose a health threat this way. An industry consultant asserted that there have beencases of painters going blind after absorbing small amounts of methanol, while anotherindustry consultant commented that this issue would pose a serious problem in trying toperform maintenance on fuel cell vehicles. One automaker predicted that if methanolcame into widespread use, there would be an increase in the number of deaths due toinhalation or ingestion of vehicle fuel.

However, there were some equally strong dissenters on this view. Two automakers saidthey believe that the health safety issue can be successfully handled by the addition ofodorants and bitterants. One auto company and two representatives from the methanolindustry commented that all fuels have safety issues to be dealt with, and that methanolcan be made safe to handle. Two other auto companies also indicated that methanol’shandling and safety issues could be resolved. One said that, with proper rules andregulations, methanol can be safe for the public to use, while the other said it could behandled safely if used in transit or fleet applications where there is training and controlledfueling. One automaker and one fuel cell company noted that methanol is already usedby the public, for example, in window washer fluid, and is used by children with modelairplane kits.

Flame visibility: Another safety issue raised related to methanol’s flame. Whenmethanol burns, it has an invisible flame (during the daytime, at night the flame can beseen). Many respondents noted that that an additive would be necessary to give methanolflame luminosity, but one energy company said that if you add hydrocarbons to givemethanol a visible flame, you make reformation more difficult. Several respondentsnoted that all fuels have safety issues, and a methanol industry representative commentedthat there is actually a 90 % reduction in fires associated with methanol vehicles.

Liability: Several experts gave their opinion that methanol would not be likely tohappen because the energy and auto companies will be too concerned about liabilityissues surrounding the toxicity concerns. This opinion came from interviewees who arenot directly involved with the decision-making surrounding methanol: two of the industryanalysts, three fuel cell or hydrogen storage companies, and one hydrogen reformer.Their opinion was not necessarily that the safety issues could not be addressed, butsimply that energy and auto companies would resist selling methanol for fear of beingsued. One fuel cell company commented that, if the energy companies do not want tosell methanol, it would be very difficult for anyone else to fight them on it. Some of theindustry analysts also stated their opinion that methanol will not become the chosen fuelfor fuel cells because the energy companies are lining up against it. One industry analystsaid that, if any methanol-related deaths occurred, it could mean the end of the fuel cellvehicle effort.

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In contrast, a methanol company noted that three oil companies have developed allianceswith the methanol industry, indicating their willingness to work with methanol, and thatoil companies will proceed with methanol as a choice. Several energy company expertsdid say they would provide the fuel chosen by the marketplace.

Environmental safety: Several experts expressed strong concerns over the effects ofmethanol on the environment. One auto company noted that methanol is miscible withwater, so if it were spilled, it would spread more easily through the groundwater. Bycontrast, he noted, gasoline does not spread. An energy company also said there is a co-solvency problem with methanol, which would create an environmental hazard if retailgas stations were to carry both methanol and gasoline. This company said that, ifmethanol spills and mixes with gasoline, it would carry the gasoline farther than the gaswould travel on its own. One auto company also commented on this co-solvency effect.This company representative said that gas does not mix well with water, so gas leaks atretail stations do not travel far from the site, maybe just a 100-ft. radius. By contrast,methanol can carry gasoline ten times farther than this.

A methanol industry expert said that, while there are some concerns with the miscibilityof methanol, detailed investigations of this issue are underway and that a solution shouldbe available. This respondent also noted that methanol is readily biodegradable, whichmakes it less of an environmental hazard than gasoline.

Several experts said that the environmental and health safety issues would primarily be apublic relations problem. One regulatory agency said that methanol is viable for a smallnumber of vehicles, but that public perception would be an issue, especially in light of theMTBE problem. This expert, as well as some others, noted that methanol and MTBE arevery different substances, but that they could be associated in the public’s mind and thatthis would have a negative effect on the desirability of methanol for the transportationinfrastructure. One energy provider noted that if methanol were actually sold to thegeneral public as a transportation fuel, it would quickly become the centerpiece of yetanother group of class action lawsuits (like the recent Tobacco litigation) against anybodyand everybody profiting from the sale of methanol.

Overall, there was considerable disagreement over whether methanol’s health andenvironmental safety issues were resolvable or not. This is an issue that appears to needfurther discussion and study.

Infrastructure compatibility and cost: Another area where respondents voiced strong –and opposing – opinions was infrastructure. These strong opinions, perhaps notsurprisingly, were mainly from the automakers, energy providers and the methanolindustry, with some others weighing in as well.

At issue are how significant the changes of the current transportation fuel distribution anddispensing system would be and how much it might cost. Respondents agreed thatmethanol is more corrosive than gasoline and therefore would require different servicestation infrastructure than has been used for gasoline. Two of the automakers mentioned

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this issue as one reason for their opposition to methanol. One automaker said thatmethanol storage issues could be handled, just as we have learned to handle gas anddiesel storage, and that partnerships are already in place to deal with these issues. Oneautomaker also noted that in both industrialized and developing countries, large citiesstruggle with the problem of municipal waste disposal. Methanol produced from wastescan both help to mitigate the disposal problems and enhance air quality in mega-cities byuse in methanol fuel cell vehicles. Another automaker noted that methanol is morecaustic, but believes that methanol will be best used in fleets, where it will be easier todeal with this.

The most extensive commentary on this issue came from an energy provider and themethanol industry. One energy provider stated that it’s not just storage tanks that wouldhave to be changed, but also pipes, seals, and dispensing pumps. He said that it would benecessary to refurbish the system at best, or possibly replace it or build a newinfrastructure alongside but separate from current gas infrastructure and that it would bevery costly.

On the other side, a methanol industry representative said that methanol storage is not thesignificant problem it’s being made out to be. He noted that methanol can be stored incarbon steel tanks and is compatible with plastic. He also commented that gasolinepipeline standards were revised recently to make all new pipelines compatible withmethanol. A synthetic gas expert claimed that, while it is true that the new standards aremethanol compatible, very little new pipeline has been built in the U.S. since these newstandards were adopted.

A non-profit association representative also weighed in on this topic. He noted thatmethanol requires a double lined tank, and that some states, like California, alreadyrequire that their gasoline tanks be double-lined. He also said that stations could simplyplace an inner lining into a tank that is not double-walled to make it methanol compatible.An existing tank would just need to be cleaned out and checked to make sure its pipingand dispenser is compatible.

The cost of methanol: With regard to costs, a few experts cited specific cost estimates forretrofitting gas stations. A non-profit association expert estimated that methanol could bemade available for approximately $60,000 per station. An energy company expert notedabove estimated the costs to be between $50,000 and $100,000. One energy companyexpressed concern over whether anyone who made the investment in a methanolinfrastructure would get their return if methanol is to be used only as an interim step tohydrogen. One industry analyst also said that, if methanol will be just an interim step tohydrogen, it wouldn’t make sense because you’d have to switch the infrastructure twice.On the other side, a fuel cell company said that if methanol were just used during theearly introduction phase with fleets, the financial outlay would be limited and not be asmuch of an issue.

An auto company and two methanol industry representatives expressed their view that,because it’s a liquid fuel, methanol makes more sense than hydrogen for the passenger

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vehicle market even in the long run; therefore, any infrastructure investment would notjust be short term. The Auto Company noted that resolution of solid or gaseous hydrogenstorage issues is nowhere on the horizon and that methanol makes the best liquidhydrogen storage option. One expert from the methanol industry commented thathydrogen may eventually beat out methanol, but that methanol could have a successfulrun for 80 – 90 years before hydrogen becomes the dominant system. The othermethanol expert said that installing a hydrogen distribution infrastructure would cost inthe millions of dollars per station, as opposed to the tens of thousands for methanol. Healso stated that the amount of money oil companies will spend on removing sulfur fromgasoline is equal to the cost of putting methanol into one-third of retail stations in theU.S.; a non profit association expert also made this point.

Well to wheel efficiency: Several respondents raised the question of the life cycleefficiency of on board methanol reformation. The two automakers that strongly opposemethanol and two of the energy companies stated that, on a well to wheels basis,methanol’s efficiency is not very good. One automaker noted that there are losses relatedto multiple energy conversion steps – from the production of methanol from natural gas,the on-board production of hydrogen from methanol, the production of electricity in thefuel cell, and the conversion of electricity into mechanical power – and that this mademethanol a poor choice as compared to gasoline from an efficiency point of view. Oneenergy company said that methanol’s CO2 emissions are virtually identical to that ofgasoline; a hydrogen company, one who favors the use of methanol, and a hydrogengeneration company also said that CO2 emissions related to methanol use are not animprovement. One automaker said that methanol production efficiencies are expected toincrease with mass production technologies, whereas gasoline and diesel productionefficiencies are likely to decline with shifting toward unconventional oil reserves.Furthermore, the automaker noted methanol could be produced from wastes and biomassat potentially good efficiencies. In this context, methanol production is CO2-neutral andcould be potentially cost-effective.

Other experts felt that methanol’s efficiency was good – one industry analyst cited it asone of the benefits of on board methanol reformation, and two governmentrepresentatives agreed.

Refueling availability: Several experts also commented that, because methanol cannotbe immediately placed into the gasoline infrastructure, there will not be a large refuelingnetwork available for the first methanol fuel cell vehicles. One energy company said thatthere would be a serious time delay if methanol were chosen as the fuel of choice becausethe current gas infrastructure will not work with methanol. He stated that, in order formethanol fuel cell cars to sell, over ten percent of retail stations would have to dispensemethanol; perhaps as much as 25 to 50% would need to be methanol ready. Anotherenergy company also stated his belief that people will not adopt a technology that cannotbe refueled everywhere.

Long-term prospects as on-board reformate: There were a few experts who felt thaton-board reformation of methanol will be competitive with, or beat out, pure hydrogen as

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the long-term option for fuel cell vehicles. Two automakers and two methanol industryrepresentatives expressed this view. One methanol representative said that a widespread,retail distribution of gaseous hydrogen would never be viable, nor would the highpressure hydrogen storage needed to provide adequate vehicle range. Therefore, thisexpert asserted that methanol offered the best “hydrogen carrier” capability for the long-term. Two automakers felt that methanol will be an attractive long-term fuel because ofits handling properties. One noted that the direct methanol fuel cell could be the long-term fuel cell technology winner, making methanol the primary fuel cell fuel.

2.2.2 GasolineWhile the issue of gasoline as an on-board reformate did not provoke as strong a reactionas did methanol, there was no consensus among the interviewees with regard to itsviability for on-board reformation, at least for the near- to mid-term. The experts weresplit between those who thought it was a good (or the best) liquid fuel option and thosewho thought it faced too many technical hurdles or would not make sense on a well-to-wheels basis in comparison with simply using the gasoline in a hybrid vehicle. Amongthe automakers, there were two one who strongly favored gasoline – one saw it as viableonly with solid oxide fuel cells, not PEM; two who felt it had some potential in the mid-term, but not as the only liquid fuel option; one who was open to the possibility of anynear- to mid-term liquid reformate; and one who opposed all liquid fuel reformation,including gasoline.

Not surprisingly, all the energy companies favored gasoline, although some did so morevigorously than the others, and the methanol representatives opposed it. Three fuel cellcompanies feel gasoline has potential, while three others did not. Most of the hydrogenproviders or hydrogen generation companies did not support gasoline. Finally, oneindustry consultant and one government agency believe that it has potential, while twoother industry experts and two government representatives did not.

Overall, the sense was that, while not arousing the level of passion that methanol does,gasoline’s future as an on-board reformate seems unclear.

Ease of reformation and status of reformer technology: This issue received the mostcomment, with experts generally agreeing that gasoline is significantly more difficult toreform than methanol. Even those who favored gasoline cited reformation as a technicalchallenge. The experts noted that fuel cells will require a very different gasoline productthan is available today, since fuel cells are easily poisoned by impurities such as sulfurand aromatics. Some experts noted that the trend is in the direction of cleaner fuelalready, so this would dovetail with the need for a cleaner “fuel cell gas”. Others whoopposed gasoline, including two methanol representatives, stated that the gasoline sulfurwill have to be almost zero, much lower than is currently being proposed, and that it isvery expensive to “remove the last bits of sulfur.” Other simply asked “why bother” ifgasoline is only a short-term option and there are other, preferred fueling options. A fewexperts commented that it simply makes more sense to use gasoline in hybrids.

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Many interviewees noted that high temperatures are needed to break the carbon-carbonbonds in gasoline, and some stated that high temperature reformation is a big technicalhurdle (also discussed under “Efficiency” below).

There was general agreement among the experts that gasoline reformer technology isseveral years behind that of methanol reformers. Therefore, many noted, if gasoline isthe chosen liquid fuel, there will be a delay in the introduction of commercially viablefuel cell cars. Various estimates of the delay were given, from two years to five or sixyears. For those that oppose gasoline, this was cited as drawback for gasoline. For thosethat supported it, they cited other “pluses” as outweighing this concern.

One auto company believes that, because of the technical issues, the only viable way toreform gasoline on-board is with a solid oxide fuel cell (SOFC). This company statesthat SOFCs are not as sensitive to impurities as PEM, although they noted that manyissues need more work, including the issue of thermal management.

Another automaker believes that, due to these various technical challenges, it willprobably be difficult to develop a gasoline fuel cell car without any compromises for theconsumer.

Finally, there were some experts who are opposed to any on-board reformation, includinggasoline. One fuel cell company said simply that “it makes no sense to put an oil refineryon a car. Another fuel cell company expert stated his belief that auto companies do notwant to be responsible for a power plant on their vehicles. This expert said that concernsover liability and the need for repair of a complicated reformation system would preventon-board gas reformation from becoming a widespread commercial reality.

Infrastructure and consumer familiarity: The availability of gasoline and itsfamiliarity to the consumer were naturally most often cited as biggest advantages. Mostof the arguments put forth on this subject are self-evident, and do not require lengthydiscussion here. Even those who opposed gasoline noted that it carries the advantage ofexisting infrastructure and widespread availability. Indeed, much of the “methanol orgasoline” debate came down to those who emphasized the reformer technology hurdlesover the infrastructure issue, and those who feel the infrastructure advantages outweighthe technological challenges. For example, one energy company said that, in order forfuel cell cars to succeed, there must be significant refueling station availability for theconsumer, and that this would favor gasoline over methanol.

Another comment made by many gasoline supporters was that using gasoline as the near-and mid-term fuel would mean making only one infrastructure change, from gasoline tohydrogen. A few experts who were against gasoline “flipped” this argument. They notedthat, if the industry selects gasoline as the on-board choice, the drive to move beyond thatwill be lost. These experts felt that would be detrimental to the long-term effort todevelop a hydrogen-based transportation system. An energy company also noted that, ifgasoline reformation is made commercially viable, it is likely to dominate.

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Health and safety to humans and environmental safety: There were not manycomments made about environmental and safety issues for gasoline. Basically, this wasbecause gasoline is a familiar commodity, and its issues are well-understood. There areknown health and safety issues, such as toxicity, inflammability, environmentaldegradation, etc. There were some comments made about gasoline came duringdiscussion of, and comparisons with, methanol, and these are covered in the methanolsection.

Emissions and efficiency: Several experts mentioned emissions as a possible concernwith gasoline, including two automakers, one energy provider, two methanolrepresentatives, two fuel cell providers, one industry analyst, and one governmentagency. The industry analyst said that gasoline is the most difficult liquid reformationoption because it will not meet California’s ZEV standards. A methanol representativesaid that gas reformation has serious problems with carbon monoxide and soot emissions.However, one energy company said that its reformer technology would have betteremissions than other gasoline reformers; this company asserted that its technology wouldmeet or exceed SULEV standards and would not produce any NOx due to the lowtemperature at which the reformer operates.

There were also several experts who cited efficiency as a problem for gasolinereformation. They noted that the need for high temperatures make the reformationprocess very inefficient. One government agency said gasoline is simply not an optionbecause the whole well-to-wheels process of getting the petroleum, refining it, crackingit, and then reforming it is too inefficient. Some experts questioned why we would evenbother to reform gasoline when it makes more sense on a well-to-wheels basis just to useit in a hybrid-electric vehicle.

2.2.3 EthanolThe majority of the interviewees do not think that ethanol is a strong competitor againstmethanol and gasoline as an on-board reformate. However, quite a few experts did saythat ethanol would be viable for certain regions where ethanol production is high, such asBrazil. Of the automakers, there was one who supported its use in certain geographicareas and one who was open to it; the others did not favor it, although they did notexpress strong opinions on it. An ethanol industry representative felt that ethanol couldbe more viable than gasoline or methanol and would provide significant benefits as arenewable fuel source for fuel cells.

On the issue of reformation, the experts gave contradicting opinions on the ease ofreforming ethanol -- whether the respondent said ethanol was easy or hard to reformdepended partly on which other liquid fuel he or she was comparing it to. The automakerwho liked ethanol commented that it is easier to reform than gasoline, as did a methanolrepresentative and the ethanol industry expert. Several other experts stated that ethanol ishard to reform, with one automaker saying specifically that it was harder than methanol.An energy company said it is similar to gasoline, with the same emissions and hightemperature reformation concerns.

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An ethanol industry representative noted that a multifuel processor has been developedthat reforms ethanol with higher efficiencies and lower emissions than gasoline.However, several experts questioned whether ethanol reformation was viable on an totalenergy efficiency basis. One energy company said that ethanol reformation is a highlyenergy intensive process, with one liter of fossil fuel (fertilizer) producing one liter ofethanol with only a two-thirds energy density. An industry consultant also said that itsefficiency is poor due to the carbon-carbon bonds. An alternative energy supplier alsocommented that it takes more energy to produce ethanol than ethanol provides.

One automaker who supports ethanol noted that it can be made from renewable sourcesand woody biomass, which would make it part of a sustainable cycle. The ethanolrepresentative also noted that ethanol could provide a new market for agriculturalproducts, and boost the economy of rural areas, since it uses agricultural, waste, andbiomass feedstocks.

Two experts – an energy company and a hydrogen provider -- said that there is a debateover ethanol’s CO2 emissions, with the hydrogen provider noting that it may have higherCO2 emissions from methanol if it is made from corn grown with fertilizer.

The ethanol representative also noted that ethanol is less toxic than either methanol orgasoline, and would help reduce dependence on imported energy supplies. Thisrepresentative said that ethanol would be easy to make available because it can bedistributed through existing infrastructure.

Finally, a significant number of experts mentioned cost as a determining factor inethanol’s viability. Many e noted that the price of ethanol is supported by subsidies inthe United States, and that ethanol will only be viable in places where there is this kind ofpolitical support.

2.2.4 Synthetic FuelsOpinions of the viability of synthetic, or gas-to-liquid, fuels varied, with five expertsgiving it positive reviews, four opposing its use, and roughly eight citing both pros andcons for its use as an on-board reformate. While most respondents did not specificallymention whether they saw synthetic fuels as near-, mid-, or long-term prospects, theygenerally seemed to assume it was a mid- to long-term fuel. Many experts cited its valueas a fuel that would be virtually free of sulfur and aromatics, thereby avoiding theconcern of poisoning the fuel cell stack. A representative of a synthetic fuel companygave his opinion that the likely near-term fueling choice would a low-sulfur fuel, whichcould be either gasoline or synthetic fuel. This expert noted that synthetic fuels areattractive because they offer the option of high hydrogen saturation. However, severalother experts, including one automaker and two energy providers, said that it is just aseasy to make a low sulfur gas, and that option would be cheaper than a gas-to-liquid(GTL) fuel. Other experts expressed doubts about the economic viability of syntheticfuels. Specifically, a hydrogen generator company and three energy companies assertedthat GTLs are only cost competitive when oil prices are quite high.

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Several experts said that synthetic fuels are useful as a means to carry hydrogen from thenatural gas wellhead to the retail stations, because a liquid fuel is easier to transport thangaseous hydrogen. The synthetic gas industry representative cited this as an advantage,and two companies that support the use of methanol said that synthetic fuels would be thesecond best means to carry hydrogen. In contrast, several experts questioned the sense ofadding an extra step to the process of turning natural gas into hydrogen. A fuel cellcompany and an automaker said that this was an unnecessary and inefficient way toprocess natural gas or gasoline.

2.2.5 Diesel and Natural GasDiesel: The vast majority of expert said that diesel is the hardest of all the liquid fuels toreform and therefore was not commercially viable. Most said that since gasoline issomewhat easier to reform, it would be hard to make a case for reforming diesel instead.Many experts commented that significant problem with diesel is the sulfur. One fuel cellcompany said that they had experience with reforming diesel and found simply toodifficult to get rid of the sulfur. A government agency noted that reforming diesel is notvery economical either.

Several experts noted that the military would have an interest in using diesel as an on-board reformate, and that military applications wouldn’t be subject to the same cost andemissions goals that drive the development of mainstream fuel cell technology. Onehydrogen generation company said that diesel reformation may also be desirable inEurope, where diesel ICEs are common.

Natural gas: Most experts agreed that it does not make sense to use natural gas on-boardthe vehicle. Many commented that it brings the “worst of both worlds” of hydrogenstorage and on-board reformation. They noted that, if we are going to deal with the on-board storage of compressed gas, it would be hydrogen, not natural gas. And, thereformation of natural gas poses many of the same problem that gasoline reformationdoes in terms of high temperature reformation. However, many noted that currentcommercial hydrogen is currently made primarily from natural gas, and they favored thecontinued use of CNG as a hydrogen feedstock. This is discussed in Sect. 5.1.

2.2.6 ElectrolysisThe majority of experts interviewed feel that electrolysis has potential as a hydrogensource. Those that strongly supported electrolysis were one hydrogen provider, onehydrogen storage company, three government representatives, and, naturally, the twocompanies that market electrolyser technology. Many others said only that electrolysishad potential, although some issues have yet to be resolved, and three other experts said itwould have niche applications. There were only three respondents who discounted theviability of electrolysis: one automaker, one hydrogen generation company, and oneindustry analyst. As a note, experts often switched between discussing centralized, retailstation electrolysis and home electrolysis; we will try to clarify which is being discussedwhen possible.

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The biggest concern cited, including by those who favored electrolysis, was cost. Twoautomakers and three energy companies cited this as the key issue to be resolved. Oneenergy company said that electrolysis is currently more expensive than making hydrogenfrom natural gas, which he viewed as the primary competitor for making hydrogen. Arepresentative of the electrolysis industry said that electrolysis is currently the most cost-effective for refueling small, low density fleets, but that, as the fuel cell vehicles reachhigh volumes, hydrogen produced by steam reformation would be more economical. Onefuel cell company said it could be cost effective now in areas where electricity is cheap –for example, where the majority of electricity is inexpensive hydropower. Another fuelcell company made a similar observation, stating that electrolysis will only have nicheapplications in these areas. An electrolysis representative said that home electrolysiswould become more cost-effective with utility deregulation.

Many experts cited the benefits of being able to generate hydrogen from renewables suchas solar or wind power. One energy company called electrolysis the “dream cycle” forthis reason, although this expert felt the economics were a long way from being viable.Others also cited electrolysis from renewables as the ideal long-term solution, includingone hydrogen company, another energy company, two fuel cell companies and threegovernment agencies. One fuel cell company was very enthusiastic, saying thatelectrolysis is the best way to go and that hydrogen produced from solar would be thebest, most widely applicable fueling solution. Many of these experts did say thatelectrolysis from renewables is a very long-term prospect.

Some experts said that the home electrolysis units would be most viable, including twoautomakers. An electrolysis company said that home electrolysis offered the option for adecentralized, distributed hydrogen generation system. This expert said that fuel cellscould bypass the issue of developing a new retail refueling infrastructure.

There were some experts who questioned the efficiency of converting electricity tohydrogen. An automaker and a fuel cell company said that using one energy source tocreate another doesn’t make sense. Other experts, including a methanol representativeand two energy companies, said it would only make sense in the long-term withrenewables.

One industry analyst said that emissions from electrolysis would be too high to make itviable. This analyst asserted that, unless the electricity is produced by renewable sources,greenhouse gas emissions from electrolysis would be very high. For example, this expertnoted, the U.S. grid is now more than 50% coal-based, so electrolysis on the U.S. gridwould have a negative greenhouse gas emission impact. However, another expertcommented that certain regions that aren’t heavily based on coal could look very goodwith regard to greenhouse gases.

2.3 On-board reformation: Is it the right direction?Many experts said that on-board reformation would never be viable beyond the fewprototype and demonstration vehicles being introduced now and over the next severalyears. These experts believe that on-board hydrogen will always be the primary fueling

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choice. These experts generally felt that the technological hurdles to any of the possibleliquid fuel reformates are too great to make on-board reformation commercially viable.One fuel cell company said that on board reformation would cause the auto companiesliability and repair concerns, making it an undesirable option. One automaker said it wasunlikely that a fuel cell car using an on-board reformer could fully satisfy consumerdemands and be successful in the market. The hydrogen storage representative alsoasserted that hydrogen storage issues would be resolved, leading to pure hydrogenvehicles with sufficient range to succeed in the market. This expert did feel that this wasnot a near-term prospect, and stated that fuel cell vehicle commercialization is farther offthan many in the industry are claiming.

One government agency feels there is an important connection between the developmentof a viable pure hydrogen fuel cell system and support of fuel cell transit vehicles. Iftransit vehicles, including federal and state government and private companies, weredeployed in 2004 to 2010, hydrogen storage would have been demonstrated withcompressed hydrogen or perhaps hydrides, and the infrastructure costs would be reducedsufficiently to be applicable to the mass market. This government representativesupports this idea and feels that off-board reforming has significant advantages, includingbeing technologically simpler with efficient fuel cells with less catalyst requirements.Further, this government representative thinks that this idea would let fuel suppliers payfor the infrastructure and get a rate of return, thereby not burdening the public with thosecosts with very inefficient utilization of the reformer. This would also enhance fuelflexibility by putting the burden on the fuel supplier at his depot, and allowing the fuelsupplier to determine whether to derive hydrogen from stranded gas or coal (in SoutheastAsia, for example) and natural gas (in the U.S. and Europe) etc. This would enhanceeverybody's ability to play by making business decisions that the companies can controlrather than relying on the public.

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3.0 MARKET DEVELOPMENT

3.1 Transit market will develop firstOne issue that respondents generally agreed upon was the development of the transitmarket vs. the passenger vehicle market. Most respondents feel that fuel cells willcapture a significant initial market share sooner in the transit market than in the passengervehicle market.

Respondents were asked when fuel cells would be able to capture a significant initialmarket share of the transit and passenger vehicle markets – for example, 5% of eachmarket, respectively. The question left it to the respondent to speak to the global market,or to the U.S., European, or Japanese markets, which would seem to be the most likelyfirst markets for fuel cells as they have the most research and demonstration activitiesunderway. Five percent of the transit market is a significantly different amount than fivepercent of the passenger vehicle market. For example, in the U.S., there areapproximately 5,000 new buses sold each year; five percent of this is 250. By contrast,the passenger vehicle market in the U.S. sees 17 million new vehicles sold in a year. Fivepercent of this market is 850,000.

All respondents think that fuel cells will be commercially viable in the transit marketbefore they are in the passenger vehicle market, although respondents vary on howoptimistic they are about the speed of this market development. A majority predicts thatfuel cell transit vehicles might reach 5% of the market by 2008 - 2010. This view wasshared across many categories of fuel cell stakeholders: one industrial supplier, a stateregulatory agency, two fuel cell companies, two hydrogen reformer/generationcompanies and a transit agency.

There were a few respondents who are more optimistic, including two automobilecompanies who predict the transit market could hit 5% penetration as early as 2005, anenergy company who predicts 2006, and a fuel cell/hydrogen generation company whopredicts 2005 – 2007.

Why did respondents think that fuel cells would reach a significant share of the transitmarket before they would in the passenger market? There are several reasons for thisprediction. The first is the issue of sheer numbers, as noted above. Using the U.S. as theexample, it will simply be quicker to get to annual production of 500 vehicles (for transit)than to reach production of 850,000 (for passenger vehicles).

Respondents also think it will be easier to introduce fuel cells into the transit market for avariety of reasons including infrastructure, cost, and integration of the fuel cell onto thevehicle platform, government subsidy and regulatory drivers. These reasons arediscussed in Sect. 2.2.2.

It is interesting to see the consistency surrounding respondents’ selection of a specificdate for fuel cell penetration of the transit market. Since all predictions are highly

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speculative, it may be telling that respondents all saw it happening somewhere within afive-year timeframe: 2005 – 2010. Some respondents cited specific drivers for thesedates. For example, several experts, including a government agency, noted thatCalifornia is requiring that 15% of new buses be zero emission by 2008. Since theCalifornia bus market is a significant percentage of the national market, they believe thiswill have a significant impact in developing the national market. But overall,respondents did not cite such specific reasons for selecting a particular timeframe formarket penetration; nevertheless, there was overall consensus that it may happen by2010. This consensus may indicate that there is no serious technological “show-stoppers” to fuel cell transit vehicles. Since respondents from all categories agreed –from fuel cell companies, vehicle manufacturers, regulatory agencies, fuel providers – itmay indicate that the technological issues are widely known and seen to be resolved orresolvable in the near future, particularly for fleet vehicles.

3.1.1 The transit market will be easier to develop than the passengermarket

The second area of consensus was on the question of whether there would be anydifference between the way the transit market develops vs. the passenger market. Ingeneral, these experts agreed that it would be easier to introduce fuel cells into the transitmarket than into the passenger market -- which is why they predicted fuel cells capturinga significant market share in transit first. However, even though the transit arena isconsidered easier for initial introduction, some doubted whether it would be a sustainabledriver for the market of fuel cells because of the low volume numbers. The light dutyvehicle market is where the large volume producing numbers are, therefore lower priceproducing numbers.

Although this question did not specify whether “market” referred to the global fleet, or tothe U.S., Europe or Asia, in general, respondents chose to apply this question to the U.S.market. Also, in framing this question, it was generally assumed that ‘transit” referred tobuses; however, several respondents commented that it was really the more generalcategory of “fleet” applications, of which ‘transit” is a subset, that would happen first.They referred to other fleet applications such as delivery vans, taxis and other urbanfleets as possible entry markets for fuel cells.

The reasons that the experts felt the transit market will be easier than passenger market isas follows;

Fuel choice: Many respondents said that direct compressed hydrogen is clearly the fuelthat will be used for heavy-duty transit applications. The lack of a debate or controversyover which fuel to use will speed the introduction of fuel cell buses. Conversely, manyrespondents seemed to feel that the uncertainty surrounding the fuel choice for passengervehicles would delay the development of this market. In stating that the use of directhydrogen gives transit vehicles an advantage over passenger vehicles, the respondents areessentially acknowledging that direct hydrogen is the easiest fuel for the fuel cell toprocess, that this technology is farther along in development, and, therefore, that directhydrogen fuel cell vehicles will happen first.

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Transit infrastructure: Almost all respondents pointed out that another advantage fortransit is the fueling infrastructure. While direct hydrogen is preferred by the fuel cell,the infrastructure is not widely developed and is not familiar to consumers. This will notas much of an issue for transit vehicles because they are centrally fueled. It will only benecessary to install hydrogen fueling at central bus depots; this constitutes a fairly smallnumber of stations compared to what would be necessary to fill the needs of thepassenger market. Also, buses are refueled and maintained by a skilled, dedicated staffwho can be trained to safely dispense compressed hydrogen. Developing a hydrogensystem that can be used safely by the general public is a more difficult task -- whereas, inthe transit vehicle market it is a much less onerous task. Transit operators can be trainedon how to deal with hydrogen, whereas the general public has to have a seamlessinfrastructure experience similar or more beneficial than gasoline for the public to beinterested.

Vehicle integration: Many respondents noted that a large transit vehicle offers betterpackaging options with regard to the fuel cell and hydrogen storage system. Fuel cellsystems are still in development, and can have weight and size penalties as compared tointernal combustion engine systems. Many respondents commented that this is less of anissue with the large transit bus applications, where there is more space to fit the fuel cellas well as the compressed hydrogen tanks, which need to be quite large at this point toallow the vehicle adequate driving range. In addition, the added weight of the fuel celland hydrogen storage is less of an issue on heavy transit buses than with passengervehicles. Recent prototype light duty vehicles have shown though that packaging andinfrastructure can be addressed in a smaller vehicle.

Cost: Many respondents noted that the initial high cost of fuel cell vehicles would beless of an issue for transit applications because bus purchases are subsidized. Oneautomaker noted that the “payback” time for buses is shorter than for passenger vehiclesbecause they have an income. One regulatory agency commented that, in some cases,about 80% of the cost of a bus is federally subsidized, so they believe transit agencies canmore easily bear the extra cost of a fuel cell powered vehicle. The passenger vehiclemarket, it was widely noted, is quite price sensitive. Several respondents, including oneautomaker, noted that consumers have not shown any inclination to pay more for “green”technology.

Societal vs. market drivers: Many respondents stated that the transit market is drivenmore by societal concerns, such as air pollution, noise pollution, and other environmentalissues, than the passenger market is and that this gives an advantage to fuel cells. Transitagencies are under more pressure to consider the environmental and societal impact oftheir vehicles, and fuel cells will seem more attractive as an option for dealing with airpollution, toxins, greenhouse gases, and noise pollution.

Regulatory drivers: This category is related to the issue of societal drivers. Severalexperts commented that, for buses that operate in cities, fuel cells would be particularlyattractive because urban governments are banning or limiting gasoline cars in their city

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centers. One automaker noted that this could be particularly important in driving theEuropean market.

While most respondents thought that infrastructure for transit will make it easier todevelop this market, some also noted that the transit market alone will not drive down thecosts of fuel cell systems because the fleet numbers are too low. At 5000 new vehicles ayear in the U.S., the transit market won’t provide the great necessary economies-of-scaleto make the cost of fuel cell systems competitive with internal combustion engines.Therefore, many experts feel that the early transit applications will be valuable primarilyas test beds for this new technology, not as market drivers. An industry consultantcommented that it will be best to put the early fuel cell buses into difficult driving routesto derive the most benefit out of these early “test beds”. This knowledge will beapplicable to fuel cell systems for passenger vehicles as well as transit.

Whatever the timeframe is for fuel cells to gainsignificant volumes of vehicles for either the transit orpassenger sectors, it is dependent upon consumeracceptance and mandates. Penetration rate is afunction of how well the public receives the newtechnology. Methanol proponents say that a few fuelcell vehicles need to be put on the road to gauge

consumer confidence first and that an introduction into smaller markets will happeninitially. A government agency mentions that depending on regulators and how firmlythe ZEV mandate is upheld, fuel cells can happen sooner or later than predicted.

3.2 Timeframe for passenger market penetrationAs for passenger vehicles, there is less consensus on when fuel cells might achieve asignificant market share. Respondents agreed it would take longer than for transit andmost seemed to agree that five- percent penetration was at least ten years away, but actualpredictions varied. Of the auto manufacturers, most predicted it would happen after2010. One automaker predicted between 2010 and 2015; one said it would be between2010 and 2020; and one said simply that it would be after 2010. One automaker did notmake any specific prediction, but said that, following commercial introduction of fuel cellvehicles, it would probably take a five to eight years starting phase to make the publicaware of the advantages of fuel cell vehicles.

As for the other respondents, two energy companies predicted that it would be sometimeafter 2010, as did an alternative fuel company and two fuel cell companies. Others feelit is further away: a hydrogen supplier and a hydrogen generation technology companyfeel that it will happen closer to 2020, and an alternative fuel company said it will be farpast 2010. A regulatory agency was one of the few who thought it might happen earlierthan 2010; this respondent predicted it could happen around 2008 – 2010.

Partnership is a challenge. Noenergy company or auto companycan introduce the fuel cell byitself.

-- AUTOMOBILE COMPANY

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There was one dissenting opinion on the introduction of fuel cells. A technologycompany commented that, whenever people predict that a technology is ten years away, itmeans that it hasn’t been invented yet.

The reasons given for why the passenger market would take longer revolved largelyaround the issue of fuel selection, infrastructure, and cost. These are discussed in detailbelow.

3.3 What is driving the fuel cell market?Many varying opinions arise from the question concerning the most important reason fuelcells for transportation applications will happen. Respondents choose from a list ofdrivers that includes global warming, criteria air pollutants, global oil availability, and oilprice increase, or add their own reason.

Criteria air pollutants is an important driver because the fuel cell can be a zeroemissions vehicle, depending on the source of hydrogen. A transit agency feels this is thenumber one issue, especially with the politics in California for the ZEV mandate. Agovernment agency and a methanol proponent says it will be an early reason becauseautomobile companies are searching for technologies to meet the ZEV mandate and fuelcells are a solution. In urban areas air pollution is particularly acute. A technologycompany mentions a report that finds many sick days, health problems, and deaths aredue to air pollution and billions of dollars are spent on health care because of airpollution. Air pollution is an immediate issue and will be an initial driver for fuel cellsfor transportation. Fuel cells do not emit the small particulate that gasoline and dieselengines do, therefore they will be desired as more is learned about the health effects ofparticulate.

A few respondents do not think criteria air pollutants are an important reason fuel cellswill happen. A fuel cell company says that since many people smoke they must notperceive air pollution as an important issue. Another fuel cell company agrees airpollution may not be a driver for fuel cells, but for a different reason, because the internalcombustion engine is continually becoming cleaner.

Global warming, or climate change, was one of the key issues experts believed fuel cellshave advantage if the well to wheels efficiency and the hydrogen generation sourcereduces greenhouse gas emissions. A fuel cell consultant feels that although fuel cellswill not necessarily be particularly energy efficient initially, they have potential. Agovernment agency thinks that lately climate change has had a greater consensus andmore automobile and oil companies are backing off initial participation in reducinggreenhouse gas emissions. One automaker said that fuel cell electric vehicles could usevaluable fuels from renewable and CO2-neutral resources most efficiently. Hence, fuelcell vehicles powered by "green" fuels can contribute to achieving CO2-reduction targetsand mitigate climate change.

Contrary to the previous opinions, one automobile company makes the argument thatglobal warming and carbon dioxide cannot be scientifically linked. A synthetic fuel

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provider and fuel cell consultant comment that on a well-to-wheels basis fuel cells do notcompete with diesel hybrids or diesel internal combustion engines for reductions inclimate change emissions. Others, like two technology companies and a transit agencyjust do not think climate change is as big an issue as criteria air pollutants.

Oil availability and price increase can be grouped together with concepts of energydiversity and security, as many respondents do. A government agency says fuel cells canuse indigenous sources of energy, helping energy security. Three automobilemanufactures mention ideas of fuel diversity. Fuel cells offer fuel flexibility, able tooperate on fuels that are not oil-based. Renewable fuels are even an option. They havethe potential to be a sustainable transportation solution. Many experts stated that thelong- term future of oil is unclear. Some oil companies say there is enough oil for thenext 280 years while others say oil production will peak soon and quickly drop in globalsupply as developing countries expand their transportation markets. Issues concerning oilavailability will help move fuel cells along. A methanol proponent comments high oilprices might motivate Congress to pass more legislation. Hydrogen fuel source pricescurrently largely depend on oil prices, adds a hydrogen provider, as most industrialhydrogen is reformed at the wellhead. As oil becomes more expensive, natural gas andelectricity become more expensive. A transit agency says oil price increase is importantbecause when prices reach over $2.35 a gallon, the issue receives a lot of public attention.A fuel cell consultant thinks oil will be available, but it will be too costly.

An automobile manufacturer is confident there is plenty of oil in the world in the nearterm. Two energy providers also say oil is not an issue. The reserves will not disappearovernight. One expert said that production might peak around 2020 but then slowlydecline. It will not be a driver for at least 20 years. Energy suppliers will move todifferent energy sources like natural gas before all the oil becomes a scarce commodity,so there is no issue with energy security, according to one expert. Many people quotedthe “the Stone Age did not end because of a lack of stones” quote as an analogy that anoil shortage would not be a driver. A synthetic fuel company says there will not be an oilshortage, just a shortage of clean oil that is low in sulfur and high in hydrogen. This isstill not a problem though because they feel there will be a transition from regular oil-based fuels to synthetic fuels. A transit agency says there are alternative energy sourcesavailable, for example a 50 or 60 year supply of natural gas in the United States. In termsof price increases they might spur some emotional responses. High prices are onlytemporary according to many energy providers. The prices are volatile and independentof logic says a fuel cell consultant. A technology company feels that oil is not a bigproblem because no one is going to let things get so out of balance that it becomes anissue. It is extremely unlikely oil will run low and prices will quadruple anytime soonaccording to many experts.

In addition to the four possible fuel cell drivers that respondents could choose from, someadded their own. An automobile company, two energy companies, and a fuel celltechnology company say a reason for fuel cells will happen is consumer preference or themarket. Many responded that the fuel cell vehicle needs to be superior, offered for agood price with new benefits like good acceleration, longevity, and accessories, not just

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environmental benefits. If fuel cells are not accepted, no amount of regulation will makeit succeed. Noise pollution is an additional driver. A technology company says adominant source of noise pollution in cities is the internal combustion engine. Adifferent technology company feels only science and technology will make fuel cellshappen and that fuel cells have been around for a long time and mass produced fuel cellvehicles have not happened yet. Once a good fuel cell vehicle that is transparent toconsumers is developed things will start nucleating according to many experts. Aconsultant feels the most important reason fuel cells will happen is profitability. Fuel cellcost can come down a lot while the internal combustion engine's cost curve has run outsince it has been around so long. Fuel cells are one factor driving consolidation inautomobile companies, helping them survive. A technology company makes a commentthat fuel cells will happen because of deregulation, not regulation. Deregulation concernsstationary applications, but they feel fuel cells will happen first in the stationary market.This will then allow money to be put back into research and development oftransportation fuel cells, according to one expert. Though many experts thought thedevelopment path and technology choices between the transportation fuel cell and thestationary fuel cell were so divergent that there were little cross platform benefits.

An energy provider, a fuel cell consultant, a fuel cell council, and a government agencysay there are different drivers in different areas of the world. Europe and Japan are moreconcerned with climate change issues and because gasoline prices are very high, there isa strong consumer pull for efficient vehicles, and there are international agreements toreduce carbon dioxide emissions such as the Kyoto treaty. Criteria air pollutants are alarger issue in the United States because of mandates like ZEV and because of the currentUS Congress lack of action on Kyoto.

Only two experts feel there is only one-reason fuel cells will happen. A technologycompany says fuel cells will only happen because of advances in science and technologyand a consultant states that the primary driver is profitability. All other respondentseither name the most important reason but give secondary drivers, or say all reasons areimportant. An automobile maker says that many reasons for fuel cells are not necessarilyall drivers, but they are still “influencers”. A technology company says all are importantbut not equally weighted. A methanol provider comments that an attractive aspect of thefuel cell is that they can achieve many goals at once. An environmental group says fuelcells will not be successful if they do not address all of the issues: of global warming,criteria air pollutants, oil price and availability. For each individual situation there arecheaper and easier strategies. No driver stands alone. There is a confluence of drivers,says a fuel cell consultant. Fuel cells for transportation will come about for a complexcombination of events according to many experts.

3.4 Is hybrid technology a transitional or long-term technology?An area of disagreement concerns whether hybrid electric vehicles will be an interim stepto fuel cells or a long-term technology. Experts fall into four categories in theirresponses. Some experts are uncertain about the future of hybrids. Some agree thathybrids will be a long-term solution while a larger number of respondents feel they are

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just an interim step. Another response is that hybrid electric vehicles will be both aninterim step and a long-term technology.

Hybrids are only an interim step: Most respondents said that hybrid electric vehiclesare an interim step to fuel cells. Many said that hybrid vehicles are just a passing phasebecause they can help fuel cells emerge. Hybrids, therefore, make a good transitiontechnology. They allow time for the development of the electric drive train and for thegeneral public to get accustomed to an electric propulsion system. Current hybrids withinternal combustion engines and batteries could be the start of an evolution to fuel cellvehicles. After internal combustion engine hybrids there could be a larger contributionfrom the electric system and less from the ICE. Then, a fuel cell could replace theinternal combustion engine. Some companies are presently looking into hybrid fuel cellswhere the battery could help improve the performance of pure fuel cells systems. Thebattery can be used for cold start-ups, as a device for storing regenerative braking, andadditional acceleration. The final step in the vehicle evolution according to some is purefuel cells.

Fuel cells vehicles will be superior to hybrids: Another reason hybrid electric vehiclesare just an interim step is because fuel cells have more benefits. Once fuel cells emergethey will be preferred over hybrid electric vehicles. Hybrids are more expensive thanfuel cells fundamentally in mass production. They are more complicated than theyshould be. The two different propulsion systems in hybrid vehicles require morecontrollers and therefore more money to manufacture. Automobile companies are losingmoney on the hybrid vehicles they produce and the losses are not sustainable according tomany. Depending on the driving conditions a hybrid vehicle may not be advantageous,according to some interviewees. Hybrids are beneficial in city driving because stop andgo traffic makes use of the battery and recovery systems. They are less efficient inhighway driving. Therefore, the concept of the hybrid is only advantageous in specialapplications and will be only a minor part of the market according to some experts.Hybrids still use fossil fuels and cannot meet the requirements of the entire newlyreformulated ZEV mandate. Regulators may not allow a petroleum-based fuel to be partof a clean technology.

Many of the experts who believe hybrids are an interim step add qualifiers to theirresponse. Hybrid electric vehicles will be an interim technology to fuel cells but thelength of their run depends on a number of factors. An automobile manufacturer says theinterim step will last 5 to 10 years and a technology company predicts 15 to 20 years.The hybrid's environmental performance is also a factor. Hybrid electric vehicles couldclosely compare to fuel cells in terms of emissions, efficiency and economics, as a recentMIT study “On The Road in 2020” analyzed, depending on the fuel cell reformation fuelchoice and the hybrid APU fuel choice and emissions. Another consideration is the fuelcell's commercial timing and infrastructure development. An automobile manufacturercomments that politics and the vested interests of industry to keep internal combustionengines in use plays a role. The major factor is how well fuel cells compare to hybridsand ICEs and customer acceptance.

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The future is uncertain. An energy provider, a fuel cell technology consulting firm, anda transit agency all agree that at this point in time it is unclear how hybrid vehicletechnology will play out. Hybrids could displace fuel cells and be a long-term solution orhybrids could help fuel cell vehicles develop and be an interim step. Hybrid electricvehicles are appealing because they have good fuel economy and reduced emissionscompared to traditional internal combustion engines. The present emissions differencesbetween hybrid vehicles and fuel cell vehicles are very small though, within errors ofestimates at full cycle analysis, depending on hydrogen feedstocks, according to a fewinterviewees. If this small difference continues and hybrids are accepted, they couldpersist for the long-term. In 20 years or somewhat sooner though, fuel cells couldbecome far superior to hybrids making them just an interim step. The energy providerwill be more confident where hybrids are going in 6 to 18 months while the transitagency feels the answer will not become clear for 15 or 20 years.

Hybrids are a long-term technology: Four respondents agree that hybrid electricvehicles are a long-term solution. An energy provider feels that diesel hybrid electricvehicles will totally beat out fuel cells vehicles. A hybrid that they are working on hasgood fuel economy, can meet emissions standards, and is able to run not only on dieselbut also synthetic fuels. The other three experts who think hybrids are long-term, twotechnology companies and a government agency say hybrids will be a competingtechnology and will exist on the road with fuel cells. Fuel cell vehicles will have a hardtime beating hybrids in terms of efficiency. Hybrid electric vehicles have a goodopportunity to seize a good size of the market in areas where fuel prices are high. Thereis not one single road for advanced automobile technologies. There will be internalcombustion engine hybrids and fuel cell hybrids as well as pure fuel cells and even pureelectric vehicles.

Hybrids are both interim and a long-term competitor: Unlike the experts who feelhybrid electric vehicles are an interim step and do not know how long they will last, fourrespondents state that they will be around for the long-term. They say hybrids are both along-term technology and an interim step. Hybrids are a great transition technology, butthey will be around for a long time because they use the existing infrastructure and aresimilar to what the general public is used to. Hybrid electric vehicles will help fuel cellvehicles emerge, the two technologies will coexist, and then the hybrid technology willend but only in the long-term.

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4.0 INFRASTRUCTURE FOR A HYDROGEN ECONOMY

4.1 One fuel, many sources: hydrogen from multiplefeedstocks

One unexpected realization from this survey was the idea that the “fuel of the future”,hydrogen, may come from many feedstocks: one fuel, many sources. Many expertsexpressed the opinion that there will not be one global “fuel” choice, as with gasoline anddiesel for internal combustion engines today; rather, different geographical regions willselect the hydrogen feedstock that is most appropriate for that area (for example,geothermal electrolysis in Iceland, ethanol in Iowa, CNG in Texas etc.). The emissionsassociated with the “well to wheels” use of the hydrogen depend on the feedstock andprocess of reformation. Many experts rated all the fuel choices for feedstocks with bothpositives and negatives with no one “winner” at this point in time.

This section briefly surveys some of the experts’ views on the viability of various fuelsfor off-board production of hydrogen, either at retail stations, central hydrogen “plants”or home production.

CNG was favored by many as a source for an off boardreformation source of hydrogen. It is already the primarysource of industrial hydrogen, and many cited it as themost cost-effective, efficient option.

Gasoline was more often mentioned as a on-boardreformate, but some expert did feel it would be a viable

option for supplying hydrogen off board.

Methanol was favored by some as an on-board source, and by some for off-boardhydrogen production. Methanol currently is mainly produced from fossil fuels, but it canalso be produced from a variety of resources, including waste wood, biomass, municipalwastes, biogenic and non-biogenic residues from agriculture and industry, as well asenergy crops. These resources are currently available in considerable quantities and couldallow a potentially low-cost fuel production if implemented.

Ethanol was primarily seen as a localized, off-board option. Many felt it would havegood applicability in certain areas with good biomass feedstock, such as Brazil and Iowa;however, it was perceived by many experts as having little widespread applicability.

Diesel was seen as a very hard hydrocarbon to “crack” to make hydrogen. It was viewedas desirable only as a battlefield fuel for the military.

Synthetic fuels was thought of as beneficial for its low sulfur and low aromatics, but wasseen primarily as an on-board option. Some felt it would not make sense to turn naturalgas into synthetic fuel instead of simply reforming the CNG straight to hydrogen. Others

Hydrogen will be theultimate “common” fuel, butit could come from multiplefeedstocks.

--Industry analyst

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felt that synthetic fuel was a better option because it avoids the problems of hydrogendistribution and delivery.

Electrolysis: There were a large number of experts who said that water electrolysis withhome units or fleet units offer an interesting potential source of hydrogen. For more onthis subject, see Section 2.2.6.

4.2 Need for advanced hydrogen storage R&DMany experts expressed the opinion that a breakthrough in hydrogen storage is critical tothe successful commercialization of pure hydrogen fuel cell cars in the passenger market.Experts were asked their opinions on metal hydrides and carbon nanotubes, with mostexperts believing that metal hydrides are the more near term technology and carbonnanotubes at this point more an R& D project. Many expressed concerns about the costsof these technologies. Many expressed beliefs that government research should befocused on hydrogen storage and those technology breakthroughs could be “gamechangers”.

4.3 Safety issues and the need for codes and standardsMost experts believed that codes and standards at international, national, and local levelshave to be implemented with an expeditious, thoughtful, process that will not impede theintroduction of the fuel cells for transportation. Many expressed concern for local codesbeing different for gaseous fuels and that proponents of fuel cells had to address theseconcerns immediately, and that governments should play a major role in helping toexpedite these codes.

Many felt that the technology could be developed but public perception of safety had tobe addressed and allayed before there would be wide spread introductions.

4.4 Sequestration: Viable emissions reduction strategy?There was no clear consensus on whether sequestration would be a viable emissionscontrol strategy. Many experts had no opinion because they did not know much about it.Of those who did, only four stated that it would be a successful and desirable strategy:one hydrogen provider, one industry analyst, and two hydrogen generators. Many otherssaid that the sequestration could be viable, but only at the wellhead, not at retail stations.(Note: Sequestration of reformation emissions currently happens in some hydrocarbon .The CO2 is shot back down the wellhead and helps reduce viscosity, making the oil moreavailable. )

From the auto industry, three companies said it was not a concern for the auto industryand expressed no opinion on it. However, two automakers said that it is not a viableemissions control strategy, although they gave different reasons. One cited cost, whichwas a concern noted by many of the respondents who gave an opinion on sequestration.A few noted that it would add to the cost of an already expensive fuel, and thereforemight not be economically viable. Four experts – one automaker, one fuel cell companyand two industry consultants – believe that sequestration will never be cost-effective.

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The three energy companies expressed interest in sequestration, saying it could be viable,but that cost would be a concern. All respondents who expressed any opinion – whetherit was pro, con or unsure – said that sequestration would only be viable at the wellhead,not at retail stations. They feel that the costs of sequestration at retail stations would beprohibitive. There was one opposing viewpoint here: a government representative thatthe viability of retail station sequestration would depend on development of cost-effective small-scale sequestration, which this expert felt could be developed.

The other primary reason given for opposing sequestration did not directly relate to theviability of the process itself. A few experts – including one auto company and amethanol industry representative – said that sequestration would only be economicallyviable if done at the wellhead, but this would only happen if hydrogen were beingproduced at the wellhead and shipped to retail stations. These two experts do not believethat this will be a viable fuel cell infrastructure option, so the question of wellheadsequestration will essentially be moot. An energy company also expressed thisviewpoint; although this expert did not rule out the possibility that sequestration mightplace, the expert felt it was not likely since the best method for storing and transportinghydrogen is in methanol or natural gas.

Finally, one government representative feels sequestration is simply the wrong approachto take in emission controls and would be, at best, a short-term strategy. This expertasked, “Why combine such a crude approach with such an elegant technology?”

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Fuel cells are like batteries: they haveinherent characteristics that make themappropriate for specific applications.PEM has rapid start-up, simplicity andlow temperature operation, which make itbest for a hydrogen vehicle.

-- Fuel cell manufacturer

5.0 FUEL CELL TECHNOLOGY: READY FOR THECONSUMER?

Although this report is primarily concerned with fuel cell infrastructure, the interviewincluded a few questions about the fuel cells themselves. Since fuel cell technology isrelatively well developed – in comparison to reformer or hydrogen storage technologies -- there are fewer outstanding issues. However, we felt that it was important to ask somequestions on issues that are relevant to fuel cell commercialization.

5.1 Which fuel cell technology will predominate?This issue was the only one where the experts were virtually unanimous in theirresponses. All except two of the interviewedexperts said that Proton Exchange Membrane(PEM) fuel cells would be the predominant fuelcell type for transportation applications. Manysaid specifically that PEM would be thedominant technology for at least the near- tomid-term because it is more advanced than othertechnologies like solid oxide fuel cells (SOFC),alkaline fuel cells, or direct methanol fuel cells(DMFC). Most commented that PEM is the most appropriate technology for primarypropulsion because of its low temperature operation and quick, cold temperature start-uptime. Many also said that it has the potential to be produced very cost effectively and isthe least complex, which gives it greater near-term commercial potential than the othertechnologies.

Many of those who noted PEM’s superiority in primary propulsion said that SOFC hasgood potential for use as an auxiliary power unit (APU). They noted that, while thetechnology is not as mature as PEM, it could be successful in the long-term in nicheapplications such as APUs for large vehicles. One fuel cell manufacturer noted that aSOFC is less sensitive to fuel impurities than a PEM and could even process the fueldirectly, giving it an advantage in fuel cell cars with on board reformers. One autocompany stated its belief that fuel cells are best used to generate electricity on a vehicle,not to propel the vehicle; therefore, SOFC is the best technology because it is moreefficient than PEM.

Direct methanol fuel cell technology was also mentioned by many experts as a possibleplayer. Several automakers, energy companies and others said that DMFCs could havelong-term potential, but that it is too early in its development to predict what will happen.Many did say that, if there is a breakthrough in DMFC in the near to mid-term, it couldbe a “game-changer” in fuel cell commercialization efforts. One fuel cell manufacturerwho is developing direct methanol fuel cells asserted that this technology could be verycompetitive with PEM and could be easier to bring to market since it wouldn’t require

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development of a hydrogen infrastructure. There was one expert who dismissed DMFCas lacking power.

There were only two experts who said PEM would not be the primary fuel cell. One wasa fuel cell manufacturer who is developing direct methanol fuel cells; as noted, he feelsthat DMFC could be very competitive with or supersede PEM. The other was a fuel celland storage technology company that said PEM won’t succeed because it is too easilypoisoned and really works best with pure hydrogen. He said that his company isdeveloping a low-temperature fuel cell that is more resistant to poisoning, does notrequire use of precious metals, is less expensive and operates at 33% higher output perweight than current fuel cell technology.

5.2 How will fuel cell vehicles differ from gas cars?The question of how fuel cell cars will be different than gas cars prompted a wide rangeof answers and some interesting prognostication by respondents. In answering, therespondents generally focused on characteristics of passenger cars not transit vehicles(with some exceptions). The responses fell into the following categories:

Transparent to user: Many experts answered this question by saying that fuel cellvehicles will only compete successfully in the market if they are not significantlydifferent than current gas cars. The experts who feel this way were varied, including twoautomakers, a fuel provider, two fuel cell manufacturers, several hydrogen processing orreforming companies, a government agency, an industry association and an industryconsultant. Many of these experts commented that consumers, especially in the U.S., arenot tolerant of vehicles that are different than current gas cars, so any successful fuel cellcar must be transparent; however, they also said that the cars may offer betterperformance and other positive features.

Superior to current gas cars: Many experts – including several automakers and energycompanies -- think that fuel cell cars will be superior to gas cars. These experts citeperformance characteristics associated with electric drive, such as better acceleration andavailability of full torque, that they believe will make fuel cells cars more desirable ormore “more fun to drive”. Several experts also note that this will be a benefit to fuel cellbuses. Other benefits noted were reduced noise and vibration; less maintenance due tofewer moving parts; and better durability, resulting in cars that could last for hundreds ofthousands of miles.

New features resulting from electrical power: A significant number of respondentsbelieve that fuel cell cars will feature a whole new range of “gadgets” due to theincreased electrical power. The experts who cite this as a significant difference betweenfuel cell and gas cars are three automakers, three energy companies, two methanolindustry representatives, a hydrogen provider, a fuel cell manufacturer, a governmentagency, and an industry consultant. Experts predict that fuel cell cars will featurecomputer and Internet access; preconditioning, (i.e., heating or cooling before the drivergets in the car) or, for vehicles that use a fuel cell APU, access to air conditioning or heatwhile the vehicle engine is turned off; even microwaves, VCRs, and other appliances.

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Some also think that the fuel cell car could be used as a generator, perhaps for emergencypower at home or for electrical power in remote locations. There are some experts whoare doubtful that fuel cell cars would ever be used like this. One fuel cell manufacturernotes that current cars could be used as generators, but aren’t because it’s noteconomical; he thinks the same will be true of fuel cell cars.

Different packaging and fueling options: A few experts pointed out that fuel cell systemsoffer automakers greater flexibility in packaging, and that fuel cell cars may featureunique body styles. One automaker, an industry consultant and a fuel cell manufacturerall made this comment. Also, a hydrogen generator company thinks that fuel cell carswill offer consumers more fueling options, with fueling taking place at home as well as atretail stations.

_______________________________________________________________________

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6.0 WHAT IS A FUEL CELL?

A fuel cell functions in a manner similar toa battery cell in that electro-chemicalenergy is utilized and converted intoelectrical energy. Just like a battery cell,multiple fuel cells may be stacked in seriesto increase the voltage of the system.However, unlike a battery, a fuel cell neverneeds to be recharged as long as a supplyof fuel and oxygen are available. A basichydrogen (H2) fuel cell, as illustrated inFigure 1, consists of an anode, a cathodeand an electrolyte. Oxygen enters throughthe cathode and the hydrogen supply isintroduced at the anode. The hydrogenmolecules split into protons and electrons,with the protons passing through theelectrolyte and the electrons travelingthrough an external circuit. The separatepathways result in an electrical current, which can be used as a power source. The onlybyproducts of the chemical reaction are water and heat when pure hydrogen and oxygenare used. A hydrogen fuel cell typically generates about 0.7 volts compared to about 2volts for a lead acid battery cell.

Theoretically, the fuel cell conversion process is 80 percent (peak) efficient compared toa 40 percent efficiency rate for an internal combustion engine. The low efficiency rate ofan internal combustion engine arises from its conversion of combustion gas expansionenergy from the fuel into mechanical energy, incurring heat and friction losses during theprocess, whereas a fuel cell directly converts chemical energy into electrical energy. Theadvantage over internal combustion engines becomes more apparent when comparingefficiency rates at various loads, as fuel cells retain their efficiency levels throughouttheir operating range far better than internal combustion engines. In addition, whileinternal combustion engines utilize combustion to oxidize the fuel, fuel oxidize in thepresence of a catalyst produces far fewer emissions than the conventional combustionmethod of burning fuel.

6.1 Types of Fuel CellsThe type of fuel cell is typically distinguished by the electrolyte that is utilized and willfall into two broad category types: low temperature and high temperature. Operatingtemperature is a critical characteristic for transportation fuel cells due to quick start andthermal insulation requirements. As a result, most transportation fuel cell developmentshave been of the low temperature variety. It is important to note that not all fuel cellsunder development are hydrogen fuel cells as some high temperature units can recoverthe electro-chemical energy of other elements, such as carbon in hydrocarbon fuels.

Source: Department of Defense

Figure 1: Fuel Cell

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6.1.1 Low Temperature Fuel CellsLow temperature fuel cells have been making significant progress in transportationapplications due to their quick start times, compact volume and lower weight comparedto high temperature fuel cells. The three main types of low temperature fuel cells areProton Exchange Membrane (PEM) fuel cells, Phosphoric Acid Fuel Cells (PAFCs) andAlkaline Fuel Cells (AFCs).

Proton Exchange Membrane. PEM fuel cells are also referred to as solid polymer fuelcells. These fuel cells feature a number of transportation friendly characteristics such ashigh power density, quick start-up, rapid response to varying loads and low operatingcriteria. These positive attributes outweigh its disadvantages of lower efficiency levelsand its low tolerance for carbon monoxide contamination. The California Air ResourcesBoard (CARB) found that “the PEM fuel cell is coming closest to meeting automotiveapplication requirements” and that a majority of research programs for transportation areconcentrating on PEM technology.1 Ballard Power Systems and International Fuel Cells(IFC) are two leading PEM fuel cell stack suppliers, with orders from major automakers,such as Ford, DaimlerChrysler and GM. The majority of fuel cell demonstration vehicleshave utilized PEM fuel cell stacks.

A special type of PEM is the Direct Methanol-Air Fuel Cell (DMFC), which utilizesmethanol directly as a fuel and ambient air for oxygen. This could provide a lessexpensive fuel cell technology since it eliminates the fuel reforming process. Currentresearch has demonstrated only modest performance results, but the potential of DMFChas shifted some PEM research into this area. DaimlerChrysler and Energy Ventures, Incare both working on DMFCs.

Phosphoric Acid. PAFCs operate at around 200°C, utilize widely available phosphoricacid as its electrolyte and have a slightly higher (one percent) tolerance level to carbonmonoxide than other fuel cell types. PAFCs are the most commercially developed typeof fuel cell and are being utilized in stationary applications, such as hospitals, schools andutility power plants. One disadvantage to this type of fuel cell is that it requires a warmup period before energy is generated, making it difficult for use in transportationapplications. In addition, PAFCs are large and heavy which will limit their usage toheavy-duty applications. Georgetown University has been operating 30 and 40 footPAFC buses since the mid 1990s, but has invested in PEM fuel cells to power buses morerecently due to the progress made with this type of fuel cell.2

Alkaline. AFCs are one of the most developed fuel cell technologies due to theirutilization by the NASA space program, but until recently were too expensive forcommercial applications. It has the advantage of being built from relatively inexpensivecomponents but its low tolerance for carbon dioxide contamination requires both purehydrogen and oxygen supplies. This carbon dioxide intolerance poses a large barrier for

1 Karlhammer et al., 1998.2 Georgetown University, “Program Rationale,” available at http://www.georgetown.edu.

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use of AFCs in transportation, although it is expected that AFCs will continue to beutilized in the space program.3

6.1.2 High Temperature Fuel CellsThe two leading types of high temperature fuel cells are Solid Oxide Fuel Cells (SOFC)and Molten Carbonate Fuel Cells (MCFCs). In general, high temperature fuel cells aremore efficient than low temperature ones in generating electrical energy. In addition,they provide high temperature waste heat which is a benefit in stationary cogenerationapplications, but presents a problem for transportation applications.

Solid Oxide. SOFCs operate between 800°C and 1000°C, have a good tolerance for fuelimpurities and use ceramic as an electrolyte, which reduces some problems associatedwith liquid electrolytes such as corrosion. As with other types of high temperature fuelcells, transportation applications will be limited to the heavy-duty sector due to its sizeand warm-up requirements. The SOFC is one of the least developed fuel celltechnologies, but shows promising potential. Delphi Automotive Systems and BMW aredeveloping SOFCs as an auxiliary power unit in vehicles.

Molten Carbonate. Due to the high operating temperature (650°C) of MCFCs, this typeof fuel cell has the advantage of being able to internally reform hydrocarbons, such asnatural gas and petroleum-based fuels. However, its high operating temperatures causecorrosion problems and require the use of costly platinum metals for fuel cellconstruction. MCFC technology promises high efficiency and is being developed forstationary applications. Fuel Cell Energy is one company demonstrating MCFC andexpects it to be commercial by 2001 for stationary applications.

6.1.3 Future of Fuel CellsThe movement toward zero emission vehicles has turned the spotlight to fuel cells, whichprovide the opportunity for emission free energy generation. Significant research anddemonstration efforts have been underway for a number of different types of fuel cells.Table 1 provides a summary of the fuel cells reviewed here.

In addition to the technology difficulties mentioned before, low efficiency levels, largesize and weight, along with cost, remain the biggest obstacles to the commercialization offuel cells. Several factors affect the price of fuel cells. First, most fuel cells are currentlybuilt using expensive materials, especially precious metal catalysts used in lowtemperature fuel cells. Second, currently fuel cells are constructed in limited quantitiesthereby not achieving economies of scale necessary for decreases in pricing. In order tobe competitive, a fuel cell in the automobile sector will need to cost about $50 perkilowatt versus $1,000 to $3,000 per kilowatt currently.4

3 Hart and Bauen, 1998.4 National Fuel Cell Research Center, “Fuel Cell Technology Comes of Age,” available athttp://www.nfcrc.uci.edu/journal/article/fcarticleE.htm.

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The other major barrier for the fuel cell technology will be fuel sources. The ultimategoal for achieving zero emissions is to utilize pure hydrogen as a fuel source, howevertechnical and cost hurdles may make this infeasible in the near term. A number ofhydrocarbon fuel sources are available, such as natural gas, methanol, gasoline andethanol, but not one of the mentioned fuels has become a clear leader due toinfrastructure and fuel purity issues.

Depending upon the base fuel used, either the current infrastructure can be used, or anentirely new one must be developed. The easiest fuel to use from a consumer standpointis gasoline, since it requires no additional action or thought on the part of the consumer.However, gasoline is one of the most difficult fuels to reform and lacks purity in its

Fuel Cell Type PEM AFC PAFC MCFC SOFC

OperatingTemperature

(°C)70-80 80-100 200-220 600-650 800-1000

CurrentDensity

High High Moderate Moderate High

Stage ofDevelopment Early prototypes

Spaceapplications

Earlycommercialapplications

Fielddemonstrations

Laboratorydemonstrations

LikelyApplications

Electric utility,portable power

andtransportation

Military andspace

Electric utilityand

transportationElectric utility Electric utility

Advantages • Lowtemperature• Quick start-up• Solidelectrolytereducescorrosion andmanagementproblems

• Highperformance

• Highefficiency forcogeneration• Can useimpurehydrogen fuel

• Highefficiency• Flexibility offuels

• Highefficiency• Flexibility offuels• Solidelectrolytereducescorrosion andmanagementproblems

Disadvantages • Highsensitivity to fuelimpurities• Requiresexpensivecatalysts

• Expensiveremoval ofcarbon dioxidefrom fuel andair supplies

• Lowcurrent andpower• Large sizeand weight

• Hightemperatureenhancescorrosion andbreakdown ofcell components

• Hightemperatureenhancescorrosion andbreakdown ofcell components

Prospect forHigh Efficiency

Good Good Good Good Good

Prospect forLow Cost

Good Good Fair Fair Fair-Good

Table 1 Characteristics of Fuel Cell Types

Sources: Karlhammer et al., 1998; Thomas and Zalbowitz, 1999.

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current form. Gasoline and other fuels such as methanol, ethanol, and CNG are hydrogencarriers so they can be used as a fuel cell fuel. However, gasoline and other hydrocarbonfuels cannot be used directly (except methanol) in a fuel cell so the key to their use willbe effectively and efficiently separating the hydrogen. To do this, fuel reformingtechnology is utilized. Table 2 provides a summary of different fuel cell types andwhether a fuel reformer is needed in using a base fuel other than hydrogen gas.

By introducing a fuel reformer, the overall system efficiency of the fuel cell vehicle isdiminished because energy is required to extract the hydrogen from the fuel and thepotential for air pollutant emissions increases. Hydrogen provides the most efficient fuel,but requires a new infrastructure since its use outside industry is limited. Ovonic claimsit has a solid hydrogen storage system which could potentially use existing infrastructure.

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7.0 HYDROGEN PRODUCTION

Hydrogen is one of the most abundant elements on Earth, but almost all of it is combinedwith other elements, forming such materials as water and fossil fuels. Most fuel celltechnologies require hydrogen in a gaseous (H2) form to harness the energy. Vehiclemakers have two options in providing the hydrogen fuel—either directly as hydrogen gas,which means producing hydrogen off-board and storing it on-board the vehicle orproducing it on-board the vehicle via a fuel processor. Off-board production allows for aless complex and more efficient fuel cell, but is constrained by on-board hydrogenstorage options. On-board fuel processing avoids hydrogen storage problems, but facesproblems with contamination and impurities that potentially arise from the fuel processorand the weight penalty of an added processor.

Regardless of the option chosen for fueling the fuel cell, there are several basic processesthat can be used to produce hydrogen. Currently fossil fuels are the primary source ofhydrogen production, with approximately 95 percent of hydrogen produced in the U.S.from steam reformation of natural gas. Reformation is essentially the cracking of a fossilfuel (hydrocarbon) into its more basic elements of hydrogen and carbon products withoutcombusting or oxidizing them. The reformation process can be conducted large scale (offboard) or small scale (on board) levels. However reformation’s utilization of fossil fuelscontinues the transportation sector’s reliance on nonrenewable resources. Two majorchallenges for fuel cells are the economic and technical hurdles involved in sustainablehydrogen production.

Electrolysis has the potential for being a renewable option in hydrogen productionprovided the electricity is produced from renewable sources. This type of off-boardhydrogen production involves the splitting hydrogen from water molecules and accountsfor about one percent of hydrogen production in the U.S. There are also several otherrenewable methods, such as biomass or municipal waste gasification and photobiologicalconversion (bacteria/algae waste product), but none of these technologies are welldeveloped for commercial applications and will not be discussed here.

7.1 ReformationA hydrocarbon fuel and air areheated to a high temperature,with or without catalysts, tocreate a synthesis gas of carbonmonoxide (CO) and hydrogen.This synthesis gas is then reactedwith water (steam), which splitsto produce additional hydrogen.The freed oxygen from the watercombines with the carbon

Table 2: Need for Fuel Reformers for Different Fuel Cells

Fuel Cell Type Reformer Required?Proton Exchange Membrane (PEM) Yes

Alkaline (AFC) Yes

Phosphoric Acid (PAFC) Yes

Molten Carbonate (MCFC) Yes a

Solid-Oxide (SOFC) Yes a

Direct Methanol (DMFC) Noa – Except when natural gas is used as the fuel

Source: Karlhammer et al., 1998.

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monoxide to form carbon dioxide and hydrogen forms hydrogen. Remaining CO needsto be removed to avoid contamination problems with most fuel cell catalysts. The carbondioxide is released to the atmosphere. On-board fuel processing is essentiallyreformation on a small scale. Companies developing on-board fuel processors includeNuvera Fuel Cells, Johnson Matthey and Hydrogen Burner Technologies.

7.1.1 Steam ReformingIn steam reforming (SR), fuel and steam are mixed in the presence of a catalyst to reformthe hydrocarbons in the fuel into hydrogen, CO and carbon dioxide (CO2). The resultinggas is sent to a shift reactor where the CO reacts with steam to form more hydrogen andCO2. A purification step then removes remaining amounts of CO, CO2 and otherimpurities to achieve high (97 to 99.9 percent) hydrogen purity. This process is the mostdeveloped and least expensive manner for generating hydrogen. The efficiency rate ofsteam reformation is approximately 70 to 80 percent. Conversion efficiency is reduceddue to the endothermic nature of the reaction, which consumes fuel to produce thetemperatures necessary for the reaction to occur—approximately 15 to 25 percent of thetotal fuel heating value. One way to increase efficiency is to utilize the waste heat fromhigh temperature fuel cells and PAFCs when reforming on-board. One limitation of SRis that only light hydrocarbons (e.g., natural gas, naphtha, gasoline and No. 1 fuel oil) canbe used in the process. Air Products and Chemicals, the largest producer of hydrogen,uses steam reforming of natural gas as its primary method to produce hydrogen. Severalautomakers with fuel cell demonstration vehicles, such as GM, DaimlerChrysler, Toyotaand Nissan have utilized SR of methanol for hydrogen production on-board.

7.1.2 Partial OxidationPartial oxidation (POX) is similar to SR in combining fuel and steam, but an additionalstep of adding oxygen is included. This extra step adds energy to the reaction making itexothermic causing some hydrogen product to be lost as heat. The process efficiency isapproximately 50 percent. The exothermic nature of the reaction, however, allows for thereaction to be more responsive than SR to variable loads, an important feature for on-board processing. Heavier hydrocarbons can be used in POX, but they have lower carbonto hydrogen ratios which reduces the amount of hydrogen end product. When coal isused as a feedstock, the process is referred to as gasification. Although heavierhydrocarbons are a less expensive input, the additional oxygen purification of the air andthe impurities within the heavier hydrocarbons make this process more expensive thanSR. Epyx Corporation’s (now Nuvera Fuel Cells) multi-fuel processor is an example of aPOX based on-board reformer.

2.1.1 Autothermal ReformingAutothermal reforming is a less developed process that combines SR and POX so that theheat production of POX offsets the heating needs of SR. Autothermal reforming producesa better concentration of hydrogen than POX but less than SR. Autothermal reformation

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may offer the best of both processes with better response to variable loads and a goodefficiency rate. 5

Johnson Matthey’s Hot-Spot reformer is an example of on-board hydrogen productionthat starts with a partial oxidation reaction until threshold levels of hydrogen are reachedand then the reaction becomes autothermic. Hydrogen Burner Technologies’ Fuel-

Flexible Fuel Processors also utilizes authothermal reactions due to their lower operatingtemperatures and higher efficiencies.

5 Berlowitz and Darnell, 2000.

Source: Karlhammer et al., 1998.

Methanol

Step 1: 2H3COH + H2O (steam) + heat à 5H2 + CO + CO2 (steam reforming)

and/or2H3COH + O2 (air) à 3H2 + CO + CO2 + H2O + heat (partial oxidation)

Step 2: CO + H2O (steam) à H2 + CO2 (water gas shift reaction)

CO + _ O2 à CO2 (preferential oxidation)

orCO + 3H2 à CH4 + H2O (methanation reactor)

Gasoline

Step 1 H3C (CH2)6 CH3 + 12H2O (steam) + heat à 21H2 + 4CO + 4CO2 (steam reforming)

and/orH3C (CH2)6 CH3 + 7 1/2O2 (air) à 6H2 + 4CO + 4CO2 + 3H2O + heat (partial oxidation)

Step 2 CO + H2O (steam) à H2 + CO2 (water gas shift reaction)

CO + _ O2 à CO2 (preferential oxidation)

orCO + 3H2 à CH4 + H2O (methanation reactor)

Table 3: Example Reformation Steps of Methanol and Gasoline

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7.2 ElectrolysisHydrogen can also be produced by electrolysis. There are two types of electrolysers:alkaline, which are commercially available, and PEM, which are in the demonstrationphase. In the electrolysis process, an electrical current is passed through water to split itinto its two basic elements, hydrogen and oxygen. Energy efficiencies for electrolysis are70 to 80 percent and the hydrogen end product is highly purified. The process itself doesnot produce any air pollution, but emissions may be generated from the source ofelectricity. The use of fossil fuel generated electricity leads to costs of three to five timesgreater than hydrogen production directly from fossil fuels. However, electrolysis has thepotential to be a fossil fuel free hydrogen production method, with electricity productionfrom renewable resources. Table 4 compares and contrasts reformation and electrolysis.Two companies that provide electrolysers include Stuart Energy Systems and ProtonEnergy Systems.

7.3 Distribution OptionsThere are three main options for distributing hydrogen fuel for use in fuel cell vehicles.They are:

• On-board reformation of a hydrogen rich fossil fuel;

• Off-board production via fossil fuel reformation or electrolysis at a largecentralized locations and transported to distribution centers; or

• Off-board production via fossil fuel reformation or electrolysis at smallerdispersed facilities or in homes.

It is likely that the near future will consist of a combination of these options. Asdiscussed earlier, a number of different fuel feedstock markets may evolve due todiffering economic characteristics and environmental goals of a region. The next section

Advantages Disadvantages

Reformationof FossilFuels

• Relatively inexpensive hydrogenproduction method

• Well developed technology

• Nonsustainable

• Pollution generated in processing

• More expensive and less efficientthan direct use of fossil fuels

Electrolysis

• Well developed technology

• Potential to be sustainable

• Creates pure hydrogen product

• Electricity widely available

• Expensive

• Pollution possible from electricitygeneration

• Less efficient use of fossil fuelsfor electricity productioncompared to reformation

Table 4: Advantages and Disadvantages of Reformation and Electrolysis

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will explore in-depth the issues surrounding the fuel debate, such as safety, efficiency,cost and environmental considerations.

8.0 FUEL OPTIONS FOR FUEL CELLS

8.1 HydrogenHydrogen is one of the mostabundant elements in the universe,but it is highly reactive and doesnot exist as a gas naturally onearth. Instead hydrogen bindswith other elements, such ascarbon to form fossil fuels andoxygen in the formation of water.Approximately 40 million tons ofhydrogen gas is produced globallyin a year, very little of which isused as an energy source. Most ofthe production is utilized in oilrefining, and methanol andammonia production. Most U.S.companies produce their own hydrogen through steam reformation of natural gas andconsume it onsite. Only five percent of hydrogen production is merchant6 (sold to otherfacilities), with chemical, metal, glass and electronic manufacturing facilities being thebiggest consumer of this supply.

Beyond hydrogen’s use in the NASA space program, its use in transportation has onlybeen in experimental and prototype vehicles. In 1997, it was estimated that in the U.S.there were less than twenty vehicles that relied on hydrogen as a fuel.7 However,Germany has been experimenting with hydrogen fuelled vehicles since the 1920s. In thepast two decades both DaimlerChrysler and BMW have invested research into hydrogeninternal combustion vehicles. Now many in the automotive industry are looking towardhydrogen fuel cells as the next generation vehicle.

8.1.1 PropertiesAs the lightest fuel, hydrogen offers the best energy to weight ratio of any fuel (energy tospace is a concern however). Hydrogen is both odorless and colorless, burning without avisible flame. Table 5 highlights some of the properties of hydrogen. Hydrogen is alsohighly diffusive, which means that a leak will dissipate quickly. Its biggest disadvantageis that hydrogen has the lowest storage density among fuels, requiring a large storage

6 Moore and Raman, 1998.7 Cannon, 1997.

Molecular Weight (kg/kmol) 2.02Specific Weight (kg/m3)

Liquid 70.8Melting Point (°C) -259Boiling Point (°C) -252Heat of Vaporization (kcal/kg) 110Lower Heating Value (kcal/kg) 28,628Flammability Range (% volume) 4 - 74Spontaneous Ignition Temperature(°C)

550

Source: Vernon Roan, “Fuel Cell Fueling Infrastructure”, SAETOPTEC, Boston, MA, March 19, 1998.

Table 5: Properties of Hydrogen (H2)

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volume in both gas and liquid form. The low boiling point of hydrogen also means thatliquid storage systems must be well insulated to reduce boiling off of liquid (LH2).

8.1.2 On-Board StorageThe ability to utilize hydrogen directly in a fuel cell, without an on-board reformationprocess, is appealing from an efficiency and emissions standpoint. However, due to itsproperties of low energy density volume and boiling point, on-board storage systems ofhydrogen tend to be large and heavy. Three types of direct storage systems are available:compressed gaseous hydrogen, liquefied hydrogen and binding hydrogen to solids inmetal hydrides or carbon compounds. Table 6 compares on-board hydrogen storagemethods to an energy equivalent amount of gasoline.

8.1.2.1 Compressed HydrogenThe National Renewable Energy Laboratory (NREL) found that compressed hydrogengas offers the simplest and least expensive method for on-board storage of hydrogen.8

The refilling time of compressed hydrogen tanks is similar to gasoline tanks. The storageof compressed hydrogen gas utilizes similar technology used for compressed natural gas,with stainless steel, aluminum or composite cylinders. Hydrogen however, requires morevolume for the same energy equivalent amount of natural gas. One way to increase thefuel stored in the container is to increase pressure, but this requires more expensivestorage containers, increasing compression costs and entails investigation into safetyissues.

8 Padro and Putsche, 1999.

Table 6: Comparison of On-Board Hydrogen Storage Options

GasolineCompressed

HydrogenLiquefiedHydrogen

Metal Hydride(Ovonics Mg

alloy)Btu 1,334,540 629,500 629,500 629,500Fuel Weight(kg)

29.5 4.7 4.7 4.7

Tank Weight(kg)

13.4 63.3 - 86 18.6 120

Total Weight ofFuel System(kg)

43.2 67.9 - 90.5 23.3 124.7

Volume (liters) 40.1 408.8 - 227.2 177.9 120Range (km) 600 600 600 570Based on: Norbeck et. al., 1996; Pembina Institute for Appropriate Development, 2000; ECD Ovonics, 2000 andStodolsky et al., 1999.

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8.1.2.2 Liquefied HydrogenLiquefied hydrogen does not have the high storage weight penalty seen with compressedhydrogen, but still is bulkier than gasoline storage. Liquid hydrogen storage also takesadvantage of storage technologies utilized with liquid natural gas. As mentioned before,hydrogen’s low boiling point requires excellent insulation of storage containers.Maintaining the extreme cold temperatures of LH2 during refueling and on-board storagecurrently poses a great technical challenge, with 25 percent of LH2 boiled off duringrefueling9 and 1 percent lost per day for on-board storage.10

8.1.2.3 HydridesHydrogen bonds easily with more than 80 metallic compounds forming a weak attractionthat stores hydrogen until heated. Metal hydride systems can either be low temperature(< 150°C) or high (300°C). Since heat is required to release the hydrogen, it avoidssafety concerns surrounding compressed hydrogen and LH2, and is one of the safestmethods for storing hydrogen. However, the metal compounds used to attract thehydrogen tend to be very heavy resulting in only 1.0 to 1.5 percent hydrogen by weight.Energy Conversion Devices (ECD) is one technology company working in the field ofmetal hydride hydrogen storage. ECD’s Ovonic proprietary magnesium alloy is alightweight metal hydride, with a 7.0 percent by weight hydrogen content, which avoidssome of the weight penalty encountered with other metal hydrides. Millennium Cell’ssodium borohydride is another hydride potential storage option

8.1.2.4 Other Storage OptionsResearch is being conducted with carbon nanotubes—microscopic carbon tubessynthesized in the laboratory—that absorb hydrogen. Work at NREL has shown that thistechnology can significantly increase the volumetric and gravimetric densities ofhydrogen adsorption systems with staff speculating that they “could provide the neededtechnological breakthrough that makes hydrogen powered vehicles practical.”11 However,there currently are no commercial applications of this type of technology.

Glass microspheres are another potential hydrogen storage option. These small, hollowglass spheres (0.001 to 0.002 inches in diameter) allow hydrogen to enter when heated to200°C to 400°C. This hydrogen becomes trapped once the temperature cools, but isreleased upon heating. This technology is still in the development stage.

9 Cannon, 1995.10 Ogden, 1999.11 Padro and Putsche, 1999, p. 15.

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8.1.3 Safety, Health and Environmental Concerns

8.1.3.1 Safety IssuesHydrogen fuel is often associatedwith the ill-fated Hindenburghydrogen dirigible and the 1986Challenger shuttle explosion.Although hydrogen fuel wasinvolved in these accidents,neither of these tragedies werecaused directly from the use ofit—investigations into thetragedies show that theHindenburg was painted withflammable compounds12 and theChallenger explosion was causedfrom an O ring rupture in the solidfuel booster rocker.13 In fact agood safety record has beendemonstrated in the last 80 yearsof hydrogen fuel transmission inGermany and with the NASAprogram since the 1960s. Allfuels are inherently dangerous, butpeople are willing to accept therisk of driving an automobile fullof gasoline. Although hydrogenrisks may differ, in general it is important for all fuel types to have adopted standards andcodes to minimize risks.

The International Organization of Standardization Technical Committee on HydrogenTechnologies (ISO TC/197) and the National Fire Protection Agency (NFPA) arecurrently developing standards related to hydrogen vehicle fuel systems and on-boardhydrogen storage. Table 4.3 shows the current status of the ISO standards. The 1998Sourcebook for Hydrogen Applications, jointly funded by U.S. Department of Energy(DOE) and Natural Resources Canada serves as an interim resource while codes andstandards are in the process of being written and adopted.

Since hydrogen is colorless and odorless, hydrogen refueling stations need leak detectiondevices to alarm personnel. Although an odorant or color could be added to ease inidentifying leaks, such as is done for CNG, its impact on the fuel purity and affects on the

12 Thomas and Zalbowitz, 1999.13 Cannon, 1995.

International standards already published are:• ISO 13984: Liquid Hydrogen – Land Vehicle

Fueling System Interface• ISO 14687: Hydrogen Fuel – Product Specification

Standards under development are:• ISO/CD 13985: Liquid Hydrogen – Land Vehicle

Fuel Tanks

• ISO/WD 13986: Tank Containers for MultimodalTransportation of Liquid Hydrogen

• ISO/WD 15594: Airport Hydrogen Fueling Facility

• ISO/WD 15866: Gaseous Hydrogen Blends andHydrogen Fuel – Service Stations

• ISO/WD 15869: Gaseous Hydrogen and HydrogenBlends – Land Vehicle Fuel Tanks

• ISO/WD 15916: Basic Requirements for the Safetyof Hydrogen Systems

• ISO/AWI 17268: Gaseous Hydrogen – LandVehicle Fueling Connectors

Table 7: ISO Hydrogen Standards

Source: International Organization for Standardization (ISO)at http://www.iso.ch/meme/TC197.html.

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hydrogen liquefaction process need to be investigated. With its low ignition temperatureand a wide flammability range, hydrogen poses one of the greatest fire hazards amongfuels. However, it also has the advantage of dissipating quickly, so proper ventilationwill reduce the risk. Large refueling stations should be equipped with dry chemicalextinguishers in the event of a hydrogen fire. One advantage of hydrogen’s long use inindustry is the experience with the storage and transportation of the fuel that can beapplied.

In terms of use in vehicles, hydrogen storage on board utilizes similar technology asnatural gas, generating similar safety issues. Storage designs are made to minimize riskscreated by collisions and safety evaluations have found that hydrogen is less dangerous inaccidents since it dissipates quickly in the air. However more research is needed in thisarea to fully understand hydrogen’s safety impacts since its use in transportation has beenlimited. On-board storage with metal hydrides is one of the safest methods for hydrogenstorage and its use in nickel metal hydride batteries provides real world automotiveapplication experience.

8.1.3.2 Health IssuesHydrogen is non-toxic, but can act as an asphxiant since it displaces oxygen in the air.Care must be issued when dealing with LH2. Human skin that comes into contact with itcan be damaged due to its extreme cold temperature.

8.1.3.3 Environmental IssuesThe accidental release of hydrogen into the environment poses no significant hazards.

8.1.4 Availability and Current Distribution InfrastructureHydrogen’s use outside refineries, chemical and other industrialized facilities is smallwith only limited utilization in the space program and demonstration projects. TheEnergy Information Administration (EIA) predicts that requirements for the desulfurationof gasoline, with processes that utilize hydrogen, will require increases in hydrogenproduction capacity beyond current capacity.14

In 1995 there were only 450 miles of hydrogen pipelines, mostly located in industrializedareas of Texas, Louisiana and New Jersey. Reliance on natural gas pipelines may be oneway to transport hydrogen during the initial stages of hydrogen infrastructuredevelopment. However hydrogen’s lower energy density would require higher pressurepumps and compressors and has a greater potential to leak. Hydrogen also causes metalembrittlement in conventional pipes, which would need to be addressed before convertinga natural gas infrastructure. Another alternative is to transport hydrogen with natural gasin pipelines and separate downstream, but more research needs to be conducted todetermine feasibility.

14 EIA, 1999.

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Long distance transport of hydrogen is conducted via tanker truck when pipelines are costprohibitive. It is often trucked in liquid form since LH2 tanks carry more energy pervolume over compressed hydrogen gas. The U.S. has an annual LH2 production capacityof 90,000 tons, which is transported by approximately 20,000 LH2 tanker truck loadseach year.15 Due to the large economies of scale involved in the liquefaction process, onemerchant hydrogen provider speculated that it would be unlikely more liquefying plantswill be developed until market demand is established.16

Hydrogen can be stored in a variety of ways to accommodate fluctuations in demand.One method is to increase the hydrogen pressure in pipelines. Utilizing depleted oil andnatural gas fields, salt caverns and aquifers is another option for larger storage, which hasbeen used in the natural gas industry. Smaller storage alternatives include liquid andcompressed gas storage tanks. Hydrogen can also be produced on-site from a number ofbase fuels.

Housed at the Chicago Transit Authority since 1997 is the first commercially operatedhydrogen refueling station for the three fuel cell powered buses deployed there. Liquidhydrogen is delivered via truck from a large industrial plant 300 miles away to a LH2

storage tank at the station.17 During refueling, the hydrogen is pumped out andpressurized into compressed hydrogen gas stored on the bus’s roof.18 A similar stationhas been constructed in Dearborn, Michigan for Ford prototype hydrogen fuelledvehicles. A hydrogen refueling station to service sixteen cars is under construction inWest Sacramento as part of the California Fuel Cell Partnership.

Coast Mountain Transit (formerly British Columbia Transit, Vancouver, Canada) andSunLine Transit Agency (Palm Springs, California) utilize on-site electrolysis to supplyhydrogen to their fuel cell vehicles. Fleet sized (1 to 200 vehicles) electrolysers arecommercially available.19 Residential sized fuelers are expected to be availablecommercially in 2004. On-site electrolysis offers many advantages because it can bebuilt in modules, allowing for the size to adjust as demand changes and it utilizes waterand electricity as inputs, which are widely available. However, the infrastructureadvantage of electrolysis can be offset by cost and emissions, depending upon theelectricity source. Cost and emission comparisons of the different fuel options areincluded later in the appendix.

8.2 Natural GasCompressed natural gas (CNG) powered vehicles have made the most progress in termsof market penetration of alternative fueled vehicles. In 1997 there were 82,700 CNG

15 Moore and Raman, 1998.16 Moore and Raman, 1998.17 Raman, V., “Chicago Develops Commercial Hydrogen Bus Fleet,” Oil & Gas Journal, July 1999.18 Air Products and Chemicals, Inc., “Air Products Goes ‘On the Road’ with Hydrogen Fuel,” available at:http://www.airproducts.com/corp/spring98/road.htm.19 Stuart Energy, “Community FuelerTM”.

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vehicles in operation in the U.S.20 One of the attractions to these CNG internalcombustion vehicles is the reduction in NOx emissions by 60 percent and particulatematter by almost 95 percent over conventional diesel vehicles. Looking back over thehistory of energy sources, a shift from carbon rich sources to hydrogen rich sources isapparent. The transition has been from wood (10 percent hydrogen), to coal (38 percenthydrogen), to oil (64 percent hydrogen), to natural gas (80 percent hydrogen). As thehydrogen content increases, less carbon is burned generating less emissions ofparticulates and carbon dioxide. Another advantage of utilizing natural gas as a transitionfuel is the overlap in storage technologies and distribution infrastructure with hydrogen.

Natural gas is the dominant fuel choice for stationary fuel cells for some of the sameadvantages it has for transportation applications. It has high hydrogen content, isrelatively inexpensive and a well established transmission and distribution infrastructureexists. Stationary sources are less constrained in terms of size, weight and waste heatlimits than mobile fuel cell applications. The fuel processors and fuel cells run on a morecontinuous basis than mobile applications, reducing warm-up and transient load demands.The PAFC fuel cell has been commercially available from IFC and ONSI Corporation forstationary sources, with a number of joint fuel cell technology companies and natural gasdistribution collaborations. ONSI Corporation has recently refocused its resources on thedevelopment of PEM fuel cells, which has the potential for increased efficiency.Reforming natural gas on-site will continue to be the fuel of choice for stationary fuel cellapplications.

8.2.1 Natural Gas ProductionNatural gas is found in large underground deposits across the globe, with the majority ofU.S. deposits in Alaska and the Southwest. Often times it is drilled in conjunction withcrude oil. However, unlike crude oil, natural gas requires limited processing forutilization as a fuel. It is a highly combustible gas containing approximately 85 percentmethane, with the remaining percentage a mixture of ethane, propane, butane, nitrogen,hydrogen, carbon dioxide and helium. The key energy component of natural gas ismethane, CH4, with its high hydrogen to carbon ratio.

The U.S. consumed 21.39 trillion cubic feet of natural gas in 1998.21 Thirty-eight percentwas utilized in the industrial sector, 20 percent in the residential sector and 17 percent inelectric generation—less than one percent was utilized in transportation. Approximately85 percent of the natural gas consumption in the U.S. was produced domestically, withthe majority of the imported supply from Canada.

The Colorado School of Mines reported that the U.S. natural gas supply is approximately1,234 trillion cubic feet, which translates to roughly a 65 year supply if consumptionremains the same.22 Both Canada and Mexico also have a large natural gas resource

20 Cannon, 1997.21 EIA, 1999.22 American Gas Association, Jan. 1999.

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base. Many suggest that estimates are low considering the difficulty in accuratelyestimating untapped natural gas reserves and the improvements in technology that willallow for more efficient extraction. Additionally, methane, the most energy valuable partof natural gas, can be recovered from other sources such as landfills and coalbeds.

8.2.2 PropertiesNatural gas is dominated by thecharacteristics of methane. Ithas a visible flame and veryfaint odor. A warning odor isadded to household supplies asa safety precaution. Table 8lists some of the properties ofmethane. Methane rises in theair, so refueling areas requireproper ventilation to avoidpotential ignition. Natural gascan be stored compressed(CNG) or liquefied (LNG).CNG requires 3 to 4.5 times thevolume of gasoline for an equalenergy equivalency. LNG hasmore energy density, butrequires more insulation (weight) to maintain the cold temperatures.

8.2.3 Safety, Health and Environmental Concerns

8.2.3.1 Safety IssuesNatural gas by itself is a relativelyharmless fuel, however whencompressed or liquefied it requiressimilar safety precautions as werediscussed in the hydrogen storagesection. There is also considerableexperience in natural gas usage bothwithin industry and vehicleapplications, which makes the publicmore comfortable with its use thanother alternative fuels.

The NFPA and Society ofAutomotive Engineers (SAE) haveissued a number of codes andstandards for its use in transportation.(See Table 9 for a list.)

Molecular Weight (kg/kmol) 16.04Specific Weight (kg/m3)

LiquidGas

720230

Melting Point (°C) -182.6Boiling Point (°C) -161.6Heat of Vaporization (kcal/kg) 121.6Lower Heating Value (kcal/kg) 11,936Flammability Range (% volume) 5 - 13.5Spontaneous Ignition Temperature(°C)

690

Energy/Volume (Btu/gal)LiquidGas

129,05741,222

Table 8: Properties of Methane (CH4)

National Fire Protection Association:• NFPA 52: Compressed Natural Gas Vehicular Fuel

Systems• NFPA 59A: Standard for Production, Storage and

Handling of Liquefied Natural Gas• NFPA 57: Standard for Liquefied Natural Gas

Vehicular Fuel Systems

Society of Automotive Engineers:• SAEJ1616 Recommended Practice for Compressed

Natural Gas Vehicle Fuel

Table 9: Natural Gas Standards

Source: U.S. Department of Transportation, Clean AirProgram: Assessment of the Safety, Health, Environmentaland System Risks of Alternative Fuel, available at:http://www.bts.gov/NTL/DOCS/afrisks.html.

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One of the biggest concerns with the use of natural gas is the potential for natural gasleaks to explode when its concentration is between 4 and 14 percent of the air. Thismeans that vehicles stored inside need to be in well ventilated areas. CNG has an odorantadded to make a leak identifiable well below its flammability limit, however no odoranthas been found suitable for LNG.

The extensive experience with transporting natural gas via pipelines has minimized anypotential problems. Natural gas transportation via pipelines is considered one of thesafest ways to transport energy. LNG is transported by tanker and if ruptured has a highprobability of fire. When spilled into a water body LNG experiences a rapid vaporizationprocess which resembles an explosion. Currently, LNG is transported by ship fromAlgeria, Australia and the Caribbean to U.S. into Boston. Natural gas has been used intransportation for a number of years, so on-board storage and vehicle designs haveevolved to minimize any potential risks.

8.2.3.2 Health IssuesThe majority of natural gas components are non-toxic, but minute amounts of benzeneand arsenic can be found, although the health risks involved are relatively low. Naturalgas can act as an asphxiant since it displaces oxygen in the air. LNG also does notcontain an odorant, which increases the likelihood of a leak occurring unnoticed. Caremust be issued when dealing with LNG as it will harm human skin due to its extremecold temperature.

8.2.3.3 Environmental IssuesThe accidental release of natural gas into the environment poses no significant hazards,except as a greenhouse gas. Methane, a greenhouse gas, has a global warming potentialof 21, meaning that it traps heat in the atmosphere 21 times more than carbon dioxide.

8.2.4 Availability and Distribution InfrastructureThe U.S. has increased demand for natural gas by approximately 36 percent since 1986,23

with the EIA predicting a 1.8 percent increase in consumption per year over the next twodecades.24 Over half of this increased demand is a result in the shift from coal-firedelectric generation to cleaner combined-cycle natural gas plants. The EIA also predictsthat natural gas demand from the transportation sector will increase annually on average13 percent over the next two decades.25

23 American Gas Association, “Natural Gas Supply Outlook,” available at: http://www.aga.org, Jan. 1999.24 EIA, 1999.25 EIA, 1999.

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The natural gas industry has been able to keep up with increasing demand for natural gaswith the exception of a few shortages in particular areas due to increased domesticheating demands during cold winters. The majority of the over 600 gas plants in the U.S.are located in Texas, Louisiana, Oklahoma, Wyoming, Kansas and New Mexico.Production facilities are being operated at about 70 percent capacity,26 indicating that theindustry will be able to meet increased demand. Facilities can vary in size, buteconomies of scale favor large production capacities. Increased Canadian imports arealso expected to help meet growing natural gas demand. There are approximately 1.3million miles of natural gas pipelines in the U.S. with Figure 2 illustrating the 190,000miles of major pipelines. The natural gas infrastructure also has excess capacity, whichcan be utilized to transport natural gas for the increasing demand. This is not to say thatall areas currently have a developed infrastructure. Pipelines may need to be constructedto access new natural gas sources and areas of demand. For example in the last year, twoCanadian/U.S. pipeline projects increased New England’s natural gas infrastructure byalmost twenty percent,27 helping to ease some of the wintertime shortages. Other

26 National Gas Supply Association, “Profile of the U.S. Gas Processing Industry,” available at:http://www.naturalgas.org/PRODUCT.HTM.27 The New England Gas Association, New England’s Natural Gas Market: Update, July 2000, availableat: http://www.nega.com.

Figure 2: Natural Gas Pipelines in Continental United States

Source: Tobin, James, “Natural Gas Pipeline and Storage Deliverability,” NARUC Winter Conference,February 1999.

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Canadian/U.S. pipelines havebeen proposed to the Midwest,with the potential to reachconstrained northeast markets.

The number of natural gasrefueling stations has increasedsignificantly from the 1990swith over 1,226 CNG stationsand 46 LNG stations. Unlikeother alternative fuels, CNGhas made inroads across theU.S. with most statescontaining at least a fewrefueling stations as seen inFigure 3.

8.3 MethanolMethanol (CH3OH) is a simple alcohol, which is found in a number of everyday itemssuch as recyclable plastics, spandex material and windshield wiper fluid. The biggestconsumption of methanol is as the feedstock for the gasoline additive methyl tertiarybutyl either (MTBE). This additive increases oxygen levels in gasoline, providing for acleaner burn and less emissions, however recent concerns about groundwatercontamination are causing many states to consider or adopt laws banning the use ofMTBE.

Due to its high octane rating, it provides excellent performance in internal combustionvehicles. In fact, methanol is the only fuel used by the racers at the Indianapolis 500motor race, due to this property and its safety characteristics. In 1997 there wereapproximately 19,800 M-85 vehicles in the U.S.28 The M-85 designation signifies ablend of 85 percent methanol and 15 percent gasoline. The added gasoline improves thevehicle’s ability to start in cold weather and reduces fuel volatility. However, due to fuelimpurity concerns fuel cells would require pure methanol, known as M-100.

28 Cannon, 1997.

* Dots do not represent actual station locations

Figure 3: CNG Refueling Stations*

Data Source: Alternative Fuels Data Center, “U.S. Refueling SiteCounts by State and Fuel Type as of 6/16/2000,” available athttp://www.afdc.doe.gov/refuel/state_tot.shtml, June 2000.

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8.3.1 Methanol ProductionMost methanol production relies on natural gas as a feedstock, although crude oil, coaland renewable resources, such as wood and municipal solid waste can be utilized. In atypical methanol production process, natural gas is steam reformed into a synthesis gas ofCO, CO2, H20 and H2. The synthesis gas undergoes a second step under hightemperatures and pressures to combine CO and H2 to produce methanol. Often timesadditional CO2 is added in this step for more methanol end product. Autothermalreformation and a combined reformation process with two reformers are two othermethanol production methods.

8.3.2 PropertiesMethanol is colorless, with a very faint alcohol odor. One of the biggest safety concernssurrounding methanol is its invisible flame in sunlight while burning, however it haslower volatility than gasoline and releases only an eighth of the heat of gasoline fires.Table 10 lists some of methanol’s properties. Methanol’s high hydrogen to carbon ratioand relatively lowcombustion temperaturemake it a good candidate asa fuel source for fuel cells.Methanol vapors are heavierthan air and will collect onthe ground if properventilation is lacking.Methanol combines(miscible) with water,making it essential to keepwater from seeping induring distribution. It alsois very corrosive withmaterials used in petroleumdistribution, such as aluminum and rubberized components.

8.3.3 Safety, Health and Environmental Concerns

8.3.3.1 Safety IssuesThere are no specific regulations or codes for methanol use in vehicles or dispensingsystems, but its storage and handling are covered under NFPA 30: Flammable andCombustible Liquids Code and NFPA 30A: Automotive and Marine Service StationCode. The majority of methanol is shipped via truck tanker and stored in stainless steel,carbon steel or fiberglass tanks. This does not pose any different safety concerns thanpetroleum product transport with the exception that methanol flammability range iswider, increasing the chance of ignition of vapors.

Molecular Weight (kg/kmol) 32.04Specific Weight (kg/m3)

Liquid 792Melting Point (°C) -98.0Boiling Point (°C) 64.51Heat of Vaporization (kcal/kg) 263.0Lower Heating Value (kcal/kg) 4,798Flammability Range (% volume) 6 - 36Spontaneous Ignition Temperature(°C)

480

Energy/Volume (Btu/gal)Liquid 57,065Source: Vernon Roan, “Fuel Cell Fueling Infrastructure”, SAE

Table 10: Properties of Methanol (CH3OH)

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8.3.3.2 Health IssuesMethanol is a neurotoxin, requiring only a small ingested quantity to produce fatalresults. It is recommended that a bad tasting additive be added to avoid consumptionwhen mistaken for ethanol (wood grain alcohol). Excessive methanol exposure to vaporsor by skin contact can lead to blindness and death in humans. Due to its high toxicity,groundwater contamination from spills is an important health issue since methanoldissolves in water and remains colorless, odorless and tasteless.

8.3.3.3 Environmental IssuesMethanol naturally occurs in the environment and spills diffuse easily and rapidly in bothair and water, with no long term effects, beyond a relatively short toxicity period forlarger spills.

8.3.4 Availability and Distribution InfrastructureThe U.S. has 18 methanol production plants with annual production capacity of 2.6million gallons per year.29 This available production level met approximately 75 percentof U.S. methanol demand,30 with the remaining supplies imported from Canada and to alesser extent Latin America. As discussed earlier, considerable natural gas reserves arefound across Alaska, Southwestern U.S. and in Canada, which would mean a significantsupply of a relatively cheap feedstock. In addition, if 10 percent of offshore flare gas wascaptured and converted to methanol it would supply 9.5 million fuel cell vehiclesannually.31 Overall current methanol production capacity is not considered a limitingfactor for the early penetration of methanol fuel cell vehicles.

As MBTE usage decreases due to environmental concerns, this will free up somemethanol supplies domestically. However it is believed that any increases in methanoldemand beyond current capacities will be met through new imported production.32 Thisis due to the low cost of natural gas feedstock in the Persian Gulf and South America. Inaddition, methanol faces economies of scale, requiring large production facilities to beeconomically viable.

Methanol imported from Canada is done via rail, while overseas production is shipped bymarine vessel. Approximately 75 percent of the U.S. population is within 100 miles of amarine terminal, which will allow for truck and pipeline distribution from thesecentralized locations.33 There is no methanol distribution pipelines currently. Somespeculate that methanol can utilize established gasoline and diesel infrastructure with

29 AMI, “Methanol: North America’s Clean Fuel and Chemical Building Block,: available at:http://www.methanol.org/methanol/fact/methanol.html30 Malcolm Pirnie, Inc., Evaluation of the Fate and Transport of Methanol in the Environment, AMI, Jan.1999.31 Nowell.32 Albert Sorbey and Associates, 1996.33 Stork et al., 1997.

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some modifications.34 Inparticular, methanoldistribution systems need tobe secured from contact withwater. The cost ofdistribution should be onlyslightly higher than gasolinedistribution and should notimpact pricing.35

There are very few refuelingstations for methanol (M-85),with the majorityconcentrated in California(Figure 4). Methanolrefueling can be done atexisting service stations withsimilar equipment as gasolinedispensing.

8.4 EthanolEthanol is an alcohol made from fermentation and is an ingredient in alcoholic beverages.However, when used as fuel it is treated, usually by adding gasoline, to make itundesirable for consumption. With recent concerns regarding MTBE groundwatercontamination, ethanol has become a potential candidate for increased use as a fueladditive. Like MTBE it is an oxygenate which decreases emissions from internalcombustion engines. It typically is added to gasoline to form gasohol, a ten percent blendof ethanol with gasoline, although it can be used more directly in a 85 percent ethanolmixture with gasoline, E-85. Any additives added to discourage consumption mayprovide a problem for its use in fuel cells, which have low tolerance for fuel impurities.

Henry Ford was a proponent of ethanol as a fuel source in early automobiles but its usagehas been limited until the 1970s petroleum energy crisis. Since that time the federalgovernment has been encouraging its use. One example of this is the Federal HighwayBill of 1998, which provides a tax credit for ethanol of $0.54 to $0.51 through 2007. In1997, E-85 and other biofueled vehicles in the U.S. numbered at 6,200.36 Approximately0.4 percent of the U.S. transportation fuel is supplied from ethanol.37

34 There is disagreement between the methanol industry and petroleum industry on the feasibility ofmethanol distribution in existing gasoline infrastructure.35 Albert Sorbey and Associates, 1996.36 Cannon, 1997.37 Hakes, James, “Statement of Jay E. Hakes Administrator Energy Information Administration U.S.Department of Energy Before the Subcommittee on Energy and Environment Committee on Science U.S.House of Representatives,” October 5, 1999.

* Dots do not represent actual station locations

Figure 4: Methanol Refueling Stations*

Data Source: Alternative Fuels Data Center, “U.S. Refueling SiteCounts by State and Fuel Type as of 6/16/2000,” available athttp://www.afdc.doe.gov/refuel/state_tot.shtml, June 2000.

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8.4.1 Ethanol ProductionEthanol is classified as a renewable resource because it can be made from any starch orsugar source, although it can also be produced chemically from ethylene, a component ofnatural gas. Ninety percent of ethanol production in the U.S. is from corn, consumingapproximately six percent of the nation’s crop.38 Other feedstock sources include othergrains, cheese whey, potatoes, sugar cane and rice straw.

There are two methods a wet (a chemical extraction process) and a dry (a grindingprocess) method for producing ethanol. The basic steps in the dry process are to grindthe feedstock into a fine powder and then mix it with water to create a mash. Variousenzymes are added to the heated mash to separate out the sugars. Next yeast is added tothe mash to ferment thesugars to produce ethanoland CO2. After two days,the mixture is distilled toremove the water andsolids, creating an ethanolconcentration ofapproximately 95 percent.

Ethanol production alsogenerates many beneficialby-products when corn isthe feedstock, such as cornoil, corn gluten feed andmeal (both feed forlivestock). In fact, the U.S. exported nearly 5 million tons of corn gluten feed and mealto the European Union during 1998.39 Also the CO2 can be captured for use incarbonated beverages or in flash freezing of meat. According to a DOE Guidebook, onebushel of corn produces 2.5 gallons of ethanol, 12.4 pounds of protein feed, 3.0 pounds ofgluten meal, 1.5 pounds of corn oil and 17.0 pounds of carbon dioxide.40

8.4.2 PropertiesEthanol is a colorless liquid with an alcoholic odor and sweet taste (when untreated).Table 11 lists some of ethanol’s properties. It has a blue flame color. Ethanol vapor isdenser than air and will sink, but it tends to disperse more rapidly than gasoline vapors.It has less energy density than gasoline, meaning it needs more volume for the sameenergy content.

38 Yacobucci and Womach, 2000.39 Yacobucci and Womach, 2000.40 Argonne National Laboratory, Guidebook for Handling, Storing and Dispensing Fuel Ethanol,Department of Energy.

Molecular Weight (kg/kmol) 46.07Specific Weight (kg/m3)

Liquid 790Melting Point (°C) -114.5Boiling Point (°C) 78.3Heat of Vaporization (kcal/kg) 210.0Lower Heating Value (kcal/kg) 6,442Flammability Range (% volume) 4 - 14Spontaneous Ignition Temperature(°C)

440

Energy/Volume (Btu/gal)Liquid 76,422

Table 11: Properties of Ethanol (C2H5OH)

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8.4.3 Safety, Health and Environmental Concerns8.4.3.1 Safety IssuesThere are no specific regulations or codes for ethanol use in vehicles or dispensingsystems, but its storage and handling are covered under NFPA 30: Flammable andCombustible Liquids Code and NFPA 30A: Automotive and Marine Service StationCode. The majority of ethanol is shipped via truck tanker and stored underground. Thisdoes not pose any different safety concerns than petroleum product transport with theexception that the ethanol flammability range is wider, increasing the chance of ignitionof vapors. Another safety concern is that ethanol conducts electricity.

8.4.3.2 Health IssuesEthanol is considered less toxic thangasoline and methanol.41 Excessive ethanolexposure to skin will cause redness andirritation. One issue that needs to beaddressed is how ethanol will be treated tomake it undesirable for consumption, whichcould have health impacts when consumed.

8.4.3.3 Environmental IssuesEthanol spills diffuse easily and rapidly inboth air and water, with no long term effects.

8.4.4 Availability and DistributionInfrastructure

Ethanol production in 1998 was over 1.4 billion gallons from 55 facilities, with 88percent of the production capacity located in the Midwest, near corn sources. (See Figure5) This is slightly less than domestic ethanol production capacity which is estimated at1.8 billion gallons. There is some fuel importation from the Caribbean and some fuelexportation to Brazil. If used as a replacement for MTBE, consumption in 2020 ispredicted to be 2.7 billion gallons.42

The DOE suggests that there is a significant amount of agricultural residue that could beused as an ethanol feedstock without competing with other agricultural products.43 Inaddition, this could provide farmers with an increased source of revenue, howeverresearch needs to be conducted on the correct amount of residue that can be harvestedecologically and economically.

Ethanol production facilities are modular meaning that expansion can be constructedquickly and to meet increasing demand over time. It also means that production facilities

41 Argonne National Laboratory, Guidebook for Handling, Storing and Dispensing Fuel Ethanol,Department of Energy.42 EIA, 1999.43 DOE, “Chapter 4: Producing Clean Fuels,” in DOE Energy Resources R&D Portfolio FY 1999-2001,February 2000.

Figure 5: Ethanol Production

Source: Renewable Fuels Association, EthanolIndustry Outlook: 1999 and Beyond, February 1999.

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face little economies of scalein production making smallfacilities as competitive aslarge ones.

The majority of ethanol istransported from productionfacilities to refueling stationsby truck. It would be difficultfor ethanol to be shippedthrough pipelines, makingtruck, rail and barge theprimary distribution methods.The Renewable FuelsAssociation had anassessment completed onwhether ethanol supplierscould meet California’sdemand for ethanol as a replacement for MTBE. The report found that supply was morethan adequate to meet this increase in demand and additional transportation pathways ofrail and marine vessels could be used to move Midwestern and foreign product toCalifornia.44 This indicates that current ethanol capacity could be used during initial fuelcell penetration stages. Since agriculture supplies the feedstock, it is conceivable thatproduction facilities could be located throughout the country. There are currently 76 E-85 refueling stations across the U.S.with the majority centered in theMidwest, as seen in Figure 6.Ethanol has a potential to be asource of hydrogen for vehicles inthose areas where reformation ofhydrogen makes sense.

8.5 Petroleum DistillatesWith over 148 billion gallons usedin 1997 to power 190 millionvehicles in the U.S., gasoline anddiesel fuel are the dominanttransportation energy sources.These petroleum distillates havebeen reformulated over the pastseveral decades to meetenvironmental objectives, such as the removal of lead, lower volatility (gasoline) and

44 Downstream Alternatives, Inc., The Use of Ethanol in California Clean Burning Gasoline: EthanolSupply/Demand and Logistics, Renewable Fuels Association, February 1999.

Figure 6: Ethanol Refueling Stations*

* Dots do not represent actual station locations

Data Source: Alternative Fuels Data Center, “U.S. Refueling SiteCounts by State and Fuel Type as of 6/16/2000,” available athttp://www.afdc.doe.gov/refuel/state_tot.shtml, June 2000.

Other Products

Residual Fuel Oil

Gas/Diesel Oil

Kerosene

Gasoline

NapthaLPG

Figure 7: North American Refinery Gross Output,

Source: Davis, Stacy, Transportation Energy Data Book, 19th

Edition, U.S. Department of Energy, ORNL-6958 1999.

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increased oxygenation levels for better combustion. Current efforts are directed at theremoval of sulfur from diesel fuel and changes in oxygenated gasoline requirements.

Energy security and economic concerns have also prompted national policies directed atreducing U.S. consumption of imported petroleum. The Energy Policy Act of 1992established the objective to reduce petroleum fuel consumption by 10 percent in 2000 andby at least 30 percent in 2010. Progress toward these goals have fallen short with only3.6 percent reduction achieved by 1998.45 The reasons for this lack of success are due tothe advantages that petroleum products have over alternative fuels, such as its relativelycheap price, well established infrastructure and higher alternative fueled vehicle costs.

8.5.1 Petroleum Distillates ProductionPetroleum, or crude oil, contains a complex mixture of hydrocarbons and othercompounds like sulfur and nitrogen. Crude oil is found in underground reservoirs andextracted through wells. Two thirds of proven petroleum reserves are found in theMiddle East and North Africa, with exploration and advances in technology expected toincrease recoverable oil throughout the world. U.S. crude oil production levels have beendeclining since the 1970s, with only 9.1 million barrels of petroleum products per dayproduced in 1998.46 In order to meet 1998 U.S. consumption of 18.68 million barrels ofpetroleum products, $46.6 billion was spent on petroleum imports.47 In terms oftransportation petroleum consumption, the U.S. utilized 137 percent of domesticproduction.48

At a refinery, crude oil is distilled (heated and condensed) into its various fractions, withthe lighter fractions condensing at the top and the heavier ones settling toward the bottomof a distillation column.Products such asgasoline, kerosene andheavy oils can be sold asan end product, or can befurther processed. Thesecond processingconverts the fractionsinto different petroleumproducts throughcracking, coking, reforming and alkylation processes. Figure 7 illustrates the percentagesof products from North American refineries, with gasoline making up over 40 percent ofthe output.

In order for petroleum distillates to be utilized in fuel cells, the sulfur must be removed.The average sulfur content ranges from 30 to 300 parts per million (ppm) for gasoline.

45 GAO, 2000.46 EIA, 1999.47 EIA, 1999.48 Davis, 1999.

Molecular Weight (kg/kmol) 114.22Melting Point (°C) -57.0Boiling Point (°C) 125.7Heat of Vaporization (kcal/kg) 71.0Energy/Volume (Btu/gal)

Liquid gasoline 114,130Source: Vernon Roan, “Fuel Cell Fueling Infrastructure”, SAETOPTEC, Boston, MA, March 19, 1998.

Table 12: Properties of N-Octane (C8H18)

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Various processes can be employed to remove sulfur at the refinery, with the creation of a“designer gasoline” that can be used in fuel cells, since they require different propertiesthan internal combustion engines. The impact that other gasoline additives have on thefuel cell is also a concern.

8.5.2 PropertiesGasoline’s domination as the primary vehicle fuel for internal combustion engines, arosefrom its properties of high energy density and the ease of handling and distributing it. Ithas a high ignition temperature compared to alternative fuels. It has a distinct odor andvisible flame.

8.5.3 Safety, Health and Environmental Issues8.5.3.1 Safety IssuesThe general public has been exposed to the risks of gasoline for over six decades.Gasoline has one of the highest risks for ignition in open areas when compared to otheralternative fuels. The creation of a petroleum distillate for a fuel cell would have somesafety advantages over current gasoline, because it could have a lower vapor pressure,increasing fire safety.

8.5.3.2 Health IssuesThe EPA recently identified 21 mobile source air toxics and proposed limits on theamount of benzene, a human carcinogen, in gasoline.49 Most of the toxic risk arises frombreathing tailpipe and evaporative/refueling emissions and accounts for approximatelyhalf of total toxic exposure in urban areas. This type of exposure can result in non-cancersymptoms of eye, nose and throat irritation. Tailpipe and evaporative/refueling emissionsalso contribute significant amounts of NOx and VOC emissions, which produce ozone.Exposure to ozone can cause lung damage and increase asthma problems.

8.5.3.3 Environmental IssuesLarge petroleum spills have a major impact on the environment, with long term impactson flora and fauna. Air quality issues affecting human health also impact the health ofthe environment.

8.5.4 Availability and Distribution InfrastructureThere are approximately 190 refineries across the U.S. with concentrations in Texas (26percent), Louisiana (15 percent) and California (14 percent). Financial andenvironmental considerations limit the possibility of any new refineries and may makeolder facilities uneconomic to operate. Current U.S. refineries have the capacity toexpand crude oil distillation to produce the lighter transportation fuels, but will not beable to expand enough to meet the increased demand. In particular, demand for themiddle distillates, such as naphtha, are already beyond capacity levels.50 Transportation

49 EPA, Control of Emissions of Hazardous Air Pollutants from Mobile Sources, EPA420-F-00-025, July2000.50 Agee, 1998.

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petroleum demand isexpected to increase by 5.4million barrels per day. 51

The EIA also predictscontinued dependence onimports to meetdemand—increasing from51 percent to 64 percent in2020.

One of the issuesconcerning fuel choicerevolves around potentialoil reserves and whetherthe world is running out ofoil. Although oil is alimited resource and worldconsumption continues toincrease, the U.S.Geological Survey reports that recoverable oil supplies continue to expand.52 Inparticular, offshore oil reservoirs grow as new technology makes these supplieseconomically recoverable. A recent Popular Science article predicts that the world willrun out of oil in 2050 and cites OPEC’s 2080 prediction,53 while the American PetroleumInstitute’s estimates between 63 and 95 years before remaining sources will bedepleted.54

There is a well established infrastructure for petroleum fuels to and from the refineries.As illustrated in Figure 8, there are approximately 190,000 refueling stations for gasolinethroughout the country.

8.6 Gas to LiquidsGas to liquids (GTL) synthetic fuels have begun to peak interest as a clean alternativefuel for transportation that can utilize current distribution infrastructure. In addition toproviding fuel cells a sulfur free fuel, conventional internal combustion engines couldalso utilize the fuel, reducing vehicle emissions. This would ease the transition from thecurrent vehicle market to zero emission vehicles.

51 EIA, 1999.52 U.S. Geological Survey, “USGS World Petroleum Assessment 2000,” USGS Fact Sheet FS-070-00,April 2000.53 Phillips, William, “Are We Really Running Out of Oil,” Popular Science, May 2000.54 American Petroleum Institute, “Oil Supplies -- Are We Really Running Out of Oil?,” October 1999,available at http://www.api.org/edu/oilsup.htm

Figure 8: Gasoline Refueling Stations*, 1999

Source: General Accounting Office, Limited Progress inAcquiring Alternative Fuel Vehicles and reaching Future Goals,GAO/RCED-00-59, February 2000.

* Please note one dot = 10 stations and does not represent actual locations.

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8.6.1 Gas to Liquids ProductionNatural gas is reacted with air in an autothermalreactor to form a synthetic gas of mostly carbonmonoxide and hydrogen. The synthetic gas is thenfeed into the Fischer-Tropsch step, where a catalystrecombines the synthetic mixtures to formhydrocarbons and oxygenated derivatives. Whencobalt is used as the catalyst the outcome is ahydrogen rich paraffin and lower carbon dioxidemolecules. Iron based catalysts are also used. Sulfuris removed prior to the autothermal step, making theend product’s sulfur content virtually zero.

8.6.2 PropertiesUnlike gasoline, GTLs contain virtually no sulfur oraromatic compounds, which foul up fuel cellsprocessors and catalysts. Gasoline contains 24.8 percent of non-hydrocarboncomponents, compared to GTL’s less than one percent, as seen in Table 13. In addition,the paraffin makeup of GTL means it has a higher hydrogen carrying capacity. GTLfuels also have the highest lowerheating value, 4460 kJ/gmol comparedto the other fuels discussed.

8.6.3 Safety, Health andEnvironmental Issues

GTL have similar safety, health andenvironmental issues as petroleumproducts, although the lack of aromaticcompounds indicates a reducedtoxicity level for humans and theenvironment.

8.6.4 Availability andDistribution Infrastructure

Most GTL projects focus on the use ofwaste natural gas, such as vented orflared gas and gas that is of too low aquality for sale, as the feedstock to theprocess. The current estimate of thislow economic value natural gas is14,000 TCF, which can be convertedto several hundred billion barrels of oilequivalent.55 There are a handful of

55 Syntroleum, “Frequently Asked Questions,” available at http://www.syntroleum.com/ab6_faq.htm

ProjectCapacity

(barrels per day) StatusRentech 800 - 100 PotentialMossgas 23,000 OperatingSasol, I, II, III 150,000 Operating*Shell Bintulu 12,500 ExistingSyntroleumSweetwater

10,000 Announced

Sasol/Phillips/QGPCQatar

20,000 Potential

Shell Bangladesh 50,000 PotentialExxon Alaska 100,000 PotentialExxon Qatar 100,000 PotentialChevron/SasolEscravos

20,000,000 -30,000,000

Potential

Aurora Project 50,000,000 -200,000,00

Potential

Texaco Petrobas N/A PotentialStatoil/Sasol N/A Potential* Coal feedstock

Table 14: Gas to Liquids Projects

Sources: Agee, Mark, “Fuels for the Future,” at EnergyFrontiers International Conference, October 1999;Rentech, Inc, January 2000.

GTLComponents Weight %

C4H10 0.08C5H12 3.81C6H14 11.83C7H16 21.18C8H18 27.20C9H20 26.46C10H22 8.80Others 0.62

Source: Ahmed et al., 1999.

Table 13: Compositionof GTL Gasoline

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GTL projects operating across the globe with a number of potential projects in the works,(see Table 14) with each producer making a similar product.

GTL can utilize the existing infrastructure for petroleum distribution and can be used ininternal combustion engines, making a transition in vehicle technologies smooth.

8.7 Technology Snapshot8.7.1 HydrogenIn October 1999, a workshop cosponsored by DOE, CARB and the California EnergyCommission, found that “there are no technical showstoppers to implementing a near-term hydrogen fuel infrastructure for direct hydrogen fuel cell vehicles.”56 Hydrogen’shistoric use in industry provides a number of established hydrogen production techniques,such as natural gas reformation. Electrolysis is also a viable option, though low costrenewable electricity sources are still down the road for most areas.

Both the Vancouver and Chicago fuel cell bus demonstration projects used compressedhydrogen gas as the storage option, relying upon experiences gained from CNG vehicles.The first fuel cell vehicle for sale is DaimlerChrysler’s direct hydrogen fuel cell bus, withcompressed hydrogen stored on the roof.57 More research needs to be conducted on highpressure storage containers for light duty vehicles. Liquid hydrogen stored on-board wasthe fueling option for DaimlerChrysler’s NECAR 4 and the General Motor’s Zafiraprototype. Metal hydrides are considered a viable storage technology, but are not costcompetitive yet. Other solid state storage methods, such as carbon nanotubes and glassmicrospheres are still in the early stages of development, but are perceived as long termsolutions.

There is a handful of demonstration hydrogen fueling stations in the U.S. providingcompressed or liquid hydrogen. However, uniform hydrogen codes and standards need tobe established for both hydrogen storage and fueling.

8.7.2 Fuel ProcessorsThe main challenges for on-board fuel processors include size, weight, cost, efficiency,start-up time and ability to respond to transient loads. Additional concerns includemaintenance issues of the on-board fuel processors and impurities that arise from on-board reformation that can poison fuel cell catalysts, such as CO and sulfur.

Most methanol processors utilize the steam reformation process and have less complexitythan gasoline processors since methanol can be reformed at lower temperatures.However, the endothermic nature of steam reformation requires up to 30 minutes beforereaching reformation temperatures. The methanol processor is considered further alongthan gasoline processors, with a number of prototype vehicles released. For example,

56 Ohi, J., Blueprint for Hydrogen Fuel Infrastructure Development, NREL/MP-540-27770, Draft January2000, p. 1.57 DaimerChrysler, “DaimlerChrysler Offers First Fuel Cell Vehicles for Customers,” April 2000.

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Daimler-Benz’s NECAR 3 utilizes a methanol processor with a PEM fuel cell and hasbeen able to respond to transient loads. Other companies with methanol demonstrationvehicles include GM, Toyota and Nissan.

Gasoline processors tend to utilize partial oxidation and auto-thermal reforming. Due tothe exothermic nature of the reformation process, the processor can essentially be usedfor any type of hydrocarbon. Start-up time is less of an issue with these processors.However, the high temperatures mean that the gasoline fuel processor needs to designedto be heat resistant, often making them bulkier and heavier than methanol processors.Gasoline processors have been demonstrated in the laboratories but no vehicledemonstration has occurred at this time. However, Nuvera Fuel Cells announced in July2000 that will ship its gasoline on-board reformers to four major automakers fordemonstration vehicles.58 IFC has developed an on-board gasoline reformer for DOE.

8.8 Fuel Cell Efficiency and EmissionsIn considering the relative efficiency and emissions associated with fuel cells, it isnecessary to consider the entire system. Consumers can gage fuel efficiency from in-useoperation, but what is not considered by the average consumer is the amount of energythat was expended and emissions generated in delivering the fuel to the vehicle as not allemissions are reflected in the cost of the fuel. For example, a direct hydrogen fuel cellvehicle appears to be a highly efficient, zero emission vehicle because the only tailpipebyproduct is water, when in reality appreciable energy could be expended and emissionsmay have been generated during production of the hydrogen fuel. All of this must beincorporated in a wells-to-wheels analysis to arrive at the true emissions and fueleconomy related to a particular fuel choice.

8.8.1 Fuel Cell EfficiencyFuel cells are more efficient than internal combustion engines because they operate atlower temperatures and waste less energy as heat. Current technology efficiencies of aninternal combustion engine includes losses of more than 80 percent of the fuel energymostly as waste heat (either as thermal radiation via the cooling system or through thevehicle exhaust), whereas for a hydrogen fuel cell the energy loss is much lower, around50 percent.59

As illustrated in Figure 9, there are several processes that influence the energy efficiencyof a fuel cell vehicle. They are feedstock recovery, transportation of feedstock, fuelproduction, fuel distribution, fuel storage, on-board fuel reformation and the fuel cellefficiency. Looking at the first column, hydrogen produced from steam reformation ofnatural gas at a centralized location, one notes that significant energy losses areassociated with the steam reformation process (~20%), compression or liquefaction of the

58 Nuvera Fuel Cells, “Nuvera Fuel Cells to Ship First Gasoline-Powered Fuel Processing Systems to AutoManufacturers Worldwide,” July 19, 2000.59 Theoretically efficiencies are 40% for an internal combustion gasoline engine, 50% for an internalcombustion diesel engine and 80% for a hydrogen fuel cell.

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hydrogen product (30%), distribution to refueling stations (30%) and then the fuel stackefficiency itself (45%). The energy losses illustrated are based on current technologyefficiencies, so these efficiency estimates may change as reformation and fuel celltechnology evolves.

Without considering the second part of the system—reformation and fuel cellefficiency— highlighted with a checked pattern, Figure 9 might be misleading. Thegasoline reformer and fuel cell stack are much less efficient than a direct hydrogen fuelcell stack alone. However, where the total system losses are considered, usingreformulated gasoline as an example, just over 20 percent of the fuel energy is lost inproduction, whereas with hydrogen it is closer to 60 percent. An initial reaction to thismight be to declare that hydrogen fuel cells, because hydrogen production uses so muchenergy in its production, are not viable. However, it is important to keep in mind thatdirect hydrogen is the most efficient fuel that can be used in a fuel cell. Whereas gasolinestill must go through a reformer which uses energy to convert the hydrocarbon fuel intohydrogen and the gas produced is not 100 percent hydrogen, reduces the fuel cell stackefficiency. Also note that while the production efficiencies of gasoline and diesel arelow, these efficiencies do not reflect the losses potentially associated with purifying thefuel to fuel cell quality.

Figure 4.9: Net Energy Losses “Well to Wheels” for Fuel Cell Vehicles

Sources: Albert Sorbey and Associates, 1996; Pembina Institute for Appropriate Development, 2000;Karlhammer, 1997; Moore, 2000; Thomas et al., 1998; and Stodolsky et al., 1999.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

H2 fro

m N

G Cen

traliz

ed

H2 fro

m N

G On-

Site

H2 fro

m E

lectro

lysis

H2 fro

m R

enew

able

On-Site

Elec

trolys

is

Met

hano

l from

NG

Direct

Met

hano

l from

NG

Ethan

ol fro

m C

orn

Refor

mula

ted

Gasoli

ne

Low S

ulfur

Dies

el

IC G

asoli

ne E

ngine

En

erg

y L

osses

Feedstock Recovery Feedstock TransportFuel Production Compression or LiqueficationDistribution On-Board ReformationFuel Cell Stack Efficiency Engine Efficiency

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The last significant energy loss in a fuel cell system is in the fuel cell stack itself. Tominimize CO2 buildup in the stack, and to avoid starving any of the cells in the stack,essentially too much hydrogen must be fed to the fuel cell, resulting in some pass-throughof hydrogen, and therefore unused energy, into the exit gas stream. Also, energy must beexpended to overcome the resistance to electrochemical changes at the electrodes, whichshows up as heat loss. In addition, the fuel cell is most efficient at steady-state, and lessso when either maximum or minimum power is required. Ideally, to maximize thepotential of a fuel cell, its operating range should be fairly narrow. This will likely meanthat some type of load leveling device must be used, such as a battery leading to furtherlosses in the system.

8.8.1.1 Hybrid VehiclesA solution for minimizing the fuel cell system losses due to reformers and the stack itself,especially during varying load operation, is to couple the fuel cell with a hybrid-electricdrivetrain. The main advantage of a hybrid fuel cell vehicle is the ability to recaptureregenerative braking energy that can be used later to supplement the fuel cell. Insupplementing the fuel cell with regenerative braking energy, the fuel cell can operate atnear constant, or minimally varying power loads, thereby maximizing its efficiency.However, this load leveling device option needs to be weighed against the impact it hason vehicle weight and efficiency.

Fuel cell systems are more efficient than current generation internal combustion engines,

0

5

10

15

20

25

30

35

Direct

H2 FC

Direct

H2 Hyb

rid F

C

Refor

med

Met

hano

l FC

Ref. M

etha

nol F

C Hyb

rid

Refor

med

Gas

oline

FC

Refor

med

Gas

FC H

ybrid

Refor

med

Dies

el FC

Refor

med

Dies

el FC H

ybrid

CNG IC

Conve

ntion

al IC

Gas

oline

Hybrid

-Elec

tric I

C Gas

oline

Conve

ntion

al IC

Dies

el

Hybrid

-Elec

tric I

C Dies

el

Eff

icie

nc

y L

ev

el

(%)

Sources: Stodolsky et al., 1999; Albert Sorbey and Associates, 1996; Pembina Institute forAppropriate Development, 2000; and Thomas et al., 1998.

Table 10: Comparison of Energy Efficiencies Between Fuel Cells, InternalCombustion and Hybrid Vehicles

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even after considering the energy losses associated with fuel reforming and inherent stacklosses. However current fuel cell technology may not represent any significant efficiencyincreases over current hybrid electric internal combustion technology. Figure 10provides a wells-to-wheels comparison of fuel cell, internal combustion and hybridvehicles.

8.8.2 Fuel Cell EmissionsIn its most simple configuration, a fuel cell produces electrical energy, water and heatusing fuel (hydrogen) and oxygen in the air. It is the promise of high efficiency and zeroemissions potential that hasfueled research anddevelopment into makingfuel cell vehicles viable forthe mass market, especiallysince EPA estimates thatmotor vehicles in the U.S.account for 78 percent of allcarbon monoxide (CO)emissions, 45 percent ofnitrogen oxides (NOx)emissions, and 37 percent ofvolatile organic compounds(VOC) nationwide.60 Whiledirect hydrogen fuel cellsare classified as zeroemission vehicles, this iszero localized emissions(i.e., tailpipe) and do not

include the emissions thatare produced during thehydrogen fuel productionoff-board. All fuelreformers, whether offboard or on board, generateemissions. Therefore, likeefficiency, emissions needto be viewed from alifecycle standpoint—well-to-wheels.

60 Thomas and Zalbowitz, 1999.

Sources: Thomas et al., 1998 and Stodolsky et al., 1999.

Figure 11: VOC Emissions

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

H2 fro

m N

G FC

H2 fro

m (N

) Elec

trolys

is FC

H2 fro

m (R

) Elec

trolys

is FC

Met

hano

l FC

Gasoli

ne F

C

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ne E

ngine

IC G

asoli

ne E

ngine

Hyb

rid

VO

C (

gra

m/m

ile

)Upstream

Tailpipe

Figure 12: CO Emissions

Sources: Thomas et al., 1998 and Stodolsky et al., 1999.

0

2

4

6

8

10

12

H2 fro

m N

G FC

H2 fro

m (N

) Elec

trolys

is FC

H2 fro

m (R

) Elec

trolys

is FC

Met

hano

l FC

Gasoli

ne F

C

IC G

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ne E

ngine

IC G

asoli

ne E

ngine

Hyb

rid

CO

(g

ram

/mil

e)

Upstream

Tailpipe

N - National marginalgrid mix

R - Renewable

N - National marginalgrid mix

R - Renewable

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Figures 11–14 look at boththe upstream emissions andvehicle emissions. Asillustrated, criteriapollutants are dramaticallyreduced for fuel cellpowered vehicles, with theexception of fossil fuelelectrolysis and to someextent gasoline reformedfuel cells. Hydrogenproduction fromelectrolysis is penalized forrelying on electricitygeneration, resulting inpotentially large NOxemissions depending upon

electricity grid mix. Depending upon the electricity source, emissions will range fromzero (non-polluting renewable sources) to the above the illustrated value (whichrepresents a mix of fossil fuel electric production from coal and natural gas). Again theseare estimates and are influenced by vehicle fuel economy.

The Pembina Institute for Appropriate Development recently released a study thatcompares the climatefriendliness of fuel cellvehicles compared toconventional and hybridvehicles. They applied alifecycle value assessmentand a common end-use unitof 1000 kilometers traveledfor a Mercedes-Benz AClass vehicle. As seen forNOx, they also found thatnon-renewable electrolysisresults in little greenhousegas reductions whencompared to an internalcombustion gasolinepowered vehicle. However, other options do represent significant greenhouse gasreductions. A gasoline hybrid and hydrogen produced from non-emissive energysources, such as solar, hydro and wind, were also included for comparison, but are notdiscussed in the Pembina report. The data suggests that the improved fuel economy of ahybrid may achieve comparable greenhouse reductions to fuel cell vehicles powered by a

Figure 14: GHG Emissions

Source: Pembina Institute for Appropriate Development, 2000.

0

50

100

150

200

250

300

H2 fro

m N

G FC

H2 fro

m E

lectro

lyzer

*

H2 fro

m E

lectro

lyzer

**

Met

hano

l FC

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ne F

C

Gasoli

ne IC

Gasoli

ne IC

Hyb

rid

CO

2 k

g e

qu

iva

len

t p

er

10

00

km

* Combined Cycle Natural Gas ** Renewable

Figure 13: NOx Emissions

Sources: Thomas et al., 1998 and Stodolsky et al., 1999.

0

0.5

1

1.5

2

2.5

3

H2 fro

m N

G FC

H2 fro

m (N

) Elec

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m (R

) Elec

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Met

hano

l FC

Gasoli

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C

IC G

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IC G

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ne E

ngine

Hyb

rid

NO

x (

gra

m/m

ile

)

Upstream

Tailpipe

N - National marginalgrid mix

R - Renewable

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reformed fuel supply. Figure 4.14 illustrates the results. Much of the CO2 benefit from ahydrogen fuel cell vehicle comes from the use of natural gas as the feedstock.

8.9 Economics of Fuel CellsAs discussed earlier, there are multiple pathways evolving for fuel cell powered vehicles.One approach is to produce hydrogen off-board and store it on the vehicle for directhydrogen fuel cell usage. The biggest issue is how to store a reasonable quantity on-board. The second is to utilize a hydrogen rich fuel, which is reformed on the vehicle toprovide hydrogen to the fuel cell.61 The issue here is the added complexity of an on-board reformer. Two types of expenses were investigated to generate an accurate pictureof the fuel cell costs related to fuel choice. First are the fuel production costs and itstransportation /refueling costs fromfeedstock to a consumer’s vehicle. Thesecond part of the equation is the costsassociated with the fuel’s usage in thevehicles, such as the storage of the fuel andreformation components.

8.9.1 Off-Board Production ofHydrogen

8.9.1.1 Electrolysis CostsHydrogen generated from electrolysis has asignificantly higher cost than other methods,due to the high cost of electricity. Theaverage retail price in 1999 was $0.066 perkWh,62 with price differentials across theU.S. dependent upon electric generationenergy source, transmission costs,

environmental regulations, etc. Electricity prices areexpected to decline following the deregulation of theelectric industry. Table 15 lists generation costs byfuel type. As discussed in the emissions section,there is a tradeoff between cost and emissions, withrenewable sources (excluding hydropower) costingappreciably more. The costs for these renewableenergy sources are expected to decline withefficiency improvements and mass production ofcomponents. An assessment by DirectedTechnologies found that retail electricity wouldneed to price at $0.02 to $0.04 per kWh to compete

61 The exception to this is direct methanol fuel cells, which can reform methanol itself.62 EIA available at http://www.eia.doe.gov/price.html.

FuelHydrogen Price

($ per kg)Fossil Fuel

(large facility)$6.15 - $7.87

Fossil Fuel(small facility)

$9.22

Solar $13.42Wind $6.49

Source: Padro and Putsche, 1999.

Table 16: HydrogenProduction Costs fromElectrolysis

Facility TypeTotal Cost($ per kWh)

Coal $0.015 - $0.030GasCombinedCycle

$0.030 - $0.045

Wind $0.039 - $0.070Hydro $0.033 - $0.037Solar $0.100 - $0.590

Table 15: Electricity Generation Costs

Source: State and Territorial AirPollution Program Administrators andAssociation of Local Air PollutionControl Officials, Reducing GreenhouseGases & Air Pollution, October 1999.

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with natural gas reformation.63 These rates may be achievable during off-peak, such asduring the night and in the early morning hours, when utilities have excess productioncapacity.

Alkaline electrolyser capital costs are approximately $500/kW, with the potential todecrease to $300/kW, while PEM electrolyserscapital costs were $5,000/kW in the early1990s, but with the potential to also cost$300/kW with mass production.64 NREL foundactual fossil fuel production costs as listed inTable 16 and projected renewable electricitysources at $13.42 (in 2000) and $7.96 (in 2010)per kg of hydrogen for solar energy and $6.49(in 2000) and $3.53 (in 2010) per kg ofhydrogen produced from wind poweredelectrolysis, assuming technology advances. 65

Home electrolysers using off-peak electricity are estimated to produce hydrogen at a costof $6 to $9 per kg.66

8.9.1.2 Steam Methane ReformationLarge natural gas steam reformation costs between $1.75 to $2.40 per kg, with over 50percent of the cost being the feedstock.67 Natural gas wellhead prices in the U.S. were$1.96 per thousand cubic feet in 1998 and are expected to rise to $2.34 by 2005.68 Theprice of natural gas is expected to increase higher than gasoline due to the large increasein demand from new electric generating plants. Another cost factor is the distance of thesteam methane reformation plant from low cost sources of natural gas. DirectedTechnologies estimated natural gas feedstock prices as $1.90/GJ for remote plants locatednear gas fields, $2.85/GJ for regional plants and $3.79/GJ for on-site reformers.69 Smallfacilities can reform natural gas at a cost of $3.62 per kg, which illustrates the economyof scales that affect reformation costs.70 It is estimated that a 1,000 vehicle smallmethane reformer system could be constructed for between $230 and $380 per vehicle.71

On-site steam reformation eliminates transportation costs producing hydrogen in therange of $2.33 to $10.97/kg, dependent upon the capacity utilization factor (i.e., smallinitial market penetration will increase costs since capital costs are spread over a smaller

63 Thomas and Kuhn, 1995.64 Thomas and Kuhn, 1995; Ogden, 1999.65 Padro and Putsche, 1999.66 Thomas et al., 1997.67 Padro and Putsche, 1999.68 EIA, 1999.69 Thomas et al., 1997.70 Padro and Putsche, 1999.71 Thomas et al., 1998; Ogden, 1999.

Plant SizeHydrogen Price

($ per kg) Large facility $1.75 - $2.40Small facility $3.62

Source: Padro and Putsche, 1999.

Table 17: HydrogenProduction Costs fromSteam Methane Reforming

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production level).72 These cost projections can be reduced if on-site steam reformationtechnology can be mass produced to yield hydrogen production costs around $2.50/kg.

8.9.1.3 Hydrogen Distribution andStorage

Hydrogen generated at centralizedlocations will be distributed to refuelingstations in either gaseous form via pipelineor by LH2 tanker truck. Pipelinedistribution costs for hydrogen aredependent upon flow rate and distance.Large scale storage, such as in undergroundreservoirs or above ground storage tanks may also be necessary to maintain continuousproduction capacity in light of demand fluctuations. Table 18 lists the costs of hydrogendistribution and storage.

Liquefaction is more expensive than compression due to higher energy consumption.However, transport by LH2 tanker trucks avoid some of the infrastructure investmentrequirements of compressed gas distribution. In particular, the refueling station costs forcompressed hydrogen are almost equivalent to the price of hydrogen production. ADirected Technologies analysis found that compression and pipeline costs were similar tothe cost of liquefaction, making the least expensive choice dependent upon local factors.

8.9.1.4 On-Board StorageCompressed hydrogen gas storage on-board vehicles requires an advanced compositetank with a pressure of at least 5000 psia. A carbon fiber wrapped aluminum tankhydrogen storage system would cost $550 to $1,000 based on high volume production(compared to a gasoline tank at $125).73 Table 19 lists the costs for the three discussedmethods of on-board storage options. Directed Technologies estimates that compressedhydrogen usage on a vehicle will add $762.74 Over the life of the vehicle (100,000 miles)the cost of the storage tank is less than $0.01 per mile, dwarfed by comparison to the costof hydrogen fuel.

72 Thomas et al., 1997.73 Thomas et al., 1999b.74 Thomas et al., 1998.

Storage System Cost ($ per kg)Compressed H2 $1,638Liquid H2 $411 - $819Fe-Ti Metal Hydride $1,349 - $2,254

Source: Padro and Putsche, 1999.

Table 19: On-Board StorageHydrogen Costs

Cost & Storage Distribution Costs* ($ per kg) Refueling Station($ per kg) 0 - 161 km 805 - 1609 km Costs ($ per kg)

Compression $1.28 - $2.25 $0.16 - $0.65 $0.37 - $8.74 $1.28 - $1.93Liquefaction $1.60 - $3.21 $0.08 - $0.59 $0.64 - $1.51 $0.51 - $0.77

* Compressed gas distributed via pipeline and liquid hydrogen transported by truck.

Sources: Padro and Putsche, 1999; Ogden, 1999.

Table 18: Hydrogen Distribution and Refueling Costs

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8.9.2 Centralized Production and On-Board Reformation8.9.2.1 MethanolMethanol has a history of unstable prices, due to fluctuations in supply and demand. Thewholesale price of methanol has averaged about $0.50 per gallon, which equates to $1.00per gasoline equivalent gallon. As discussed earlier, excess capacity in the methanolindustry can meet the initial demand of fuel cell vehicles (approximately 1.5 million fuelcell vehicles). Once excess capacity is reached a 1,000 metric tonne per day methanolplant could be built for $1 billion dollars.75 This would result in an additionalinfrastructure cost per fuel cell vehicle of $450.

Adding a new methanol system at an existing facility costs $62,400, while the conversionof a gasoline dispensing system would cost less than $20,000.76 Directed Technologiesestimates a $50 infrastructure cost per vehicle for methanol, assuming no new productionfacilities are needed. Methanol storage on-board is relatively inexpensive and thetechnology has been used for a number of years. Methanol fuel processors are expectedto be less expensive than gasoline processors since methanol reforms at a lowertemperature, with a price of $1,309 - $2,364.77 The only expensive component of the fuelprocessor is a platinum catalyst, which is used in a small quantity.

8.9.2.2 EthanolThe average production cost for ethanol is approximately $1.10 per gallon78 with retailprices higher due to increased demand as an oxygenate. Federal subsidies reduce theprice of ethanol by $0.54 (reducing to $0.53 in 2001). New capacity would have to bebuilt to meet demand if ethanol becomes a fuel of choice. Production facilities do notface economies of scale, allowing capacity to grow as demand does. The capital costs forbuilding a new wet mill plant are approximately $2.00 per annual gallon, and $2.50 perannual gallon at a dry mill plant.79 Rail shipment costs for transporting ethanol from theMidwest to California is between $0.14 and $0.17 per gallon and takes 2 to 3 weekstime.80 Marine cargo shipping costs would be similar.

Ethanol is dispensed like methanol and gasoline, so gasoline station conversion costs aresimilar to methanol. Ethanol is in the same reforming difficulty category as gasoline,making any gasoline reformer essentially a multi-fuel reformer. Gasoline fuel processorcosts are estimated to be $20 to $40/kW, adding $2,388 - $5,247 to the cost of a vehicle.

75 Thomas et al, 1999b.76 EA Engineering, Methanol Refueling Station Costs, American Methanol Foundation, February 1999.77 Thomas et al., 1998.78 DOE, “Chapter 4: Producing Clean Fuels,” in DOE Energy Resources R&D Portfolio FY 1999-2001,February 2000.79 California Energy Commission, Supply and Cost Alternatives to MTBE in Gasoline, P300-98-013,February 1999.80 Downstream Alternatives Inc.

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8.9.2.3 Petroleum DistillatesThe price of gasoline is expected to remain relatively stable, even though petroleumconsumption is expected to climb.81 However, the gasoline price jumps in 2000 ($1.59per gallon in July 2000 compared to $1.16 per gallon July 1999)82 illustrate how volatilethe petroleum market is. Typically, crude oil prices make up 37 percent of the cost of aregular grade gasoline,83 and as seen in Figure 15, gasoline prices fluctuate with crudeprices. The July 27, 2000 crude oil price per barrel was $27.39, compared to $18.63 theprevious year.84 EIA predicts crude oil prices to remain in the $21.00 range over the next15 years. 85

Certain areas of the U.S., such as the Midwest, also faced higher prices due to limitedsupply of reformulated summer gasoline. This market reaction is important to note sinceit is likely that the small penetration of fuel cell vehicles will also set up the potential fora small market for specialized fuel cell gasolines. The special requirements for fuel cellgrade gasoline, such as sulfur removal, have historically increased the price $0.04 to$0.17 per gallon.86 As discussed earlier, petroleum has an established infrastructure. Asa reference to compare infrastructure costs, an estimated $11 billion is spent yearly ongasoline infrastructure, such as drilling new areas and maintenance at refineries.87

Petroleum distillate fuelprocessor costs are expected tobe $20/kW to $40/kW, whichadds a cost $2,388 - $5,247 to agasoline fuel cell vehicle.88

8.9.2.4 Gas-to-LiquidsGTL production has yet to bedemonstrated at a commercialscale, although an Arthur D.Little study found that GTLproduction for plants with atleast 50,000 barrels per day is“technically viable andeconomically competitive” inareas of low construction costsand near sources of cheap

81 Hakes, 1999.82 Cook, John, “Rising Crude Oil and Gasoline Prices,” Statement of John Cook, Director PetroleumDivision, EIA Before the Committee on Energy and Natural Resources, US Senate, July 13, 2000.83 EIA, April 2000.84 EIA, “Crude Oil Watch” July 16, 2000, available at http://www.eia.doe.gov.85 EIA, 1999.86 Allison, 1996.87 Thomas et al., 1998.88 Thomas et al., 1998.

Source: EIA, April 2000.

Figure 15: Average Gasoline Price and Imported Oil Price

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natural gas.89 Economies of scale exist for the production process, requiring a minimumplant size of 10,000 barrels per day to be economically viable. Capital costs areestimated to be at $20,000 to $25,000 per barrel per day, compared to crude oil refinerycosts of $10,000 to $15,000 per barrel per day.90 GTL is not considered economicallycompetitive until crude oil is $30/barrel. As discussed earlier, petroleum distillate fuelprocessor costs are estimated to be $20 to $40/kW, adding $2,388 - $5,247 to the cost ofa vehicle. There are efforts underway to develop modular systems to produce 1,000barrels per day cost effectively.91

89 Business Wire, “Gas-to-Liquids Fuel Technologies to Commercialize,” March 1998, available at:www.dieselnet.com.90 Greene, 1999.91 Rentech, Inc., “Rentech and Phoenix Gas Systems Jointly Announce Agreement to DevelopBreakthrough Small Scale Gas-to-Liquids Plants,” March 1999.

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Abt Associates and Booz-Allen & Hamilton, Inc., Sector Notebook Project: PetroleumRefining, Environmental Protection Agency, Sept. 1995.

Agee, Mark, “Gas to Liquids Technology - A New Tool for the Energy Industry,” at AiCGas to Liquids Conversion Conference, March 1998.

Ahmed, S., J. Kopasz, B. Russell and H. Tomlinson, “Gas-to-Liquids Synthetic Fuels forUse in Fuel Cells: Reformability, Energy Density and Infrastructure Compatibility,” inProceedings of 3rd International Fuel Cell Conference, November-December 1999.

Albert Sorbey and Associates for Allison Gas Turbine Division, General MotorsCorporation, Research and Development of Proton-Exchange-Membrane Fuel CellSystem for Transportation Applications, U.S. Department of Energy, Office ofTransportation Technologies, DOE/CH/10435-03, November 1996.

American Petroleum Institute, Fuel Choices for Fuel Cell Powered Vehicles.

Amos, Wade, Costs of Storing and Transporting Hydrogen, NREL/TP-570-25106,November 1998.

Bechtold, Richard, Alternative Fuels Guidebook, SAE, 1997.

Berlowitz, Paul and Charles Darnell, “Fuel Choices for Fuel Cell Powered Vehicles,” inFuel Cell Power for Transportation 2000, SAE SP-1505, March 2000.

Cannon, James, Harnessing Hydrogen: The Key to Sustainable Transportation,INFORM, 1995.

Cannon, James, Clean Hydrogen Transportation: A Market Opportunity for RenewableEnergy, REPP Issue Brief, April 1997.

Casten, Sean, Peter Teagan and Richard Stobart, “Fuels for Fuel Cell Powered Vehicles,”in Fuel Cell Power for Transportation 2000, SAE SP-1505, March 2000.

Davis, Stacy, Transportation Energy Data Book, ORNL-6958, September 1999.

Energy Information Administration, Annual Energy Outlook 2000, U.S. Department ofEnergy, Dec. 1999.

Energy Conversion Devices, “Ovonic Hydrogen Technology Fueling the FutureTM”available at http://www.ovonic.com.

Fuel Cells 2000, “Types of Fuel Cells,” available at http://www.fuelcells.org.

General Accounting Office, Limited Progress in Acquiring Alternative Fuel Vehicles andReaching Fuel Goals, GAO/RCED-00-59, February 2000.

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Kalhammer, Fritz, Paul Prokopius, Vernon Roan and Gerald Voecks, Status andProspects of Fuel Cells as Automobile Engines: A Report of the Fuel Cell AdvisoryPanel, California Air Resources Board, July 1998.

Hart, David and Ausilio Bauen, Fuel Cells: Clean Power, Clean Transportation, CleanFuture, Financial Times Energy, 1998.

Hawley, Gessner, The Condensed Chemical Dictionary, 9th Edition, Van NostrandReinhold Company, 1977.

Moore, R.M. and V. Raman, “Hydrogen Infrastructure for Fuel Cell Transportation,”International Journal of Hydrogen Energy, vol. 23, no. 7, 1998.

National Renewable Energy Laboratory (NREL), Hydrogen Energy For Tomorrow,DOE/GO-10095-066, August 1995.

Norbeck, Joseph, James Heffel, Thomas Durbin, Bassam Tabbara, John Bowden andMichelle Montano, Hydrogen Fuel for Surface Transportation, Society of AutomotiveEngineers (SAE), 1996.

Nowell, Gregory, The Promise of Methanol Fuel Cell Vehicles, American MethanolInstitute.

Ogden, Joan, Prospects for Building A Hydrogen Energy Infrastructure, PU/CEESReport 318, July 1999.

Padro, C.E.G and V. Putsche, Survey of the Economics of Hydrogen Technologies,NREL/TP-570-27079, September 1999.

Pembina Institute for Appropriate Development, Climate Friendly Hydrogen Fuel: AComparison of the Lifecycle Greenhouse Gas Emissions for Selected Fuel Cell HydrogenProduction Systems, David Suzuki Foundation, March 2000.

Raman, Venki, “Hydrogen Infrastructure for Fuel Cell Vehicles,” at F-Cell 2000, PalmSprings, California, May 2000.

Renewables Fuel Association, “Ethanol as a Renewable Fuel Source for Fuel Cells,”available at: http://www.ethanolrfa.org/fuelcells.htm

Roan, Vernon, “Fuel Cell Fueling Infrastructure: An Introduction,” at Fuel Cells forTransportation SAE TOPTEC, March 1998.

Stodolsky, Frank, Linda Gaines, Christopher Marshall, Feng An and James Eberhardt,Total Fuel Cycle Impacts of Advanced Vehicles, SAE 1999-01-0322, 1999.

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Stork, Kevin, Margaret Singh, Michael Wang and Anant Vyas, Assessment of CapitalRequirements for Alternative Fuel Infrastructure, Argonne National Laboratory ReportNo. ANL/ESD/TM-140, 1997.

Thomas, C. E. and I. F. Kuhn, Jr., Electrolytic Hydrogen Production InfrastructureOptions Evaluation, National Renewable Energy Laboratories, NREL/TP-463-7903,September 1995.

Thomas, C.E., Brian James, Ira Kuhn, Jr., Franklin Lomax, Jr. and G. Baum, DirectHydrogen Fueled Proton Exchange Membrane Fuel Cell System for TransportationApplications: Hydrogen Infrastructure Report. DOE/CE/50389-504, July 1997.

Thomas, C.E., Brian James, Franklin Lomax, Jr. and Ira Kuhn, Jr., Integrated Analysis ofHydrogen Passenger Vehicle Transportation Pathways, Revision 2 – Final Draft, March1998.

Thomas, C.E., Brian James, Franklin Lomax, Jr. and Ira Kuhn, Jr., Societal Impacts ofFuel Options for Fuel Cell Vehicles, SAE 982496, October 1998.

Thomas, C.E., Brian James, Franklin Lomax, Jr. and Ira Kuhn, Jr., “Fuel Options for theFuel Cell Vehicle: Hydrogen, Methanol or Gasoline?” International Journal of HydrogenEnergy, vol. 25, 2000.

Thomas, Sharon and Marcia Zalbowitz, Fuel Cells - Green Power, Los Alamos NationalLaboratory, 1999.

U.S. Department of Transportation, Clean Air Program: Assessment of the Safety,Health, Environmental and System Risks of Alternative Fuel, available at:http://www.bts.gov/NTL/DOCS/afrisks.html.

Yacobucci, Brent and Jasper Womach, RL30369 Fuel Ethanol: Background and PublicPolicy Issues, Congressional Research Service Issue Brief, March 1, 2000.

Additional Reference Materials:

Bauen, A. and Hart, D., “Assessment of the environmental benefits of transport andstationary fuel cells,” Journal of Power Sources, vol. 86 (2000), pp 482-494.

Bauen, A. and Hart, D., “Further assessment of the environmental characteristics of fuelcells and competing technologies,” ETSU Report F/02/00153/REP, ETSU, Harwell, UK,1998.

EA Engineering, Science and Technology, Inc., Methanol Refueling Station Costs,prepared for the American Methanol Institute, February 1, 1999 (available atwww.methanol.org).

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Ford Motor Company (prepared by C.E. Thomas, Directed Technologies), Direct-Hydrogen-Fueled Proton-Exchange-Membrane Fuel Cell System for TransportationApplications: Hydrogen Vehicle Safety Report, for the National Renewable EnergyLaboratory, May 1997.

Ford Motor Company (prepared by C.E. Thomas, Directed Technologies), Direct-Hydrogen-Fueled Proton-Exchange-Membrane Fuel Cell System for TransportationApplications: Hydrogen Infrastructure Report, for the National Renewable EnergyLaboratory, July1997.

Fuel Cell Power for Transportation 2000, SAE SP-1505

Fuel Cell Power for Transportation 1999, SAE SP-1425

Hart, D., M.A. Leach, R. Fouquet, P.J. Pearson, and A. Bauen, “Methanol Infrastructure:Will It Affect the Introduction of SPFC vehicles?” Journal of Power Sources 86 (2000),pp 542-547.

Hart, D. and G. Hörmandinger., Initial assessment of the environmental characteristics offuel cells and competing technologies: Volume 1, ETSU Report F/02/00111/REP/1,ETSU, Harwell, UK (1997).

Hart, D. , Hydrogen power - the commercial future of the ultimate fuel, Financial TimesEnergy Publications, February 1997.

Hart, D., M.A. Leach, R. Fouquet, P.J. Pearson, A. Bauen, D. Hutchinson, and D.Anderson, "Methanol supply and its role in the commercialisation of SPFC vehicles",ETSU Report F/01/00142/REP, ETSU, Harwell, UK (1999).

Hart, D., A. Bauen, M.A. Leach, R. Fouquet, P.J. Pearson, and D. Anderson, "Hydrogensupply for SPFC vehicles", ETSU report F/02/00176/REP, ETSU, Harwell, UK (2000).

James, Brian D., C.E. Thomas, and Franklin D. Lomax, Jr., “Onboard Compressed HydrogenStorage,” presented at the 9th Canadian Hydrogen Conference, February 7 – 10, 1999.

Malcolm Pirnie, Inc., Evaluation of the Fate and Transport of Methanol in theEnvironment, prepared for the American Methanol Institute, January 1999 ((available atwww.methanol.org).

Ohi, J., Blueprint for Hydrogen Fuel Infrastructure Development, National RenewableEnergy Laboratory, January 2000.

Proceedings of the 11th Annual U.S. Hydrogen Meeting by the National HydrogenAssociation, February 29 – March 2, 2000.

Russell, B.J. and H.L. Tomlinson, Syntroleum Corporation; S.K. Prabhu and W.Mitchell, Epyx/Arthur D. Little, Demonstration of Natural Gas-to-Liquids (GTL) Light

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Paraffin Fuel in an Integrated Fuel Processing System, ,” in Fuel Cell Power forTransportation 2000, SAE SP-1505, March 2000.

B. J. Russell, “Advantages of Gas-to-Liquids Synthetic Fuels for use in Fuel Cells,”ESD conference, May 2000.

Schlais, Rudolph A., Dr. Byron McCormick, and Dr. Erhard Schubert, Overview ofGeneral Motors Fuel Cell Activities and Fuels Strategy, presentation to the Practical FuelCell Application Strategy Study committee, April 18, 2000.

Technical Insights, Futuretech, “Proton Exchange Membrane Fuel Cells: PoweringFuture Vehicles” Briefing No. 249, March 6, 2000, John Wiley & Sons, Inc.

Thomas, C.E., Brian D. James, Frank D. Lomax, Jr. and Ira F. Kuhn, Jr., “Fuel optionsfor the fuel cell vehicle: hydrogen, methanol or gasoline?”, International Journal ofHydrogen Energy, Vol. 25 (2000) pp. 551-567.

Thomas, C.E., I. F. Kuhn, Jr., B.D. James, F. D. Lomax, Jr., and G.N. Baum,“Affordable Hydrogen Supply Pathways for Fuel Cell Vehicles”, International Journal ofHydrogen Energy, vol. 23 (1998), pp. 507-516.

Thomas, C.E., Brian D. James, Franklin D. Lomax, Jr. and Ira F. Kuhn, Jr., “Fuelinfrastructure costs for fuel cell vehicles”, presented at the 9th Canadian HydrogenConference, February 10, 1999.

Thomas, C.E., Brian D. James, Franklin D. Lomax, Jr. and Ira F. Kuhn, Jr., “AnotherLook at the CARB Fuel Cell Technology Advisory Panel”, presented at the 9th CanadianHydrogen Conference, February 10, 1999.

Thomas, C.E., PNGV-Class Vehicle Analysis: Task 3 Final Report”, NationalRenewable Energy Laboratory, June 1999.

Thomas, C.E., B.D. James, F. D. Lomax, Jr., “Market Penetration Scenarios for FuelCell Vehicles”, International Journal of Hydrogen Energy, vol. 23, No. 10 (1998), pp.949-966.

Thomas, C.E., Jason P. Barbour, Brian D. James, and Franklin D. Lomax, Jr., CostAnalysis of Stationary Fuel Cell Systems Including Hydrogen Co-Generation, NationalRenewable Energy Laboratory, December 1999.

Weiss, Malcolm A., John B. Heywood, Elisabeth M. Drake, andreas Schafer, and Felix F.au Yeung, On the Road in 2020: A Life-Cycle Analysis of New Automobile Technologies,Massachusetts Institute of Technology Energy Laboratory Report #MIT EL 00-003,October 2000.