Hearings - Testimony
 
Full Committee
Oversight to Examine Transportation Fuels of the Future
Wednesday, November 16, 2005
 
Richard Goodstein
Washington Representative, Air Products and Chemicals, Inc.

Mr. Chairman, Senator Jeffords, thank you very much for the opportunity to testify on the subject of hydrogen and its role as an important transportation fuel, not just of the future, but indeed of the present as well. I am the Washington Representative for Air Products and Chemicals, Inc., which is an $8 billion per year company in the industrial gases and chemicals business. Air Products has operations throughout the United States and abroad in thirty countries. Air Products has previously testified before Congress on the subject of hydrogen and is regularly a key participant in domestic and international conferences on hydrogen and the hydrogen economy.

 

Summary

My testimony will make the following points: (1) Hydrogen is not some futuristic concept. It is widely -- and safely -- used throughout industry today. (2) The public policy reasons for moving toward a hydrogen economy -- energy security and environmental protection -- are extremely compelling. (3) Technology for dispensing hydrogen into vehicles already exists and is being deployed, albeit slowly, today. (4) Hydrogen, mainly generated by reforming natural gas today, can also be derived from oil, coal, biomass, waste heat from nuclear reactors, and renewable energy such as wind or solar power, so it is compatible with all alternative fuels. (5) The federal government must play an important role in the development of a hydrogen economy.

Air Products: World Leader In Hydrogen

Air Products is the world leader in third-party hydrogen production and distribution of hydrogen, with approximately a 50% market share globally. Air Products safely operates sixty hydrogen production and processing facilities throughout the United States and the world, including Asia and Europe. Air Products is recognized as the industry leader in safety. The company maintains over 350 miles of hydrogen pipelines worldwide, and has been operating pipeline systems for over thirty-five years without a single recordable incident. Air Products alone has supplied liquid hydrogen to NASA since its earliest launches.

Air Products supplies hydrogen through a variety of supply modes. The company operates hydrogen pipelines domestically in Texas, Louisiana, and southern California; delivers hydrogen—both liquid and gaseous—in tanker trucks throughout the country; and produces hydrogen on-site, at oil refineries and steel and glass plants. In short, Air Products is a fully-integrated supplier of hydrogen and also has unparalleled know-how in handling hydrogen safely.

Air Products has formed collaborations and alliances with the full range of automotive companies worldwide that are committed to developing hydrogen-fueled vehicles, whether fuel cell or internal combustion vehicles. Air Products also works closely with companies that manufacture fuel cells, and with energy companies looking to dispense hydrogen fuel at their service stations. The company works closely with the Department of Energy in its research and development of the hydrogen economy, with many state and local governments, and with a range of universities that are moving the country more rapidly down the path toward a hydrogen economy.

Why Embrace Hydrogen?

Those of us in the hydrogen world were very excited when President Bush heartily embraced the role of hydrogen in his State of the Union address in 2003. He vowed that the first car driven by a child born that year would be a hydrogen fuel cell vehicle. Such a strong endorsement of a hydrogen economy from the White House was very big news for Air Products, and for our “partners” who manufacture fuel cells and hydrogen fuel cell cars as well as many in the petroleum industry.

The case for moving toward a hydrogen economy has been stated often in recent years, but it bears repeating. Nothing could be more important than energy security. To be free of the pricing power of the oil cartel would have tremendous value to the American economy. A hydrogen economy, especially once the hydrogen is totally renewable, will enable the United States to escape the stranglehold of the oil cartel.

Along with energy independence will come the savings from no longer having to maintain a defense posture predicated on maintaining open sea lanes for the shipment of oil. The hemorrhaging trade deficit would also be addressed in large part by eventually ending our dependence on foreign oil.

A hydrogen economy also provides a high degree of domestic security because it can be predicated on a system that delivers both electricity and hydrogen as fuel for vehicles. No one quite knows exactly how the hydrogen economy will develop, but there are likely to be several “right” answers to hydrogen production and delivery, depending on regional dynamics. One can imagine a series of regional hydrogen-generating facilities operating in hub-and-spoke networks. The natural gas lines that already exist in a city can be used to feed a hydrogen-generating plant. This plant, in turn, could be the starting point for the distribution of hydrogen within a metropolitan area. Such a system could free the United States from the fears of disasters, natural (consider the havoc wrought by Hurricane Katrina on our nation’s energy supply) or man-made (such as a terrorist attack on the originating point of oil pipelines).

Of course, the environmental benefits from a hydrogen economy are significant too. The only emission from a hydrogen fuel cell vehicle is water vapor. No carbon dioxide is generated in the production of renewable hydrogen, nor would there be particulates. A number of U.S. cities are currently experimenting with hydrogen fuel cell buses to help them address urban air quality degradation. While hydrogen today is generated mainly by reforming natural gas, the vision shared by hydrogen proponents is of a totally renewable fuel that would rely on renewable sources of energy to separate the hydrogen from the oxygen molecules in water and then use that hydrogen in a fuel cell or an internal combustion engine.

Current Role Of Hydrogen

A review of hydrogen production will help the committee understand its promise. Thanks to the Clean Air Act’s requirement for cleaner burning gasoline, hydrogen—which removes sulfur from petroleum distillates such as gasoline and diesel—is generated at or near oil refineries nationwide. (See attached photo of hydrogen generating plant.) Hydrogen is thus widely available in the U.S. today. (See attached map.)

Hydrogen has many other industrial purposes. It is used in processes to make steel, glass, semiconductors, detergent, and an enormous variety of other products. For the most part, hydrogen is made by reforming natural gas. But a huge advantage of hydrogen is that it can be obtained from a wide variety of other energy sources, including oil, biomass, coal, and nuclear. As mentioned earlier, renewable sources such as solar and wind can generate the electricity to separate the hydrogen and oxygen atoms in water. Therefore, research and development into hydrogen should not be seen as taking away from alternative energy technologies, but instead as dovetailing perfectly with them. In a hydrogen economy, hydrogen will be derived from several major sources.

Once generated, hydrogen can be distributed by pipeline, as a compressed gas in truck trailers, or as a cryogenic liquid in tanker trucks, as well as by ship and by rail.

The hydrogen used in vehicles today typically is dispensed in a compressed gaseous form. One challenge for hydrogen is how to store enough hydrogen in a vehicle to provide the driving range that consumers demand. The Department of Energy and the private sector are working on this storage issue, and considerable strides have been made just within the past few years. Some auto companies have decided to utilize hydrogen in an internal combustion engine and store hydrogen onboard in cryogenic (super-cooled) form. Municipal buses are turning to a mixture of compressed natural gas and hydrogen as their fuel. Others use hydrogen in fuel cells. Air Products works closely with all end users.

High-profile use of hydrogen and fuel cells is not new. NASA incorporated fuel cells into its early spacecraft, and liquid hydrogen, furnished by Air Products, has been used in space launches since the inception of the space program. While most of the current attention is on hydrogen to fuel vehicles, there is also a parallel effort to develop hydrogen fuel cells for everything from batteries for cell phones and laptops to backup power for hospitals and office buildings.

No Chicken-And-Egg Problem: Hydrogen Is Available Today

In hydrogen circles it is often said that a chicken-and-egg problem exists: auto companies wonder whether they can assume the risk of putting large numbers of hydrogen-powered cars on the roads without an existing hydrogen infrastructure, whereas hydrogen generators question the wisdom of deploying a hydrogen infrastructure without enough hydrogen-powered vehicles to generate sufficient demand for hydrogen.

Air Products believes this argument is a red herring. Because an extensive hydrogen-generating network exists throughout the country, hydrogen is very much available today—not in a dispensable form, perhaps, but it is certainly available to be tapped by the auto industry for many years to come as we make the transition into a fully deployed hydrogen economy.

Moreover, Air Products has developed mobile hydrogen fueling stations—devices that are approximately the size of one or two large U-haul trailers—that can hold enough hydrogen to fuel 15-50 cars per week. (See attached photos of mobile fuelers.) They are self-contained and require no utility hook-ups. Air Products currently deploys a number of these throughout the United States, but nothing precludes rural deployment. Therefore, if an auto company decides to experiment with hydrogen fuel cell cars in Oklahoma or Vermont, for example, rather than Florida or California, no technical reason prevents a mobile fueler from being deployed to service these autos. What’s more, one of our mobile hydrogen fueling stations actually costs less than a hydrogen fuel cell car does today.

Air Products also has developed a number of stationary hydrogen-dispensing facilities that look much like a standard gasoline pump at the corner gas station today. (See attached photos of hydrogen fueling products.) Indeed, the hydrogen that is used at the Shell station on Benning Road in Washington, D.C. (where a number of General Motors hydrogen fuel cell cars are fuelled) is generated by Air Products in Delaware and trucked to Washington. The dispensing equipment at this station is a proprietary design developed by Air Products. I encourage everyone on the Committee to visit that Benning Road station to see that hydrogen is here and now, not simply some futuristic fantasy.

Air Products has deployed hydrogen fueling station equipment throughout the country. Seventeen of our fueling stations will have been deployed in California by the end of 2005, in part to meet Governor Schwarzenegger’s call for a statewide “hydrogen highway.” We also have hydrogen generation and fueling equipment in Las Vegas, in three California municipalities, at the University of California at Irvine and at Davis, and at Penn State University, among other locations. Air Products’ stationary hydrogen fueling dispensers are in place with each of the Big Three auto makers in Michigan, and internationally in Japan, Korea, Singapore, China, Taiwan Germany, and Italy. Beijing is trying to use the 2008 Olympics as an opportunity to showcase a move toward cleaner technologies and we should expect to see a variety of hydrogen fueling stations and hydrogen fuel cell cars flitting about Beijing during the Olympics.

Of course, there are only about 100 hydrogen fuel cell cars currently deployed in the United States. It will be many, many years before hydrogen fuel cell cars number in the thousands, let alone in the millions. Given the enormous amount of hydrogen generated for industrial purposes today, it will be at least a decade in the United States before hydrogen-fuelled vehicles make a dent in the overall amount of hydrogen generated for industrial purposes.

The price of hydrogen fuel has come down substantially in the past few years. Hydrogen generated off our pipeline in Los Angeles, for example, can be competitive with gasoline in Los Angeles on a per gallon equivalent. Hydrogen delivered over the road gets more expensive than gasoline today because of the specialized hauling equipment that is required. Novel methods of hydrogen delivery that would reduce the distribution cost are being examined by Air Products. Once economies of scale are reached, those costs will drop. Moreover, the most commonly used hydrogen fuel cell is more than twice as efficient as a gasoline internal combustion engine.

Legislative Actions To Facilitate Hydrogen

Government’s Role Is Vital

Government has a special role in proceeding toward a hydrogen economy. The goals to be accomplished—energy security, a clean environment—are unlikely to be ones that will affect most consumer behavior. Individual consumers do not purchase our national defense. The nation as a whole does that through taxation. Similarly, we should not expect the private sector solely to assume the cost of developing technologies that benefit society at large rather than any individual consumer. While the free market will certainly play a role in responding to consumer choice, government action will be indispensable to accomplishing the very meritorious objectives of the hydrogen economy.

The Clean Air Act Is A Predicate To The Hydrogen Economy

Oil refineries presently use large quantities of hydrogen to comply with the Clean Air Act. Some in the petroleum industry counsel relaxing certain provisions of the Clean Air Act for a variety of reasons. To the extent that this Committee believes that movement in the direction of a hydrogen economy is a worthy goal for the United States, we strongly advise that the Clean Air Act requirement to remove sulfur from petroleum distillates not be weakened (nor is anyone seriously suggesting that is should be).

Air Products, among others, has invested billions of dollars in building and maintaining hydrogen-generating facilities and the beginnings of a hydrogen pipeline infrastructure. This was largely in response to the requirement that oil refineries produce cleaner-burning fuels. Relaxing or negating these requirements would leave companies like Air Products with enormous stranded assets and would represent a huge setback regarding the deployment of a hydrogen fueling infrastructure in the United States.

We hope the Air Products hydrogen investments, originally intended to help our refinery customers meet their Clean Air Act and clean fuel requirements, will pave the way for a robust domestic hydrogen infrastructure. Indeed, the areas in which Air Products has major hydrogen generating and pipeline facilities—southern California and a Houston to Lake Charles corridor—are seen by some as opening up the possibility of a “Silicon Valley” for hydrogen: not just the widespread introduction of hydrogen-fueled cars and buses, but factories, dwellings, and commercial establishments that could be powered by hydrogen fuel cells.

Establishing Codes And Standards

Establishing codes and standards applicable to hydrogen storage, dispensing, and the operation of hydrogen-fueled vehicles is important to assure public confidence in this new technology. At present, local fire marshals—given very little guidance—are left to their own devices to establish setbacks or other requirements applicable to hydrogen fueling stations. Standardizing hydrogen dispensing equipment—to assure compatibility between the dispenser and the vehicle—is obviously essential, but not a forgone conclusion. Establishing requirements for pressurizing hydrogen, to assure uniformity, is vital. Given this Committee’s jurisdiction, to the extent that hydrogen-fueled cars and buses will be used at or near public buildings and grounds, the Committee can have a major role in requiring the implementation of codes and standards that can be adopted throughout the country—indeed, throughout the world.

Government Procurement Can Be A Major Catalyst

Air Products, along with others in the hydrogen and fuel cell industries, encourages the federal government to be as aggressive as possible regarding procurement of hydrogen-fueled vehicles, including mass transit buses. There is particular value in having the government in this role. Until full-blown hydrogen fueling infrastructure exists, filling hydrogen-fueled vehicles will be easiest at centralized locations, where fleets are housed. Government fleets tend to fit this bill quite well. Whether the vehicles are buses that might run among government buildings or serve a community, or cars used by government employees during the day, we encourage the federal government to procure hydrogen-fueled vehicles wherever possible. To date, automobile companies have leased hydrogen fuel cell vehicles at costs comparable to other mid-range vehicle leases, so the high cost of hydrogen fuel cell vehicles need not necessarily be borne by the federal government.

The Next Highway Bill Will Be Important

While we recognize that the ink on the highway bill is barely dry, we encourage this Committee to begin thinking of ways to pave the way for broader use of hydrogen-fueled vehicles in the next iteration of this legislation. Demonstration of hydrogen fuel cell vehicles in various contexts—high altitude versus low altitude, dry versus wet, hot versus cold climates, for example—is likely to still be necessary.

By the time of the next highway bill, a consensus on the best way to develop a hydrogen fueling infrastructure is still unlikely. Therefore, we recommend that the committee consider supporting various hydrogen production mechanisms for purposes of generating hydrogen as a fuel—hydrogen generators at individuals’ homes or at places of work, large-scale hydrogen production facilities as the hub of a network of regional hydrogen pipelines, perhaps, or other methods for assessing the applicability of different hydrogen fuel production methods. Certainly the next highway bill will be a welcome opportunity to integrate hydrogen-powered buses into municipal transportation systems.

Tax Preferences Influence Consumer Behavior

Legislation beyond the jurisdiction of this Committee can certainly help as well. Tax preferences for the production of hydrogen used as a fuel will certainly encourage the establishment of a robust network of hydrogen fueling stations. Any reasonable tax preference that encourages consumer purchase of hydrogen-powered equipment—whether mobile or stationary—will provide an incentive for the full development of a hydrogen fueling infrastructure.

The Department of Energy continues to perform essential research and development on reliable and long-lasting fuel cells, hydrogen storage, and other essential ingredients of a hydrogen economy. We encourage Congress to fund this effort as robustly as possible. We recognize that the federal budget has limits. We merely urge the Congress to recognize that the closer we get to a fully deployed hydrogen economy, the more rapidly we will reduce our enormous trade deficit, expenditures on foreign oil and on the defense posture needed to facilitate importing foreign oil, and the expensive health impacts of polluted urban air.

Conclusion

On behalf of Air Products, I thank you for the opportunity to share with you this perspective on hydrogen, its current applications, and promise for the future. Hydrogen is not some pie-in-the-sky concept. It has been shown to work, yet needs the federal government’s support to overcome the remaining technical hurdles and be widely integrated in society. We very much look forward to working with you, with the entire Committee, and with staff and all stakeholders in achieving a reliable hydrogen economy as soon as possible.

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