JUDITH ANN BAYER
DIRECTOR, ENVIRONMENTAL GOVERNMENT AFFAIRS
UNITED TECHNOLOGIES CORPORATION
SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE FIELD HEARING
DURHAM, NEW HAMPSHIRE
MAY 30, 2001
Good afternoon. My name is Judith Bayer. I’m the Director of Environmental Government Affairs for United Technologies Corporation (UTC). UTC is based in Hartford, Connecticut and provides a broad range of high-technology products and support services to the building systems and aerospace industries. Our products include Carrier air conditioners, Otis elevators and escalators, Pratt & Whitney jet engines, Sikorsky helicopters, Hamilton Sundstrand aerospace systems and fuel cells by International Fuel Cells.
UTC spends an average of $1 billion per year on research and development. Our corporate environment, health and safety policy includes commitments to: conserve natural resources in the design, manufacture, use and disposal of products and the delivery of services and develop technologies and methods to assure safe workplaces and to protect the environment worldwide. UTC has invested heavily in bringing clean, energy efficient technology to the global marketplace, and we need to continue to work closely with government policy makers to maximize the benefits of these innovative technologies.
While UTC’s diverse portfolio offers a number of examples of clean, energy efficient technologies, I will focus today on technologies and products from our International Fuel Cell (IFC) and Carrier units. I will describe some of our fuel cell and air conditioning products and activities, their applications and benefits. In addition, my testimony will provide some suggestions regarding government actions that will help to maximize these benefits and improve air quality, protect the ozone layer, avoid man-made greenhouse gas emissions, reduce dependence on foreign oil, provide reliable power as well as reduce electric utility peak load demand.
Fuel cells are the cleanest fossil-fuel generating technology available today. They use an electro chemical process to convert chemical energy directly from natural gas or other hydrogen rich fuel sources, into electricity and hot water at a very high level of efficiency.
REALITY OF FUEL CELLS
Fuel cells are not a futuristic dream. More than 250 US astronauts have depended on UTC’s fuel cell products to provide all the electrical power and drinking water used in every manned U. S. space mission. Each space shuttle mission carries three IFC 12 kW fuel cell units and we have accumulated more than 81,000 hours of fuel cell operating experience in the most demanding environment of all – outer space.
Closer to home, IFC has produced and sold more than 220 fuel cell systems in 15 countries on four continents. We’re the only company in the world with a commercial fuel cell product available today. It’s known as the PC25ä and it produces 200 kWs of power and 900,000 BTUs of heat. Each unit provides enough power for roughly 150 homes. The worldwide fleet of PC25s has accumulated more than four million hours of operating experience with proven reliability. The PC25 system requires only routine maintenance and has a life of 40,000 hours or five years.
Since fuel cells operate without combustion, they are virtually pollution free. In addition they produce significantly lower levels of carbon dioxide emissions – the primary man-made greenhouse gas contributing to climate change. For example, while the average fossil fuel generating station produces as much as 25 pounds of pollutants to generate 1,000 kilowatt-hours of electricity, the PC25 power plant produces less than an ounce.
The existing fleet of PC25s has already prevented nearly 800 million pounds of CO2 emissions and more than 14.5 million pounds of NOx and SOx compared with typical US combustion-based power plants. The U.S. Environmental Protection Agency recognized IFC last year with a Climate Protection Award in recognition of these accomplishments.
Fuel cells are inherently more efficient than combustion-based systems. In the “electricity-only” mode of operation, IFC’s PC25 unit achieves approximately 40% efficiency. When the waste heat from the fuel cell is utilized, an efficiency of 87% can be achieved. In addition, fuel cells can be installed at the point of use thus eliminating transmission line losses that can run as high as 15%.
cells can provide power at the point of use, thereby alleviating the load on
the existing transmission and distribution infrastructure, and eliminating or
minimizing the need for additional investment in the current transmission and
The use of fuel cells helps to diversify the energy market and reduce reliance on imported oil. Fuel cells can operate with a variety of fuel sources, but most commonly use natural gas.
Unlike other environmentally favorable solutions, fuel cells can be used as a continuous source of base power – independent of time-of-day or weather - for critical facilities and power requirements.
Its compact size, quiet operation and near-zero emissions allow a fuel cell system such as the PC25 to be sited easily in communities and neighborhoods. Unlike many other forms of power generation, fuel cell power plants are good neighbors. For example, two PC25s are located inside the Conde Nast skyscraper at Four Times Square in New York City.
Fuel cell power plants offer a solution when power is needed on-site, or when distribution line upgrades become cost-prohibitive and/or environmentally unattractive. For example, a PC25 installed at the Central Park Police Station in New York City provides all the power for the facility in an onsite installation. In this case, it would have been too expensive to dig up Central Park and install an additional power line, so the fuel cell became the ideal solution for an operation that required a dedicated, reliable power supply and flexible siting.
hospitals in the US, including Department of Defense facilities, rely on PC25
systems to provide on-line emergency power.
The largest commercial fuel cell system in the world is currently operating at a U.S. Postal Service facility in Anchorage, Alaska. The system provides one megawatt of clean, reliable fuel cell power by joining five PC25 units. In this installation, the units operate in parallel to the grid and are owned and operated by the local utility. The system is seen as a single one-megawatt generation asset and is dispatched by the utility through its standard dispatch system. The system is designed so the fuel cells can either provide power to the U.S. Postal Service mail-processing center or provide power back to the grid. In case the grid fails, a near instantaneous switching system automatically disconnects the grid and allows the fuel cells to provide uninterrupted power.
As our society increases its reliance on sophisticated computer systems, very short power interruptions can have profound economic consequences. In 1996 the Electric Power Research Institute reported that US businesses lose $29 billion annually from computer failures due to power outages and lost productivity.
PC25 power plants are currently delivering assured power at critical power sites such as military installations, hospitals, data processing centers, a US Postal Service mail processing center and sites where sensitive manufacturing processes take place. One of IFC’s installations at the First National Bank of Omaha where four fuel cells are the major component of an integrated assured power system, is meeting customer requirements for 99.9999% reliability. This translates into a power interruption of one minute every six years.
The Conde Nast Building at Four Times Square in New York City is a “green building” with two PC25 power plants installed inside to provide five percent of the building’s electrical needs. If there is a blackout, the systems are capable of operating independent of the utility grid to maintain power to critical mechanical components and external landmark signage on the façade of the building. The waste heat from the unit is used to run the air conditioning and the power plants provide critical backup power in case the grid fails.
When fueled by anaerobic digester gases or biogas from wastewater treatment facilities, fuel cells are a source of renewable power. IFC and the US Environmental Protection Agency (EPA) collaborated in the early 1990s on a greenhouse gas mitigation program that continues to bear fruit today. Initial efforts targeted landfills and the development of gas cleanup systems that enable fuel cells to use waste methane to generate electricity and resulted in the issuance of several patents jointly held by EPA and IFC. These systems prevent methane– a potent greenhouse gas – from being released into the environment and avert the use of fossil fuels as the fuel source.
Follow-on work has focused on anaerobic digester off-gases (ADGs) from wastewater treatment facilities. This technology has been implemented successfully at PC25 installations in Yonkers, New York, Calabasas, California, Boston, Massachusetts, and Portland, Oregon as well as Cologne, Germany and Tokyo, Japan.
The examples noted above demonstrate the flexibility of fuel cell technology and its appeal to many different customers with a wide range of requirements. But it gets better. Fuel cell technology and its associated benefits, which have broad application in the commercial/industrial sector, is also being developed for homes, small businesses, cars, trucks and buses.
IFC is currently pursuing residential and light commercial fuel cell applications for homes and businesses. These units will use next-generation proton exchange membrane (PEM) fuel cell technology. We are drawing on our experience in both commercial and mobile fuel cell programs to develop a five-kilowatt PEM fuel cell system suitable for homes and small commercial buildings. IFC is teaming up with its sister UTC unit Carrier Corporation the world’s largest maker of air conditioners, as well as Toshiba Corporation and Buderus Heiztechnik on this effort.
We are currently testing our residential power plants and plan to have residential fuel cells units commercially available in 2003. We have a residential fuel cell model with us today in the exhibit area.
In the transportation arena, IFC is aggressively developing quiet, highly efficient ambient-pressure PEM fuel cells and gasoline reformation technology for automobiles, heavy-duty trucks and bus applications. Fuel reforming technology allows fuel cells to operate on pump gasoline.
IFC is currently working with major automobile manufacturers, including BMW and Hyundai and with the U.S. Department of Energy on development and demonstration programs for automobiles.
Last year, for example, IFC replaced the internal combustion engine in a Hyundai Santa Fe Sport Utility Vehicle with its zero emission Series 300 75-kilowatt hydrogen powered fuel cell. This vehicle was featured at the grand opening ceremony of the California Fuel Cell Partnership on November 1, 2000. Pure water vapor is the only by-product of this fuel cell power system. Hyundai and IFC has put two fuel cell powered Santa Fe’s into driving service in California and expect to provide another four in 2002-2003.
The IFC vehicle power plant is quiet and efficient. It’s unique because it uses a near ambient pressure system, which substantially increases its efficiency. By eliminating the high-pressure requirements of other fuel cells, IFC has created a system with fewer parts, which translates into lower costs for the consumer. To date, we have demonstrated the following capabilities with the IFC/Hyundai Santa Fe fuel cell vehicle:
u Starts in less than 30 seconds;
u Performs with undetectable noise levels;
u Operates without any operator intervention;
u Achieves maximum power output of 75 kW and a top speed of 72 mph;
u Fills the vehicle’s fuel tank with hydrogen to a pressure of roughly 3,000 psi in less than 3 minutes; and
u Avoids any loss of passenger or cargo space.
In addition, we’ve also developed fuel cell auxiliary power units (APUs) that can power all the electronic components of a car thus removing this heavy power demand from the engine. In 1999,BMW demonstrated at the Frankfurt Auto Show a Series-7 vehicle featuring a 5-kilowatt hydrogen IFC fuel cell that powered the onboard electrical systems and air conditioning. During the two-week exhibition, we used the APU to run the car’s lights and radio continuously without the engine running.
For buses, IFC has teamed with Thor Industries, the largest mid-size bus builder in North America and Irisbus, one of the largest European bus manufacturers, to build fuel cell powered zero emission transit buses. These prototype vehicles will take to the road this year.
The cost of fuel cells has been reduced dramatically in the past decade. The space shuttle application had a price tag of $600,000 per kW. Commercial stationary units being installed today cost $4,500 per kW, but fuel cells are still not competitive with existing technology which costs about $1,500 per kW. Fuel cell production volumes are low, which increases their costs. Increased volume is needed to bring the purchase cost down and accelerate commercialization of this clean, reliable, efficient source of power so its benefits can be more widely enjoyed.
There are a number of things the federal government can do to help accelerate the commercialization of fuel cell technology. These include providing financial incentives, eliminating regulatory barriers, and funding government purchases and demonstration programs.
UTC/IFC is leading an industry effort to secure a five-year, $1,000 per kW tax credit for homeowners and business property owners who purchase stationary fuel cells. This initiative has gained support from major fuel cell manufacturers, suppliers and related organizations as explained in Attachment A.
In addition, these same organizations have endorsed continuation and expansion of the existing DOD/DOE buydown grant program for public sector and non-profit organization investment in fuel cell technology. An $18 million FY 2002 DOD appropriation is being sought for this initiative as indicated in Attachment B.
These efforts will make the units more affordable and increase volume. With higher production volume, costs can be reduced, thus accelerating market acceptance and deployment.
We also support tax credits and financial incentives for fuel cell vehicles.
We believe the federal government must address several regulatory barriers to fuel cell distributed generation technology. UTC recommends that the federal government:
Adopt a common technical standard for interconnection of small power generation devices to the USD utility system based on the Institute for Electrical and Electronic Engineers’ (IEEE) 1547 recommendation.
Minimize the competitive impact of exit fees and stand-by charges.
Standardize user fees for Independent Power Producers (IPPS) in the same geographic region.
Require states to ensure that the “buy” and “sell” rates of power are the same for any given time of day or year.
The U.S. government is the single largest energy consumer in the world. Its vast purchasing power can be put to use in the procurement and deployment of clean, efficient, reliable fuel cell systems. We suggest a three-year federal program to install one hundred 200 kW size units or 20 megawatts of fuel cell power at key federal facilities.
Priority should be given to facilities in non-attainment areas as defined by the Clean Air Act of 1990 as well as those that have sophisticated and sensitive computer or electronic operations; where high-quality, reliable, assured power supply is required; where remote locations makes off-grid power generation essential; where security concerns require reliable, assured power; and at critical manufacturing facilities that support DOD or DOE missions.
In making purchasing decisions, the federal government uses a life cycle cost benefit analysis. Unfortunately, this calculation does not consider the environmental benefits of technologies such as fuel cells, nor does it place a cost on lost productivity due to unreliable power supplies. We recommend that the government’s economic analytical tools be revised to include these important factors in the decision making process.
The federal government already has played a significant role as a user of fuel cell technology in NASA’s space program as well as at DOD where 29 fuel cells were purchased in the early 1990's to demonstrate the performance characteristics of the technology. Since the government will undoubtedly also be a key future customer for the technology, it is important for it to continue to support and participate in fuel cell demonstration programs.
A fuel cell bus demonstration program would be particularly beneficial. Diesel emissions from transit and shuttle buses are particularly significant since they affect large concentrations of people in urban and suburban areas, military bases and airports. Diesel school buses are of particular concern because of the potential impact on the health of vulnerable children.
Transit, shuttle and military buses return to a central location each night. Early deployment of hydrogen powered fuel cell buses offers a strategic path to establishing a hydrogen infrastructure that later can be utilized by personal vehicles and light trucks for significant environmental benefit.
While prototype fuel cell buses have been developed, a program to demonstrate this technology in real operating conditions, improve the durability and performance characteristics and create opportunities for replication across the country is needed. We support a 3-year $40 million comprehensive program including a minimum of $10 million in FY 2002 funding for a zero emission ambient pressure fuel cell bus demonstration program.
Fuel cell systems such as the PC25 require a fuel-processing step to derive hydrogen from hydrocarbon feedstocks such as natural gas. If hydrogen were available directly, this step could be eliminated and a zero emission power generating system made possible. We need to continue to support the development of hydrogen production, distribution and storage infrastructure to support the deployment of zero emission stationary and mobile fuel cell applications. UTC/IFC therefore supports the reauthorization of the Hydrogen Future Act and a minimum of $26.8 million for FY 2002 funding for DOE hydrogen research, development and demonstration and an additional $15 million for integration of fuel cells and hydrogen production systems into federal and state facilities for stationary and transportation applications.
Carrier is the world’s largest manufacturer of air conditioning, heating and refrigeration systems. The company believes that with market leadership comes the responsibility for environmental leadership. Carrier led the global air conditioning and refrigeration industry in the phaseout of ozone depleting refrigerants well ahead of international and domestic mandates. And while pioneering the technologies to enable this transition to non-ozone depleting products, Carrier has also increased energy efficiency, minimized materials and product weight, introduced new air quality management features and developed the tools to evaluate a holistic building systems approach to indoor comfort cooling.
The heating, air conditioning and refrigeration industry has made significant improvements over the past two decades in technologies that benefit the environment. And while these technologies are readily available for consumers today, barriers to full deployment do exist, preventing the realization of maximum environmental benefit.
In the commercial air conditioning market, major advancements have been achieved in large building chiller technology. Not only does Carrier manufacture non-ozone- depleting chillers throughout the world; these same products are, on average, 20% more efficient than their counterparts of 20 years ago, with 10-15% less weight for the same capacity. This has reduced raw materials like steel and the intensive energy required to produce it. In fact, we believe the industry is saving 16 million pounds of steel each year, or enough to build 7,000 cars.
Despite these breakthroughs, more than 44,000 old, inefficient, CFC-based ozone- depleting chillers remain in operation in the United States. If these chillers were replaced with today’s products, roughly seven billion-kilowatt hours per year would be saved, enough to power 740,000 homes on an annual basis, saving four million tons of carbon emissions at power plants. We believe these old CFC chillers would be replaced more rapidly if it weren’t for the U.S. tax code, which allows building owners to depreciate chillers over a staggering 39-year period! If this term were reduced to 15 or 20 years, the advanced chiller technologies would become more prevalent in the marketplace to the benefit of the environment.
Equal advancements have been made in residential systems within the last decade. Carrier introduced the nation’s first non-ozone depleting residential central air conditioning system, called Puron, in 1996 -- a full 14 years prior to the deadline mandated by the Clean Air Act. And while we’re proud to have been the first, we congratulate the three other major manufacturers that have followed suit so far.
Carrier also leads the residential market with the highest rated efficiencies and supports a full 20% increase in the federal minimum energy efficiency standard. But Carrier also believes that federal and state governments can do more to deploy high efficiency products rapidly through tax incentives and we congratulate Senator Smith for introducing S.207 which we view as a good framework for tax incentives, especially if the levels start at 13 SEER.
But as federal and state governments examine tax credits, we would like to point out that opportunities exist to maximize these incentives for additional environmental benefit, like ozone protection, along with energy efficiency. Not too long ago, there was a trade-off between efficiency and ozone protection. Most residential systems sold today operate with an ozone-depleting refrigerant scheduled for phaseout in new products in 2010. The amount of this refrigerant required for higher efficiency systems, like 13 SEER, is 40% greater than standard 10 SEER systems. Fortunately, Carrier pioneered the technology that other manufacturers have followed to avoid this “Hobson’s choice” of efficiency or ozone protection. Clearly and thankfully we can have both, and we urge any tax incentive plan to maximize the environmental benefits of efficiency combined with ozone protection.
To address electric utility demand-management initiatives, Carrier was the first in its industry to develop a web-enabled smart thermostat that will interface between a homeowner’s air conditioning system and the local utility. This technology can reduce residential peak load demand by 30%, frequently without the consumer’s awareness.
In essence, the thermostat allows the utility to “purchase” peak load demand from the homeowner by offering electrical rate discounts for setting-back the thermostat a few degrees. Carrier’s smart thermostats, called ComfortChoice, have already been deployed by utilities in New York, Connecticut and Washington. For every 100,000 homes installed with this technology, 150 megawatts of peak power can be saved, which is enough to power 100,000 additional homes for one year. At an average of $375 per installation (labor and material) plus utility software costs and monthly communication fees, the cost of deploying these smart thermostats has been the principal barrier to more widespread use, which utilities and state policy makers are starting to address through rebates and other incentives.
Another safeguard that ensures maximum environmental benefit is the proper installation of products. Manufacturers can design and sell the most energy efficient systems, but if third party contractors do not install the system properly, the environmental benefit will be lost. Fortunately, thousands of these systems are installed properly each day by qualified technicians, but no one doubts that additional training will yield greater environmental benefit. According to the Consortium for Energy Efficiency, proper residential system installations could reduce energy consumption by as much as 35%. With over 300,000 installation technicians in the country, the opportunity for additional training is great.
That is why the air conditioning manufacturers and contractors have teamed up to form a national technician training and certification program called NATE – North American Technician Excellence. This program has trained a total of 10,000 technicians since its creation. The federal government can support NATE in two meaningful ways: (1) provide resources to raise public awareness of the program, and (2) encourage federal facilities to ensure that they purchase service only from NATE technicians. Support of NATE will help ensure that the best environmental technologies that exist today are properly deployed so that they yield their intended benefits.
Finally, the federal government can help develop the next generation of environmental technologies for air conditioning and refrigeration systems by continuing to fund the “Research for the Twenty-first Century” program also known as “21-CR.” This collaborative program pools the financial resources of the federal government, state governments and private enterprise to conduct pre-competitive research on energy efficiency, indoor environmental quality, refrigerants and others. We urge the Congress continue supporting this valuable program with a $4 million appropriation for FY 2002.
UTC products have useful lives that can be measured in decades. That’s one of the reasons our corporate environment, health and safety policy statement requires conservation of natural resources in the design, manufacture, use and disposal of products and delivery of services. It also mandates that we make safety and environmental considerations priorities in new product development and investment decisions.
UTC products offer the potential for significant energy savings as well as improved environmental quality. Working with government and end users of our equipment we can ensure that these benefits are optimized and accelerated. We look forward to working with Congress, the Administration and other stakeholders to achieve these goals.
I would be happy to answer any questions you might have.
ATTACHMENT 1 Why Should Congress Support a Stationary Fuel Cell Tax Credit? / Key Elements of a Fuel Cell Tax Credit for Stationary Applications
ATTACHMENT 2 STATIONARY FUEL CELL INCENTIVE PROGRAM