Hydrogen Fuel: The Chicken and Egg Problem

“The first car driven by a child born today could be powered by hydrogen and pollution-free,” George W. Bush proclaimed in his 2003 State of the Union address, as he announced a $1.2-billion hydrogen-fuel initiative for the coming decade [1]. Ten years later, the focus seems to have shifted almost entirely to hybrid and electric cars. One of Steven Chu’s first actions as Secretary of Energy was to propose cuts to hydrogen research and development (R&D) and shift the money to research for electric vehicles [2]. Over the next several years, Honda will lease only 200 of its fuel cell experimental (FCX) vehicles in select areas of California; Mercedes even fewer; and Chevrolet’s and BMW’s hydrogen cars are still stuck in the concept stage [3,4,5]. The total number of fuel cell vehicles sold worldwide last year was fewer than 500 [6]. Although, while the rise of hydrogen-powered vehicles has not been as quick as Bush predicted, and the Obama administration has shown little initiative toward fuel cell technology, hydrogen may be about to take off, as long as it can acquire some crucial support from federal and state governments.

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Over the last decade, the country has turned its focus to developing new fuels for cars, having finally faced a tough realization: Gasoline, the ubiquitous fuel, is far from perfect. There are many reasons why gasoline has become an unreliable fuel for the future. Reliance on foreign oil, whose price is largely subject to the whims of unfriendly cartels, poses great economic and security threats. Gasoline-powered cars emit greenhouse gases, which drive dangerous climate change. Furthermore, there is a finite supply of oil, which makes it necessary to replace oil as a fuel source—preferably before the resource is completely exhausted. We’ve been searching for a domestic, clean, renewable fuel that could help solve these problems. While both electric and hydrogen cars produce zero emissions, hydrogen cars have been overshadowed by electric for two reasons. In justification of the funding cuts to R&D spending, Steven Chu explained that fuel cells and hydrogen fuel are expensive, making the cars themselves far too pricey for the average consumer [5], and hydrogen cars have limited driving range.

However, recently the future for hydrogen fuel has begun to look more favorable. Congress overrode Chu’s decision to cut hydrogen R&D and, according to Obama administration insiders, Chu has become more supportive of hydrogen as a fuel source [1,2]. More importantly, the private sector has begun to show strong interest in fuel cell technology. Toyota and BMW announced that they would collaborate on hydrogen R&D to release a $50,000 hydrogen car by 2015, which is significantly cheaper than the $70,000 electric Tesla [7]. Renault, Ford, Daimler, and Nissan also reported that they would develop a fuel-cell car by 2017, ready for production by 2020 [8]. Daimler’s Chief Technologist stated, “This technology has the biggest potential for emission-free driving” [9]. Other major automakers have announced they will pursue hydrogen technology on their own: GM could release a hydrogen-powered car by 2016; Hyundai will lease 1,000 hydrogen cars in the U.S. starting in 2015; and Honda will soon release a new and improved version of the hydrogen car that was leased in California [6]. Almost every major automaker is betting on hydrogen technology. Things are looking up for fuel cell vehicles, and they are expected only to get better.

Ever since Chu abandoned hydrogen technology, the three main problems—fuel cell cost, hydrogen fuel cost, and short range—have been reduced significantly. The most expensive part of the fuel cell is platinum, which sells for $1,380 an ounce. On October 10 of 2013, Toyota made a significant breakthrough, lowering its use of platinum from 100 grams per fuel cell to 30, and Toyota engineer Hitoshi Nomasa expects that the number will continue to drop as technology improves. Toyota has also managed to cut costs by using more mass-produced components. As hydrogen fuel cells continue to fall in cost dramatically, the cost of hydrogen fuel is decreasing as well [10]. According to the Department of Energy, hydrogen fuel is currently only slightly more expensive than gasoline, and it’s likely to be cheaper than gas soon as the electrolytic process of extracting hydrogen from water becomes more efficient [6].

The range of hydrogen cars, which once was too impractical for the consumer market, has significantly improved. While electric cars can travel about 40-100 miles before recharging, hydrogen vehicles rival these cars with ranges between 250 and 300 miles [2]. Hydrogen cars are also much lighter than electric because fuel cells weigh much less than batteries, which weigh about 1,000 pounds—part of the reason why hydrogen cars are much more efficient. Not to mention that electric car batteries leak charge over time, while hydrogen fuel cells do not have this problem [7]. Furthermore, electric cars take hours to recharge, but hydrogen cars can be refueled in just a few minutes [2]. For these reasons the auto industry now believes that the demand for hydrogen cars will exceed the demand for electric vehicles by 2025 [11]. However, even with the increased efficiency and reduced cost that has made hydrogen fuel more competitive, it is not without drawbacks.

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Despite the hype in the media, hydrogen cars are not as clean as they appear. Though hydrogen cars have no direct emissions besides water vapor, the process to obtain hydrogen fuel is highly controversial. Either it is extracted from natural gas, a process that releases carbon monoxide and carbon dioxide, or through electrolytic decomposition, which requires electricity normally produced with fossil fuels like coal [5,6]. However, electric cars face the same problem. Neither electric nor hydrogen-powered cars will be completely emissions-free until a greater proportion of electricity comes from clean sources like wind and solar. Until then, hydrogen proponents can boast that their cars are 30-50% cleaner than gasoline-powered vehicles [6]. Still, the cars are rather expensive—and they will continue to be so despite the new developments in platinum technology. But their prices are expected to drop significantly with more technological advancements and with economies of scale—when the cars are mass-produced production costs will decrease significantly, and consumer prices will follow [12]. The question is when will this mass production occur, and why it hasn’t happened yet?

Chris Hostetter, the VP of Strategic Planning at Toyota Motor Sales USA, describes it as a “chicken and egg” problem [6]. Today, there are 53 hydrogen fuel stations in the country, nearly all located in Southern California. With so few places to fill up, there’s essentially no demand for hydrogen cars, and since no one owns these cars, there is little incentive to invest in hydrogen fuel stations. The private sector in theory might be able to build the infrastructure, but it is an enormously expensive investment with uncertain, long-term returns. Even if private companies did have the funds to build the hydrogen infrastructure, their investment would be worthless if hydrogen cars turned out to be unpopular. General Motors has publicly stated that it is waiting to see how the development of hydrogen infrastructure progresses before it makes major investment [2]. In short, the private sector will not pour money into the hydrogen fuel industry without higher security for their investment.

With so few places to fill up, there’s essentially no demand for hydrogen cars, as owning one would be impractical to say the least. But since no one owns hydrogen cars, there’s little incentive to invest in hydrogen fuel stations

In cases like this, governments can step in to solve the market failure, providing funds to corporations to stimulate the market for hydrogen cars. Unfortunately, government is currently doing very little to promote the development of hydrogen infrastructure.  While the Department of Energy has spent over $1.5 billion on fuel cell R&D over the last 10 years, it hasn’t spent any money to build hydrogen fuel stations or even provided any monetary incentives to private companies. It’s estimated that replacing the over 170,000 gasoline stations with hydrogen stations would cost $512 billion, about one-eighth the annual federal budget [6]. Spread over many years among the federal and state governments and large companies, this burden wouldn’t be unbearable. Without this public investment, it will be very hard for hydrogen-powered cars to take off no matter how much more feasible and affordable they become.

Despite the lack of support from the federal government, there is hope. California is leading the way with the California Fuel Cell Partnership, a public-private partnership designed to increase hydrogen fuel infrastructure and increase security for private investors.  Keith Malone, a spokesperson for the organization, believes that if the public-private partnership can build 100 hydrogen stations in California, it will reach “critical mass,” a point where the private sector can be left with enough confidence to finish the investment by itself [6]. While the group stagnated under Arnold Schwarzenegger’s tenure, it seems to have renewed vigor, expecting to build as many as 20 stations this year, more than twice the current number in California [6].

If the U.S. is committed finding a more sustainable fuel source, federal and state governments will need to follow California’s lead. Hydrogen technology continues to improve and gain some important advantages over electric, but it needs public investment to escape from the chicken-and-egg problem. Private companies have signaled that they are ready to replace gasoline-powered cars with a wave of cleaner, sustainable, and more efficient hydrogen-powered cars as long as they receive help putting the infrastructure in place. All we need now is steadfast commitment from governments to help this promising technology take off.

References 

[1] Tollefson, Jeff. Nature, “Hydrogen vehicles: Fuel of the future?” Last modified April 29, 2010. Accessed November 1, 2013.

[2] LeVine, Steve. Slate, “Why Obama May Give Hydrogen Fuel-Cell Cars Another Chance.” Last modified May 17, 2012. Accessed November 1, 2013.

[3] Honda, “Honda FCX Clarity.” Accessed November 1, 2013. http://automobiles.honda.com/fcx-clarity/.

[4] Mercedes-Benz, “B-Class F-Cell.” Accessed November 1, 2013. http://www.mbusa.com/mercedes/benz/green/electric_car.

[5] Lampton, Christopher. How Stuff Works, “How Hydrogen Cars Work.” Accessed November 1, 2013

[6] Dumaine, Brian. CNN, “Has the fuel cell car’s time finally come?” Last modified August 15, 2013. Accessed November 1, 2013.

[7] Zielinski, Sarah. Slate, “Who Was Right About Hydrogen: George W. Bush or Elon Musk?” Last modified August 17, 2013. Accessed November 1, 2013.

[8] Atiyeh, Clifford. MSN Autos, ” Ford, Daimler and Renault-Nissan partner on hydrogen car for 2017.” Last modified January 29, 2013. Accessed November 1, 2013.

[9] P.E. The Economist, “Hydrogen-powered cars The future, finally.” Last modified February 05, 2013. Accessed November 1, 2013.

[10] Kubota, Yoko. Reuters, “Toyota says slashes fuel cell costs by nearly $1 mln for new hydrogen car.” Last modified October 10, 2013. Accessed November 1, 2013.

[11] Ko, Vanessa. CNN, “Hydrogen fuel-cell cars look to overtake electric autos.” Last modified November 25, 2012. Accessed November 1, 2013.

[12] Jaynee, Nick. Digital Trends, “TOO LITTLE TOO LATE? WILL HYDROGEN FUEL CELL CARS EVER BE ABLE TO CATCH ON?” Last modified September 08, 2013. Accessed November 1, 2013.

Image Credit:

[1] GM HydroGen4 concept car, August 9, 2007. Courtesy of GM Europe

[2] Hydrogen Fueling Station, August, 2008. Courtesy of Wikimedia Commons, Department of Energy

 

Cameron Davis is a philosophy and economics major at Johns Hopkins University interested in various political and public policy issues. Follow The Triple Helix Online on Twitter and join us on Facebook.

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  • James Frank

    Is this the same “chicken and egg” problem that happened with gasoline?

  • Mathy

    Water vapor actually is a pretty major emission. It doesn’t have a direct climate effect, but as the Earth heats up from CO2, more water vapor exists at any given time in the atmosphere, amplifying the effects of CO2.