Ballard Visions On
We live in a world that runs on oil, a world that's running out of oil. By some estimates, nearly nine hundred billion barrels of oil have been removed from the earth since that first well was drilled in Pennsylvania. How much is left? How long will it take us to use it up? And what will happen to prices when oil production peaks; when we've consumed half of the ultimately recoverable reserves?
Now some experts predict that peak could arrive as early as 2010. Once oil production peaks, the inevitable rules of supply and demand will prevail. Fossil fuels will very quickly become too rare and far too valuable to burn. We know what happens when energy prices spike. Over the past century, every major downturn in the economy has been connected to a disruption in energy supply, or an increase in energy costs.
Fuel cells provide an opportunity for the most powerful economies in the world to break their lethal addiction to fossil fuels, to become self-sufficient and secure in their energy needs. In fact fuel cells offer a solution to the most pressing issues of our time. In addition to the issues of energy security and long-term energy supplies, fuel cells address our growing concerns with air quality and global climate change.
In the more than thirty years since the passage of the Clean Air Act, we've been seeking a practical alternative to the internal combustion engine. The PEM fuel cell is the only viable technology that can replace the internal combustion engine for automotive applications and still meet customer expectations.
Piston engine-powered cars are going to disappear the same way vacuum tube radios did in the Sixties; the same way CRT monitors and televisions are disappearing right now. Why? Because fuel cells, just like transistor radios and flat screen TVs are lightyears better. Like transistorss and LCDs, fuel cells deliver superior performance, higher efficiency, a smaller footprint, and they are environmentally friendly. A fuel cell can be two to three times more efficient than an internal combustion engine. Fuel cells run on hydrogen, the most abundant element in the universe...
Even when the hydrogen is manufactured from hydrocarbons like natural gas, the fuel cell's better efficiency will conserve and extend the supply of those limited resources. When hydrogen is produced from water using renewable sources of energy solar, wind, geothermal or hydro, the greenhouse gases that contribute to global climate change can also be eliminated.
Fuel cell provide the opportunity for emerging markets like China and India to satisfy the explosive demand for motor vehicles that is accompanying their economic transformation. Today there are 18 million vehicles in China. Automobile production in China is soaring. It is expected that by next year, China will be the fourth largest vehicle producer in the world after the US, Japan and Germany.
Today China consumes about five million barrels of oil a day. That compares with 20 million barrels a day consumed in the US. How long before the car and truck population in China eclipses the two hundred million vehicles in the U.S. today, and China's demand for oil approaches that of the U.S.?
Oil consumption aside, consider the air quality impact of all those cars. Fujio Cho, the president of Toyota, summed it up best when he said, 'Creating vehicles with low environmental impact is no longer just one option for an automaker, it has become a crucial corporate task.' Mister Cho went on to say that without environmental initiatives, the automobile has no future.
Well, fuel cells allow the kind of game changing technology that will allow the auto industry to satisfy the needs of emerging markets, to provide a viable product to the eighty-eight percent of the world's population that currently do not own a car, without compromising the environment and without draining our global oil reserves. Fuel cells and the hydrogen economy will be to this century what computers and the information age were to the last century. The hydrogen fuel cell is the power source of the future, of that there can be no doubt.
So, how do we get from where we are today to the hydrogen economy of the future?
First let's review the tremendous progress that's already been made. We have fuel cell cars on the road today in the hands of everyday customers. Last December, the Honda FCX, powered by a Ballard fuel cell, was the first fuel cell automobile to be certified by the EPA for everyday customer service. A total of ten FCXs are in service today in Tokyo and Los Angeles. Honda is planning to commission a total of thirty of these Ballard-powered, fuel cell vehicles for field testing over the next several years.
In Europe, together with our partner Daimler-Chrysler and in corporation with the European Union and ten host cities, we are fielding a fleet of thirty Mercedes-Benz Citaro buses, powered by Ballard's heavy-duty fuel cell engine and power train. These buses are already carrying customers in daily revenue service in five cities. We are also building heavy-duty fuel cell engines for three Gillig buses to be deployed with the Santa Clara transit authority here in California next year. These engines represent our fifth generation heavy-duty fuel cell technology and build on the experience we've gained in field trials in Vancouver, Palm Springs and Chicago.
In addition to the buses, our alliance partners, DaimlerChrysler and Ford Motor Company, have each announced plans to field passenger car demonstration fleets to gain real-world, over-the-road experience with Ballard's latest technology. And we are pleased that Ford's first announced fleet will be launched in Ballard's home town of Vancouver, in cooperation with Fuel Cells Canada and Natural Resources Canada. DaimlerChrysler has announced plans to field test a Dodge Sprinter van and a Mercedes Benz F-Cell sedan with the United Parcel fleet in Ann Arbor, Michigan. Additional F-Cell vehicles using Ballard's engine will be deployed in Europe, Japan and Singapore, as well as other cities in the U.S.
These customer demonstration fleets represent a critically important step on our path to mass market introduction of fuel cell technology. We'll gain vital information that will help us change the world from a piston-powered past to a fuel-cell powered future.
Well, what are the challenges that remain and how will they be overcome?
Let's start with the hydrogen infrastructure. In my view, the hydrogen infrastructure will not be a pacing item. The technical solutions are essentially understood. Sure there are issues to be worked out, optimization to be completed, and certainly there is a capital committment required to establish distribution, but the fact is, we know how to get there. The only real impediment today is the lack of demand. As demand ramps up, I am confident the hydrogen infrastructure will be able to keep pace.
The key areas that Ballard and our partners are focused on include improving the durability and reliability of the basic hardware. Achieving the desired performance profiles under all operating conditions, including cold weather performance, achieving sufficienton boardd hydrogen storage, and -- of course -- reducing the manufacturing cost.
Now at Ballard, we're extending the life of our fuel cell modules with new, more robust materials through improvement in the design and application of our catalyst and electrode structure, through improved sealing systems, through improved manufacturing processes, and by optimizing the stack and system operating conditions.
Our state-of-the-art test lab capabilities, coupled with advanced modeling and simulation tools, and the extensive fleet demonstration testing we're undertaking with our customers and our partners provide Ballard with the competitive advantage that we need these challenges.
In terms of performance, we focused our current generation technology on demonstrating the power and dynamic response necessary to establish the basic feasibility of a PEM fuel cell power train. Ballard fuel cell vehicles have performed impressively in head-to-head match-ups such as the recent Michelin Challenge Bibendum where Ballard fuel cells powered four of the eight fuel cell vehicles in the competition, including Honda's FCX which placed first in the category for small production vehicles. The Mercedes-Benz Citaro bus also placed first in its class, competing against a battery electric bus and a fuel cell hybrid, winning gold awards for emissions, energy efficiency and noise. Overall, Ballard fuel cell vehicles received ten gold awards at this year's Bibendum.
Ballard fuel cell vehicles have traveled from coast to coast, set the world altitude record for a fuel cell vehicle, and set a twenty-four hour driving record when the Ford team clocked 1,391 miles, averaging about 58 mph over a twenty-four hour period, stopping only for fuel.
Now our next step is to establish cold weather performance capability, a significant, but not insurmountable challenge. Proper humidification and water management is essential to fuel cell operation. Without water, a fuel cell can't function. So, figuring out how to manage that water in sub zero conditions is a challenge that can be met and will be demonstrated in our next generation prototype.
Achieving sufficient on-board storage of hydrogen fuel is also an area that needs attention. The tank manufacturers need to develop lighter weight, higher capacity tanks to cram more hydrogen into the available space. The OEM's need to develop purpose built fuel cell platforms that can optimize the space available for tank packaging; and we need to consider other hydrogen storage strategies such as metals or chemical hydrides.
Now let's talk about costs. Most people think about costs as a major barrier to commercialization. Well, at today's very low volumes, the cost of building a prototype fuel cell is understandably high. With each generation of design form the Mark III to the current Mark IX series, we reduced the number of parts, we introduced lower cost materials with better performance and significantly improved the power density. In fact, our progress in improving power density approaches a fuel cellderivativey of Moore's law. With the current Mark IX stack, we achieve a twenty-five fold increase in power density compared to our earlier Mark III.
From the outset of a program at Ballard, we involve our manufacturing experts in the design process to insure the cost-effective manufacturability of the Ballard fuel cell system. Our path to mass production of a cost-competitive product is well-defined and we believe achievable.
The biggest piece of the reduction will come, as you'd expect, from volume related efficiencies. Beyond that, the next generation will involve further system simplification, reduction in parts count, and lower cost, higher performance materials. We have active efforts underway in each of these areas and a technology road map to achieve our targets.
Our suppliers will play a key role in achieving these targets. The increasing momentum in the fuel cell industry is attracting greater numbers of more capable suppliers who are willing to share their ideas, to leverage their high-volume components and proven processes, and to make the investments necessary to support our requirements.
You might expect that sheer industrialinertiaa would be a barrier worth mentioning. After all, the oil industry and auto industry are both heavily invested in the status quo.
Surprisingly, that's not what we see. In fact, each of the major automakers has declared their committment to fuel cell technology and they're backing that up with financial commitments on the order of a billion dollars each. In fact, the case for a fuel cell future is so compelling it has inspired a spirit of collaboration that is unprecedented in theautomobilee industry. You heard Jim [Press] talk about Toyota's commitment to collaboration and the importance of partnering to advance this technology.
Another example is the unique relationship Ballard has with our alliance partners, Ford and DaimlerChrysler. Here are two companies that go toe-to-toe in the marketplace every day, battling over market share; and yet these two fierce competitors have decided to unit around onceissuem, to pool their interests and cooperate in the development of what, arguably, is the most new automotive technology of the last one hundred years. Ford and DaimlerChrysler are committed to making fuel cell-powered vehicles a reality. And they recognize that by working together, they can get there sooner.
At Ballard, we believe this spirit of collaboration is absolutely key to accelerating the commercialization of fuel cell technology. We've recently expressed our willingness to consider a variety of collaborative approaches that would help drive the industry forward.
For example, in the context of a long term relationship and where there's a clear, strategic benefit to do so, Ballard is willing to consider selling fuel cell components and/or licensing certain elements of our technology. We're adopting this strategy because we believe it will help accelerate the mass market introduction of fuel cell technology.
We believe that automotive OEM's can collaborate at the core fuel cell level utilizing Ballard's industry leading technology, andstilll compete effectively at the vehicle level. Using a common Ballard stack or complete system, OEM's can still create distinctive vehicles with performance and driving personalities unique to their own brand and image profile.
Now there's no question that strong governmental support can also play a vital role in the successful commercialization of fuel cell technology, and I was struck by Dave [Garman] comments earlier about the support that we see from this Administration, and we are delighted with that.
The overwhelming economic, social and environmental promise of a hydrogen economy provides ample justification for an all-out commitment to this technology. Government support can accelerate our progress by priming the pump with incentives for fleet demonstrations and fuel infrastructure development; by supporting industry-led research on key enabling technologies to reduce costs, extend life and increase performance; by supporting the development of the necessary codes and standards; through government fleet purchase and operation of fuel cell vehicles; and through support for public education.
Now another key element in our drive to commercialize fuel cell power, is the work we are doing in the stationary and portable power market.
Ballard is proud to have introduced the world's first commercially-available fuel cell... the AirGen fuel cell generator, powered by Ballard's Nexa power module. The AirGen is the first portable back-up generator designed and certified for indoor operation. [An AirGen generator powered the Internet Cafe at EVS 20]
In August, we introduced the Nexa RM series stationary fuel cell power generator, developed to meet needs of the UPS and telecommunications markets. Our joint venture company in Japan, Ebara-Ballard is marketing the FC Box (?), and other fuel cell products powered by our Nexa power module. This hydrogen-fueled, portable power generator is designed forintermittentt use forcommerciall applications. Ballard is working with the three largest natural gas companies Japan to commercialize a one kilowatt combined heat and power fuel cell generator for residential applications. The commercial introduction of these stationary and portable power is providing important technical experience that we can apply to our transportation product line.
It's an exciting time to be in the fuel cell business. We stand at the threshold of a new era, the dawn of the hydrogen age; an age when Nicholas Otto's piston engine will become a distant memory; an age when that invention, which enabled Karl Benz and Henry Ford to put the world on wheels, will be found only in classic and antique cars, the Stanley Steamers of the Twenty-second Century; an age when the air quality in Los Angeles and Mexico City, in Beijing and in cities all over the world clean and free oftailpipep- induced smog; an age when energy security and long-term energy supply are not the topic of national debate. The age foreseen by Jules Verne more than one hundred years ago when he suggested that the hydrogen and oxygen in water would someday furnish an inexhaustible supply of heat and light.
By working together, energy suppliers, automakers, technology companies, material suppliers, government agencies and regulators, we can create a hydrogen economy, a future powered by fuel cells. When it comes to fuel cells, it's not a question of 'if', it's only a question of when; and that question when is a topic of great debate. Five years, ten years, twenty years, fifty years? Some say, never, although this is a verysmalll group who are also members of the Flat Earth Society.
I won't make a prediction here today, but I will point out that in 1901 Wilbur Wright told Orville that it would take at least fifty years before man could learn to fly. Two years later, four weeks shy of exactly one hundred years ago today, Orville proved his brother wrong.
We've learned that with the right combination of ingenuity and persistence, seemingly unattainable goals can be achieved with surprising speed. The fleet demonstration phase we are now entering will help establish consume acceptance and demand for automotive fuel cells. We'll learn a great deal about the readiness of our technology and establish direction of our next generation design.
There is not question the momentum is building. Hybrids are paving the way to a fuel cell future by establishing and perfecting a new electrical architecture. The unprecedented approach, simultaneous collaboration and competition is helping to advance fuel cell technology at an ever-increasing pace. We know its not easy to change the world. It take optimism,perseverancee, patience and a relentless committment to the vision. It takes a high energy team, the talent, the resources, the leadership and the passion to deliver that vision.
At Ballard, we have the passion, we have the resources, we have the partners, and we have a group of talented and committed employees who truly believe they have the power to change the world.
It's not a question of if, it's only a question of when.