The Once and Future Price of Hydrogen -- Part II
By Bill Moore
The "holy grail" of the hydrogen economy is making the gas from clean, renewable energy sources, especially wind power, and to a lesser extent from solar energy, both thermal and photovoltaic. But from Dale Simbeck's perspective, the hydrogen economy is going have to get its initial "kick start" from fossil fuels.
The reason is economic. It costs a lot more to make hydrogen from renewable energy than it does from fossil fuels, if one doesn't include the environmental impact, of course. He pointed out that wind turbines have a annual load factor of less than thirty percent, while solar is less than 16 percent. My local utility here in eastern Nebraska tells me that their experiments show only a ten percent annual load factor for photovoltaics and 28 percent for wind in a class three region. It's that intermittency that drives renewable costs up, he asserted. It also means you need other sources of energy to provide your base load power.
On the other hand, hydrogen proponents will argue that is precisely why you would want to make hydrogen from wind power, for example. Hydrogen can store that intermittent energy for use at a later time, though until wind power contributes 25 percent of the grid's power, it makes more sense environmentally to use that electricity to displace coal-fired capacity first rather than squander it on making hydrogen. He said the same principle applies to nuclear power, as a "waste of good electrons" to use it to make hydrogen by electrolysis.
"The capital investments involved in making and storing the hydrogen at very poor utilization of very expensive equipment turns out to be an insurmountable opportunity for the short term."
He explained that the United State's coal-fired power plants are "becoming an international disgrace." The average plan is now 32 years old and has an efficiency of only 35 percent with high emissions.
"We're getting a very aging, dirty, inefficient fleet that we continue to life extend because of the current laws economically encourage that."
Simply put, America needs to rapidly modernize and or replace its electric power plants so they get more energy and fewer emissions from what fossil fuels they do use, while integrating directly into the power grid increasing percentages of renewables, which at the moment contribute less than one percent when hydroelectric power is excluded. Making hydrogen will only serve to divert valuable electrons.
On the topic of peak oil, Simbeck agrees that oil production someday is going to peak and go into decline, though he believes it's more likely to be 25-to-50 years in the future. The consequence of that is much higher energy prices, which will then drive us towards greater conservation. He told me that today people can choose between a 10 mpg SUV or a 60 mpg Prius, and most are choosing the SUV because gas prices in America are still relatively cheap. That will inevitably change.
"You don't need a fuel cell to get high efficiency," he said, "you need a modern, efficient vehicle like a Prius. People like to do these analysis of fuel cells where they compare rotten red apples to green lemons. They never want to compare apples to apples."
To explain what he meant, Simbeck pointed out that a near-term diesel-electric hybrid family sedan could get about 75 mpg ( ), which at current fuel prices translates into less than 3 cents per mile. For a future hydrogen-hybrid with a 100 mpk efficiency, hydrogen would have to cost between $2-3 per kilogram, a number that is possible today -- without taxes -- using fossil fuel feedstocks, but is unlikely if we try to rely on renewables (See "The Utility of the Future" for a counter-argument).
"You have to game hydrogen to be competitive," he said, adding that you don't include the cost of renewably-generated hydrogen from electrolysis when trying to sell the concept of hydrogen fuel cell vehicles, a point an astute EV World reader once pointed out. That reader noted that when critics talk about battery electric cars, they always point out that half of America's electricity comes from dirty coal, but then hydrogen fuel cell advocates talk about the future, their hydrogen always comes from renewable sources.
For "green" hydrogen from renewable sources to become a competitive option with other alternatives like biodiesel, cellulosic ethanol, methanol, as well as conventional gasoline and diesel fuel, will require continued improvements in the efficiency of hydrogen production and drops in the cost of the equipment along with higher energy prices for the alternatives. The bottom line is going to be higher energy costs all around, in Simbeck's view. Renewable-generated hydrogen will be competitive when it can be sold for the same or less than the alternatives.
The Best Use of Hydrogen
Simbeck is critical of what he calls the "doomsdayers" who see oil peak occurring in ten years. He contends they are "dishonest" because they "ignore" -- his word -- the vast amounts of heavy oil and tar sands from which can be extracted vast quantities of liquid petroleum fuels. Current estimates project that the tar sands of Alberta, Canada alone could yield as much oil as Saudi Arabia.
Ironically, it takes large quantities of natural gas-derived hydrogen in order to "lighten" the tar sands into usable liquid fuels.
"That's the best use of hydrogen for now from a transportation perspective," Simbeck said.
He projected that by 2012 somewhere around one million barrels of oil a day will be extracted from Alberta's tar sands. At the moment there is a great deal of new investment going on in this field, especially now that oil prices are at or above $35 a barrel. He told me that the early investors in tar sand extraction pegged their return on investment target price at $25 a barrel, so according to Simbeck, they are rapidly paying off their investors.
This also poses a dilemma for the natural gas industry and users, alike. High natural gas prices not only drive up the cost of making usable fuels from tar sands, but using it to make oil means there will be less to ship south into the United States. It becomes a question of which makes more economic -- and one would hope, environmental -- sense. Do we use the natural gas to replace dirty coal-fired electric generation and to make hydrogen for fuel cell vehicles or use the hydrogen to make lighter, cleaner oil from tar sands?
Simbeck is of the opinion that the fuel of the foreseeable future will continue to be some form of liquid hydrocarbon, most likely "clean" diesel fuel burned in diesel-electric hybrid engines. Though he also sees significant roadblocks being thrown up to their introduction in North America by carmakers who will have to retool and oil companies who will have to shift their refining and distribution networks from gasoline to "clean", low-sulfur diesels like those found in Europe.
"Economically, no one wants to hear that in the United States, but the reality is clean, high-performance diesels are taking the rest of the world by storm," he asserted. He also sees a potential someday -- if the world gets serious about global warming and limiting CO2 emissions -- for a diesel substitute like dimethyl ether derived from coal or coke in combination with biomass. This would produce a low carbon fuel, which when combined with sequestration, creates an essentially clean, carbon-neutral diesel fuel.
The Future Price of Hydrogen
Finally, I asked Simbeck to "guesstimate" the price of hydrogen at the pump in 2024. At today's prices, he thinks it will still cost at least $4-5 per kilogram, in large part because it will still be a "hobbyist" fuel, at that point. That translates, by my calculation, to about 10 cents per mile.
Beyond this, say 50 years out, Simbeck is a bit more optimistic and sees the price eventually dropping into the $2-3 per kilogram-range in today's dollars. The hydrogen will come from a variety of "black" and "green" sources still, but by then carbon sequestration will capture most of the CO2 from the non-renewable sources.
Will consumers accept hydrogen as the transportation fuel of the future? Simbeck thinks, yes, provided carmakers' products meet or exceed current buyer expectations. He admitted that he was skeptical until he drove in Toyota's fuel cell Highlander in Japan recently. He was impressed both by its power and quietness. But costs are going to have to come down significantly so the vehicles and their renewable fuels will be affordable.
"Off the Record"
At this point, we officially ended the interview, but carried on talking for another seven minutes about various topics, during which Simbeck made two extraordinarily interesting comments, which I thought EV World readers will find of interest.
"I didn't want to say it, but the more you look at hydrogen, the more advanced electric vehicles, the nicer they (EVs) look." The "kicker" for Simbeck is that most of the "marginal" electricity for EVs will come from the dirtiest, most-inefficient coal-fired plants during off-peak hours
He continued, "There are two things I didn't want to muddy the water on was the electric vehicle relative to hydrogen makes a lot of sense if you're an advocate of renewables and you're going to go to all this trouble to make the electrons and then turn the electrons into hydrogen, then to just turn them back into electrons on the vehicle. I mean that's a no-brainer; you don't want those double conversions of energy carriers. That doesn't make a lot of sense."
Because of this, Simbeck not only sees a wider role for electric vehicles -- possibly including the introduction of inductively powered vehicles from wires embedded in the roadway -- but also a potential "wild card" in the form of direct methanol fuel cells.
"At the end of day, you realize for mobile sources, a liquid at ambient conditions is the only way to go. Then you ask what liquid can be at ambient conditions that I can directly convert into electrons in a fuel cell, that's methanol. But you mention methanol and a lot of people want your tongue cut out because they realize that it could be more of a challenger to hydrogen because it is a liquid at ambient conditions."