[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
 DEPARTMENT OF ENERGY'S FREEDOMCAR: HURDLES, BENCHMARKS FOR PROGRESS, 
                       AND ROLE IN ENERGY POLICY
=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 6, 2002

                               __________

                           Serial No. 107-111

                               __________

       Printed for the use of the Committee on Energy and Commerce







 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
RICHARD BURR, North Carolina         BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
GREG GANSKE, Iowa                    BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           TOM SAWYER, Ohio
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES ``CHIP'' PICKERING,          GENE GREEN, Texas
    Mississippi                      KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
TOM DAVIS, Virginia                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland     LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
                  David V. Marventano, Staff Director
                   James D. Barnette, General Counsel
      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
                                 ------                                

              Subcommittee on Oversight and Investigations

               JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida           PETER DEUTSCH, Florida
CLIFF STEARNS, Florida               BART STUPAK, Michigan
PAUL E. GILLMOR, Ohio                TED STRICKLAND, Ohio
RICHARD BURR, North Carolina         DIANA DeGETTE, Colorado
ED WHITFIELD, Kentucky               CHRISTOPHER JOHN, Louisiana
  Vice Chairman                      BOBBY L. RUSH, Illinois
CHARLES F. BASS, New Hampshire       JOHN D. DINGELL, Michigan,
ERNIE FLETCHER, Kentucky               (Ex Officio)
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)










                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Culver, Robert N., Executive Director, United States Council 
      for Automotive Research....................................    40
    Garman, Hon. David K., Assistant Secretary, Energy Efficiency 
      and Renewable Energy, U.S. Department of Energy............    10
    Miller, William T., President, UTC Fuel Cells................    82
    Paul, Donald L., Vice President and Chief Technology Officer, 
      ChevronTexaco..............................................    86
    Roan, Vernon P., Professor of Mechanical Engineering, 
      Director, Fuel Cell Laboratory, University of Florida, on 
      behalf of the PNGV Peer Review Committee, National Research 
      Council....................................................    56
    Wells, Jim, Director, Natural Resources and Environment, U.S. 
      General Accounting Office..................................     8










 DEPARTMENT OF ENERGY'S FREEDOMCAR: HURDLES, BENCHMARKS FOR PROGRESS, 
                       AND ROLE IN ENERGY POLICY

                              ----------                              


                        THURSDAY, JUNE 6, 2002,

                  House of Representatives,
                  Committee on Energy and Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
room 2123, Rayburn House Office Building, Hon. James C. 
Greenwood (chairman) presiding.
    Members present: Representatives Greenwood, Stearns, 
Gillmor, Bass, Fletcher, Deutsch, and Dingell (ex officio).
    Staff present: Peter Spencer, majority professional staff 
member; Joe Greenman, legislative assistant; Yong Choe, 
legislative clerk; Jonathan J. Cordone, minority counsel; and 
Bruce Gwinn, minority professional staff member.
    Mr. Greenwood. Good morning. The meeting will come to 
order. Today we'll be examining a far-reaching and quite bold 
automotive research initiative that has been launched by the 
Department of Energy and the big three automakers.
    The FreedomCAR program, a public-private research and 
development initiative, presents a vision of a day when 
automobiles will not be only pollution free, but no longer 
dependent on petroleum. This is a bold vision indeed.
    The focus of this initiative is for the long term, of 
course, which may have merit for setting priorities, but it 
also raises some basic issues I hope we can explore in depth 
today. Some of these issues involve assuring that we will be 
able to assess, as the program moves forward, whether taxpayer 
money is well spent. Some issues also involve placing this 
program in the broader context of our energy policy, an 
important area of the full committee's jurisdiction, and fully 
appreciating the challenges the program will face.
    Some of you may remember the large ad campaign a couple of 
months ago for the new model lineup from Nissan's Infiniti 
division. The flashy ads displayed futuristic vehicles, the 
kind we used to read about in Popular Science, with the catchy 
question, ``where are the cars we were promised?''
    We know now those so-called future cars promised to be 
right around the corner were never delivered. The ads struck 
me, because they pointed to something I think can affect our 
thinking about future technology. We can get carried away with 
our imagination, only to be disappointed by reality. This is 
not to say that we shouldn't have bold visions that go beyond 
what we are presently capable of achieving. Innovation would 
wither away otherwise. But it should serve to remind us as we 
go forward with spending from limited resources to seek policy 
goals that are important for our Nation that we must maintain 
some perspective and be willing to say no when a vision goes 
off track.
    The two panels from which we will hear this morning should 
help us make sure that we stay on track with this program so 
that we can be confident it is a beneficial pursuit for our 
Nation's energy policy goals. The panelists should help us 
check whether we will be able to assess as time goes on that 
the program fits with policy goals, that it will make a 
positive impact on our efforts to reduce our oil dependence and 
cut pollution, or whether adjustments are necessary.
    At the outset, there are some key questions we need to 
consider about the respective roles in the program of the 
Department of Energy and the U.S. Council for Automotive 
Research, which represents the auto makers.
    For example, there are some threshold questions about the 
structure of the program. What is the role of industry in this 
partnership? How is the money spent? Where does it go? There 
are questions about the balance of the technology portfolio 
currently being pursued by FreedomCAR. Has the shift in focus 
to a fuel cell, hydrogen future diminished the pressure to get 
the intermediate gains in automobile efficiency we've already 
been researching and spending more than a billion dollars on 
these past 8 years?
    As our General Accounting Office witness will point out in 
his testimony, reviews of past R&D efforts by the Federal 
Government reveal that, surprise, surprise, some of these 
efforts have come up short due to lack of focus, absence of 
measurable goals and benchmarks, or failure to consider actual 
marketplace potential of the research. Some efforts have 
produced positive results, so we have some experience here that 
offers up lessons we should consider as we examine FreedomCAR.
    It is essential that we examine this program in the context 
of our broader energy policy. We must consider how the pieces, 
the technology portfolio, the benchmarks and goals fit together 
to make an actual difference in how we use energy and in what 
we emit into the air. When all is said and spent, this 
initiative should enable the production of something that 
consumers and businesses will want to purchase and use. Is 
FreedomCAR structured to help launch products and innovation 
into the marketplace?
    Is the strategy contemplated by the Department of Energy 
sufficient to prevent advances from gathering dust on a lab 
shelf? Panelists today will help us put FreedomCAR's goals and 
its connection to a hydrogen future in proper perspective. I 
look forward to discussion about the requirements for 
infrastructure, the demands on fuel supply, the cost barriers 
and challenges. I look forward to learning about what Congress 
may have to consider to help address these issues. I'm not sure 
that all that will be involved or how long this vision will 
take to be realized has been fully appreciated by the public.
    Moreover, I'm not sure the questions are settled about the 
current course of FreedomCAR. We will hear today about other 
aspects of research and development concerning hydrogen 
infrastructure. For example, that might need more immediate 
attention if the hydrogen vision is to overcome the chicken-
and-egg problem. Unlike conventionally fueled vehicles, after 
all, you can't really convince people to leap to fuel cell cars 
unless they can drive them far and wide without worry about 
filling up.
    Finally, as we step back to view the program in a broad 
context, we should also not lose sight of its potential for 
positive side effects. There is something to be said about 
long-range focus. Properly sighted, it can generate research 
outcomes we cannot even contemplate as it fosters innovation.
    So I'd like to kick off this hearing on that upbeat note, 
but without forgetting that we should not let our imaginations 
get too far ahead of us when we're spending the taxpayers' 
money.
    [The prepared statement of Hon. James C. Greenwood 
follows:]
 Prepared Statement of Hon. James C. Greenwood, Chairman, Subcommittee 
                    on Oversight and Investigations
    Good morning and welcome. Today we'll be examining a far-reaching 
and quite bold automotive research initiative that has been launched by 
the Department of Energy and the Big Three automakers.
    The FreedomCAR program, a public-private research and development 
initiative, presents a vision of a day when automobiles will be not 
only pollution free, but no longer dependent on petroleum. This is a 
bold vision indeed.
    The focus of this initiative is for the long-term, of course, which 
may have merit for setting priorities, but it also raises some basic 
issues I hope we can explore in depth today. Some of these issues 
involve assuring that we will be able to assess, as the program moves 
forward, whether taxpayer money is well spent. Some issues also involve 
placing this program in the broader context of our energy policy--an 
important area of the full Committee's jurisdiction--and fully 
appreciating the challenges the program will face.
    Some of you may remember the large ad campaign a couple of month's 
ago for the new model line-up from Nissan's Infiniti division. The 
flashy ads displayed all these futuristic vehicles--the kind we used to 
read about in Popular Science--with the catchy question: ``Where are 
the cars we were promised?'' We know now those so-called future cars, 
promised to be right around the corner, were never delivered.
    The ads struck me because they pointed to something I think can 
infect our thinking about future technology; we can get carried away 
with our imagination, only to be disappointed as reality sets in.
    Now, this is not to say that we shouldn't have bold visions, 
visions that go beyond what we're presently capable of achieving. 
Innovation would wither away otherwise. But it should serve to remind 
us, as we go forward with spending from limited resources to seek 
policy goals that are important for our Nation, that we must maintain 
some perspective, and be willing to say no when a vision goes off 
track.
    The two panels we will hear this morning should help us make sure 
we stay on track with this program so we can be confident it's a 
beneficial pursuit for our nation's energy policy goals. The panelists 
should help us check whether we will be able to assess, as time goes 
on, that the program fits with policy goals, that it will make a 
positive impact on our efforts to reduce our oil dependence and cut 
pollution, or whether adjustments are necessary.
    At the outset, there are some key questions we must consider about 
the respective roles in the program of the Department of Energy and 
U.S. Council for Automotive Research, or USCAR, which represents the 
automakers.
    For example, there are some threshold questions about the structure 
of the program. What is the role of industry in this partnership? How 
is the money spent? Where does it go?
    There are questions about the balance of the technology portfolio 
currently being pursued by FreedomCAR. Has the shift in focus to a fuel 
cell, hydrogen future diminished the pressure to get the intermediate 
gains in automobile efficiency we've already been researching--and 
spending more than a billion dollars on--these past eight years?
    As our General Accounting Office witness will point out in his 
testimony, reviews of past R&D efforts by the federal government reveal 
that some of these efforts have come up short--due to lack of focus, 
absence of measurable goals and benchmarks, or failure to consider 
actual marketplace potential of the research. Some efforts have 
produced positive results. So we have some experience here that offers 
up lessons we should consider as we examine FreedomCAR.
    It is essential that we examine this program in the context of our 
broader energy policy. We must consider how the pieces' the technology 
portfolio, the benchmarks and goals--fit together to make an actual 
difference in how we use energy, in what we emit into the air. When all 
is said and spent, this initiative should enable the production of 
something that consumers, businesses will want to purchase and use.
    Is FreedomCAR structured to help launch products and innovation 
into the marketplace? Is the strategy contemplated by the Department of 
Energy sufficient to prevent advances from gathering dust on a lab 
shelf?
    Panelists today will help us put FreedomCAR's goals and its 
connection to a hydrogen future in proper perspective. I look forward 
to discussion about the requirements for infrastructure, the demands on 
fuel supply, the cost barriers and challenges. I look forward to 
learning about what Congress may have to consider, to help address 
these issues. I am not sure that all that will be involved or how long 
this vision will take to be realized has been fully appreciated by the 
public.
    Moreover, I'm not so sure the questions are settled about the 
current course of FreedomCAR. We will hear today about other aspects of 
research and development--concerning hydrogen infrastructure, for 
example--that might need more immediate attention if the hydrogen 
vision is to overcome the chicken and egg problem. Unlike 
conventionally fueled vehicles, after all, you can't really convince 
people to leap to fuel cell cars unless they can drive them far and 
wide, without worry about filling up.
    Finally, as we step back to view this program in a broad context, 
we should also not lose sight of its potential for positive side 
effects. There's something to be said about long-rang focus, properly 
sighted. It can generate research outcomes we cannot even contemplate 
as it fosters innovation.
    So I'd like to kick off this hearing on that upbeat note, but 
without forgetting that we should not let our imaginations get too far 
ahead of us when we're spending other people's money.

    Mr. Greenwood. The Chair recognizes the ranking member, Mr. 
Deutsch.
    Mr. Deutsch. Thank you, Mr. Chairman. Again, I appreciate 
this hearing. I don't think that there is a more important 
domestic policy issue than what this program is about. The 
potential in terms of fuel cells would have a dramatic effect 
on our national security, on our macroeconomy, and so it 
clearly is a very, very high priority in terms of the goals of 
this country, and I look forward to the testimony and working 
with the committee and the committee staff in trying to make 
this program as successful as possible. Thank you.
    Mr. Greenwood. The Chair thanks the gentleman and 
recognizes the gentleman--the other gentleman from Florida--Mr. 
Stearns, for an opening statement.
    Mr. Stearns. Thank you, Mr. Chairman, and I thank you for 
having this hearing. Over the past year and a half, much of the 
energy policy debate has centered around CAFE standards. 
Obviously as summer approaches, more Americans are taking more 
vacations. The demand and subsequently the price of gasoline is 
increasing. Add to that the tensions in the Middle East, and we 
are again looking at possibly a higher set of gasoline prices 
this summer.
    As America searches for ways to become more self-sufficient 
in energy consumption, we're also looking for ways to reduce 
consumption. So I believe today's hearing shed light on the 
problem talking about perhaps not a new approach, but an 
improvement over an older approach to fuel efficiency. As many 
of you know, nearly 9 years ago, President Clinton announced a 
new government and industry program called the Partnership for 
New Generation of Vehicles. The goal was to eventually produce 
an environmentally friendly vehicle that would achieve greater 
fuel economy without sacrificing performance, affordability and 
safety. These are the same influential factors within the CAFE 
standards debate. As many are concerned that arbitrarily 
raising CAFE standards would hurt these same areas.
    The new program brought together the resources and 
expertise of both the private sector and the Federal 
Government. The research centered around reducing U.S. oil 
consumption by developing new technologies, such as hybrid 
electric fuel cells and light-weight materials. At the 
beginning of this year, the Bush administration decided to 
expand the research and development of fuel cells within a new 
initiative called FreedomCAR. This expands upon the old 
partnership initiative, while narrowing the focus. Fuel cells 
offer the most promising opportunity, especially in terms of 
domestic production. In addition, the new initiative focuses on 
expanding the use of new technologies across a wider spectrum 
of car manufacturing design so as to make such technologies 
more marketable.
    And this makes business sense. In light of President Bush's 
energy policy and the desire for all of us to wean ourselves 
off the nearly 60 percent reliance on foreign fuel imports, the 
FreedomCAR initiative is a proper step in focusing these 
research efforts to a more and what we hope to be achievable 
goal.
    As a member representing a State that imports nearly 100 
percent of its fuel needs in Florida, I support common sense 
approaches to fuel efficiency and the increased use of new 
technologies. So, again, Mr. Chairman, I thank you for this 
hearing. Look forward to our witnesses.
    Mr. Greenwood. The Chair thanks the gentleman.
    [Additional statements submitted for the record follow:]
    Prepared Statement of Hon. Paul E. Gillmor, a Representative in 
                    Congress from the State of Ohio
    Mr. Chairman, given the recent focus on formulating our nation's 
energy policy, I am grateful for this opportunity to address the status 
of the DOE's new FreedomCAR program. In particular, I am anxious to 
hear about the progress of fuel cell technology and FreedomCAR since 
its announcement last January.
    Like many of the Members here, I support conservation efforts, 
while at the same time, enhancing the use of renewable energy 
resources, improving energy efficiencies, and increasing domestic 
energy supplies to decrease America's dependency on foreign oil. At the 
onset, I believe this program is a step in the right direction to 
achieve this goal.
    However, with a technology of chemically generating electricity 
from hydrogen, one that is not market-ready in our nation's automotive 
industry, I feel it is important to continue to improve upon and give 
attention to current technologies such as hybrids.
    Furthermore, as we delve into this issue, I am hopeful that this 
program will produce long-term goals that motivate researchers, inspire 
the public, and provide the appropriate avenues to measure progress.
    Again, I thank the Chairman and yield back my time.
                                 ______
                                 
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce
    Thank you Chairman Greenwood. And, let me also thank you for 
putting together what promises to be a very interesting hearing this 
morning on the Department of Energy's FreedomCAR partnership.
    Several policies we pursue on this Committee aim, in one way or 
another, to encourage innovation and technological advancement and to 
assist efforts to deploy workable innovations into the marketplace. 
Whether it is pharmaceuticals, telecommunications, the Internet, or, of 
course, energy, the bulk of this innovation comes from private sector 
initiatives.
    Clearly, the federal government can and does aid in this process. 
It pursues its own research and development, which has spin offs into 
the market--think of the Intemet's development, for example. And it can 
implement policies that encourage (or at least don't stifle) the 
innovative and technological pursuits of those in the private sphere. 
The federal government also can serve as an incubator of sorts, or can 
assist through demonstration projects and the like, where there is 
promise but not enough incentive for individual companies to pursue.
    Or, in the case of the program at hand, federal R&D can work in 
partnership with the private sector--and appropriately so, if it is 
properly structured.
    However, I think there's a delicate balancing act, which we in 
Congress must monitor very carefully. We have a responsibility, as you 
indicated Mr. Chairman, to make sure taxpayer dollars are spent wisely 
on initiatives that are in the public interest--and that hold some 
promise of producing results. And as Members of this Committee, with 
its broad jurisdiction, know quite well, we also have limited 
resources, but a seemingly unlimited number of vexing problems we'd 
like to address.
    I look forward to learning from the witnesses about the structure 
of this program, and the measures in place, or that will be put into 
place, that will assist Members as well as the agency and automaker 
planners themselves to track the progress of FreedomCAR, and to correct 
its course, if necessary.
    I also look forward to hearing about the prospects of this program 
in our dynamic marketplace, and the ongoing innovations and changes 
that occur in the transportation sector.
    It's been encouraging to see advances such as hybrid vehicles 
coming into the market, and to see demonstrations of other advanced 
engine technology on the verge of market introduction. When we consider 
the goals of this program, it's important to look at them against the 
backdrop of the marketplace, rather than just a blackboard.
    It's also important to look at the goals in the context of our 
nation's energy policy, which, as it happens, is one of the Energy and 
Commerce Committee's front-burner issues at the moment.
    I look forward to learning about the broader, but related, goals of 
a leap to a hydrogen economy. I'd like to hear more about how this will 
effect our energy usage, how it will effect innovation and the future 
of transportation, and our economy. These are big questions. I'm 
pleased we're taking a stab at them today.
    I thank the witnesses for taking the time to come and discuss these 
important issues with us, and I yield back, the remainder of my time.
                                 ______
                                 
Prepared statement of Hon. Diana DeGette, a Representative in Congress 
                       from the State of Colorado
    Mr. Chairman, thank you for holding this hearing today and I thank 
our witnesses for being here as well. FreedomCAR does have a nice ring 
to it. I hope that the program's goals go deeper than that, though. I'd 
like to see substantial changes in the vehicles we drive.
    As a member of the Renewable Energy and Energy Efficiency Caucus, 
it probably will not surprise anyone here that I am very interested in 
today's discussion. I strongly believe that we have to think creatively 
to solve our current energy needs and look toward solving the energy 
needs of tomorrow.
    I have been in Congress for three terms. But I have a lot of 
friends and colleagues who have been here for much longer. I won't name 
any names. When we get to talking about these projects to develop cars 
and trucks that are more fuel efficient, they tell me how they have 
been talking about how the fuel cell vehicle is just around the corner. 
Those conversations, I'm afraid to say, have taken place for the last 
three decades. And we are still having the same conversations.
    I don't think I'm alone in realizing how important it is to develop 
new technologies that will help our country to be less reliant on oil. 
Of course our current oil dependence is largely driven by our car 
culture. Major assertions to the contrary, we have not made great 
strides in implementing technologies that substantially improve gas 
mileage. Instead, the recent trends toward larger and larger vehicles 
have only increased this dependence.
    I like the sound of Secretary Abraham's assertions that this 
project aims to ``leapfrog the status quo'' and pursue ``dramatic 
environmental benefits.'' I look forward to hearing how the goals of 
this program differ from earlier federal efforts and how they are more 
achievable. We do not want to re-invent the wheel here. By that, I am 
saying that I think we need to continue to build on the research that 
has already taken place.
    I want to talk about how we aim to implement any new technologies 
we develop. How do we build on past research to develop the next 
generation of vehicles that will actually wean us from our dependence? 
How do we safely transport and store hydrogen?
    I think this is also an excellent opportunity to further explore 
some interim solutions. I am glad that the Department of Energy has 
decided that we are heading to a day when we all drive clean, fuel-
efficient, hydrogen-powered vehicles--albeit in ten years. But I 
wouldn't mind discussing improvements we could implement sooner in 
order to achieve cleaner air standards sooner.
    And I wouldn't mind hearing why we have determined that hydrogen 
has become the fuel of choice to drive this mission. I am not saying it 
isn't the way to go. I would just like to discuss why it is the best 
option.
    Further, I do not pretend to be a physicist or mechanical engineer. 
That is why I am glad we have the experts here to help us achieve a 
better understanding of these issues. I ask that we use this hearing to 
get a clearer map of where we are heading and why it is that that is 
the best direction in which to head. Thank you.
                                 ______
                                 
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan
    Mr. Chairman, I want to thank you for holding this important 
hearing. The industry must search for long-term ways to boost fuel 
economy substantially. Among those methods--10 to 20 years or more from 
now--the President's fuel cell program holds a lot of promise. The 
development of hydrogen fuel cell technologies is vital to the future 
competitiveness of the U.S. auto industry. Public-private partnerships, 
such as FreedomCAR and Michigan's Next Energy initiatives, are 
necessary to apply these developing technologies to practical uses and 
to adequately prepare the Nation's infrastructure to receive and 
support them.
    For the immediate future, however, the answer is either hybrids or 
advanced clean burn diesel technology. The problem with hybrid electric 
technology is that its reliability and performance are unproven. The 
reliability and performance of clean burn diesel technology, on the 
other hand, has been well demonstrated.
    Clean burn diesel technology is in wide use in the European Union 
(EU), the world's second largest vehicle market. Clean burn diesel 
vehicles accounted for 48 percent of all light-duty vehicles and 75 
percent of all luxury vehicles sold in the EU last year. By 2010, 
diesels are expected to account for 75 percent of all light-duty 
vehicle sales in the EU.
    One of the primary reasons this technology is so popular in Europe 
is that diesels have outstanding fuel economy. Audi's recently 
introduced A2 model has a fuel economy rating of 78 miles per gallon. 
The A2's mileage rating is better than that of the Honda Insight with 
its hybrid electric engine, and the A2 seats four passengers rather 
than the Honda's two passengers.
    If diesel accounted for only 30 percent of California's fleet of 
motor vehicles, estimates are that fuel consumed by vehicles in 
California could be cut in half. If fuel consumed nationwide could be 
reduced by half, the Department of Energy says fuel consumption would 
be reduced to a level we haven't seen since November 1964.
    Clean burn diesel engines are also very close to meeting U.S. 
emission standards. The motor vehicle companies have until 2007 to meet 
new nitrous oxide standards and the manufacturers believe they can do 
it.
    None of these clean burn diesel vehicles, however, can be sold in 
the U.S., now or in the future, unless the U.S. cleans up its diesel 
fuel as the EU is doing. The U.S. allows 15 parts per million sulfur in 
its diesel fuel--not the six parts per million fuel that EPA used in 
its testing of the European Toyota.
    Europe has been far more aggressive than the U.S. in banning sulfur 
from both gasoline and diesel fuels. Sweden has already adopted 
regulations allowing only ``zero sulfur'' diesel to be sold in that 
country. By 2005, the sulfur content of diesel fuel sold throughout the 
EU must be effectively ``zero.''
    With essentially sulfur-free diesel fuel, recent advances in 
catalyst emission control technology make it possible to reduce nitrous 
oxide emissions from clean burn diesel engines by as much as 90 
percent. Particulate emissions would also be greatly reduced with 
particulate trap technology. With clean burn diesel, hydrocarbon 
emissions are also much less than with current state-of-the-art 
gasoline engines.
    Technology can be developed to make clean burn diesel engines meet 
U.S. standards, but it cannot happen without clean diesel fuel. U.S. 
refiners must take the sulfur out of diesel fuel just as the EU is 
doing. At the current U.S. standard of 15 parts per million, both the 
efficiency and durability of diesel engines is compromised to the point 
that the fuel economy advantages diesels offer cannot be realized.
    All that blocks our path to high fuel economy here in the U.S., 
like the Audi A2's 78 miles per gallon, is dirty diesel fuel and the 
technology to overcome one test hurdle on nitrous oxide. Industry's 
engineers can overcome the nitrous oxide problem. But the motor vehicle 
industry can do nothing about cleaning up diesel fuel. That is a task 
only the Congress can handle.
    I will be introducing legislation that requires refiners to produce 
lower sulfur diesel fuel. Because there will be investment and 
development costs associated with this requirement, my legislation will 
also provide for tax credits for the refining industry.
    Diesel is the way of the future, and I am hopeful that its short-
term benefits will not be overlooked by the Administration or the 
Congress, even as we examine longer term strategies.
    Again, thank you for holding this hearing.

    Mr. Greenwood. The Chair recognizes and welcomes our first 
panel, consisting of Mr. Jim Wells, who is the director of 
Natural Resources and Environment for the U.S. General 
Accounting Office; the Honorable David Garman, who is assistant 
secretary, Energy Efficiency and Renewable Energy at the U.S. 
Department of Energy; and Mr. Robert N. Culver, executive 
director of United States Council for Automotive Research. We 
welcome you all and thank you for helping us out this morning.
    I believe you all are aware that this committee is holding 
an investigative hearing and it has had the practice of taking 
testimony under oath. Do any of you object to giving your 
testimony under oath? The Chair then advises you that under the 
rules of the House and the rules of the committee, you are 
entitled to be advised by counsel. Do any of you choose to be 
advised by counsel while you testify?
    In that case if you'd please rise and raise your right 
hand, I'll swear you in.
    [Witnesses sworn.]
    Mr. Greenwood. Okay. Thank you. You are under oath, and we 
will recognize you for your opening statements, and we will 
begin with Mr. Wells.

    TESTIMONY OF JIM WELLS, DIRECTOR, NATURAL RESOURCES AND 
  ENVIRONMENT, U.S. GENERAL ACCOUNTING OFFICE; HON. DAVID K. 
 GARMAN, ASSISTANT SECRETARY, ENERGY EFFICIENCY AND RENEWABLE 
   ENERGY, U.S. DEPARTMENT OF ENERGY; AND ROBERT N. CULVER, 
   EXECUTIVE DIRECTOR, UNITED STATES COUNCIL FOR AUTOMOTIVE 
                            RESEARCH

    Mr. Wells. Thank you, Mr. Chairman, and members. I too 
would like to begin my statement in an upbeat note, as you 
mentioned. We are pleased to be here to discuss the previous 
work on the Federal R&D initiatives that have provided some 
perhaps useful insight as the Congress considers the FreedomCAR 
initiative. As you know, gasoline consumption in the 
transportation sector is huge, 160 billion gallons a year. 
Given the reliance on petroleum, there's a high vulnerability 
to the uncertainties related to a world oil market. As a 
result, the Federal Government is and has been spending 
billions of dollars attempting to reduce the consumption of 
petroleum in the transportation sector. A variety of means have 
been tried. Tax incentives, mandates to use vehicles that run 
on alternative fuels and laws designed to enhance fuel 
efficiency.
    More recently, the old last year's $1.2 billion partnership 
between industry and government as referred to the Partnership 
New Generation Vehicle, is being replaced with the new 
FreedomCAR initiative. Clearly, today's cars, Mr. Chairman, are 
more fuel efficient, and they are less polluting. The sad news 
is that any gains in fuel efficiency are being outpaced by the 
increase in the total miles that are being driven and the 
growing popularity of the sport utility vehicles and light 
trucks. We're using approximately 10-plus million barrels of 
petroleum a day to fuel these vehicles, and we're heading 
toward 15-plus million barrels in 2010.
    As a result, I'd like you to look at the chart to my left 
here. It is also there in my printed statement. I draw your 
attention to that slender line at the top. This is the result 
so far in reducing petroleum usage. The largest dark-shaded 
area will show you two things: The annual petroleum usage is 
going up, increasing 40 billion gallons just in the last 10 
years. You're looking at a 10-year period with billions of 
gallons to the left and 160 billion gallons at 2001. 97 percent 
of our transportation usage is gasoline, not alternative fuels.
    That light-colored line that you see there at the top shows 
that we really haven't made much of a dent. Consumers have not 
widely embraced vehicles that run on anything other than 
gasoline. The challenge is going to be whether you build a car, 
a new hydrogen car and or whether you reduce the dependence on 
oil. Clearly these goals are going to be formidable goals. As 
Congress considers the FreedomCAR initiative or any comparative 
Federal-sponsored research program, we're here today to 
suggest, perhaps, four themes for Congressional oversight. 
These are based on some of the lessons we've learned as 
auditors in looking at these programs over 20 years.
    The first one, make sure that the research being performed 
by private industry would not do on its own. Earlier, GAO had 
looked at work relating to the Department of Commerce's 
Advanced Technology Program. Forty percent of the participants 
in that program responded to the auditors that they would have 
performed the research even without Federal funding. A second 
theme, make sure the programs specify a clear and measurable 
goal.
    Clearly, SEMATECH in the late 1980's, early 1990's, a 
Federal industry consortium, was successful because it clearly 
articulated both a goal that was improving the competitiveness 
of the U.S. manufacturer capability in semiconductors, and it 
did have a method to achieve this goal, and that was to build 
state-of-the-art semiconductors using only equipment 
manufactured in the United States.
    Although the recent PNGV program began with a clear goal, 
they tried to develop a highly fuel efficient family sedan. The 
partnership struggled a little bit in not later reassessing the 
goal as consumers' tastes shifted away from the family sedans 
toward lighter trucks--light trucks and sport utility vehicles. 
The third theme that we bring to your attention is to ensure 
that all the new initiatives they devise a strategy to directly 
address the goal.
    Although it may sound surprising, the government-sponsored 
R&D research programs over the years sometimes have articulated 
a goal and then not devised a strategy that directly addressed 
that goal. The classic case was the Energy Policy Act of 1992. 
It had a goal of reducing petroleum fuel reduction, but it also 
allowed a strategy to be put in place instructing the Federal 
agencies to buy alternative fuel vehicles, which ended up being 
powered by gasoline, and as a result, achieved no fuel 
reductions.
    As you consider the FreedomCAR initiative, it's important 
to recognize as was the case with alternative fuels and was 
mentioned by the chairman, that there is a lack of 
infrastructure for fuels other than gasoline. Look at these 
charts. The question will be asked, how far are you willing to 
drive to find fuel? The top chart represents gasoline 
infrastructure. The bottom chart represents filling stations 
related to alternative fuels. This lack of infrastructure could 
pose a very significant challenge to the implementation of any 
kind of FreedomCAR-type initiative when the vehicles it 
develops will run on anything other than gasoline.
    And my last theme would be to consider whether consumers 
will buy the product resulting from the R&D expenditure and 
efforts that you put forth. We've seen that Federal research 
sometimes producing compelling technical accomplishments but 
few marketable products. In 1995, we reported the U.S. advanced 
battery consortium could potentially achieve its immediate 
technical goals, and they did, but the resulting batteries 
would be too expensive, and would not enable the electric cars 
that were equipped with these batteries to be competitive with 
the traditional automobiles.
    Mr. Chairman, in conclusion, the FreedomCAR initiative plan 
to develop fuel cell technology clearly, in our opinion, 
represents an exciting area of research. The payoff could be 
large. As auditors based on our earlier reviews, it would be 
critical for the initiative to keep one eye on achieving 
technical goals, and also to keep one eye particularly on the 
marketplace. Moreover, if there's one thing I want to leave you 
with, the ultimate success of how this new FreedomCAR 
initiative may be judged in the future, it may be judged not by 
the specific technical goals that it achieves along the way, 
but by its contribution toward enlarging that slim sliver of a 
line that I showed you earlier on the chart that represents 
future nonpetroleum usage.
    Mr. Chairman, that concludes my summary, remarks, and will 
be glad to answer questions at a later time. Thank you.
    [The prepared statement of Jim Wells appears at the end of 
the hearing.]
    Mr. Greenwood. Thank you, Mr. Wells. We appreciate your 
testimony and we'll now turn to Mr. Garman.

                  STATEMENT OF DAVID K. GARMAN

    Mr. Garman. Thank you, Mr. Chairman. I appreciate the 
opportunity to discuss FreedomCAR, which is an initiative to 
reduce the Nation's dependence on foreign oil by dramatically 
changing how we will 1 day power our cars and light trucks. 
This light illustrates the expanding gap between declining 
domestic oil production and our increasing demand, even if we 
open ANWR, a business-as-usual approach, to research and 
development does not close the gap. Mindful of this fact, 
Secretary Abraham challenged us to take a bolder approach to 
our work. He challenged us to leapfrog the status quo and 
pursue dramatic environmental benefits.
    On January 9, Secretary Abraham, joined by top leadership 
of General Motors, Daimler-Chrysler and Ford announced 
FreedomCAR at the North American International Auto Show in 
Detroit. The ``CAR'' in FreedomCAR stands for ``cooperative 
automotive research,'' and the ``Freedom'' concept represents 
our fundamental long-term goals for this program: Freedom from 
petroleum dependence, freedom from pollutant emissions, freedom 
for Americans to choose the kind of car they want to drive and 
to drive where they want when they want.
    In short, we're looking to eventually remove the automobile 
as a factor in the environmental equation and as a factor that 
drives our dependency on foreign petroleum. If we want all of 
these things as well as performance functionality and 
affordability in a wide range of vehicles, we see the most 
promising long-term approach is hydrogen-fueled fuel cells 
combined with electric drive. Therefore, the first element of 
our strategic approach is to develop technologies enabling mass 
production of affordable fuel cell vehicles and to assure the 
hydrogen infrastructure to support those vehicles.
    The partnership we've enjoyed in the past, the Partnership 
for a New Generation of Vehicles, had some successes, and we're 
certainly not abandoning them. Indeed many of the research 
elements of the PNGV program are embodied in the second element 
of our approach to continue support for hybrid and other 
technologies that can dramatically reduce oil consumption and 
environmental impacts in the near term.
    The third element of our strategic approach is to develop 
technologies applicable across a wide range of passenger 
vehicles. One of the problems with the PNGV program was it 
focused on a production prototype of a family sedan. We're not 
limiting our focus.
    In its most recent peer review of the PNGV program, the 
National Academy of Science has made a number of observations 
and recommendations. They suggested that PNGV goals be re-
examined. They observed that the real opportunities for saving 
energies are in increasing the efficiencies of sport utility 
vehicles and pickups. They cautioned that it's inappropriate 
for government to be involved in the development of production 
prototypes. And we took their advice to heart and made changes.
    With respect to key goals, FreedomCAR is focused on 
petroleum-free, emissions-free transportation with an emphasis 
on hydrogen fuel cells and also on systems and components 
applicable to many types of vehicles. PNGV was focused on a 
production prototype 80-mile-per-gallon family sedan. With 
respect to timeframe, Free-domCAR has a long-term vision with 
component technology goals over the next 10 years to gauge our 
progress. PNGV was a 10-year program focused on 2004.
    With respect to government leadership and focus, FreedomCAR 
is a partnership solely between DOE and USCAR. PNGV was a 
collaboration between USCAR and seven government agencies led 
by the Department of Commerce. With respect to technology 
emphasis, FreedomCAR is focused on hydrogen and fuel cells with 
transitional efficiency gains from advanced combustion and fuel 
processors. PNGV emphasized compression, ignition, direct 
injection hybrids. With respect to vehicle focus, FreedomCAR's 
focus is R&D at the component level with equal emphasis on cars 
and light trucks. PNGV emphasized development and demonstration 
of preproduction, mid-sized family sedans. We're not abandoning 
the good work that has emerged from PNGV.
    There are many shared components between an advanced hybrid 
electric vehicle and a fuel cell vehicle including light-weight 
materials, power electronics, electric motors and batteries. 
Advances we make in these components need not wait for fuel 
cells or hydrogen infrastructure to reach the market, as they 
can be introduced as soon as they're ready. We'll also be 
continuing our work in alternative fuel and advanced combustion 
engines needed to support the development of advanced hybrid 
electric vehicles.
    Of course, new areas of emphasis needed for fuel cell 
vehicles include hydrogen storage, on-board reformation and 
fuel cell stack development. This is our budget cross-cut for 
FreedomCAR. We're proposing to spend $150.3 million on this 
initiative in fiscal year 2003. And a lot has been said about 
specific technology goals. The transition to a hydrogen-based 
transportation system is a long-range vision.
    To assure progress, intermediate goals are necessary to 
ensure that these accomplishments can be measured and our 
progress can be measured along the way. We have goals to ensure 
reliable affordable fuel cell power trains. We have goals to 
promote energy efficient vehicles operating on hydrocarbon-
based fuels to be powered either by internal combustion power 
trains or fuel cells. We have goals focused on improving hybrid 
durability and affordability. We have goals focused on the need 
for a widespread availability of hydrogen fuels. We have goals 
designed to assure vehicle functionality. We have goals 
designed to improve the manufacturing base, and we also have 
goals geared to performance-based management.
    In summary, our vision for FreedomCAR is a bold one in 
response to Secretary Abraham's challenge that we act boldly. 
Although FreedomCAR is a long-term effort beyond any near-term 
political horizon, we've developed intermediate goals to ensure 
that we make measurable demonstrable progress toward our vision 
in the coming decade. Thank you, Mr. Chairman.
    [The prepared statement of David K. Garman follows:]
 Prepared Statement of David K. Garman, Assistant Secretary for Energy 
       Efficiency and Renewable Energy, U.S. Department of Energy
    Mr. Chairman, I appreciate this opportunity to discuss FreedomCAR--
our flagship research and development initiative to reduce the nation's 
dependence on foreign oil by dramatically changing how we power our 
cars and light trucks.
    By way of background, the most striking feature of our 
transportation system is its nearly complete dependence on petroleum as 
an energy source. Petroleum is used to satisfy 95% of America's 
transportation energy needs, consuming two-thirds of all the petroleum 
we use. Since roughly 55% of our petroleum is imported from abroad, the 
implications of this dependency on our energy security are well 
understood by the members of this Committee, and I need not dwell on 
them here.
                         the ``gap'' is growing
    This slide illustrates the expanding gap between declining domestic 
oil production and our increasing demand. As you can see, opening the 
Coastal Plain of the Arctic National Wildlife Refuge to exploration 
would clearly help, but that alone would not close the gap. The R&D 
approach we were previously embarked on would have also helped . . . 
but would not have closed the gap either. Indeed, both taken together 
would not have closed the gap.
    Mindful of these realities, Secretary Abraham challenged the 
Department of Energy to take a bolder approach to our work. He directed 
us to focus our efforts on programs that ``revolutionize how we 
approach conservation and energy efficiency.'' He challenged us to 
``leapfrog the status quo'' and to pursue ``dramatic environmental 
benefits.''
                      freedomcar is a partnership
    On January 9, 2002, Secretary Abraham, joined by top leadership 
from General Motors, Daimler Chrysler, and Ford, announced FreedomCAR 
at the North American International Auto Show in Detroit.
    The CAR in FreedomCAR stands for Cooperative Automotive Research. 
And the ``Freedom'' concept represents our fundamental, long-term goals 
for this program:

 Freedom from petroleum dependence;
 Freedom from pollutant emissions;
 Freedom for Americans to choose the kind of vehicle they want 
        to drive, and to drive where they want, when they want; and
 Freedom to obtain fuel affordably and conveniently.
    We are seeking to develop cars and trucks that are free of foreign 
oil and harmful emissions, without sacrificing safety, freedom of 
mobility and freedom of vehicle choice. We are looking to eventually 
remove the automobile as a factor in the environmental equation, and as 
a factor that drives our dependency on foreign petroleum.
    This is a dramatic, far reaching vision . . . one that requires new 
technology. We cannot break the bonds of oil dependency by continuing 
with the status quo. Given the low gasoline and diesel prices we enjoy 
today, we can reasonably expect consumers to continue demanding larger, 
heavier, more powerful vehicles, and vehicle manufacturers to continue 
using internal combustion engines to satisfy that demand. We clearly 
see this in the marketplace today. The majority of the new passenger 
vehicles sold in 2001 were, for the very first time in automotive 
history, light trucks in the form of sport utility vehicles, vans and 
pickups.
                           strategic approach
    How is it possible to offer performance, convenience and 
functionality in a range of vehicles that can meet the needs of a 
diverse population without using petroleum? We believe the most 
promising long-term approach is to employ hydrogen fuel cells combined 
with electric drive.
    Therefore, the first element of our strategic approach is to 
develop technologies to enable mass production of affordable hydrogen-
powered fuel cell vehicles and assure the hydrogen infrastructure to 
support them.
    Fuel cells, of course, can be thought of as batteries that are 
continuously replenished by a constant supply of hydrogen. And 
hydrogen, the most plentiful element in the universe and the third most 
plentiful on earth, can be derived from a variety of sources including 
petroleum, natural gas, coal, biomass, and even water.
    But there are significant technical and infrastructure barriers 
that must be overcome, including fuel cell cost and durability; 
electric drive performance and cost; hydrogen production, storage, cost 
and distribution challenges; and many others. Neither industry nor 
government, working alone, is likely to overcome these barriers in any 
reasonable timeframe. Therefore, we must work in partnership.
    The partnership we have enjoyed in the past, the Partnership for a 
New Generation of Vehicles (PGNV), has had some successes, and we are 
certainly not abandoning those successes or the collaborations it 
fostered. Indeed, many of the research elements of PNGV are embodied in 
the second element of our approach: Namely, to continue support for 
hybrid technologies and advanced materials that can dramatically reduce 
oil consumption and environmental impacts in the nearer term.
    But one of the problems of PNGV was its focus on a production 
prototype of a family sedan. Therefore, the third element of our 
strategic approach is to develop technologies applicable across a wide 
range of passenger vehicles.
     national academy of sciences observations and recommendations
    In its most recent peer review of the PNGV program, the National 
Academy of Sciences made a number of observations and recommendations, 
a few of which I will list here:

 ``[T]he priorities and specific goals of the PNGV program 
        should be reexamined. There is a need to update the program 
        goals and technical targets in the context of current and 
        prospective markets . . . government and industry participants 
        should refine the PNGV charter and goals.''
 ``[T]he demand for sport utility vehicles, vans, and pickup 
        trucks in the United States has drastically increased . . . 
        This has increased the importance of reducing the fuel 
        consumption of these vehicles compared to the typical family 
        sedan.''
 ``If the program goal (sic) were refocused on reducing total 
        new light duty vehicle petroleum consumption, this would 
        encourage the emphasis to be placed on those vehicles that 
        offer the greatest potential for achieving this societal 
        goal.''
 ``. . . it is inappropriate to include the process of building 
        production prototypes in a precompetitive, cooperative 
        industry-government program.''
                      freedomcar differs from pngv
    We have accordingly made changes responsive to the observations and 
recommendations of the peer review panel. With respect to key goals: 
FreedomCAR is focused on petroleum free, emissions free transportation, 
with emphasis on hydrogen fuel cells. PNGV was focused on building a 
production prototype 80 mile-per-gallon family sedan.
    With respect to timeframe: FreedomCAR has a long-term vision with 
2010 component technology goals to gauge progress. PNGV was a 10-year 
program focused on 2004.
    With respect to government leadership and focus: FreedomCAR is a 
partnership solely between DOE and USCAR.
    PNGV was a collaboration between USCAR and seven government 
agencies led by the Department of Commerce.
    With respect to technology emphasis: FreedomCAR is focused on 
hydrogen and fuel cells, with transitional efficiency gains from 
advanced combustion and fuel processors. PNGV emphasized compression 
ignition direct injection (diesel) hybrids.
    With respect to vehicle focus: FreedomCAR's focus is R&D at the 
component level with equal emphasis on light trucks and cars. PNGV 
emphasized development and demonstration of pre-production mid-sized 
family sedans.
                freedomcar and hybrids share technology
    Let me again emphasize that we are not abandoning the good work 
that has emerged from PNGV. There are many shared components between an 
advanced hybrid electric vehicle and a fuel cell vehicle, including 
lightweight materials, power electronics, electric motors, and 
batteries. Breakthroughs we make in these components need not wait for 
fuel cells or hydrogen infrastructure to reach the market, as they can 
be employed as soon as they are ready.
    We will also be continuing our work in alternative fuels and 
advanced combustion engines (including emissions controls R&D) that are 
needed to support the development of advanced hybrid electric vehicles.
                      fuel cell vehicle components
    Of course, new areas of emphasis aboard the vehicle include 
hydrogen storage, on-board reformation, and fuel cell stack 
development.
    But we are also beginning to address the technologies necessary to 
make a transition to a hydrogen-based transportation economy. Principal 
among these efforts will be solving the problems associated with 
producing and making hydrogen fuel widely available. To that end, 
elements of the hydrogen program in the Office of Power Technologies 
(OPT) are being integrated into the FreedomCAR effort. Efforts by DOE's 
Fossil Energy office on deriving hydrogen from coal (with sequestered 
carbon) are also being reviewed. In addition, a related effort in OPT 
on hydrogen-fueled internal combustion engines is under consideration 
for inclusion.
    In November of 2001 my office convened senior executives 
representing energy industries, environmental organizations and 
government officials to discuss the role for hydrogen systems in 
America's energy future. This group addressed a common vision for the 
hydrogen economy, the time frame for the vision and the key milestones 
needed to get there. There was general agreement that hydrogen can be 
America's clean energy choice, and that the transition to a hydrogen 
future has already begun but could well take 40-50 years to fully 
unfold. We are working on a specific technology roadmap covering 
production, storage, conversion and infrastructure that leads us to 
that vision, and we are continuing that work as a part of the 
FreedomCAR program plan.
           freedomcar research components and spending levels
    My next slide shows our budget crosscut for FreedomCAR. We are 
proposing to spend $150.3 million on this initiative in FY 2003. The 
most notable changes in the FY 2003 budget are: 1) increased funding 
for vehicle fuel cell R&D of $8.075 million, to a level of $50 million, 
and 2) increased funding for hydrogen generation, transport and fueling 
infrastructure by $9.659 million relative to FY 2002 appropriation 
levels.
    Whereas PNGV was a multi-agency partnership, the only Federal 
partner in FreedomCAR is the Department of Energy. Since the inception 
of PNGV, DOE has accounted for most of the government's contributions. 
In FY 2001, we provided 86 percent of the funding that was directly 
relevant to the PNGV goals, and that was linked with the plans 
developed by the PNGV government-industry technical teams. While other 
agencies are not formally involved as FreedomCAR partners, we intend to 
coordinate our work with the appropriate technology research, 
development and demonstration programs managed by other Federal 
agencies, and by State governments as well. The mechanisms by which 
coordination is accomplished will be worked out during the next few 
months.
              specific technological goals and timetables
    The transition to a hydrogen-based transportation system is a long-
range vision. To assure progress, nearer-term goals are necessary so 
that accomplishments can be measured and recognized. Therefore, the 
Partnership has identified the following 2010 technology-specific 
goals.\1\
              2010 technology goals: fuel cell powertrains
     To ensure reliable systems for future fuel cell 
powertrains with costs comparable to conventional internal combustion 
engine/automatic transmission systems, the goals are:

 Electric Propulsion System with a 15-year life capable of 
        delivering at least 55kW for 18 seconds, and 30kW continuous at 
        a system cost of $12/kW peak.
 60% peak energy-efficient, durable fuel cell power system 
        (including hydrogen storage) that achieves a 325 W/kg power 
        density and 220 W/L operating on hydrogen. Cost targets are at 
        $45/kW by 2010 ($30/kW by 2015).\2\
            2010 technology goals: hydrocarbon fuel platform
     To enable clean, energy-efficient vehicles operating on 
clean, hydrocarbon-based fuels powered by either internal combustion 
powertrains or fuel cells, the goals are:

 Internal combustion engine powertrain systems costing $30/kW, 
        having a peak brake engine efficiency of 45%, and that meet or 
        exceed emissions standards.
 Fuel cell systems, including a fuel reformer, having a peak 
        brake engine efficiency of 45%, and that meet or exceed 
        emissions standards with a cost target of $45/kW by 2010 and 
        $30/kW in 2015.\2\,\3\
                  2010 technology goal: hybrid systems
     To enable reliable hybrid electric vehicles that are 
durable and affordable, the goal is:

 Electric drivetrain energy storage with 15-year life at 300 Wh 
        with discharge power of 25 kW for 18 seconds and $20/kW.
               2010 technology goals: hydrogen transition
     To enable the transition to a hydrogen economy, ensure 
widespread availability of hydrogen fuels, and retain the functional 
characteristics of current vehicles, the goals are:

 Demonstrated hydrogen refueling with developed commercial 
        codes and standards and diverse renewable and non-renewable 
        energy sources. Targets: 70% energy efficiency well-to-pump; 
        cost of energy from hydrogen equivalent to gasoline at market 
        price, assumed to be $1.25 per gallon (2001 dollars).\4\
 Hydrogen storage systems demonstrating an available capacity 
        of 6 weight percent hydrogen, specific energy of 2000 W-h/kg, 
        energy density of 1100 W-h/liter at a cost of $5/kWh.\5\
 Internal combustion engine powertrain systems operating on 
        hydrogen with a cost target of $45/kW by 2010 and $30/kW in 
        2015, having a peak brake engine efficiency of 45%, and that 
        meet or exceed emissions standards.
               2010 technology goals: manufacturing base
     To improve the manufacturing base, the goal is:

 Material and manufacturing technologies for high volume 
        production vehicles which enable/support the simultaneous 
        attainment of:
     50% reduction in the weight of vehicle structure & 
            subsystems,
     affordability, and
     increased use of recyclable/renewable materials.
                      performance based management
 Key metrics to be tracked annually
 2010 goals supported by targets and milestones detailed in 
        EERE's Budget Request
 All FreedomCAR work to be assessed annually against the R&D 
        investment criteria developed as part of the President's 
        Management Agenda
    I understand that these goals are highly technical, and they all 
have a target year of 2010. I also understand that the NAS criticized 
PNGV for not developing interim milestones for its ten-year ``stretch'' 
goals. Therefore, we are developing a suite of easily understandable 
key metrics that can be presented graphically and will be tracked 
annually so that we can measure our progress.
    We have also developed numerous supporting objectives for the 
various sub-programs that will contribute to the FreedomCAR goals. We 
have identified an easily quantifiable performance indicator for each 
of these objectives to ensure that all of the sub-programs are making 
progress.
    In addition, as with all DOE applied R&D programs, FreedomCAR R&D 
will be assessed annually against the R&D investment criteria developed 
as part of the President's Management Agenda to ensure that the R&D:

 Does not drift into areas that are inappropriate for Federal 
        investment
 Will maintain strong merit and is well planned
 Is producing beneficial results
    Furthermore, FreedomCAR R&D will strictly follow the cost-sharing 
guidelines developed with the Administration's R&D investment criteria.
                               conclusion
    Mr. Chairman, our vision for FreedomCAR is a bold one, in response 
to Secretary Abraham's challenge that we act boldly to ``revolutionize 
how we approach conservation and energy efficiency.''
    FreedomCAR is clearly a long-term effort beyond any near-term 
political horizon. But even as we pursue our ultimate vision of 
emissions-free, petroleum-free, safe and affordable transportation, we 
have developed near-term goals to ensure that we make measurable, 
demonstrable progress toward that vision in the coming decade.
    And again, while we do face significant technology and 
infrastructure risks, the exceptional rewards and national benefits we 
could achieve justifies the effort.
    I welcome your questions.

                               References

    \1\ Cost references based on CY 2001 dollar values. Where power 
(kW) targets are specified, those targets are to ensure that technology 
challenges that would occur in a range of light-duty vehicle types 
would have to be addressed.
    \2\ Does not include vehicle traction electronics.
    \3\ Includes fuel cell stack subsystem, fuel processor subsystem 
and auxiliaries; does not include fuel tank.
    \4\ Targets are for hydrogen dispensed to a vehicle assuming a 
reforming, compressing and dispensing system capable of dispensing 150 
kilograms per day (assuming 60,000 SCF per day of NG is fed for 
reforming at the retail dispensing station) and servicing a fleet of 
300 vehicles per day (assuming 0.5 kgs used in each vehicle per day). 
Targets are also based on several thousand stations, and possibly 
demonstrated on several hundred stations. Technologies may also include 
chemical hydrides such as sodium boro-hydride.
    \5\ Based on lower heating value of hydrogen; allows over 300-mile 
range.




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    Mr. Greenwood. Thank you, Mr. Garman.
    Mr. Culver.

                 STATEMENT OF ROBERT N. CULVER

    Mr. Culver. Thank you, Mr. Chairman. Members of the 
committee, thank you for inviting me to address the committee 
today on the new government industry partnership called 
FreedomCAR. My name is Bob Culver and I'm the executive 
director of United States Council for Automotive Research, or 
USCAR. USCAR is the umbrella organization formed in 1992 by 
Daimler-Chrysler, Ford Motor Company and General Motors to 
conduct collaborative precompetitive research.
    USCAR partners fully support Department of Energy Secretary 
Spencer Abraham's vision of a personal transportation system 
free from reliance on petroleum fuels. We are pleased to join 
Secretary Abraham at the auto show in Detroit on January 9th 
when he announced the FreedomCAR program to pursue this goal.
    While the vision of FreedomCAR partnership is long range, 
many aspects of the program will have near-term benefits. 
Light-weight material technologies can and will provide 
benefits for a variety of vehicles, regardless of the 
propulsion system. And power electronic technologies, which are 
critical for fuel cells are equally beneficial for near-term 
vehicles.
    The USCAR partners also support continuing FreedomCAR 
funding to address promising combustion and after-treatment 
technologies for internal combustion engines. Through decades 
of research, many industry and government and environmentalist 
experts have come to agree that hydrogen powered fuel cells are 
our best investment into the future of transportation. Nearly a 
decade ago, the possibility that a fuel cell could power a car 
or light truck appeared light years away.
    At that time, in order to achieve the power equivalent of 
an internal combustion engine, the fuel cell required would be 
larger than the vehicle it would power. However, today 
experimental passenger vehicles powered by fuel cells have been 
demonstrated by our companies in a variety of segments, from 
compact cars to SUVs and mini vans.
    While progress on this very promising technology is being 
made, much research and development work is still needed. 
Affordability remains a major challenge. The cost associated 
with putting fuel cell power trains into vehicles at the 
current technology level are literally in the hundreds of 
thousands of dollars. Significant progress on this 
affordability challenge must be made in order to make a 
business case for producing them and marketing them.
    Because this technology is high risk but offers significant 
societal benefits, it is appropriate and necessary for 
government. USCAR worked with the Department of Energy to 
streamline and refocus our partnership on longer term, higher 
reward technologies such as hydrogen powered fuel cells. As 
Secretary Abraham made clear, this is not a short-term vision. 
It will take many years of hard work by the auto industry, by 
energy providers and Federal research organizations to realize 
this bold vision. Industry and the DOE have agreed on detailed 
near-term technical goals for each research area. Mr. Garman 
just showed you those. And they are also attached to my 
testimony.
    Along with technical road maps, the goals will ensure that 
funds are being spent in the most promising areas and that 
research is progressing. While the vision of a hydrogen-based 
transportation system is decades away, it is extremely 
important to begin addressing the issues involved with shifting 
the balance from petroleum and toward hydrogen. It is also 
critical to demonstrate user-friendly hydrogen fueling stations 
and to develop a road map for the new infrastructure 
development. FreedomCAR can serve to jointly develop those 
demonstration plans and milestones to lead the transition to 
hydrogen-powered vehicles.
    FreedomCAR research is being focused at the component and 
subsystem level which will be applicable to a wide range of 
vehicle segments. This will facilitate the migration of 
technologies into the most appropriate vehicle platform as the 
technologies meet their goals. The auto industry pledges to 
bring these advanced technologies to market as soon as the 
business case can be made for them, while at the same time 
providing our customers with vehicles that are safe and give 
them the kinds of performance, function, utility and value they 
need and expect for their money. Past USCAR and government 
collaborative programs have provided, and will continue to 
provide, benefits to the American public. New material 
technologies have helped reduce weight and combustion and after 
treatment technologies are migrating to today's vehicles. Clean 
fuels including low sulfur diesel are a must if these interim 
technologies are going to make it into the marketplace.
    All of the USCAR partners have announced hybrid electric 
vehicles in the 2003 and 2004 timeframe, and all in truck and 
light duty or SUV segments where this technology will yield the 
maximum fuel savings.
    In summary, the USCAR partners are in full support of 
FreedomCAR and are hard at work at advanced technologies 
including technologies that will help make hydrogen powered 
vehicles a reality. Thank you.
    [The prepared statement of Robert N. Culver follows:]
  Prepared Statement of Robert N. Culver, Executive Director, United 
                 Sates Council for Automotive Research
    Mr. Chairman and Members of the Committee: Thank you for inviting 
me to address the committee on the new industry/government cooperative 
research partnership called FreedomCAR. My name is Bob Culver and I am 
the Executive Director of the United Sates Council for Automotive 
Research, or USCAR. USCAR is the umbrella organization founded in 1992 
by DaimlerChrysler, Ford Motor Company, and General Motors to conduct 
collaborative, pre-competitive research.
    The USCAR partners fully support Department of Energy Secretary 
Spencer Abraham's vision of a personal transportation system free from 
reliance on petroleum fuels. We were pleased to join Secretary Abraham 
at the North American International Auto Show on January 9 when he 
announced the FreedomCAR program to pursue this goal.
    While the vision of the FreedomCAR partnership is long range, many 
aspects of the research will likely have nearer term benefits. 
Lightweight material technologies can and will provide benefits for a 
variety of vehicles regardless of propulsion system. And power 
electronic technologies, critical for fuel cell drivetrains, are 
equally beneficial for nearer-term vehicles. The USCAR partners also 
support continuing FreedomCAR funding to address promising combustion 
and aftertreatment technologies for internal combustion engines.
    Through decades of research, many industry, government and 
environmentalist experts have come to agree that hydrogen-powered fuel 
cells are our best investment into the future of transportation. Merely 
a decade ago, the possibility that a fuel cell could power a car or 
light truck appeared to be light years away. At that time, in order to 
achieve the power equivalent of an internal combustion engine, the fuel 
cell required would be larger than the vehicle it would power. However, 
today experimental passenger vehicles, powered by fuel cells, have been 
demonstrated by our companies in a variety segments, from compact cars 
to SUVs and minivans.
    While progress on this very promising technology is being made, 
much research and development works is still needed. Affordability 
remains a major challenge. The costs associated with putting fuel cell 
powertrains into vehicles at the current technology level are literally 
in the hundreds of thousands of dollars. Significant future progress on 
this affordability challenge must be made in order to make a business 
case for producing them. Because this technology is high risk but 
offers significant societal benefits, it is appropriate and necessary 
for Government involvement.
    USCAR has worked with DOE to streamline and refocus our Partnership 
on longer term, higher reward technologies such as hydrogen-powered 
fuel cells. As Secretary Abraham has made clear, this is not a short-
term vision--it will take many years of hard work by the auto industry, 
energy providers, and federal research organizations to realize this 
bold vision. Industry and the DOE have agreed on detailed near term 
technical goals for each research area, which are attached to this 
testimony. Along with technical roadmaps, the goals will ensure that 
funds are being spent in the most promising areas and that research is 
progressing.
    While the vision of a hydrogen-based transportation system is 
decades away, it is extremely important to begin addressing the issues 
involved with shifting the balance from petroleum and toward hydrogen. 
It is also critical to demonstrate user-friendly hydrogen fueling 
stations and develop a roadmap for the new infrastructure development. 
FreedomCAR can serve to jointly develop demonstration plans and 
milestones to lead the transition to hydrogen powered vehicles.
    FreedomCAR research is being focused at the component and sub-
system level which will be applicable to a wide range of vehicle 
segments. This will facilitate the migration of technologies into the 
most appropriate vehicle platforms as the technologies meet their 
goals. The auto industry pledges to bring advanced technologies to 
market as soon as a business case can be made for them while at the 
same time providing our customers with vehicles that are safe and give 
them the kind of performance, function, utility, and value they need 
and expect for their money. Past USCAR and government collaborative 
programs have provided, and will continue to provide benefits to the 
American public. New materials technologies have helped reduce weight, 
and combustion and aftertreatment technologies are migrating to today's 
vehicles. Clean fuels including low sulfur diesel is a must if these 
interim technologies are going to make it into the market place. All of 
the USCAR partners have announced hybrid electric vehicles in 2003/2004 
and all are in truck and SUV segments where this technology yields the 
maximum fuel savings.
    In summary, the USCAR partners are in full support of FreedomCAR 
and are hard at work on advanced technologies, including technologies 
that will help make hydrogen powered vehicles a reality.
        FreedomCAR: Energy Security for America's Transportation
 [agreement between department of energy and united states council for 
                          automotive research]
    Vision: Affordable full function cars and trucks are free of 
foreign oil and harmful emissions, without sacrificing safety, freedom 
of mobility and freedom of vehicle choice.
    Message: America's transportation freedoms:

 Freedom from petroleum dependence
 Freedom from pollutant emissions
 Freedom to choose the vehicle you want
 Freedom to drive where you want, when you want
 Freedom to obtain fuel affordably and conveniently
    National Benefits: Ensure the Nation's transportation energy and 
environmental future, by preserving and sustaining America's 
transportation freedoms. In other words, Freedom and Security made 
available through Technology.
          The government and industry research partners recognize that 
        the steady growth of imported oil to meet our demand for 
        petroleum products is problematic and not sustainable for the 
        Nation in the long term. No single effort limited to one 
        economic sector can successfully change this trend. Altering 
        our petroleum consumption patterns will require a multi-tiered 
        approach, including policy and research programs, across every 
        end use sector of our economy. The transportation sector has a 
        significant role to play in addressing this challenge, and 
        success resulting from the FreedomCAR research initiatives will 
        help accomplish the broader National Goals and Objectives that 
        are being pursued.
    Strategic Approach:

 Develop technologies to enable mass production of affordable 
        hydrogen-powered fuel cell vehicles and assure the hydrogen 
        infrastructure to support them.
 Continue support for other technologies to dramatically reduce 
        oil consumption and environmental impacts.
 Instead of single vehicle goals, develop technologies 
        applicable across a wide range of passenger vehicles.
Technology Specific 2010 Goals \1\
 To ensure reliable systems for future fuel cell powertrains 
        with costs comparable to conventional internal combustion 
        engine/automatic transmission systems, the goals are:

     Electric Propulsion System with a 15-year life capable of 
            delivering at least 55kW for 18 seconds, and 30kW 
            continuous at a system cost of $12/kW peak.
     60% peak energy-efficient, durable fuel cell power system 
            (including hydrogen storage) that achieves a 325 W/kg power 
            density and 220 W/L operating on hydrogen. Cost targets are 
            at $45/kW by 2010 ($30/kW by 2015).\2\
 To enable clean, energy-efficient vehicles operating on clean, 
        hydrocarbon-based fuels powered by either internal-combustion 
        powertrains or fuel cells, the goals are:
     Internal combustion engine powertrain systems costing $30/
            kW, having a peak brake engine efficiency of 45%, and that 
            meet or exceed emissions standards.
     Fuel cell systems, including a fuel reformer, having a 
            peak brake engine efficiency of 45%, and that meet or 
            exceed emissions standards with a cost target of $45/kW by 
            2010 and $30/kW in 2015.\2\,\3\
 To enable reliable hybrid electric vehicles that are durable 
        and affordable, the goal is:
     Electric drivetrain energy storage with 15-year life at 
            300 Wh with discharge power of 25 kW for 18 seconds and 
            $20/kW.
 To enable the transition to a hydrogen economy, ensure 
        widespread availability of hydrogen fuels, and retain the 
        functional characteristics of current vehicles, the goals are:
     Demonstrated hydrogen refueling with developed commercial 
            codes and standards and diverse renewable and non-renewable 
            energy sources. Targets: 70% energy efficiency well-to-
            pump; cost of energy from hydrogen equivalent to gasoline 
            at market price, assumed to be $1.25 per gallon (2001 
            dollars).\4\
     Hydrogen storage systems demonstrating an available 
            capacity of 6 weight percent hydrogen, specific energy of 
            2000 W-h/kg, energy density of 1100 W-h/liter at a cost of 
            $5/kWh.\5\
     Internal combustion engine powertrain systems operating on 
            hydrogen with a cost target of $45/kW by 2010 and $30/kW in 
            2015, having a peak brake engine efficiency of 45%, and 
            that meet or exceed emissions standards.
 To improve the manufacturing base, the goal is:
     Material and manufacturing technologies for high volume 
            production vehicles which enable/support the simultaneous 
            attainment of:
     50% reduction in the weight of vehicle structure & 
            subsystems,
     affordability, and
     increased use of recyclable/renewable materials.

                               References

    \1\ Cost references based on CY 2001 dollar values. Where power 
(kW) targets are specified, those targets are to ensure that technology 
challenges that would occur in a range of light-duty vehicle types 
would have to be addressed.
    \2\ Does not include vehicle traction electronics.
    \3\ Includes fuel cell stack subsystem, fuel processor subsystem 
and auxiliaries; does not include fuel tank.
    \4\ Targets are for hydrogen dispensed to a vehicle assuming a 
reforming, compressing and dispensing system capable of dispensing 150 
kilograms per day (assuming 60,000 SCF per day of NG is fed for 
reforming at the retail dispensing station) and servicing a fleet of 
300 vehicles per day (assuming 0.5 kgs used in each vehicle per day). 
Targets are also based on several thousand stations, and possibly 
demonstrated on several hundred stations. Technologies may also include 
chemical hydrides such as sodium boro-hydride.
    \5\ Based on lower heating value of hydrogen; allows over 300-mile 
range.

    Mr. Greenwood. Thank you, Mr. Culver. The opening statement 
of the gentleman from Michigan will be placed in the record. 
And we appreciate his presence.
    The Chair recognizes himself for 5 minutes for questions.
    To each of the members of the panel, I would ask this 
question. It is implicit in the fact that the Congress 
appropriates roughly $150 million annually for this program 
that we are investing in research that would otherwise not 
happen, not occur. I'm interested in understanding the premise 
for that assumption. The auto makers have spent a lot of money, 
I believe a billion dollars was spent on acquiring Ballard fuel 
systems--Ballard power systems--by Daimler-Chrysler and Ford 
collectively to acquire partial ownership in that company. So 
why do we think that without the investment of public dollars, 
this research would not go on at a pace in the private sector? 
We'll start with you, Mr. Culver.
    Mr. Culver. I'd like to try that one, Mr. Chairman. The 
investment in fuel cell manufacturers is a new investment for 
all the auto companies to ensure their place once the research 
goals of being able to make these affordably will be realized. 
I believe that there is still tremendous research needed to 
help reduce the cost, improve the durability, improve the 
efficiency of fuel cells before they can be ready for the 
marketplace. Combining the efforts of the auto industry, the 
supplier community, the national labs will help ensure that and 
accelerate that progress.
    Mr. Greenwood. Mr. Wells, your views.
    Mr. Wells. I can relate to the work we did a couple of 
years ago when we were actually looking at the accountability 
and trying to track the contributions during the PNGV program. 
Clearly when we talked to the industry, we were made aware of a 
large dollar value of their committed R&D effort. I believe in 
that particular year it was, like, $18 billion by the major car 
companies in all kinds of R&D efforts. Their contribution self-
acknowledged to the Federal agencies that were involved in the 
PNGV effort were in the neighborhood of $980 million, if I 
remember the numbers right, approximately 5 percent of their 
research they self-disclosed to us was being contributed toward 
related technologies for the PNGV vehicle.
    Our point from a lessons-learned standpoint, as you design 
future efforts, to ensure that there are mechanisms available 
to ensure clear, crisp accountability and trackability for 
monitoring who's spending what and what the money is being 
spent for. So we would come at it from an accountability and a 
documentation standpoint.
    Mr. Greenwood. Mr. Garman.
    Mr. Garman. Yes, Mr. Chairman. It's difficult to expect 
auto makers to really invest their heart and soul and their 
dollars in technologies that aren't going to be ready for the 
showroom floor for 10 or 20 years, and I'll give you some 
examples. Hydrogen storage is a major problem to make the car 
have the kind of range it will need so that a consumer will 
want to buy it. One of the very long-term R&D efforts that the 
government is involved in that no auto maker is involved in are 
advanced storage technologies--such as carbon nanotubes--that 
have an affinity for the storage of hydrogen.
    This is the kind of work that goes on at a place such as 
the National Renewable Energy Lab in Colorado, a government 
lab. But I wouldn't expect the auto makers to engage in that 
kind of high-risk long-term technology, because its promise for 
the showroom is so far off, that it's just not a good 
investment of their dollars. It's a very iffy proposition. So 
it's an appropriate role for the government to invest in long-
term high-risk technologies, and that's part of the focus and 
the thrust behind FreedomCAR.
    Mr. Greenwood. Well, personally, I would invest zero or ten 
times what we're investing if I thought it was going to--
whatever approach would give us the results that you gentleman 
have referred to as quickly as possible. How do we know--how do 
we arrive at the appropriation figure that we have? We've got 
this assumption that the auto makers are interested in having 
and have a national interest in investing in future technology, 
that this may be sufficiently over the horizon, that this 
inducement or this additional public investment makes a 
difference, but how do we know--who determines or how do we get 
to the answer of the question, what is the appropriate level of 
Federal funding that gets us where we want to go the quickest?
    Mr. Garman. The real purpose of the Federal funding is to 
leverage some of the public dollars into the private dollars 
and to attract auto makers into areas of R&D that they wouldn't 
do by themselves. Ultimately, of course, Congress decides how 
much is appropriated, and our proposal is to appropriate 
roughly $150 million toward these activities, but there's the 
leveraging effect. We bring to the table--the Federal 
Government brings to the table facilities at the national labs, 
talent at the national labs that the auto makers would not by 
themselves have access to, regardless of how much money they 
spent in some cases.
    Mr. Greenwood. The time of the Chair has expired.
    The Chair recognizes the gentleman from Michigan for 5 
minutes, and would say in advance that after the gentleman from 
Michigan's inquiry, the committee will recess for this vote and 
then return.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy and 
I commend you for the hearing. I thank you for inserting my 
statement into the record.
    Mr. Culver, do you believe that in view of our interest in 
promoting clean-burn diesels for passenger use in the United 
States, that we should lower the sulfur content in the diesel 
sulfur rule now pending at EPA?
    Mr. Culver. Mr. Dingell, thank you for the question. The 
alliance has recommended in the past the--that sulfur content 
of diesel fuel be reduced to 5 PPM or near-zero fuel. Such a 
reduction will increase the efficiency, help improve the 
durability of after-treatment systems, and help reduce the cost 
of after-treatment systems.
    Mr. Dingell. In other words, you'll improve the reliability 
of your catalytic converter?
    Mr. Culver. Yes, sir. Every so often you have to purge your 
catalytic treatment, your particulate trap. The lower the 
sulfur reduces the number of times you have to do that, 
improving the durability, lowering the cost, and you use diesel 
fuel to do that. So if you don't have to do it as often, you 
actually improve----
    Mr. Dingell. Europeans are going to zero?
    Mr. Culver. That is correct.
    Mr. Dingell. And that will especially enable them to bring 
on the Audi A-2 system, will it not?
    Mr. Culver. I'm not familiar with the Audi A-2 system, but 
I know that----
    Mr. Dingell. They have a clean burn system in Europe, the 
Audi A-2, which will get them 78 miles a gallon for a four-
passenger car. The hybrids and the fuel cell vehicles and so 
forth will get some 60 miles per gallon for a two-seater car, a 
much smaller vehicle. Is that not true?
    Mr. Culver. I'm not sure of the Audi system, sir, but I do 
know that----
    Mr. Dingell. Would you----
    Mr. Culver. Zero PPM sulfur will enable the full potential 
of diesel technology to be realized without compromises of 
after-treatments.
    Mr. Dingell. So is the feasibility of developing the 
technology to meet future sulfur emissions requirements greater 
with fuel that has a sulfur content of 5 to 10 parts per 
million rather than the 15 parts per million required by EPA's 
diesel sulfur fuel? I believe you said yes to that.
    Mr. Culver. Absolutely.
    Mr. Dingell. Now, it's been reported that EPA has had 
Toyota run emissions tests on clean burn diesel vehicles for 
the European market. The tests were conducted using diesel fuel 
with a sulfur content of 6 parts per million. The vehicle 
passed all but one of the emissions tests the EPA performed. 
The test that failed was conducted by running the vehicle for 
long periods of time at highway speeds, fully loaded and with 
air-conditioning on. Is it feasible for the U.S. motor industry 
to develop technology to make clean-burn diesel engines that 
comply with the emissions tests that the Toyota vehicle 
recently failed, or should we be thinking in terms of lowering 
the sulfur content even below 6 parts per million?
    Mr. Culver. Again, I'm not familiar with the technology 
that was on the Toyota vehicle, but I do agree that the 
durability and performance at 5 PPM or closer to zero PPM will 
improve the durability and enable us to meet the tests--meet 
all the tier 2 requirements much easier than with 15 PPM.
    Mr. Dingell. Now, the American auto industry currently 
makes clean burn diesel vehicles that are used throughout 
Europe. Is that not so?
    Mr. Culver. Yes, sir, it is. In fact----
    Mr. Dingell. And what percentage of the new light duty 
vehicle sales and new luxury vehicle sales are attributable to 
clean burn diesel vehicles in the European market?
    Mr. Culver. Currently, it's about 30 percent. There are 
reports that it will go as high as 50 percent as Europe tries 
to meet their CO2 commitments.
    Mr. Dingell. Europe is going to zero on diesel fuel sulfur 
content; is that right?
    Mr. Culver. That is correct.
    Mr. Dingell. Now Mr. Garman, do you agree that the lower 
sulfur fuel like they have in the European Union is necessary 
for emissions technology to work effectively and durably over 
the life of a clean burn diesel vehicle?
    Mr. Garman. Yes, sir, a lower sulfur standard in diesel is 
very desirable. I need to make one clarification, though. 
Currently the EU standard for on-road diesel is 350 parts per 
million. They're moving to a cap of 50 parts per million in 
2005 and considering a lower cap for later years. Some of the 
European countries have a diesel fuel tax incentive in place to 
reward the use of 10 parts per million fuel in later years. 
They generally refer to the 10 part per million number as zero 
sulfur fuel even though it doesn't actually have zero, but it 
has very low amounts. The EPA standard--our current U.S. cap is 
500 parts per million which is clearly not amenable to clean-
burning diesel. We need to do a lot better than that, and the 
U.S. has established a cap of 15 parts per million for 2006.
    Mr. Dingell. Mr. Chairman, I know my time is up but I have 
just one more question if you'd bear with me.
    Do you believe, Mr. Culver, that clean-burn diesel vehicles 
would be attractive to consumers in the U.S. market?
    Mr. Culver. Absolutely. We know that they would be very 
attractive.
    Mr. Dingell. Given effectively zero sulfur diesel fuel, do 
you believe the U.S. motor vehicle industry can build clean 
burn diesel vehicles that will satisfy EPA emission 
requirements at a price customers will be willing to pay?
    Mr. Culver. I do, and I believe that we'd also bring them 
in in markets where they provide the biggest benefit in 
vehicles like light trucks and SUVs and mini vans.
    Mr. Dingell. And we can do this at huge fuel savings, can 
we not?
    Mr. Culver. The projection of fuel savings range from 25 to 
35 percent improvement over existing fuel economy.
    Mr. Dingell. Mr. Chairman, I thank you.
    Mr. Greenwood. The Chair thanks the gentleman. The 
committee will stand in recess until approximately 10:30.
    [Brief recess]
    Mr. Greenwood. The committee will return to order. The 
Chair recognizes the gentleman, Mr. Stearns, for 5 minutes.
    Mr. Stearns. Good morning and thank you, Mr. Chairman. 
Before I start, I'd like to welcome Dr. Vernon Roan, professor 
of mechanical engineering and director of the Fuel Cell 
Laboratory at the University of Florida. He was kind enough to 
come up here and say hello to me.
    On the new apportionment, Mr. Chairman, I might have, and 
the University of Florida returned to be within my 
Congressional district, and I look forward to that opportunity.
    The first question I have is for Mr. Culver. I just have 
sort of a threshold question to start out. Is government needed 
in this research? Clearly the auto makers are pursuing fuel 
cell technology and other advanced automotive technology on 
their own, spending sums far greater than the Department of 
Energy is spending. So can you sort of elaborate on your role 
in the FreedomCAR partnership. What does the USCAR bring to the 
partnership considering the amount of money that they're doing 
and the amount that the private industry is doing, and perhaps, 
do we need government research on this when the private 
industry is doing it?
    Mr. Culver. Let me--thank you. Let me start by saying that 
the numbers Mr. Wells quoted earlier are directionally correct 
for the year that the GAO talked to us, but the far great 
majority of that money we spent on R&D is heavily related to 
the D side in developing products for the next generation of 
vehicles going into production within the next few years, and 
quite--and the pressure is to put more and more toward the near 
term and less and less on the long term as we get into 
especially tight years like we're in right now.
    I do believe government research is necessary for many 
reasons. One, government scientists have shown that they are 
free from some of the constraints that the auto industry is, 
and when we can combine their expertise with our sense of the 
business case, we can really push the technology forward 
collaboratively, the leverage opportunities of all of us 
working together really actually make the sum total much 
greater than would be any one of us working alone. So I think 
the collaborative aspect is really important in this whole 
aspect.
    And finally, I believe that the goals that we're working on 
for the FreedomCAR program all have costs and durability kinds 
of efforts in them, which is a little new to this program 
before the prior program. And it's important to do that, 
because if we have the costs and durability and customer into 
the equation now with the new program, we can help really 
ensure that these technologies will get to the marketplace 
faster.
    The auto company is spending a lot of money on these 
technologies. With the government we're really accelerating the 
pace of bringing that to the marketplace.
    Mr. Stearns. I think it has been brought out in some of the 
opening statements is to get to the ultimate goal of the 
FreedomCAR of the hydrogen as a fuel, it's going to require a 
lot more expenditure for petroleum products, and can you talk a 
little bit about that tradeoff, we're going to have to spend a 
lot more, go import a lot more to even get us to the point 
where we have the feasibility or release of a fuel cell of 
hydrogen? I mean, it seems like it's a total impediment to get 
us to where we want to go, we're going to have to expend more 
petroleum to get it out of the ground, to store it and all 
that.
    Mr. Culver. I apologize. I'm not sure of the question. I 
know there are many--you're talking about the production of 
hydrogen?
    Mr. Stearns. Yeah. Just to get to the production of 
hydrogen, we're going to have to spend a lot of gasoline 
petroleum products to get there. Isn't that true?
    Mr. Culver. Well, there are many different scenarios being 
investigated for the production of hydrogen.
    Mr. Stearns. Let me ask Mr. Garman on that. Is that true?
    Mr. Garman. Sure. I mean, we don't see market penetration 
of this technology for quite some time, so in the general 
course of events, we will be importing and using a lot of 
petroleum between now and then, and also----
    Mr. Stearns. But to get to the ultimate objective, we're 
going to spend even more petroleum than we would in a normal--
--
    Mr. Garman. Not necessarily, because hydrogen can be 
produced from a variety of sources. It can be produced from 
natural gas. It can be produced from renewable energy, from 
biomass, from nuclear. There are a lot of options available to 
us in the short and long term to produce hydrogen from a 
variety of different sources, and that's one of its 
attractions.
    Mr. Stearns. Mr. Garman, what do you see as the greatest 
technological impediment to this program's success?
    Mr. Garman. Fuel cell cost and durability. Right now fuel 
cells cost on the order--the designs we have today--of $400 to 
$450 per kilowatt. We're going to an internal combustion engine 
costs roughly $30 to $35 per kilowatt. We're going to have to 
decrease the cost of the fuel cell stack by an order of 
magnitude in order to make it competitive with internal 
combustion engines.
    Right now the models we have operate an average of 3,000 
hours. If you want to get something comparable to an automobile 
that will last 120 or 150,000 miles, we need a 5,000-hour fuel 
cell. So cost and durability of the fuel cell itself are 
fundamentally important technical challenges for us to 
overcome.
    Mr. Stearns. Mr. Chairman, this is my last question. This 
is for Mr. Garman. Again, you say in your testimony that, 
quote, neither industry nor government working alone is likely 
to overcome these barriers in any reasonable timeframe. 
Therefore, we must work in partnership. And I ask Mr. Culver a 
little bit about the government's need for research and so 
forth. So can you explain how this working together is--will 
speed up the process and perhaps elaborate on the government's 
role and the industry's role in this partnership and how that 
works.
    Mr. Garman. Sure, and I'll probably do that the best way by 
giving you a real world example. The auto makers have been 
looking at fuel cells for many years and dismiss them as being 
just too expensive and saying it's going to take us a long time 
to bring down that cost. And actually there's work at Los 
Alamos National Laboratory by scientists there, working in 
partnership with the industry to actually say, how can we bring 
down the cost of fuel cells?
    There's a membrane and a PEM fuel cell of the type we're 
talking about that uses a lot of platinum in that membrane to 
actually help the reaction happen, and the scientists at Los 
Alamos were able to reduce the amount of platinum needed in 
that membrane by a factor of 10, and thus they brought down the 
costs significantly.
    I mentioned how expensive fuel cells were now in relation 
to where they needed to be to produce a commercial product, but 
I failed to mention the fact that--in the last 5 or 6 years--
we've decreased the cost of fuel cells by an order of magnitude 
as well. So we've made great progress, and what we want to do 
is to continue that progress so that we get toward a commercial 
product.
    Mr. Stearns. That magnitude has come down 10 percent, 20 
percent--what would you say the percent that that costs.
    Mr. Garman. An order of magnitude of a 100 percent. I'm 
sorry, an order of magnitude of 1000 percent.
    Mr. Stearns. Thousand percent?
    Mr. Garman. Yes.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Greenwood. I thank the gentleman and recognize the 
gentleman from Florida, Mr. Deutsch, for 5 minutes.
    Mr. Deutsch. Thank you. If each of you can respond to this 
question. How long will it take to develop fuel cell-powered 
vehicles for mass production in the United States? Mr. Culver.
    Mr. Culver. I believe mass production won't occur for at 
least a decade. We will be seeing fleets appear on the market, 
small volume fleets in the numbers of hundreds of vehicles 
within the next 2 to 3 years, but the cost--to get down to the 
costs that Mr. Garman just mentioned will take at least another 
decade in my opinion.
    Mr. Deutsch. Mr. Wells.
    Mr. Wells. One of the first questions we asked, about the 
FreedomCAR, we were told that this is not a car. We've also 
heard DOE talk to a horizon 40, 50 years in terms of building 
component pieces and putting it all together.
    Mr. Deutsch. Mr. Garman.
    Mr. Garman. If we meet every one of the technology goals 
that we've specified over the next decade, the auto makers--we 
believe--will be in a position to make a decision about 
commercialization in the 2012 to 2015 timeframe, and that's a 
commercialization decision on mass production vehicles. As Mr. 
Culver indicated, we have a few tens of fuel cell vehicles on 
the road today that will migrate up to hundreds, then 
thousands, then 10,000's as we do demonstrations and start to 
work on aspects of infrastructure, but mass marketed hundreds 
of thousands of vehicles on the road we don't see until the 
2015 to 2020 timeframe. And total fleet turnover would take 
much longer than that, and that's assuming that we're 
successful in addressing these first tranche of technological 
goals that we have for ourselves over the next decade.
    Mr. Deutsch. So in your opinion in a best-case scenario, 
are you talking 2015 for a mass production?
    Mr. Garman. Yes, sir.
    Mr. Deutsch. And that's----
    Mr. Culver. In that case is with the--such that we have in 
place at that time an infrastructure that will support those 
vehicles, which is absolutely crucial.
    Mr. Deutsch. Uh-huh. And what comes first?
    Mr. Culver. That's a great question. Constantly talking 
about the chicken and egg of whether you get fuel cells first 
or whether you get an infrastructure first and the way to 
really address that is to look at demonstrations and the 
Department of Energy's plan includes demonstrations that will 
have limited fleets expanding to wider fleets and more wide 
fleets and as the track develops around those fleets, it will 
be critical to expand it in many areas before commercialization 
is possible.
    Mr. Deutsch. You were mentioning there how many fuel cell 
vehicles actually on the roads today in demonstrations?
    Mr. Garman. We've through the California fuel cell 
partnership, SunLine transportation, Ballard has some--in 
Vancouver, Canada. Mostly on bus and fleet vehicles, in the 
tens, I would say.
    Mr. Culver. Probably not more than a hundred worldwide.
    Mr. Deutsch. Worldwide?
    Mr. Culver. Right.
    Mr. Deutsch. Okay. And outside of the United States, I 
mean, is anyone taking any kind of a role in any magnitude 
comparable to us?
    Mr. Culver. Europe has some programs going on, especially 
in Germany with some buses that are out at Munich Airport, for 
example. Japan is doing some work as well in fuel cell 
vehicles. We've had a chance to see one of those at the Future 
Car Congress earlier this week. So there is worldwide effort 
going on.
    Mr. Deutsch. Is there any kind of coordination between 
these pure research efforts?
    Mr. Culver. Not on the fuel cell manufacturer level. There 
have been calls for development on how we approach 
infrastructure together. Secretary Abraham has talked about a 
conference to bring together the different markets to talk 
about these issues and----
    Mr. Deutsch. Is there any reason why we shouldn't be 
coordinating with basically all of the industrialized world on 
this issue?
    Mr. Culver. Well, areas like the California fuel cell 
partnership also bring in the Japanese manufacturers and the 
European manufacturers as well. So some of that is happening at 
that level. It's a little tougher to collaborate worldwide on a 
day-to-day basis like we do with the Department of Energy, but 
I think those efforts are increasing.
    Mr. Deutsch. Why is it more difficult?
    Mr. Culver. Just face-to-face collaboration, working 
together in the same laboratory side by side with researchers. 
And that's what FreedomCAR really helps us do, get those people 
together.
    Mr. Deutsch. You know, one of the comments people were 
saying that the development of fuel cell-powered vehicles for 
mass production is around the corner over 30 years ago. What 
has changed to make this goal more realistic today?
    Mr. Culver. I believe the progress in the last decade. As 
Mr. Garman pointed out, we've already reduced the fuel cell 
price a tenth by--down to a tenth of what it was a decade ago. 
Size of the fuel cells, as I mentioned, were so huge, you had 
to tow them in a trailer 15 years ago. Now they're in A class 
vehicles. So I think that progress has really excited us about 
moving that much closer to marketplace than we were 20 years 
ago.
    Thank you. I see my time has expired.
    Mr. Gillmor. Thank you very much, Mr. Chairman. And let me 
ask Mr. Garman: You state in your testimony that you are 
beginning to address the technologies necessary to make a 
transition to a hydrogen-based transportation economy. Several 
of the witnesses highlight in their testimony the need to 
address infrastructure issues. What is the timeframe for 
addressing hydrogen infrastructure development, and what are 
FreedomCAR's plans on this front?
    Mr. Garman. It is very important that we develop 
infrastructure in a timeframe that makes it possible, about the 
same time that the automakers are making that commercial 
ization decision in the 2013 to 2015 timeframe. Before we start 
investing heavily in infrastructure, it is important that we 
continue to see over the next year or 2 or 3 that we are 
meeting these very difficult technical challenges, the cost and 
durability goals and fuel cells, so that we are assuring 
ourselves that we do have something that we would be building 
an infrastructure for ultimately. But I think we are in the 
process of putting together our 1904 budget and, planning in a 
5-year planning timeframe, for budgets in the 1904 to 1909 
timeframe, are thinking very hard about this infrastructure 
problem and how government will work in this area.
    Some of the areas that we need to work on include codes and 
standards, how hydrogen would be handled, how it would be 
stored. This is a government role. We also want to employ the 
convening power of government to bring energy companies into 
the mix. Companies such as BP, Texaco, Shell, and others are 
thinking themselves not exclusively as oil companies anymore, 
but energy companies, and they as well have to think about how 
they might want to provide this service to consumers when the 
time is right.
    So, part of the technical milestones as outlined in the 
testimony are geared specifically and directly toward the cost 
of hydrogen and the ability to produce it in an affordable 
manner and distribute it appropriately.
    Mr. Gillmor. Are you working with companies that may, in 
the future, be providing some of that infrastructure; for 
example, oil companies, pipeline companies?
    Mr. Garman. Yes, sir. We have involved them in some of our 
hydrogen technology road-mapping exercises, companies such as 
Air Products and Chemicals, Prax Air. There is--they have a 
substantial amount of hydrogen pipelines and production in play 
today, and it's roughly a $2 billion industry, if memory 
serves.
    Mr. Gillmor. When we are talking about energy security 
issues, you mentioned that hydrogen is very plentiful as a 
resource to produce for the fuel cell car. But given that the 
hydrogen must be produced, how is FreedomCAR and DOE addressing 
the fuel supply issues?
    Mr. Garman. We, in a variety of ways, through DOE's fossil 
energy program, we are looking at ways, for instance, to use 
coal. Where coal would be gasified, the carbon dioxide and 
sulfur could be sequestered, and the pure hydrogen put into 
use. Through the nuclear energy program, we are also looking at 
the possibility of high-temperature gas reactors being used 
over the very long term to produce hydrogen. We are also 
looking at hydrogen conversion technologies, using biomass and, 
of course, renewable--other renewable technologies such as wind 
and solar.
    We have a variety of different ways to produce hydrogen. 
The one that's used mostly today is natural gas, the steam 
reformation from natural gas. Natural gas is very rich in 
hydrogen, and that's how it's mainly done today.
    Mr. Gillmor. Let me ask you to elaborate a little more on 
what's being done and what the potential is in the coal area. 
And I have a somewhat parochial interest in asking that since 
Ohio is the Saudi Arabia of coal with a 600-year supply that we 
can't use. So I would be interested in how far we are coming 
and what you realistically think the potential might be in that 
respect.
    Mr. Garman. Yes. Absolutely. I mean, the United States is 
blessed with a bountiful and abundant coal resource, and coal 
is chemically nothing more than long strings of hydrogens and 
carbons with some sulfurs and a few other elements mixed in. If 
we can use coal gasification technology, which we have been 
working on at DOE for some years, and marry that up with 
sequestration, that that could separate the rich hydrogen gas 
from the coal gas, capture the other elements, and sequester 
them in perhaps the mine from which the coal came through a 
chemical or other type of process, then we would have coal, the 
use of coal that would be consistent with a carbon-free future. 
And this is something that is very important to us.
    Again, this is a long-term technology. We don't see this 
happening in an economic fashion any time soon, but in the next 
15-, 20-year timeframe, we hope that we can have some 
demonstrations of this technology well in hand.
    Mr. Gillmor. Thank you.
    Mr. Greenwood. The next gentleman, and recognizes himself, 
for 5 minutes for this next round of questions.
    There has been some concern as to whether the FreedomCAR 
program, with its bold vision of leaping forward into fuel 
cells, is going to in any way diminish our efforts with regard 
to the intermediate steps, trying to get the hybrid vehicles on 
line and available to the public.
    Mr. Culver, what are your views on that? Are we, in fact, 
in any way, by focusing some of these resources on the fuel 
cells, diminishing our progress in the other hybrid vehicles?
    Mr. Culver. Well, I trust not, sir, Because about 50 
percent of the budget that was proposed, the FreedomCAR budget, 
goes toward--directly toward hydrogen and fuel cell 
technologies. The other 50 percent goes to nearer-term 
technologies, like lightweight materials, advanced combustion, 
batteries, those types of technologies, which, for the most 
part, will be required and are very supportive of the longer-
range fuel cell goals.
    I think it's very important, and the U.S. Car Partners have 
provided input to the Appropriations Committee that those 
technologies be preserved in the budget and still get the 
adequate funding. There are promising technologies under way 
investigating on reducing after-treatment--or reducing 
emissions through advanced after-treatment technologies. New 
materials like magnesium and advanced composite materials are 
slowly coming into the realm of being available for nearer-term 
vehicles.
    So these types of technologies, we believe, are crucial and 
critical and should be retained in the FreedomCAR program.
    Mr. Greenwood. Let me ask you, on that question, and I 
would like Mr. Garman to respond and perhaps Mr. Wells as well, 
what are the incentives to get, to make, to reach milestones by 
particular timeframes? In other words, if a group of scientists 
in a research lab in the private sector--clearly there are 
corporate goals, and they, I imagine, devote a certain amount 
of attention trying to figure out how to reach those milestones 
in a timely fashion. I mean, there is a sense that--
particularly because of our concern with the war on terrorism 
and our desire to be free of foreign oil, freer of foreign 
oil--that we have an almost Manhattan Project approach to 
getting these vehicles on line. Is that--is there a sense of 
urgency? And what determines the pace, what drives the pace of 
our getting to these hybrid cars, and how do we in Congress 
judge whether we are making the progress in a timely enough 
fashion?
    Mr. Culver. I believe there are many parts to the answer to 
that question. Let me begin by saying the ultimate answer is 
that they get into the marketplace. In the next 2 years, you 
will see hybrid offerings from all the Big Three in trucks, 
SUVs. Customers are starting to show greater appreciation for 
fuel economy as a discriminator amongst various models, and the 
companies recognize that being able to offer higher-fuel-
economy vehicles are certainly going to be in the marketplace 
and be more attractive. So I think the customer side, the pull 
of these technologies is starting to come into play much more 
than it was even a few years ago. So I think that will help 
bring it to marketplace a lot faster.
    Mr. Greenwood. I'm not sure that that's responsive to my 
question. My question, if we were simply relying on the pull of 
the marketplace, we wouldn't need Federal dollars, because the 
car--automakers would accelerate their efforts to beat--to get 
marketable vehicles on the market faster than the other 
companies. So if we are going to infuse $75 million a year into 
accelerating this advancement, my question is, what makes the 
guys in the laboratories scurry across the room faster and, you 
know, work their brains quicker and collaborate more 
efficiently using these Federal dollars?
    Mr. Culver. I do believe the new goals, with timing and 
cost in all of the new goals, will help accelerate that 
progress and help get that sense of urgency across to everyone 
involved in this program.
    Mr. Greenwood. Let me ask Mr. Wells and Mr. Garman to also 
respond to that question.
    Mr. Wells. Mr. Chairman, as they design this program, the 
Congress should insist that measurable points in time be 
identified so that you can measure success.
    Mr. Greenwood. And is it your view that those milestones 
are now absent?
    Mr. Wells. I believe those milestones are not--I'm not able 
to interpret those milestones yet because they are fairly 
technical, and it's difficult at this moment to really measure 
the concreteness of those measurements. But clearly we have 
moved into a society where performance and results will get 
future funding in terms of the scarce dollars we have. So the 
program is going to have to be held accountable to demonstrate 
results quickly to get continued funding.
    Mr. Greenwood. Mr. Garman.
    Mr. Garman. I would agree. And one of the reasons that we 
had technical milestones is that our own Office of Management 
and Budget insisted that we did and will be measuring our 
budget requests and our performance against those technical 
milestones on a year-by-year basis. This is a very, very 
important thing.
    I also--I think there is a certain excitement in this 
partnership between the government project managers, and the 
private sector scientists and the government scientists in the 
lab who are working on this process, because we developed these 
milestones together. In the past there have been some so-called 
partnerships where the government said this is our goal, this 
is our milestone, and, frankly, the private sector participants 
weren't full participants in the process of setting these 
milestones. But they are invested in these milestones. They 
would come up with--they came up with them in partnership with 
us, and they are excited but challenged by the milestones, and, 
like any engineer or any lab, you know, you get excited by a 
good challenge. These are tough challenges.
    I would also, with respect to your question about hybrids, 
which are very important, I think it's very important to 
recognize what the Congress has done in response to the 
President's energy plan in putting forth tax credit 
opportunities for hybrid vehicles. We think this is very 
important and commend the Congress for doing that. We think 
this is going to be an important incentive for customers who 
are teetering on the edge of buying a hybrid to be able to do 
it. I have one hybrid vehicle, and I am looking forward to the 
time when I get to purchase another one from a U.S. auto 
manufacturer, and, frankly, the tax credit is helpful in that 
regard.
    Mr. Greenwood. A final question. What are the proprietary 
issues? How are they managed in terms of U.S. automakers, 
foreign automakers? Is it--how are we balancing out the normal 
commercial interests or proprietary knowledge against the 
societal urgency of getting where we want to go here? Who wants 
to take a stab at that? Mr. Garman?
    Mr. Garman. I see this first-hand when you go to, for 
instance, Oak Ridge National Laboratory. We have a power 
electronics lab where lab scientists and industry scientists 
will work side by side on a workbench on a technology. But we 
also have space in that lab for proprietary technology in which 
the private sector worker will go behind the curtain, if you 
will, and try to carry it further or make it distinctive in 
some way for their own commercial interest.
    We think this is kind of a healthy dichotomy of approaching 
these kinds of R&D challenges. They work together on one hand, 
but they have an opportunity to take the technology and take it 
a step further and commercialize it perhaps sooner than their 
competitors can. And we try to maintain that balance.
    Mr. Culver. I would agree.
    Another good example is the California fuel cell 
partnership, where all the companies are collaborating together 
to demonstrate refueling, demonstrate the safety, demonstrate 
the drivability of these vehicles. Yet, at night, those 
vehicles go into very secure individual garages, and we don't 
share any of that kind of information, so there is room for 
proprietariness and collaboration to coexist at the same time.
    Mr. Greenwood. Thank you, gentlemen, for your testimony, 
and we appreciate your help here this morning, and you are 
excused.
    And the Chair would call forward the second panel, 
consisting of Dr. Vernon Roan, professor of mechanical 
engineering, and director of the Fuel Cell Laboratory at the 
University of Florida; Mr. William Miller, president of UTC 
Fuel Cells; and Dr. Donald Paul, vice president and chief 
technology officer of Chevron-Texaco.
    Doctor, I think we would like you to sit at that chair.
    Welcome, gentlemen. We thank you for your assistance this 
morning. You heard me notify the first panel that this is an 
investigative hearing, and it is our practice to take testimony 
under oath. Do any of you object to giving your testimony under 
oath?
    Seeing no such objection, I would advise you that, pursuant 
to the rules of the House and this committee, that you are 
entitled to be advised by counsel during your testimony. Do any 
of you wish to be advised by counsel?
    Okay. In that case, if you would rise and raise your right 
hand, I will swear you in.
    [Witnesses sworn.]
    Mr. Greenwood. Thank you. You are under oath. And I 
understand I should stand corrected; it's Dr. Vernon P. Roan, 
not Run. We thank you, and you are recognized to give your 
testimony, sir.

     TESTIMONY OF VERNON P. ROAN, PROFESSOR OF MECHANICAL 
  ENGINEERING, DIRECTOR, FUEL CELL LABORATORY, UNIVERSITY OF 
FLORIDA, ON BEHALF OF THE PNGV PEER REVIEW COMMITTEE, NATIONAL 
RESEARCH COUNCIL; WILLIAM T. MILLER, PRESIDENT, UTC FUEL CELLS, 
SOUTH WINDSOR, CONNECTICUT; AND DONALD L. PAUL, VICE PRESIDENT 
          AND CHIEF TECHNOLOGY OFFICER, CHEV-RONTEXACO

    Mr. Roan. Thank you, sir. Thank you for inviting me here 
today. I would like to start by just giving a few comments from 
the summary of the Peer Review Committee, who oversaw the PNGV 
program, and I will just go right into that. Since I have 
issued a written copy of all this, I'm only going to hit just a 
few of the points because I have a few additional comments I 
would like to make.
    Of the goals, goal 3 is the one that has received the most 
attention, and that's to try to develop the fuel-efficient car, 
family sedan, up to 80 miles per gallon. In terms of the--some 
of the comments and recommendations from the Peer Review 
Committee, the first bullet, the Committee believes that the 
PNGV program has established a unique and valuable framework 
for directing closely coordinated industry and government 
research efforts toward the development of technologies capable 
of solving societal problems.
    That's probably the most important bullet from the 
recommendations of the committee and the comments, because 
basically we see this government industry framework as having 
worked.
    The fourth bullet down: Fuel cells continue to show promise 
of high efficiency and very low emissions, with continuous 
progress toward targets that are very difficult to meet for any 
general-purpose, high-volume automotive application.
    And, as such, the next to the last bullet, from the 
inception of PNGV, practical automotive fuel cell power plants 
have been considered to be well beyond the 2004 time limit of 
the program.
    And the next one, basically we said that we should extend 
those targets.
    If I go to the next sheet, a couple of recommendations. 
Essentially the first bullet says that the PNGV program should 
be refined and redefined to better reflect current societal 
needs, and the ability of the cooperative program, so forth, to 
meet these needs.
    The second bullet: Because of the potential for near zero 
tailpipe emissions and high-energy efficiency of the fuel cell, 
the PNGV should continue the research and development efforts 
on fuel cells even though achievement of performance and cost 
targets simultaneously will have to be extended substantially 
beyond the original expectations.
    So what these issues say is that the Peer Review Committee 
felt that the PNGV approach worked. We felt that the fuel cell 
was one of the most attractive technologies, and that should be 
considered on a longer-term basis, and, essentially, that's 
what the FreedomCAR program does.
    I would like to skip the next slide, if I may, and go to 
the next one.
    Hydrogen production issues. And this comes to a little of 
what Congressman Stearns was asking about a moment ago. Right 
now almost all of our hydrogen is produced from natural gas. We 
get about a 70 or 75 percent energy efficiency in doing that, 
and actually a little lower when we take into account 
compressing and transferring the hydrogen to where it's used. 
So it takes about 4 pounds of natural gas to produce a pound of 
hydrogen, roughly.
    When we use renewable energy sources, you have to consider 
the question: Do you do better making hydrogen, or do you do 
better by using that renewable energy to retire some of the 
fossil-burning coal plants which are still operating at 25 or 
30 percent efficiency?
    The next slide, please.
    As Mr. Garman mentioned, there are other ways than steam 
reforming hydrocarbons or the electrolysis of water to produce 
hydrogen, but none of these have really been shown to be 
successful yet. It is also possible to sequester the 
CO2. That's still an unknown. The electricity can be 
produced in a lot of ways, but if we use fossil fuel to make 
electricity, and if we use fossil fuel--namely, natural gas--to 
make hydrogen, we wind up actually putting more CO2 
into the air than we are doing right now.
    In terms of the magnitude of this--the next slide, please, 
the effect of electrolysis. To produce hydrogen for an 80-mile-
per-gallon fuel cell car would take about 600 kilowatt hours 
per month of electricity from using electrolysis of water. For 
a two-car family, assuming they drive a little less than the 
average combined, this would be about 1,000 kilowatt hours per 
month, and that's about what the average home actually uses 
right now.
    So, regardless of where we get this electricity, including 
from renewable, we are essentially going to have to duplicate 
the entire grid insofar as electrical energy is concerned if we 
are going to produce enough hydrogen for all of the cars.
    I won't go into the next ones, I'm out of time----
    Mr. Greenwood. Dr. Roan, don't worry about the time.
    Mr. Roan. Yes, sir.
    Mr. Greenwood. Don't worry about the time.
    Mr. Roan. Continue?
    Mr. Greenwood. Please do.
    Mr. Roan. Okay. The next slide on the transportation issues 
is basically the fuel for hydrogen transportation.
    The next one, please. No, the previous one.
    This shows what we can do with basically 1 pound of natural 
gas. Right now, if we use this in a conventional car, which we 
can and we do, this would take us about 4.3 miles. If we put 
this in a 60-mile-per-gallon hybrid, which we can, this would 
take us about 9.6 miles. If we put it into a fossil-fuel fuel 
cell car, which hasn't really been demonstrated, but we 
projected about 70 miles per gallon, this pound of natural gas 
would take you about 11 miles.
    If we use natural gas to make hydrogen, that same pound of 
natural gas now would take us about 2.6 miles in a present car, 
about 5.8 in a hybrid, and about 7.5 in a hydrogen fuel cell 
car, which is going to be more efficient than the hydrocarbon 
fuel cell car.
    I don't think that we would have any problem with 80-mile-
per-gallon on that.
    The next slide basically shows what we are doing from the 
standpoint of carbon dioxide in the atmosphere, And these are 
very approximate numbers, because, obviously, they depend on 
the assumptions that you make.
    But if we use our petroleum fuel directly, on the left side 
I have the amount of energy, of petroleum-based energy, that's 
required. This is to travel 300 miles. Using a present car 
would take about 1.4 million BTUs of petroleum energy. That 
produces around 240 pounds of carbon dioxide. If we go to a 60-
mile-per gallon hybrid, that brings that down to about 630,000 
and about 107 pounds of carbon dioxide. If we go to a 
hydrocarbon fuel cell--and, again, the 70-miles-per-hour--70-
miles-per-gallon would still have to be demonstrated--we are 
down to about 540,000 BTUs and 95. It actually, in terms of the 
best utilization, probably right now would be a diesel 
compression ignition, CIDI, hybrid, which would give probably 
about 80 miles per gallon. So this gives us the lowest 
consumption of petroleum and the least amount of CO2 
produced.
    If we go to hydrogen produced from steam-reformed natural 
gas, the amount of energy now, because we are losing energy in 
producing hydrogen, is up to about 2.1 million BTUs; and, if we 
use it in a conventional car--which we can--and that produces 
about 270 pounds of CO2. In a spark ignition hybrid, 
that would bring it down to 950,000, and 125; and the hydrogen 
fuel cell down to about 710,000 and about 95 pounds of 
CO2.
    And, finally, if we use hydrogen from electrolysis, older 
fossil plants--now, this is not from renewable, this is using 
our current electricity supply to produce hydrogen--then we 
have the worst in terms of the CO2 and the BTUs. 
Even if we use hydrogen fuel cell, it's a lot of energy, and 
it's a lot of CO2. In other words, using current 
electricity is not the way to produce hydrogen.
    The bottom line on that--the next slide--as we move toward 
this hydrogen economy, we will probably use more fossil fuel 
and produce more greenhouse emissions per capita than we do 
right now; and this is likely to continue until there is a big 
reduction in fossil fuel power plants. We either have to go to 
renewable or nuclear. And even after we transition, the total 
energy--not fossil energy, but total energy consumption is 
probably going to increase unless we change our energy use 
patterns, because it takes more energy to make the hydrogen 
that we are using for our transportation systems.
    And, finally, I support the concept of the FreedomCAR 
program. I think this is a long-term thing, and I think we 
really need to be working on it. And I think that what the 
government can do, especially with the support of the national 
labs, that's going to be of great benefit in eventually getting 
there.
    So the production and distribution of hydrogen, the storage 
of hydrogen onboard vehicles. Just, very quickly, right now, if 
you took the size of a gasoline tank and used it to store 
compressed hydrogen, it would hold about 2 pounds of hydrogen, 
roughly, and that would take you less than 100 miles. So we 
have to have some way to store the hydrogen onboard the 
vehicles.
    And, of course, the fuel cells themselves, they have to be 
made, the price right, durable, safe, and so forth.
    Thank you, sir.
    [Material submitted by Vernon P. Roan follows:]
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Additional Comments by Vernon P. Roan, Professor, University of Florida
    These comments are presented as an addendum to the brief summary of 
relevant issues from the NRC 7th PNGV Peer Review Report that I have 
submitted to the Committee. I also refer the Committee to the complete 
report for additional information. This addendum is not based on any 
type of consensus from the PNGV Peer Review Committee but represents my 
own observations and opinions.
    Since no specific questions have been presented to me by the 
Committee on Energy and Commerce, I will offer opinions which I think 
relate to the probable areas of consideration by the Committee, namely:

1. The appropriateness of emphasis on hydrogen and fuel cells for 
        transportation-related energy visions of the future.
2. The viability of the proposed FreedomCAR program as an approach for 
        directing government-sponsored research and development in 
        support of long-range transportation energy goals.
    With respect to the first area of consideration, the ultimate 
transition from fossil fuels to hydrogen as the primary chemical fuel 
is essentially inevitable. Fossil fuels represent a finite resource 
which will become increasingly more difficult and expensive to utilize. 
Further, it seems likely that other technologies competing for limited 
fossil fuel supplies (especially petroleum) such as for textiles, 
plastics, medicines, etc., might achieve a higher priority than simply 
burning the fuel to produce heat. Hydrogen, on the other hand, can be 
produced without consuming fossil fuels through the electrolysis of 
water by using non-fossil primary energy to produce the electricity. 
The non-fossil primary energy sources include hydro, wind, solar, 
geothermal, tidal, and nuclear.
    The downside of producing hydrogen through the electrolysis of 
water is that more electrical energy goes into producing the hydrogen 
than will be available from the hydrogen fuel. This fact emphasizes the 
importance of utilizing the hydrogen in the most efficient manner as a 
transportation fuel. The most efficient manner currently known is to 
use the hydrogen in a fuel cell-powered vehicle. It should be noted, 
however, that while electricity is still being produced for the 
national power grid using some fossil fuel power plants, it might 
conserve more fossil fuel and produce fewer greenhouse gases to put the 
renewable energy-produced power into the grid and take older power 
plants off-line. Another potentially more efficient alternative could 
be to use the renewable-energy-produced power to recharge batteries in 
electric vehicles.
    An interesting and troubling likely outcome of the transition 
period where a significant portion of the electricity to produce 
hydrogen might come from fossil-fuel plants and/or where hydrogen is 
partially produced from steam-reforming natural gas (as almost all 
hydrogen is produced today) is that the consumption of fossil fuel per 
unit of fuel energy available for transportation will likely increase. 
In other

words, there will probably be a period of time when we actually use 
more fossil fuel in our efforts to transition from fossil fuels to 
hydrogen in transportation systems. In addition, since hydrogen must be 
produced in an energy loss process, the total electrical energy 
consumption as we move towards a hydrogen economy is sure to increase 
dramatically. For example, an average American home uses around 1000 
kWh of electricity per month. If this home has two fuel cell cars 
operating on hydrogen, it will take about an additional 1000 kWh of 
electricity to produce the hydrogen fuel for the cars. The implication 
is that a complete transition to electrolysis-produced hydrogen for 
transportation fuel will roughly require doubling the residential 
electrical generation capacity.
    Thus, the DOE vision of proceeding towards a hydrogen economy with 
fuel cells becoming the preferred way to utilize the hydrogen for 
transportation certainly seems appropriate but there will be troubling 
events along the way.
    The second area of consideration involves the path and some of the 
related priorities en route to the long-range vision. The path and 
priorities are extremely important since, even under the best of 
circumstances, there will likely be some very difficult issues. Fossil 
fuels, which have been essentially free except for the costs of 
extracting and processing them, will be replaced with hydrogen which 
must be ``produced.''' Millions of megawatts of new, non-fossil, power 
generation plants will be needed to replace older fossil fuel plants 
and to provide electrical power to produce the hydrogen. This 
transition will take decades and will involve huge amounts of capital 
expenditures. During this lengthy transition period, it will become 
increasingly important to have an orderly evolution of technologies 
which can contribute to more fuel-efficient vehicles. It will also be 
important to use the available fossil fuels in the most appropriate 
manner. As an example of the appropriate use of fuels, consider natural 
gas.
    Natural gas is the cleanest burning and has the highest mass 
heating value of any fossil fuel currently being consumed. It is the 
primary heat source for many electrical power plants including 
virtually all now under construction or in the planning stages. It is 
also used as a motor fuel in spark ignition, compression ignition 
(diesel), and gas turbine engines. In addition, it is the feedstock for 
many chemical processes including virtually all of the hydrogen 
currently being produced. Each of these uses of natural gas is related 
to transportation energy options. Specifically, some of the ways that 
natural gas could be utilized for transportation, are:

1. Directly as a motor fuel for conventional cars.
2. Directly as a motor fuel for spark ignition (SI) or compression 
        ignition (CI) hybrid vehicles.
3. Directly as a fuel for hydrocarbon fuel cell-powered vehicles 
        (utilizing onboard fuel processors).
4. Directly as a power plant fuel to produce electricity for recharging 
        electric vehicle batteries.
5. Indirectly as a feedstock to produce transportation hydrogen fuel 
        through steam reforming.
6. Indirectly as an electricity generation power plant fuel to produce 
        electricity which would then be used to produce transportation 
        hydrogen fuel through electrolysis of water.
    Adding to the complexity is the fact that the hydrogen produced by 
methods 5 or 6 could also be used in many ways for transportation 
purposes, including as a fuel for conventional vehicles, hybrid 
vehicles, or fuel cell vehicles. Interestingly, for the relatively near 
term, probably the most energy-efficient way to utilize the natural gas 
for transportation is directly as a fuel in CI hybrid vehicles. The 
least energy-efficient option is to use it to produce hydrogen by 
electrolysis and then to use the hydrogen in conventional vehicles. The 
successful development of enabling hydrocarbon fuel, fuel cell 
technologies could provide not only another energy-efficient 
alternative but also an alternative with extremely low emissions. 
However, once the hydrogen is produced (by any means), the most energy-
efficient way to utilize it will be in hydrogen fuel cells.
    Similar options obviously exist also for the most effective ways to 
utilize petroleum or any other form of fossil fuel. The options which 
are actually feasible will depend on many factors but certainly 
including the successes in developing many enabling technologies. 
Clearly, of high importance in technology development must be included 
the following:
1. Exhaust emission reduction at the source or through after-treatment 
        for fuel-efficient compression ignition (diesel) engines.
2. The fuel processing and other issues associated with hydrocarbon 
        fuel cell systems that would have costs, performance, physical 
        characteristics, durability, etc., compatible with consumer 
        cars and other transportation systems.
3. Clean and energy-efficient ways of producing hydrogen.
4. A plan for developing a hydrogen infrastructure that would be 
        compatible with widespread distribution and use of hydrogen-
        powered vehicles.
5. Development of vehicle onboard hydrogen storage that will allow safe 
        and inexpensive onboard storage of sufficient hydrogen to 
        provide an adequate vehicle range.
6. The resolution of costs, performance, and other issues to make the 
        hydrogen fuel cell truly a technology compatible with mass-
        produced, low cost automotive applications.
    As a final note, it should be emphasized that even with a good plan 
for achieving large-scale hydrogen production and infrastructure, it 
will be exceedingly difficult and expensive to implement. As an 
example, an Argonne National Laboratory study (ANL/ESD/TM-140) 
concluded that capital costs for production facilities capable of 
producing 1.6 millions of barrels of gasoline-equivalent hydrogen fuel 
per day, could be $400 billion for production and $175 billion for 
distribution. Their study was based on a ``high'' market penetration of 
hydrogen-fueled vehicles by the year 2030. Another study by Directed 
Technologies, Inc. (DE-ACO2-94CE50389, July 1997) was more optimistic 
but was partially based on assumptions of unlimited availability of 
very inexpensive natural gas and unlimited availability of off-peak 
electricity at 1.5 cents per kWh. There are also the inevitable 
problems with siting and licensing of facilities, as well as the 
obvious safety concerns of distributing massive quantities of liquid (-
423(F.) or high pressure (3000 to 5000 psi) hydrogen.
    There are, of course, many other issues to be considered including 
many that should be fostered by the government en route to the long-
term vision of a hydrogen economy and an efficient transportation 
utilization of the hydrogen. However, it is felt that the ones 
mentioned above are among the more important.
    In summary, with respect to the proposed FreedomCAR plan, it 
appears that it is reasonably well considered and includes the 
necessary elements to guide and support the more critical technology 
developments in a fashion appropriate for the government. Since the 
duration will involve many years of activities and many potential 
pitfalls, progress should be reviewed regularly and programs and plans 
changed as deemed appropriate.






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    Mr. Greenwood. Thank you, Dr. Roan.
    Mr. Miller?

                 TESTIMONY OF WILLIAM T. MILLER

    Mr. Miller. Thank you, Mr. Chairman. I am Bill Miller of 
UTC Fuel Cells, a subsidiary of United Technologies 
Corporation. I appreciate the opportunity to testify regarding 
DOE's FreedomCAR program and the role it plays in our national 
energy policy.
    UTC Fuel Cells has been developing and producing fuel cells 
for more than four decades. With NASA, we have supplied the 
fuel cells for every U.S. manned space mission since the 
1960's, including Apollo and today's space shuttle orbiter. 
Since 1991, we have produced a 200-kilowatt fuel cell for 
buildings called the PC25, and we have delivered 250 of these--
is that better? Delivered more than 250 of these to customers 
in 19 countries on 5 continents.
    Building on this extensive experience, we are now 
developing new fuel cell technology, the PEM technology, for 
transportation, commercial buildings, and residential.
    UTC Fuel Cells is working with DOE and a number of car and 
bus manufacturers. These include BMW, Hyundai, Nissan, and 
Renault for auto applications, and ThoranAirs Bus for bus 
applications.
    My written testimony is more detailed, but I would like to 
highlight several key points today.
    UTC Fuel Cells participated in the PNGV program. As a 
leading developer of fuel cells, I can tell you that PNGV was a 
success because it served as a catalyst for fuel cell 
technology. Let me give you an example.
    In our case, this public-private partnership led to the 
development of on a PEM fuel cell system that operates at 
ambient pressure and, consequently, is 20 percent more fuel-
efficient than other PEM fuel cell technology, which relies on 
a compressor.
    In addition, we developed the first gasoline-powered fuel 
cell system powerful enough to operate an automobile. This 
technology would allow us to use the existing gasoline 
infrastructure if it takes longer to develop the hydrogen 
infrastructure than we were expecting.
    Today's FreedomCAR initiative builds on PNGV successes, but 
it faces hurdles. On the technical side, we must still reduce 
the system's cost, size, and weight while improving its 
durability and performance. We also need to address 
manufacturing processes and materials issues. Continued 
investment in core fuel cell power plant technology from both 
the private and public sources is needed to reach these goals, 
and the same joint effort is needed in the areas of hydrogen 
production, storage, and distribution that are key to 
establishing the hydrogen infrastructure that we are talking 
about.
    PNGV drew on expertise from 19 national labs and 400 
organizations in 38 States, and we urge that FreedomCAR 
continue the successful approach by incorporating and promoting 
significant involvement from fuel cell power plant makers and 
the entire supplier base to fuel cells. Every State represented 
on this committee has a fuel-cell-related supplier or natural 
gas interest that can benefit from fuel cell commercialization. 
But let me be clear. Although petroleum-free, emission-free 
transportation is a revolutionary concept, like most 
technologies, it will require an evolutionary process.
    The introduction of stationary fuel cell power plants using 
PEM is the key starting point. UTC Fuel Cells plans to 
introduce new stationary fuel cells by the end of next year 
that will cost $1,500 to $2,000 per kilowatt in volumes of a 
few hundred, but they will be competitive in producing 
electricity in high-electricity areas like California and New 
York. This will be followed by the introduction of fuel cells 
for buses, starting with inner-city buses, and demonstrations 
in the 2004-2005 timeframe, with commercial availability in 
2006 or 2007.
    Automotive applications are the most demanding in terms of 
cost, weight, and size. Hence, it is understandable to take 
longer for fuel cells to successfully compete in this market. 
We are targeting $50 per kilowatt for the personal vehicle 
application by the end of the decade, as volume gets into the 
hundreds of thousands and millions of vehicles. In fact, we 
think the introduction will happen by 2010. As we gain 
experience and build volume by deploying fuel cells for 
stationary markets and then buses and then trucks and fleet 
vehicles, these successes can pave the way for the zero 
emission personal vehicle.
    In summary, UTC Fuel Cells believes the FreedomCAR 
initiative is appropriately focused on hydrogen-fuel-cell-
powered vehicles as a key element of a comprehensive long-term 
national strategy that will enhance energy security and deliver 
environmental benefits, and we look forward to partnering with 
DOE to achieve our common goal of an emission-free cycle of 
energy.
    Thank you for the opportunity to testify, and I would be 
happy to answer your questions.
    [The prepared statement of William T. Miller follows:]
   Prepared Statement of William T. Miller, President, UTC Fuel Cells
    Thank you Mr. Chairman. I'm Bill Miller, president of UTC Fuel 
Cells (UTCFC). I appreciate the opportunity to testify regarding the 
Department of Energy's (DOE) FreedomCAR program and the role it plays 
in national energy policy.
    UTC Fuel Cells (UTCFC) is a unit of United Technologies 
Corporation, which is a $28 billion global manufacturer of Pratt & 
Whitney aircraft engines, Carrier air conditioners, Otis elevators and 
escalators, Hamilton Sundstrand aerospace systems and Sikorsky 
helicopters.
                      utcfc's fuel cell experience
    UTC Fuel Cells has more than four decades of fuel cell experience. 
We've developed and produced the fuel cells for every U.S. manned space 
mission since the Apollo missions in the 1960s and continuing today 
with the Space Shuttle program. These fuel cells produce the 
electricity for the orbiter when it is in space and all the drinking 
water for the astronauts.
    We've also sold more than 250 stationary fuel cell power plants to 
customers in 19 countries on five continents. Our installed base of 
these 200 kW fuel cell power plants, known as the PC25 TM, 
has accumulated more than five million hours of operating experience. 
The PC25 provides powers for schools, hospitals, military 
installations, data processing centers and other facilities in diverse 
operating conditions and customer configurations.
    Building on this extensive experience, we are now developing new 
fuel cell technology for transportation, commercial and residential 
applications. UTCFC is working with DOE and a number of car and bus 
manufacturers to develop fuel cell power plants and auxiliary power 
units for vehicles. Our partners include BMW, Hyundai, Nissan and 
Renault for auto applications as well as United Parcel Service, Thor 
and Irisbus in the heavy-duty vehicle market.
    For example, our hydrogen fuel cells now power four Hyundai Santa 
Fe Sport Utility Vehicles (SUVs). These cars are the world's first zero 
emission SUVs and get the gasoline equivalent of 50 to 60 miles per 
gallon. We are a member of the California Fuel Cell Partnership that is 
demonstrating fuel cell vehicle technology, including the Santa Fe, in 
real world operating conditions.
                          fuel cells and pngv
    Fuel cell R&D was funded under the Partnership for a New Generation 
of Vehicles (PNGV) effort during the early years of the program. 
Hundreds of technologies were evaluated prior to a 1997 ``down select'' 
of promising technologies that included: hybrid electric vehicle drive, 
direct injection engines, fuel cells and lightweight materials.
    From UTCFC's perspective, PNGV was a success. It served as a 
catalyst for fuel cell technology, including UTCFC efforts with the 
Ford Motor Company that kicked off our entry into Proton Exchange 
Membrane (PEM) fuel cells for transportation applications.
    We had two dramatic technology breakthroughs as a result of this 
cost shared program.
    First, in cooperation with DOE, we developed a PEM fuel cell that 
operates at ambient or room pressure. Why is this important? This 
enables our system to achieve substantially better fuel economy than 
other automotive fuel cell systems.
    Our system does not need a compressor, which can consume large 
amounts of power and decrease overall system efficiency. This ambient 
pressure technology enabled us to win ``best in class'' honors in two 
key performance tests at the Michelin Bibendum in California last year 
where new automotive technologies are evaluated by independent judges. 
This breakthrough would not have been possible without cost-shared PNGV 
funding.
    Our second significant accomplishment under PNGV was the 
development of the first gasoline powered fuel cell system powerful 
enough to operate an automobile. This technology provides an 
alternative to automakers should the hydrogen infrastructure take 
longer than expected to develop by allowing us to use the existing 
gasoline infrastructure.
    UTCFC's distinction is that its power plant can use readily 
available, pump grade gasoline. Other systems rely on specialized de-
sulfurized fuel to accomplish this feat. UTCFC's success in this area 
is the result of leveraging its own resources, the resources and other 
expertise available through our United Technologies Research Center, as 
well as funding from the Department of Energy.
                      freedomcar/fuel cell hurdles
    Today's FreedomCAR initiative faces hurdles, not the least of which 
is a sustained national commitment and adequate levels of investment by 
the private and public sector. Other FreedomCAR challenges include 
technical, market, infrastructure and public policy hurdles before fuel 
cell vehicles are commercially available and DOE's vision of a 
petroleum free, emission free transportation system is a reality.
    Fuel cells face a number of technical challenges including reducing 
the system's cost, size and weight while improving durability and 
performance characteristics. We also need to address manufacturing 
processes and materials issues. While substantial progress has been 
made on many of these fronts, more work needs to be done.
    Cost is a major issue driven by volume as well as a number of 
technical factors. New technology, improved manufacturing processes, 
materials substitution and other strategies have been used to reduce 
fuel cell costs over the past two decades from $600,000 per kilowatt 
for the unique needs of the Space Shuttle orbiter application to $4,500 
per kilowatt today for UTCFC's current PC25 stationary power plant with 
an annual volume of 50 units per year. We expect to be at $1,500-$2,000 
per kilowatt by the end of 2003 with stationary volumes of 200 units 
per year, driving towards $50 per kilowatt for the automotive market 
when volume approaches one million units per year.
    Continued investment in fuel cell core power plant technology is 
needed to reach these goals. We believe the government has a legitimate 
role to play in supporting high-risk fuel cell core technology R&D 
efforts on a cost-share basis with industry so the public at large can 
enjoy the efficiency, reliability and environmental benefits of fuel 
cell technology.
    In addition to these technical challenges, the country also faces 
significant infrastructure hurdles such as hydrogen production, storage 
and distribution. The goal is to ensure the successful convergence of 
parallel efforts to meet fuel cell and hydrogen infrastructure 
performance goals. A fuel cell vehicle that meets all the performance 
targets will have very limited commercial viability without affordable 
and widespread access to hydrogen fueling capability, availability of 
service technicians to maintain the equipment and development and 
adoption of appropriate codes and standards to facilitate customer 
acceptance and use. All these issues need to be addressed 
simultaneously so there is no ``long pole in the tent'' holding back 
commercialization.
    Practically speaking, this means hydrogen production, storage and 
distribution research and development efforts must be funded in tandem 
with research, development and demonstration efforts for the power 
plant.
    This parallel R&D emphasis on core technology and infrastructure 
needs to embrace significant supplier involvement to maximize the 
opportunity for success. PNGV drew on expertise from 19 national labs 
and 400 organizations from 38 states. We urge that FreedomCAR continue 
this successful approach by incorporating and promoting significant 
involvement by the fuel cell power plant and supplier base, which we 
believe will accelerate the pace of technology deployment as well as 
generate innovative approaches.
    It is essential that we harness the ingenuity, innovation and speed 
with which the supplier base brings technology to the market. For 
example, a FreedomCAR focus on fuel cell membrane suppliers will help 
bring down fuel cell system costs and based on a common stationary/
transportation technology platform, these breakthroughs can be applied 
in the near term to buses, fleet vehicles and stationary applications.
                        benchmarks for progress
    Our nation's visionary goal to put a man on the moon first required 
launching primates into space. This was followed by manned orbits of 
progressively longer flights with more complex missions before the 
ultimate objective of the manned moon landing was accomplished. 
Similarly, our long-term objective of powering our economy with a 
renewable source of hydrogen is a revolutionary concept that will 
require an evolutionary approach.
    UTCFC believes the sequence of this evolutionary process will 
include first the deployment of stationary power plants by the end of 
2003 at a cost of $1,500-$2,000 per kilowatt that will start to be 
competitive in areas with high electricity costs such as California and 
New York. This will be followed by inner city bus demonstrations in the 
2004-2005 timeframe and commercial availability in 2006. These 
milestones are on track and we believe will occur spurred by 
developments in California.
    Transit buses are ideal candidates for the initial deployment of 
fuel cell vehicles. Hydrogen storage is not a problem because of space 
availability on the roof of buses. And hydrogen fueling stations and 
technician training can be made available given the relatively small 
number of inner city bus stations and service technicians.
    Since the automotive application is the most demanding in terms of 
cost, weight, size, durability, ease of maintenance, start up time and 
other performance criteria, it is understandable that it will take 
longer for fuel cells to successfully compete in this market. But as we 
gain experience in deploying fuel cells for stationary, inner city 
buses and fleet applications, these successes can pave the way for zero 
emission personal vehicles and serve as benchmarks to measure progress 
towards the 2010 goals of the FreedomCAR initiative. It will be 
important to balance funding requirements so the fuel cell and hydrogen 
infrastructure R&D efforts as well as stationary and fleet vehicle 
demonstration programs receive appropriate levels of support.
                         role in energy policy
    The FreedomCAR initiative is a key element of a more comprehensive 
strategy to address heavy-duty vehicles as well as stationary power 
generation. This important effort will need to be coordinated with 
other key federal agencies such as the Departments of Transportation 
and Defense. It should also be integrated with strategies for these 
other fuel cell applications as indicated above. This will maximize the 
synergies that exist and leverage public and private investment.
                                summary
    In summary, UTCFC believes DOE's FreedomCAR initiative is 
appropriately focused on hydrogen fuel cell powered vehicles as a key 
element of a comprehensive, long-term national strategy that will 
enhance energy security and deliver environmental benefits. Deployment 
of stationary fuel cells and inner city buses powered by fuel cells 
represent important milestones that will help us measure progress. R&D 
efforts should focus on fuel cell as well as hydrogen production, 
storage and distribution with the full involvement of the supplier 
community and national laboratories. Capturing and leveraging the 
synergies between the various fuel cell applications will maximize 
taxpayer benefit and accelerate the pace of deployment.
    Thank you for the opportunity to testify. I would be happy to 
respond to any questions.

    Mr. Greenwood. We thank you, Mr. Miller.
    Dr. Paul?

                   TESTIMONY OF DONALD L. PAUL

    Mr. Paul. Chairman and members of the subcommittee. 
ChevronTexaco is pleased to have the opportunity to testify 
before the subcommittee on the FreedomCAR program and the 
future of advanced energy technologies. As ChevronTexaco's 
chief technology officer, I am involved in all facets of our 
company's energy technology, including fuel cell research and 
development, and can share our experiences about both key 
market incentives as well as the challenges to the development 
of new energy technology. Today, I will focus my testimony on 
our work in fuel cell technology applications, challenges to 
commercializing the technology, and public policy 
recommendations.
    By way of background, ChevronTexaco is an integrated global 
energy company that produces oil, natural gas, transportation 
fuels, and other energy products. We operate in 180 countries, 
and employ more than 55,000 people worldwide. ChevronTexaco is 
the second largest U.S.-based energy company and fifth largest 
in the world. We consider ourselves to be an environmentally 
responsible company; and, in addition to supplying global 
energy, we are also involved in a whole host of advanced clean 
energy and fuel technologies.
    We believe that fuel cell technology will continue to 
evolve. Stationary fuel cells to generate high-quality power 
are commercially available in selected operations today; 
however, we believe that mobile source fuel cells have a much 
longer timeframe for development given the complexities of the 
issues.
    We continue to support development of fuel cell technology 
and the conversion of hydrocarbon fuels into hydrogen for use 
in fuel cells. We are actively working to develop safe methods 
for storing and delivering hydrogen in anticipation of future 
energy demands. To meet the numerous challenges involved with 
this new technology, we are involved in partnerships, 
participate in government and private workshops, and privately 
fund basic and applied research for hydrogen fuels and 
refueling stations.
    An example of this type of activity is the California Fuel 
Cell Partnership, which was formed to explore pathways to 
commercialization of fuel cell vehicles, to demonstrate these 
vehicles in everyday driving conditions, and to demonstrate 
fueling options and other infrastructure needs. ChevronTexaco 
has been an active partner in the California Fuel Cell 
partnership since it was formed in 1999.
    Challenges facing the development of the technology. First, 
the supply of hydrogen. Hydrogen is a fuel; it is not a natural 
resource; it must be manufactured from other sources. The two 
primary sources of hydrogen are water and hydrocarbons. For the 
past 50 years, we have been engaged in the conversion of 
hydrocarbons to hydrogen through refinery and gasification 
processes. We are leveraging our longstanding core competencies 
in fuels, catalysis, proprietary gasification, and process 
engineering technology to explore the development of a fuel 
processing business for hydrogen.
    Reforming gasoline into hydrogen. An avenue that leverages 
the existing fuel infrastructure is to produce hydrogen 
onboard. We are collaborating to develop systems for the 
conversion of gasoline into hydrogen within a car. 
ChevronTexaco and General Motors are engaged in a multiyear 
research collaboration in support of General Motors' 
development of a gasoline-fed fuel cell for vehicles. One key 
component of this collaboration is the development of an 
economically producible gasoline that can be used in vehicles 
with fuel cells and conventional internal combustion engines. 
Providing consumers with this practical solution may help 
remove fuel availability as a near-term impediment to 
commercial fuel cell vehicle systems.
    The delivery of hydrogen. One of the other challenges--one 
other challenge is how hydrogen would be distributed in a 
decentralized manner. We are trying to design a hydrogen 
refueling station that is economic and safe. Designing these 
stations requires incorporation of a range of new technologies, 
including hydrogen extraction, safe site storage technologies, 
stationary fuel cells to provide power at the site, and 
advanced hydrogen detection to control systems to make the 
station safe for consumer use.
    Hydrogen storage. Distribution of fuels for commercial and 
consumer uses will require an infrastructure that must provide 
for hydrogen storage. We are currently engaged in the R&D and 
commercialization of a new hydrogen technology. Our focus is to 
produce safe, reliable products, using a common technology 
capable of meeting a wide range of applications, including 
small portable, automotive, and bulk storage applications.
    Challenges to commercialization. We have operated in the 
refining and marketing business segment for over 100 years. The 
financial investment has been enormous. Integrated oil 
companies in the United States have generally been reducing 
their exposure to this business because of our inability to 
achieve a required return on capital. It is unlikely that U.S. 
refiners and marketers would create a substantial new 
infrastructure investment without believing they could obtain 
satisfactory economic returns. The interest--therefore, the 
introduction of fuel cell cars must be coordinated with the 
introduction of the infrastructure. Hydrogen must be available 
when and where it will be needed. We understand that customers 
must be confident that hydrogen will be available before they 
will buy cars powered by hydrogen.
    It is likely that some of the first fleet refueling 
stations and even retail stations will make the hydrogen right 
at the station. We need codes and standards to be developed 
that will let us demonstrate this concept. They do not 
currently exist.
    The challenge will be to build a network of large-scale 
industrial hydrogen generation facilities, pipelines, truck 
delivery systems, and smaller onsite generation facilities. The 
cost of hydrogen to consumers needs to be competitive in the 
marketplace with other energy fuels.
    From our perspective it will take time to work through all 
of these challenges. Centralized fleets of fuel cell cars and 
buses are going to be important to get the infrastructure 
started and to prove the value and functionality of the fuel 
cell vehicle infrastructure. Specialty applications and niche 
markets that use much of the same technology but in different 
products are going to be important and will be signposts. We 
recommend the following:
    One, consider the infrastructure as well as the technology. 
This should be a high priority in terms of DOE and other 
government R&D funds.
    Two, manage public expectations to ensure that the public 
understands that this technology has a long time line.
    Three, leverage private industry stakeholders. We believe 
that it will help make the technology commercial and also focus 
government priorities on areas where there is the most need.
    Four, monitor market signals. Often we see that there are 
factors that change the need for particular technology, either 
increasing or decreasing its demand, and these factors need to 
be considered when it comes to looking at competing 
technologies as well.
    Thank you for the opportunity to testify, and I will be 
happy to answer any questions.
    [The prepared statement of Donald L. Paul follows:]
    Prepared Statement of Donald L. Paul, Vice-President and Chief 
                   Technology Officer, ChevronTexaco
    Chairman Greenwood, Ranking Member Deutsch, and Members of the 
Subcommittee: ChevronTexaco is pleased to have the opportunity to 
testify before the Energy and Commerce Oversight and Investigations 
Subcommittee on DOE's FreedomCAR Program and the future of advanced 
energy technologies.
    As ChevronTexaco's Chief Technology Officer, I am involved in all 
facets of our company's energy technology, including fuel-cell research 
and development, and can share our experiences about both key market 
incentives as well as challenges to the development of new energy 
technology.
    Today I will focus my testimony on our work in fuel-cell technology 
applications, challenges to commercializing the technology and public 
policy recommendations.
    By way of background, ChevronTexaco is an integrated, global energy 
company that produces oil, natural gas, transportation fuels and other 
energy products. We operate in 180 countries and employ more than 
55,000 people worldwide. ChevronTexaco is the second-largest U.S.-based 
energy company and the fifth largest in the world, based on market 
capitalization. We consider ourselves to be an environmentally 
responsible company. In addition to supplying global energy, we are 
also involved in a whole host of advanced clean energy and fuel 
technologies.
    We believe that fuel-cell technology will continue to evolve. 
Stationary fuel cells to generate high quality power are commercially 
available in selected operations today. ChevronTexaco is particularly 
optimistic about stationary fuel-cell applications and believes that 
mobile source fuel cells have a much longer time frame for development 
given the complexity of issues. For example, it was relatively easy for 
us to install Northern California's first commercial fuel-cell power 
plant, located at our office park in San Ramon, California. This fuel 
cell converts hydrogen from natural gas into electricity, clean water 
and usable heat, and provides secure digital-grade power to information 
technology systems. We undertook this project to gain experience with 
designing and installing stationary fuel-cell systems, and to help us 
translate this experience into other types of fuel cell projects. 
However, mobile source fuel-cell technology faces substantially more 
challenges.
          chevrontexaco's research and development initiatives
    We continue to support development of fuel-cell technology and the 
conversion of hydrocarbon fuels into hydrogen for use in fuel cells. We 
are actively working to develop safe methods for storing and delivering 
hydrogen in anticipation of future energy demands. To meet the numerous 
challenges involved with this new technology, we are involved in 
partnerships, participate in government and private workshops, and 
privately fund basic and applied research for hydrogen fuels and 
refueling stations. These efforts were under way prior to DOE's 
announcement regarding the FreedomCAR initiative; however, certainly 
this does provide an impetus for the private sector to focus its 
attention on the development of this technology. Unlike stationary fuel 
cells, this technology will require long-term development, especially 
with regard to fuel production and distribution infrastructure.
    An example of the type of activity that we are involved in as a 
private/public partnership includes:

 California Fuel Cell Partnership: One of the most well-
        recognized initiatives is the California Fuel Cell Partnership, 
        which was formed to explore pathways to commercialization of 
        fuel-cell vehicles, to demonstrate these vehicles in everyday 
        driving conditions, and to demonstrate fueling options and 
        other infrastructure needs. ChevronTexaco has been an active 
        participant in the California Fuel Cell Partnership since it 
        was formed in 1999. This organization is a voluntary 
        collaboration of 8 automakers, 4 energy companies, a number of 
        State and Federal government agencies, and technology 
        providers.
      Working with other energy partners, we are providing hydrogen to 
        operate a project facility that safely delivers high-pressure 
        hydrogen to demonstration vehicles. Today, the partnership is 
        operating about a dozen fuel-cell vehicles at its West 
        Sacramento facility.
    Examples of our research and development activities, which reflect 
the many challenges facing the development of this technology, include:

 Supply of Hydrogen: Hydrogen is a fuel--not a natural 
        resource. It must be manufactured from other sources, so how 
        the supply system is developed is critical. The two primary 
        sources of hydrogen are water and hydrocarbons. For the past 50 
        years, we have been engaged in the conversion of hydrocarbons 
        to hydrogen through refinery and gasification processes. As you 
        may be aware, oil refineries are the largest current producers 
        and users of hydrogen. We are leveraging long-standing core 
        competencies in fuels, catalysis, proprietary gasification and 
        process engineering technology to explore the development of a 
        fuel-processing business. The total environmental consequences 
        of making hydrogen from any source need to be carefully 
        evaluated. There needs to be a cost effective technology that 
        enables fuel-cell systems to operate on readily available 
        hydrocarbon fuels and to deliver hydrogen fuels at competitive 
        costs. We have developed relationships with leading fuel-cell 
        developers, utilities and suppliers in an effort to introduce 
        competitive fuel-cell systems into the market. We have hydrogen 
        fuel-processing systems under development that will convert a 
        hydrocarbon feedstock, such as natural gas, into hydrogen.
 Reforming Gasoline Into Hydrogen: An avenue that leverages the 
        existing fuel infrastructure is to produce the hydrogen on-
        board. We are collaborating to develop systems for the 
        conversion of gasoline into hydrogen within a car. 
        ChevronTexaco and General Motors are engaged in a multi-year 
        research collaboration in support of General Motor's 
        development of a gasoline-fed fuel cell for vehicles. GM is 
        developing gasoline-fueled fuel cells as its interim strategy 
        until a hydrogen infrastructure is established. This technology 
        is largely based on fuel refining and related expertise, and is 
        targeted to improve performance of converting gasoline-like 
        fuels to hydrogen.
      Technology to convert gasoline to hydrogen in on-board processors 
        has been demonstrated. However, to use a gasoline-like fuel to 
        produce hydrogen, on-board a vehicle, it will be necessary to 
        reduce sulfur to very low levels, below that of the cleanest 
        fuels available today. Development of a method to reduce sulfur 
        to very low levels is one of the main features of our research 
        with General Motors. We also are investigating other 
        modifications to gasoline that will be needed for use in fuel-
        cell systems.
      One key component of this collaboration is the development of an 
        economically producible gasoline that can be used in vehicles 
        with fuel cells and conventional internal combustion engines. 
        As I will discuss in more detail later, the special 
        infrastructure requirements, high costs and safety issues 
        associated with hydrogen delivery are virtually prohibitive, at 
        least in the near term. It is for this reason that we are 
        working with GM to develop on-board fuel processors that will 
        allow customers to use gasoline-like fuels that are familiar, 
        the least expensive and use existing fueling infrastructure. 
        Providing consumers with this practical solution may help 
        remove fuel availability as a near-term impediment to 
        commercial fuel-cell vehicle systems.
 Delivery of Hydrogen: One other challenge is how hydrogen 
        would bedistributed in a decentralized manner. We are trying to 
        design a hydrogen refueling station that is economic and safe. 
        Designing these stations requires the incorporation of a range 
        of new technologies including hydrogen extraction from natural 
        gas, safe-site storage technologies, stationary fuel cells to 
        provide power at the site, and advanced hydrogen detection and 
        control systems to make the station safe for consumer use. This 
        is a daunting array of simultaneous technical challenges that 
        we are excited to take on, but recognize that they will require 
        involvement of many industry technology providers as well as 
        public and government agencies to make them happen.
 Hydrogen Storage: Distribution of fuels for commercial and 
        consumer uses will require an infrastructure that must provide 
        for hydrogen storage. We are currently engaged in the R&D and 
        commercialization of new hydrogen storage technology. Our focus 
        is to produce safe, reliable products using a common technology 
        capable of meeting a wide range of applications including small 
        portable, automotive, and bulk storage applications. We are 
        forming partnerships and associations with companies in various 
        areas to coordinate our efforts.
               challenges to technology commercialization
    We have operated in the refining and marketing business segment for 
over 100 years. The financial investment has been enormous. The current 
level of discretionary capital spending on the refining business 
segment by integrated oil companies has been close to zero. Integrated 
oil companies have generally been reducing their exposure to this 
business because of our inability to achieve a required return on 
capital. This has created an environment where refining assets have 
been sold for about 20% to 40% of replacement cost. It is estimated 
that six to nine refineries may be up for sale in the U.S. within the 
next 12 months either because of weak business conditions or Federal 
Trade Commission mandates. It is unlikely that U.S. refiners and 
marketers would create a substantial new infrastructure investment 
without believing that they could obtain a satisfactory economic return 
to compensate for this risk.
    The introduction of fuel-cell cars must be coordinated with the 
introduction of the infrastructure. We know that the infrastructure 
must be in place before customers buy these cars. We also know that 
this will require significant investment with a minimal return 
initially until widespread adoption occurs.
    In addition to the financial risks outlined above, we see the 
following additional challenges to the commercialization of this new 
technology and infrastructure:
    Hydrogen must be available when and where it will be needed. We 
understand that customers must be confident that hydrogen will be 
available before they will buy cars powered by hydrogen. It is a 
significant task to develop technology to:

1. produce the hydrogen at a reasonable cost;
2. deliver it over a broad geographic area;
3. store it at the sales point;
4. fuel the cars; and
5. in addition, the technology must be employed in a safe manner to 
        achieve total consumer confidence.
    There are 9 million tons per year of hydrogen produced and used in 
the United States. Worldwide production is 40 million tons per year. 
Most of this hydrogen is used in refineries, chemical plants, metals 
processing and the electronics industry. Hydrogen right now is a 
specialty chemical, and it must be transformed into a broader energy 
fuel as it begins to be used for transportation.
    Storing hydrogen in the car, at the refueling station and 
throughout the delivery infrastructure is a sizable, unfulfilled 
challenge. The problems are different at each location, and they each 
deserve the attention of industry, national labs and the DOE. Much 
attention is given to storing hydrogen on board the car, and rightly 
so, but similar attention is needed in the other places that hydrogen 
needs to be stored. This technology still needs to be developed, tested 
and embraced.
    It is likely that some of the first fleet refilling stations and 
even retail stations will make the hydrogen right at the station from 
reforming natural gas. We need codes and standards to be developed that 
will let us demonstrate this concept; they do not currently exist.
    Eventually the hydrogen market may be big enough that we can make 
hydrogen in large centralized plants, similar to refineries today. But 
this still needs to be distributed across the country. The challenge 
will be to build a network of large-scale industrial hydrogen 
generation facilities, pipelines, truck delivery systems and smaller 
on-site generation facilities--all expanding as an economic market 
develops due to increasing consumer acceptance of fuel-cell vehicles.
    Once large centralized plants are built, it will be possible to 
capture a significant portion of the carbon dioxide made as a by 
product. Capturing, inertly storing or sequestering large volumes of 
CO2 are two distinct challenges yet to be solved.
    New codes and standards need to be developed that permit the 
development of the infrastructure. Existing building codes and hydrogen 
system design standards were not developed with consumer applications 
in mind. Today's codes provide large distance ``setbacks'' from other 
facilities that limit the locations where hydrogen can be manufactured, 
stored and dispensed. This was appropriate for the technology and 
hydrogen applications of the 20th century, but they make retrofits of 
existing sites with limited area for expansion impractical for future 
hydrogen facilities. Codes and standards will need to be updated to 
reflect the developments in safer hydrogen technologies arising from 
the new storage and control system technologies. In some cases, 
building codes will need to strengthened to ensure safe maintenance 
facilities. In all cases, revisions of the codes will need to occur 
simultaneously with developing hydrogen technologies.
    The cost of hydrogen to consumers needs to be competitive in the 
market with other energy fuels. We need to be convinced that hydrogen 
can compete with other fuels in the market. This looks achievable once 
the demand for hydrogen is substantial, but as of yet this has not been 
demonstrated. The ability to supply hydrogen to the market while the 
demand is very low is difficult.
    From our perspective, it will take time to work through all these 
challenges. Centralized fleets of fuel-cell cars and buses are going to 
be important to get the infrastructure started and to prove the value 
and functionality of the fuel-cell vehicle and infrastructure. 
Specialty applications and niche markets that use much of the same 
technology but in different products are going to be important and will 
be a signpost along the path. One opportunity in this area would be for 
use of the technology by the military. In addition, applications, such 
as airport ground equipment vehicles and fleets of industrial vehicles 
with centralized and stationary refueling, need to be successful before 
consumers become a significant user of this technology.
                     public policy recommendations
    We believe that there are several areas that are critical to the 
development of the technology and the need for a public-private 
partnership. We recommend the following:

1. Consider the Infrastructure As Well As The Technology: It is 
        absolutely critical that DOE work on the infrastructure issues 
        simultaneously. Although technology can be developed, it will 
        not be implemented until there is an infrastructure to support 
        it. Energy companies have a large role to play in the 
        development. This should be a high priority in terms of DOE and 
        other government R&D funds.
2. Manage Public Expectations: When new technologies are on the 
        horizon, there is a lot of fanfare and media attention 
        surrounding the development of the technology. Unfortunately, 
        this leads to unrealistic public expectations that such 
        technology will be readily available within a short time frame. 
        We believe that it is critical and responsible to ensure that 
        the public understands that this technology has a long 
        timeline, and not create unrealistic or false expectations.
3. Leverage Private Industry Stakeholders: DOE has held a number of 
        meetings bringing together public and private industry 
        stakeholders. We believe that this will help make the 
        technology commercial, and also focus government priorities on 
        areas where there is the most need.
4. Monitor Market Signals: Often we see that factors can change the 
        need for a particular technology--either increasing or 
        decreasing demand. Some of these factors may include competing 
        technologies, availability of resources, public opinion, etc. 
        For example, we expect that hybrid cars are going to increase 
        the fuel economy of future cars and impact the market. To 
        embark on a long-term major government initiative without doing 
        mid-course reviews would be a mistake. By doing periodic full 
        reviews, there would be an opportunity to steer or change 
        policy as needed and implement appropriate mid-course 
        corrections.
    I should note that pending energy legislation, now in a House-
Senate conference, does include several provisions to address issues 
related to this technology as well as other advanced energy 
technologies.
    Thank you for the opportunity to testify and I would be happy to 
answer any questions.

    Mr. Greenwood. Thank you, Dr. Paul.
    Let me start with you, Dr. Roan, and your comparison of the 
various vehicles and their efficiencies and the amount of fuel 
used, and particularly the amount of CO2 emitted. My 
recollection--I don't know if we can get those slides back up, 
but my recollection was that it was a hybrid that took the blue 
ribbon; is that correct?
    Mr. Roan. In terms of using petroleum fuel today, that's 
correct. Now, that's the diesel or compression ignition hybrid. 
And that's why I personally believe that continuing the 
research--the government-sponsored or supported research on the 
exhaust emissions, both at the source, meaning combustion 
process and cleanup, is important.
    Mr. Greenwood. What are the challenges in getting that 
diesel, that diesel engine, widely used in the marketplace?
    Mr. Roan. Well, I probably am not the best one to ask, 
someone from the industry would be better, but I can give you 
my opinion. I think that there really are two.
    No. 1 is, of course, the problem in meeting the EPA and the 
California emission requirements. That's extremely difficult 
for diesels. No. 2, of course, is the image.
    Mr. Greenwood. I think you were present when Mr. Dingell 
was making inquiries about the sulfur content of fuel. Is it 
your understanding that if we were to succeed in getting close 
to zero sulfur content, that, in fact, that would eliminate 
that concern, and, in fact, move us very quickly toward very 
significant fuel efficiency?
    Mr. Roan. I don't believe that that eliminates the concern, 
but I do believe that it's a great big help. I think that it 
helps considerably, and especially in terms of the alternatives 
for emission treatment. There still is the issue of 
particulates to deal with and the--it's very difficult for the 
diesel engine to meet it; however, I do think it's possible, 
especially with very low sulfur fuel.
    Mr. Greenwood. What about--what's the most positive thing 
we can say about the amount of CO2 that we will be 
putting into the atmosphere in the best of all scenarios? 
That's the question I would pose to any of you.
    Mr. Roan. Right now we would be minimizing the amount of 
CO2 that we put in the atmosphere either with this 
compression ignition hybrid vehicle, or with the hydrocarbon 
fuel cell hybrid vehicle. I believe that, ultimately, there 
would not be much difference in terms of the fuel efficiency, 
and the fuel cell would have an advantage with respect to 
emissions. The fuel cell would not have the difficulty in 
meeting the emission requirements that the diesel does.
    So, those two, I think, are our best bet using petroleum.
    Mr. Greenwood. Mr. Miller?
    Mr. Miller. Well, I would just say you could eliminate 
CO2 entirely if we get to the point where we can 
produce electricity through a renewable means, either through 
wind or solar or through nuclear. And then you electrolyze 
water to produce hydrogen, and then you use the hydrogen in 
cars to transport people, you would literally have no 
CO2 emissions in that type, if we get to that point 
of where we get power from--if we can find power from renewable 
means.
    Mr. Greenwood. Dr. Paul.
    Mr. Paul. Yes, Mr. Chairman. One way, probably a third 
option--all of those, I think, are options. A third option is 
if you were able to have an infrastructure that allowed for a 
large central production of hydrogen where you could capture 
and sequester the CO2, you would have effectively 
the same situation.
    Mr. Greenwood. And how would you do that?
    Mr. Paul. How would you capture it?
    Mr. Greenwood. How do you sequester the CO2?
    Mr. Paul. Well, there are challenges there, as you are 
probably aware, but there is a considerable amount of research 
effort going on in the industry as well as in the DOE around 
finding geologic formations where one could inject and 
sequester CO2, for example, in the subsurface. And 
there are, in fact, a number of projects looking specifically 
at the options for capture and sequestration of CO2.
    Mr. Greenwood. A question for each of you gentlemen. We 
saw--in the previous panel we saw the graph of petroleum 
utilization by this country. It's heading upward. What is a 
realistic scenario based on the technology, the research that 
we are doing on all of this automotive technology? What is a 
realistic scenario in which we see--is there a realistic 
scenario in which we see that trend line take a negative 
direction?
    Mr. Roan. Well, I will give you comments on some of the 
things that were discussed along that line. First of all, 
nothing is probably going to cause it to decrease for the 
immediate future, because the mechanism is already in place for 
a continuation of the increase. The thing that's going to cause 
it to decrease, of course, is if we consume less petroleum, and 
this means that either the consumers are restricted in the 
amount of petroleum that they can use, or the vehicles are 
restricted in the amount of fuel that they can consume; or, 
that there is some kind of a strong incentive for the consumer 
to want to use the higher-mileage, lower petroleum-consuming 
vehicles.
    Mr. Miller. I would say for the next 10 years, the trend 
line is going to be difficult to change, but if we do get fuel 
cell cars on the road in the next decade, they would be powered 
by hydrogen, probably coming from natural gas; and, instead of 
importing oil, we have a lot of more resources in terms of 
natural gases in North America than--and that could change the 
trend line from importing petroleum.
    Mr. Greenwood. Dr. Paul.
    Mr. Paul. I would agree with both gentlemen here. Basically 
the issue to drive down petroleum use is the fundamental energy 
demand in the system, the efficiency of the system. Looking at 
a broad array of technologies that introduce and improve energy 
efficiency, this is certainly one of the programs and one of 
the big sources of the use of energy. But I think it's a broad-
based issue of improving energy efficiency and use in the U.S. 
to track down overall petroleum and natural gas.
    Mr. Greenwood. Looking specifically at the FreedomCAR 
program, are there--given the challenges, the visions that you 
have outlined in your testimony and in your response to the 
questions, do you believe that the existing program as it is 
functioning now is on the right track? Do you think or would 
you recommend the Congress make significant changes, or even 
minor changes in the program to get us where we want to go 
sooner?
    Mr. Roan. My personal opinion is that I do believe it's on 
the right track; however, as you can see from some of the 
things I've said, I see enormous pitfalls in getting to the 
capability to produce hydrogen and also the infrastructure. And 
so I think that it has to be reviewed often and carefully to 
see about the progress being made, and to make sure it is going 
in the right direction.
    Mr. Greenwood. Mr. Miller.
    Mr. Miller. In general, we support the FreedomCAR program. 
I would say--I would like to add one thing and emphasize one 
thing, which is we believe in this evolutionary model. It's 
like in the computer industry. If, before computers were 
invented, we tried to invent the PC, it never would have 
happened. You had mainframes, and then you went to the first 
PCs, and now we are today where everyone can afford them.
    I think the same thing is going to happen in the fuel cell 
industry. That's why we think it's important for the Federal 
Government and DOE to support the introduction of stationary 
fuel cells, which can afford to pay the most for fuel cell 
technology, then buses, and then cars. And we think it will be 
that evolution over the next 10 years which gets us--and it 
will also keep businesses and suppliers interested, because 
they will be getting revenue serving as suppliers to the fuel 
cell industry over that period of time as opposed to continuing 
to try and fund research in the hopes that 10 or 12 years from 
now there will be a payoff.
    So we think it will be an evolutionary process, and we 
think it's important for the government to focus on the interim 
steps as well.
    Mr. Greenwood. Mr. Paul?
    Mr. Paul. Yes. I would say, in general, we do support the 
program. As I discussed in my remarks, it is important to 
ensure that the program includes these infrastructure elements. 
I would also say that it's important that some of the basic 
research that sits underneath the technology development 
continue. Research in areas like surface chemistry, material 
science, memory and technology, and things like that are 
extremely important because they support the broad platform 
around fuel cell technologies that will have a broad array of 
applications in addition to perhaps the central feature of 
transportation.
    Mr. Greenwood. How do--what are your views on Congress 
increasing the CAFE standards? I think it was Dr. Roan who said 
that, in the absence of essentially government efforts or 
impositions on fuel utilization, that we were going to continue 
an upward trend for the foreseeable future. What do each of you 
think about Congress increasing the average fleet efficiency?
    Mr. Roan. I--there are so many issues involved there that I 
hesitate----
    Mr. Greenwood. I don't have anybody here to take the 
microphone, so it's okay.
    Mr. Roan. I think that it is going to work better if there 
is an incentive for the industry to make more fuel-efficient 
vehicles, such as hybrids, which they seem to be intending to 
do, and for the consumers to buy them. The CAFE standards have 
probably served a good purpose, and it's certainly conceivable 
to me that it could do the same thing again, that it could 
bring fuel consumption down. It seems to be kind of a hard way 
to do it--a tough way to do it, I should say, but I think it 
could work.
    Mr. Greenwood. Mr. Miller, do you have views on that 
subject?
    Mr. Miller. Well, let me answer it may be in a little 
roundabout way. I would just note that the State of California 
has put in very strict guidelines for emissions of a certain 
percentage of each manufacturer's fleets for cars in the 2007/
2008 timeframe. I believe that's been instrumental in getting 
most of the major auto manufacturers to spend in excess of $100 
million each annually to go pursue fuel cell vehicles.
    California also has legislative requirements on buses for 
transit agencies, and the result of that is that many of the 
bus transit agencies are starting to purchase small fleets of 
fuel cell buses. And so the State of California is taking a 
leading role, and consequently industry is responding because 
of how large that market is.
    Mr. Greenwood. Dr. Paul.
    Mr. Paul. Chairman, Texaco has not taken a position on CAFE 
standards. We just feel that's not our business.
    Mr. Greenwood. Okay.
    The Chair recognizes the gentleman from Kentucky for 5 
minutes for questioning.
    Mr. Fletcher. Thank you, Mr. Chairman.
    I had just a brief chance to look over your testimony. 
Forgive me for being a bit late and having to run to vote. But, 
Mr. Miller, you mentioned in the testimony that, practically 
speaking, how does--your production and storage distribution 
R&D must be funded in tandem with R&D in efforts for a power 
plant. Do you believe that the FreedomCAR sufficiently pursues 
this course now? And what are your thoughts on that?
    Mr. Miller. I think the FreedomCAR program, DOE is 
absolutely focused and is funding research efforts in both 
hydrogen storage and hydrogen production. And so, you know, I 
don't have any substantial disagreement with the program as it 
stands now.
    Mr. Fletcher. Let me ask you a question in general. And I 
know this is all fairly new to me, other than we used to talk 
about these things years ago when I was in engineering, but 
what would you say, before you start looking at these things 
being marketable, if we strictly did it on a market basis. What 
would the price of gasoline have to get at the pumps before you 
would think that this would be competitive and that, from a 
consumer standpoint, it would be something they choose based on 
that, without government being much more involved?
    Mr. Greenwood. Mr. Miller?
    Mr. Miller. Yes.
    Mr. Greenwood. And I will be glad to hear from the others, 
too, committee members as well.
    Mr. Miller. That's a good question. I don't have--I might 
go back to our people and ask them that question. I don't have 
a specific dollar number for the price of gasoline where it 
would really encourage--it would really depend on the cost of 
hydrogen production.
    Mr. Paul. Yes. We--this is a--the price that one could 
model in a scenario of the future is a very complex issue, 
involves the cost of the infrastructure and the distribution 
system, the state of--the number of cars and a lot of other 
things. I don't think there has been a--there is a number that 
one could put forward at this time. But I will say that a lot 
of people are looking at this as a strategic issue, but I 
couldn't give you a good number at this point.
    Mr. Greenwood. Okay. Let me go back, I guess.
    Mr. Fletcher. You mention in your testimony--and this may 
have been asked since I was not here all the time, Mr. 
Chairman--but in any case, other interim strategies for using 
fuels such as natural gas to achieve fuel efficiency gains, has 
this been given sufficient consideration or does it conflict 
with the goals outlined in FreedomCAR and the hydrogen vision?
    Mr. Roan. The issue of natural gas, I don't believe, is 
treated specifically in the FreedomCAR program. The issue of 
hydrogen production is. I mentioned the natural gas because I 
have felt for a long time that we could have a major problem 
there. If we provide hydrogen through the conversion of natural 
gas and steam, which is what we're doing now, and if we use 
additional natural gas to produce the additional electricity 
that we would need to produce hydrogen, then I believe we would 
be simply importing natural gas, liquefied natural gas, in 
much, much larger quantities than we could get it. And we would 
with petroleum. So I see the efficient use of natural gas as a 
very important part of our energy strategy personally.
    Mr. Fletcher. Well, in addition, do you think the 
FreedomCAR program, at least as it's currently outlined, do you 
believe it's sufficient to really address the various 
challenges that your testimony pointed to?
    Mr. Roan. I do because of the fact that they included in 
the FreedomCAR programs continued research on the exhaust 
treatment for the diesel engine, and I think that the diesel 
hybrid may prove to be one of our most efficient transportation 
systems. They also include additional research, insofar as 
hydrogen carbon-fueled fuel cell vehicles is concerned, and I 
think that that's a very clean alternative and a very fuel-
efficient alternative to transportation. Both of those would 
give us a big increase over the conventional vehicle. So--and 
DOE is proposing to do this in addition to the hydrogen fuel 
cell and the storage and the production and infrastructure 
issues.
    So I think, yes, I do agree that they are on the right 
track.
    Mr. Fletcher. Let me ask just--and it'll be a final 
question, a kind of follow-up. If you could look in a crystal 
ball, and I know that is difficult to do, but if you're looking 
at hydrogen and some of the other alternative fuel systems, 
transportation systems, where do you see down the road that 
these are going to really become significant? I know we have 
some, certainly hybrid cars now, but when you're looking at 
hydrogen, when do you see, if you looked into a crystal ball, 
that that may be something that we grow accustomed to on a 
daily basis?
    Mr. Roan. That is pure speculation. I mean, it's really 
very hard to tell, but I would see at least two decades, maybe 
three decades, before we would have much hope of getting to 
that point.
    Mr. Miller. I would answer it just by once again focusing 
on this issue of an evolutionary change in the industry. I 
believe you're going to see many, many fuel cell buses in the 
second half of this decade, and it could be that by 2010 almost 
all--most buses are fuel cell buses, because fuel cells are 
extremely efficient, and they're extremely efficient at low 
power or at part power, which is what inner-city driving cycles 
are all about.
    Cars, it's certainly going to be substantially beyond that, 
sometime in the following decade.
    Mr. Paul. That is very consistent with our perspective. I 
would like to reiterate the support for the evolutionary view 
with fuel cell technology extending across stationary power, 
fleets, special purpose applications, building that out 
extensively over the next decade, and--but I think for a large 
distribution of fuel cell vehicles as consumer items, I think 
you have to think multidecade timeframes.
    Mr. Greenwood. The gentleman has no--Mr. Miller, did you 
want to comment?
    Mr. Miller. No, that's fine.
    Mr. Greenwood. The time of the gentleman from Kentucky has 
expired. The Chair recognizes the ranking member, Mr. Deutsch.
    Mr. Deutsch. Thank you. Dr. Paul, the EPA has informed us 
that it's feasible to reduce sulfur content of diesel fuel to 
less than 15 parts per million with existing technology. Given 
what we know now about the benefits of low-sulfur diesel fuel, 
why is it the petroleum industry in the United States has not 
yet reduced the sulfur content in diesel?
    Mr. Paul. Well, I would like to say with respect to--
respectfully, with respect to our activities, we're actually 
converting our major refinery in Pascagoula, Mississippi to 
produce a low-sulfur diesel actually well ahead of the date. So 
I think that there are members of the industry that are 
beginning to make these changes. So my response would be that 
we're making the changes. I believe other members of the 
industry are doing so as well.
    Mr. Deutsch. You're only converting one refinery. Is that 
it?
    Mr. Paul. We're converting the Mississippi refinery at this 
point in time. We already make clean air gasoline in 
California.
    Mr. Deutsch. Uh-huh. All right. Dr. Paul, you testified 
that U.S. refiners and marketers would not be willing to make a 
substantial infrastructure investment without a satisfactory 
economic return. If the U.S. auto makers are willing to widely 
produce vehicles powered by low-sulfur diesel, would you be 
willing to make the fuels to support the significant 
investment?
    Mr. Paul. We will always make fuels that meet the market, 
but when--at the same time, one has to decide on capital that 
it takes to build the infrastructure to meet the market. So 
those two things I believe go in concert. But we will always 
strive to deliver fuels that customers demand in the market.
    But the infrastructure issues with fuel production and 
distribution and sales are very challenging, and historically 
have not delivered in satisfactory terms.
    Mr. Deutsch. Interacting with the auto makers, I mean, the 
auto makers build the infrastructure, again this chicken-and-
egg-type thing. At what point do you start building the 
infrastructure?
    Mr. Paul. For new fuels?
    Mr. Deutsch. Correct.
    Mr. Paul. We of course change fuels--make adjustments to 
refineries to meet environmental requirements, as I mentioned 
before with the low-sulfur diesel, and as we have for many 
years in clean air gasoline in California. We make 
infrastructure investments when we believe that the timing of 
the investments and the emergence of the markets will support 
such investments.
    Mr. Deutsch. I want to go back to a question I asked the 
panel, and some of you have touched on it, but just to give a 
time horizon. If each of you can respond, how long will it take 
to develop a fuel-cell-powered vehicle for mass production in 
the United States? Dr. Roan.
    Mr. Roan. The big issue in developing the vehicle is the 
cost, as already was pointed out by Mr. Garman. The progress 
has been extremely encouraging. In about a 10-year period, 
we've had about a factor of 10 decrease in the predicted price, 
as well as the size. I think that the progress is going to 
continue. I think that the industry is going to be continuing, 
as well as the work done in the national labs and supported by 
the government.
    We have quite a ways to go. So I think that probably before 
we're looking at mass-produced vehicles that would be 
competitively priced so that people would actually buy them, 
probably 10 years.
    Mr. Deutsch. Mr. Miller.
    Mr. Miller. 2010. I think there are auto manufacturers 
today with plans. Whether they eventuate or not is another 
thing, but they have plans, 2010.
    Mr. Deutsch. Dr. Paul.
    Mr. Paul. Yes, I would agree.
    Mr. Deutsch. 2010?
    Mr. Paul. Yeah.
    Mr. Deutsch. Whoever feels comfortable answering this. But 
wouldn't widespread use of hydrogen-powered vehicles almost 
double the demand for electricity in the United States?
    Mr. Roan. I'm sorry. I didn't hear the last----
    Mr. Deutsch. Would the widespread use of hydrogen-powered 
vehicles double the demand for electricity in the United 
States?
    Mr. Roan. Not right now, because----
    Mr. Deutsch. But if it were to occur.
    Mr. Roan. If we're using renewable energy source--or using 
electricity, electrolysis of water to produce the hydrogen to 
convert our personal vehicle fleet would roughly double the 
amount of electricity we're using for our residential 
applications right now.
    Mr. Deutsch. Do either one of you want to respond? Is that 
the conventional wisdom in terms of the industry at this point?
    Mr. Miller. I would say I think there's a debate as to 
whether you'll produce hydrogen through electrolysis or through 
reformation of a hydrocarbon, and if it happens through the 
reformation of a hydrocarbon, in other words, breaking those 
hydrogen and carbon bonds, then you wouldn't increase 
electricity at all, I don't think.
    Mr. Deutsch. Then you're still using the same original 
basis, then, in terms of--you know, where you're going to--all 
right. Thank you.
    Mr. Greenwood. The Chair thanks the gentleman and 
recognizes the gentleman, Mr. Stearns, for 5 minutes for 
inquiry.
    Mr. Stearns. Thank you, Chairman. Again, I welcome Dr. Roan 
from the University of Florida. Dr. Roan, I at my home where I 
am here in Virginia, I heat the apartment with gas, and down in 
Florida I use gas to heat my home. And when you transition to 
this FreedomCAR and the use of hydrogen, don't you--won't we 
use a lot of gas in this country to do that?
    Mr. Roan. Yes, sir. If we continue making hydrogen the way 
we do now, which is primarily through the steam reformation of 
natural gas, we would dramatically increase the amount of 
natural gas that we would use if we are talking about large 
numbers of vehicles and the supporting amount of fuel to power 
those vehicles. It would be a great deal of gas.
    Mr. Stearns. I think what I'm trying to get at, are we 
actually going to exhaust in doing--in doing this, that we 
might exhaust our domestic supply of natural gas, because a lot 
of homes, particularly in the Northeast, are using gas. So this 
goes back to what I tried to touch on earlier with Mr. Garman, 
and also Mr. Wells when I asked him relative to the use of 
petroleum products, to get the hydrogen developed, the 
production of hydrogen, we're going to use a lot of petroleum. 
So my question to you is, would you say that we're going to 
actually exhaust or perhaps--because we don't have the same 
kind of gas supply, and we're using more and more gas. So is it 
possible we're going to exhaust our gas supply in-country to do 
this?
    Mr. Roan. I don't consider myself an expert in that area, 
but based on the numbers I have seen, I believe we put in 
something like 22,000 new gas wells last year and roughly broke 
even, and that we're projecting that our imported liquefied 
natural gas is going to increase, and that is even without 
using natural gas to make large quantities of hydrogen. So I 
would have to say that, again, based on what I've read, the 
reports and so forth, it seems to me as though we could get 
into a very serious problem with the availability of natural 
gas.
    Mr. Stearns. I'm surprised Mr. Garman didn't sort of agree 
with what I told him about petroleum. I didn't ask about gas.
    The idea of the new exploration and production in this 
country of gas is not going very well, is it? I mean, are there 
incentives in place that--when we talk about ANWR for gasoline 
products--but there doesn't seem to be the new exploration, new 
production of gas. So we have a problem if we continue this 
FreedomCAR as a long-term, long-range objective, and at the 
same time we don't seem to have the incentives to get more gas 
production.
    Mr. Roan. Right now gas is still quite cheap even compared 
to petroleum. As I remember, the number is on the order of 
about $4 per million Btu for natural gas as opposed to about 6 
for petroleum. And I think, if that's what you were asking, I 
don't think there's a strong incentive there in terms of----
    Mr. Stearns. Let me ask Dr. Paul or Mr. Miller what your 
feeling is about the thrust of my----
    Mr. Paul. I guess in my remarks, the supply of hydrogen is 
the issue and----
    Mr. Stearns. What did you just say?
    Mr. Paul. The supply of hydrogen, how you make the 
hydrogen, and certainly today reforming natural gas is the most 
common way in which to make hydrogen for commercial use in 
either fuel cells or for industrial processes. One of our major 
research efforts, and I believe anyone that is involved in the 
hydrogen supply business, is how to reform other things in 
which there may be much--may be much more plentiful.
    One that Dr. Garman mentioned that we've been actively 
involved in the technology--in fact, we have over 100 plant 
licenses around the world--is to basically gasify coal refinery 
bottoms, residuals, very low--in effect low-grade carbons, out 
of which you do in fact produce hydrogen as part of the stream. 
So it is possible to make a broader array of sources through 
technology, turn them into hydrogen; rather than right now the 
most attractive one, which is to reform gas.
    Mr. Stearns. So, Dr. Paul, you would say we would not be in 
danger of exhausting our supplies of natural gas?
    Mr. Paul. I think that the conversion of natural gas to 
hydrogen is one of the many demands for natural gas but, you 
know, burning it in power plants for electricity is certainly a 
much, much larger market.
    Mr. Stearns. So yes and no. Do you agree with Dr. Roan that 
we would possibly exhaust our natural gas supplies at the 
present rate we're going if we had to develop the hydrogen 
production?
    Mr. Paul. In terms of would our use of natural gas--U.S. 
supplies, of course----
    Mr. Stearns. Yes.
    Mr. Paul. [continuing] as opposed to the global supply of 
natural gas----
    Mr. Stearns. We would become more dependent on somebody 
else?
    Mr. Paul. Would this demand rise? My guess is that gas 
demand will rise.
    Mr. Stearns. Okay. And, Mr. Miller, do you----
    Mr. Miller. I'm not an expert in that area.
    Mr. Stearns. Dr. Roan, the last question is do you believe 
the National Research Council can continue to play a role in 
reviewing and advising on the progress of this research? As I 
understand from staff, these folks, the National Research 
Council, are not quite involved. And I guess the question is, 
should they continue to play a role; and, perhaps, why aren't 
they playing a bigger role?
    Mr. Roan. To my knowledge, they are not involved right now, 
and my speculation would be that it's too early to even--to set 
up the mechanism to do this. But in terms of the first 
question, I believe that this involvement played a very 
positive role in the PNGV program. I think it was extremely 
helpful. And I think that the same thing would be true, insofar 
as the FreedomCAR program is concerned. I do think that the 
National Research Council could play a very important, positive 
role there.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Greenwood. Thank you, Mr. Stearns. The Chair thanks our 
witnesses for your testimony this afternoon. You are excused, 
and this hearing is adjourned.
    [Whereupon, at 12 noon, the subcommittee was adjourned.]





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