[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                      THE HYDROGEN ENERGY ECONOMY

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 20, 2003

                               __________

                           Serial No. 108-21

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


                               __________

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                            WASHINGTON : 2003
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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
  Vice Chairman                      PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               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           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Energy and Air Quality

                      JOE BARTON, Texas, Chairman

CHRISTOPHER COX, California          RICK BOUCHER, Virginia
RICHARD BURR, North Carolina           (Ranking Member)
ED WHITFIELD, Kentucky               ALBERT R. WYNN, Maryland
CHARLIE NORWOOD, Georgia             THOMAS H. ALLEN, Maine
JOHN SHIMKUS, Illinois               HENRY A. WAXMAN, California
  Vice Chairman                      EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico           RALPH M. HALL, Texas
JOHN SHADEGG, Arizona                FRANK PALLONE, Jr., New Jersey
CHARLES W. ``CHIP'' PICKERING,       SHERROD BROWN, Ohio
Mississippi                          BOBBY L. RUSH, Illinois
VITO FOSSELLA, New York              KAREN McCARTHY, Missouri
STEVE BUYER, Indiana                 TED STRICKLAND, Ohio
GEORGE RADANOVICH, California        LOIS CAPPS, California
MARY BONO, California                MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon                  CHRIS JOHN, Louisiana
MIKE ROGERS, Michigan                JOHN D. DINGELL, Michigan
DARRELL ISSA, California               (Ex Officio)
C.L. ``BUTCH'' OTTER, Idaho
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Garman, David K., Assistant Secretary for Energy Efficiency 
      and Renewable Energy, U.S. Department of Energy............     8
    McCormick, J. Byron, Executive Director, Fuel Cell 
      Activities, General Motors Research and Development........    39
    Preli, Francis R., Jr., Vice President, Engineering, UTC Fuel 
      Cells......................................................    55
    Rips, Catherine, Director of Hydrogen Programs, Sunline......    46
    Samuelsen, Scott, University of California at Irvine, 
      Mechanical, Aerospace, and Environmental Engineering.......    65
    Schwank, Johannes, Department of Chemical Engineering, 
      University of Michigan.....................................    70
    Vesey, Gregory M., President, Technology Ventures, 
      ChevronTexaco Corporation..................................    59
Additional material submitted for the record:
    Americam Petroleum Institute, prepared statement of..........    85
    Samuelsen, Scott, University of California at Irvine, 
      Mechanical, Aerospace, and Environmental Engineering, 
      letter dated July 7, 2003, enclosing response for the 
      record.....................................................    89
    Schwank, Johannes, Department of Chemical Engineering, 
      University of Michigan, letter dated July 5, 2003, 
      enclosing response for the record..........................    88

                                 (iii)

  

 
                      THE HYDROGEN ENERGY ECONOMY

                              ----------                              


                         TUESDAY, MAY 20, 2003

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2123, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Shimkus, Buyer, 
Bono, Otter, Wynn, Allen, Rush, and John.
    Staff present: Bob Meyers, majority counsel; Kelly Zerzan, 
majority counsel; Andy Black, policy coordinator; Peter Kielty, 
legislative clerk; Bruce Harris, minority counsel; Jonathan J. 
Cordone, minority counsel; and Sue Sheridan, minority counsel.
    Mr. Barton. The Subcommittee on Energy and Air Quality is 
holding a hearing today on hydrogen and the potential for a 
hydrogen economy.
    Without objection, we are going to proceed pursuant to 
Committee Rule 4E, which governs opening statements by members 
and the opportunity to defer them for extra questioning. 
Hearing no objection, prior to the recognition of the first 
witness for testimony, any member who, when recognized for an 
opening statement may defer his or her 3-minute opening 
statement and instead use those 3 minutes during the initial 
round of witness questioning.
    Looks like we are going to be swamped with opening 
statements this morning. So the Chair is now going to recognize 
himself for an opening statement.
    Today we are going to turn our attention to the future of 
hydrogen fuel cells, vehicles powered by hydrogen, and the 
hydrogen fueling infrastructure necessary to make it work. I 
want to thank my colleague, the Congressman from Maryland, the 
Honorable Albert Wynn, for encouraging a closer look at this 
topic. We have the same purpose of doing everything Congress 
can do to give hydrogen powered vehicles a chance to succeed.
    It is amazing to contemplate the potential of millions of 
vehicles no longer needing conventional gasoline with emissions 
consistently near zero. H.R. 6, the Energy Policy Act of 2003, 
provides for a collaborative process between the Federal 
Government and the private sector. H.R. 6 foresees a 
fundamental decision by fueling companies and vehicle 
manufacturers by the year 2015 regarding having on-road 
vehicles and a fueling infrastructure deployed by 2020.
    The 2020 deadline calls for cars to be acceptable to 
consumers in terms of price, performance, and safety. As we 
have learned with natural gas vehicles, a hydrogen fueling 
infrastructure must be pervasive and widespread in order for 
mass acceptance by consumers.
    In his State of the Union address, President Bush 
envisioned a child born today having their first vehicle 
powered by hydrogen. I might say as an aside that since in 
Texas it is a Texas constitutional right that you get your 
first car at age 16, that we are going to have to move that up 
for children that are actually born today.
    It may take that long because of the many technology 
improvements and cost reductions that must occur in addition to 
the development of thousands of new codes and standards. It 
may, indeed, take lessons from many years of stationary fuel 
cell applications before vehicles can succeed, and it may be 
that you cannot rush technology.
    However, we do not want to delay the project until 2020 if 
it can be completed sooner than that. In fact, one of our 
witnesses, a gentleman from General Motors, may say that 
consumers could see this new product well before then if 
everything goes right.
    During the subcommittee consideration of H.R. 6, 
Congressman Wynn offered an amendment to speed up the time 
table, require a Federal fleet mandate, and to authorize 
additional funding for stationary fuel cell demonstrations. I 
asked Congressman Wynn to withdraw his amendment, so that this 
subcommittee could more fully review the issues in the Wynn 
amendment. Today we are having that opportunity. I want to 
thank Congressman Wynn for working with us on this issue.
    As we move toward the expected conference on energy with 
the other body, the lessons that we learn today will help us 
craft a hydrogen title that can achieve the vision that we all 
share.
    We have before us witnesses from many of the different 
sectors that will play a role in the future of hydrogen fuel 
cells and energy infrastructure. Two of our witnesses can 
comment on barriers that this growing technology application 
will face in the real world. I want to welcome all of our 
witnesses today for their testimony.
    At another hearing later in the summer, we are going to 
consider the broader issues relating to the future of energy 
production, where we will cover the potential for coal 
gasification, which could allow coal to produce electricity 
with fewer emissions and the possibility of carbon 
sequestration. We will also explore the administration's new 
future generation proposal, which could greatly improve our 
ability to produce hydrogen.
    A decade or two from now, Americans may look back to this 
Congress as the time that we inspired a new generation of 
vehicles, a reduced reliance on imported oil, and a broad 
transition on a voluntary basis to produce the energy much more 
cleanly. When I fully retire from use my 1981 Buick Century 
station wagon, which I hope lasts at least half a century, you 
will know we, as a Nation, are headed in the right direction.
    Now I would like to recognize Congressman Wynn for an 
opening statement.
    Mr. Wynn. Thank you very much, Mr. Chairman. Before I 
begin, let me request that all members on the minority side be 
allowed to insert statements in the record by unanimous 
consent.
    Mr. Barton. Is that all members or just statements of the 
minority?
    Mr. Wynn. Well----
    Mr. Barton. I think you said of the minority. Do you 
broaden that to say all members?
    Mr. Wynn. I am happy to say that, to all members.
    Mr. Barton. Without objection, so ordered.
    Mr. Wynn. Now, Mr. Chairman, let me say very sincerely that 
I thank you for calling this hearing. As you indicated when we 
were discussing H.R. 6, the issue of hydrogen fuel cells came 
up, and we talked about whether we were doing enough. You liked 
what we were doing, but you certainly wanted to hear more about 
it. I was very pleased at that, and I am even more excited and 
enthused that you have, in fact, called this hearing. I thank 
you for that.
    I also want to note that there is a great deal of 
bipartisan support for the development of fuel cell technology. 
And if there are any partisan differences, it probably has to 
do with degree and certainly not purpose or intent of the 
initiative. The President's fuel car initiative provides $1.73 
billion for the development of hydrogen fuel cell vehicles.
    His initiative, which would provide money for research and 
development and demonstration projects, is a step in the right 
direction toward the development of commercially viable 
hydrogen fuel cell cars. Unfortunately, this plan would put 
hydrogen fuel cells on the road between 2020 and 2025 when the 
U.S. is over 70 percent dependent on foreign oil for its 
domestic oil consumption needs. I believe that we should make 
the vehicles commercially viable by 2015.
    Today, stationary hydrogen fuel cells are a reality, 
providing backup electricity in some skyscrapers. 
Interestingly, the New York Police Department, Central Park 
Station, is powered by hydrogen fuel cells independent of the 
grid. In order to advance this technology, I believe that 
Congress should adopt a significant increase in Federal funding 
for the advancement of hydrogen fuel cell technology and the 
production and the fueling infrastructure needed to support the 
initiative.
    I look forward to hearing from our industry witnesses who 
can talk about the challenges in developing affordable fuel 
cell vehicles and fuels.
    As you mentioned, in April, I offered an amendment to 
provide $5.3 billion over 10 years for the advancement of 
hydrogen fuel technology. This program, like the FreedomCAR, 
would provide grants for research and development and allow 
corporations to apply for funding and demonstration programs.
    By increasing funding and providing benchmarks for the 
rollout of the technology, the amendment would help make 
hydrogen fuel cell vehicles commercially viable around 2015. 
The things that I believe ought to be included would be 
elements such as research and development funds for hydrogen 
production, storage, and transport activities, as well as 
research and development funds for fuel cell technologies to 
develop more economically and environmentally sound fuel cells.
    Also, we need a Department of Energy cost-sharing vehicle 
demonstration program to show the viability of fuel cell 
vehicles and widespread commercial use as well as cooperative 
agreements with the private sector to demonstrate fuel cell 
powered buses and trucks. The amendment that I offered would 
also include a demonstration project for stationary hydrogen 
fuel cells.
    We would also require Federal Government agencies with 
motor vehicle fleets to collectively purchase 100,000 vehicles 
powered by fuel cells--the first phase of developing a 
commercially viable vehicle fuel cell program. In order to 
bring hydrogen fuel cells online in a way that makes the U.S. 
less dependent on the volatile world oil market, we must move 
forward with the fortitude of a Marshall Plan to bring hydrogen 
fuel cell vehicles online by 2015.
    This not only requires additional funding but clear 
benchmarks as laid out in the amendment that I introduced for 
the technology to transition from stationary fuel cells to 
commercially viable vehicles within 15 years.
    Let me conclude by saying again, thank you for holding this 
hearing, and I look forward to hearing from our witnesses this 
morning.
    Mr. Barton. Thank you, Congressman.
    Seeing no other witnesses, we are going to start our 
hearing.
    [Additional statements submitted for the record follow:]

Prepared Statement of Hon. Mary Bono, a Representative in Congress from 
                        the State of California

    Mr. Chairman, thank you for holding this important hearing today.
    I am very grateful that you invited Catherine Rips from Sunline 
Transit Agency to testify. As you know, Sunline is located in 
California's 45th Congressional District and is a leader in this field.
    President Bush has challenged Congress to move ahead with 
groundbreaking initiatives in hydrogen fuel cell technology. In this 
year's comprehensive energy bill, the House took the first steps in 
this direction by authorizing the President's FreedomCAR program and 
Hydrogen Fuel Initiative.
    But we also need to work on refining other proposals. For instance, 
I understand the Administration has requested a total of $100 million 
for the Multi-Modal Research Program. However, these monies could thin 
out as they are split between fuel cells, the 21st Century Truck 
project as well as other programs. I would like to learn more from Ms. 
Rips, and other panelists, about suggestions on improving this program 
structure.
    Another issue we must address is something that all alternative 
fuel initiatives must face, and that is building a reliable 
infrastructure. If we are to ever move from taking this technology 
beyond the public sector and into the garage of the average American, 
we must prepare to face this question now.
    Again, Mr. Chairman, thank you for holding this hearing and I look 
forward to hearing today's testimony.

                                 ______
                                 
 Prepared Statement of Hon. C.L. ``Butch'' Otter, a Representative in 
                    Congress from the State of Idaho

    Thank you, Mr. Chairman.
    Whether through the threats of rogue nations in the middle-east, 
the unreliability of OPEC, or the strikes of Venezuela, Americans have 
been all too often reminded of the threat our growing reliance on 
foreign oil poses to our economy and way of life.
    Sadly, as the Clinton Administration sat by and watched, our 
nation's reliance on foreign oil grew steadily throughout the 1990's 
peaking at nearly 60 percent. Today, our nation's economy is a virtual 
hostage to the political and economic whims of the nation's that supply 
our oil. Hydrogen, however, offers us a promising domestic alternative 
to the uncertainty and manipulation of OPEC.
    I am particularly interested in the idea of producing an abundant 
supply of hydrogen through the next generation of nuclear power 
reactors in our nation. I firmly believe that if our nation is going to 
meet its growing need for base-load electricity in the future, it will 
have to turn to nuclear power for the answer--and in that answer we 
will also find a source for hydrogen.
    My home state is home to the Idaho National Engineering and 
Environmental Laboratory and Argonne National Laboratory West. These 
two facilities are on the cutting edge of nuclear power research and 
development and are poised to lead our nation's efforts to produce 
hydrogen from nuclear power. I've met with the engineers and scientists 
who work at these two world-class facilities, listened to their ideas 
and enthusiasm, and am convinced they're vision of combining nuclear 
reactors with hydrogen production makes undeniable sense.
    Mr. Chairman, it's time our nation harnesses the intellectual 
strength and boundless ingenuity it possesses and ends its reliance on 
foreign oil. In doing so, we can look forward to a day when the power 
of OPEC and its oil is replaced by the security of a domestically-
produced energy source like Hydrogen.
    Again, thank you Mr. Chairman for holding today's hearing and I 
look forward to the testimony of the witnesses.

                                 ______
                                 
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce

    Last year, the Oversight and Investigations Subcommittee, under the 
leadership of Chairman Greenwood, examined several issues regarding the 
Department of Energy's ``FreedomCar'' program, which was first 
announced on January 9, 2002. That hearing examined several issues 
concerning the respective roles of the Department and the private 
sector in this new endeavor as well as its relationship to the previous 
Partnership for a New Generation of Vehicles, or PNGV program.
    Today, the Energy and Air Quality Subcommittee expands the focus of 
this committee's review by looking not only at FreedomCar, but other 
efforts in the public and private sectors. As our first witness, 
Assistant Secretary David Garman, will testify, since the release of 
the Administration's National Energy Plan in May of 2001, three 
separate but related efforts have been announced: FreedomCar, the 
President's Hydrogen Fuel Initiative and, most recently, FutureGen, a 
program to develop a zero-emission coal-fired powerplant.
    We cannot possibly address all issues and every aspect of these 
programs at this hearing. Instead, today we will focus on FreedomCar 
and the related Hydrogen Fuel Initiative. As our audience should know, 
both programs were authorized in H.R. 6, the comprehensive energy bill 
that was approved by the full House of Representatives on April 11th. 
Very broadly, this legislation provides for a set of twin commitments 
to occur in 2015 that will lead to the deployment of hydrogen fuel cell 
vehicles and the necessary hydrogen infrastructure in the year 2020.
    I think it is important to understand, however, that a hydrogen 
energy economy is not limited to a fuel cell minivan pulling up to a 
hydrogen filling station in 2020, driven by a 16 year old (born today) 
who somehow managed to get the keys from mom and dad and who may have 
no intention of driving to the library like he promised. Instead, this 
new energy economy contains a massive set of interrelated efforts, 
which will extend throughout the fuel production, storage and 
distribution system and which will require a massive downstream 
retooling of industry and commitment of vast sums of private capital.
    I think we all realize that this cannot occur in the blink of an 
eye. We cannot instantly change the course of industrial and 
transportation history that began roughly one hundred and forty-four 
years ago in Pennsylvania when the first commercial oil wells were 
drilled. Nor can we determine today how market forces will respond and 
shape the hydrogen energy economy in its real staging ground, the 
private marketplace.
    But I think we can agree that there are important, vital questions 
concerning hydrogen energy for our country and for this Congress. And I 
look forward to our committee's continued examination and legislative 
work in this effort.

                                 ______
                                 
Prepared Statement of Hon. Tom Allen, a Representative in Congress from 
                           the State of Maine

    I would first like to thank the Chairman and our distinguished 
panelists for this important hearing. Mr. Garman, it is nice to see you 
again.
    Hydrogen and fuel cell technology presents a potentially 
revolutionary technology for our nation, and we need to understand it 
here in Washington. This hearing will inform members about the policy 
choices presented by the current hydrogen debate.
    Last month this committee passed a new energy bill that funded 
research and development of a fuel cell vehicle. It also created an 
incentive payment program in support of stationary advanced fuel cell 
distributed electricity generation. I hope our speakers will address 
this new legislation, whether it does enough to promote this 
technology, and whether it will lead to a commercial hydrogen vehicle 
market and a broader hydrogen based energy system.
    I have supported hydrogen fuel cell development since I joined 
Congress. There is significant bipartisan support for this research. 
But the current bill allows industry to decide in 2015 whether or not 
to produce a fuel cell product. I am concerned that we will spend 
nearly $2 billion and end up with nothing to show for it.
    Thank you all for coming. As this committee continues to consider 
energy policy, Members must be well informed about the real potential 
of a hydrogen economy.

                                 ______
                                 
Prepared Statement of Hon. Sherrod Brown, a Representative in Congress 
                         from the State of Ohio

    Thank you, Mr. Chairman, for scheduling this hearing, and thanks to 
our witnesses for what I expect will be informative testimony.
    Thanks are also due our colleague, Mr. Wynn, for raising the issue 
of hydrogen technology commercialization during this committee's energy 
bill debate. As Mr. Wynn's amendment illustrated, it is well worth 
exploring whether and how we might bring hydrogen energy technology to 
the mass marketplace more quickly than the bill envisioned.
    I would add that it is equally important to make sure that when we 
do bring this potentially revolutionary technology to market, we do it 
right. If we roll out vehicles and infrastructure that consumers cannot 
use or will not buy, we risk consigning a promising technology to the 
back bench. If we do not ensure that fuel production and use are 
environmentally sound, the new hydrogen economy will simply trade one 
set of problems for another. And if we focus exclusively on the 
development of hydrogen technology for only one mode of transportation, 
we risk undermining the transit systems upon which many of our 
constituents depend.
    I am pleased to know that today's witnesses will discuss all of 
those important issues. Several witnesses will stress how indispensable 
it is to ensure that refueling options are widely available by the time 
hydrogen-powered vehicles hit the showrooms. As Mr. Garman and several 
of our stakeholder witnesses will also discuss, it is essential to 
ensure that the development and marketing of carbon sequestration 
technology is timed to dovetail with the vehicle and infrastructure 
technologies to ensure that fossil sources remain ecologically viable 
as sources of hydrogen. And as we will hear, public transit systems 
offer a number of advantages as laboratories for the commercialization 
of hydrogen energy technologies.
    Let me take a moment to add my voice to the recommendation by Dr. 
Schwank for active university-based involvement in this effort. Fuel 
cell membrane research is one of several groundbreaking technology 
initiatives under development at the University of Akron's Polymer 
Center. That institution and other university-based programs offer not 
only technical expertise but also an independent perspective that will 
be invaluable as we work to ensure that hydrogen research is put to the 
best possible use.
    I would also suggest that we consider an addition to the hydrogen 
provision included in the energy bill. Many of the research initiatives 
envisioned by that legislation would likely have applications for 
improved motor fuel economy in traditional gasoline-fueled vehicles. It 
may be worth doing more to promote the sharing of materials research 
and other technologies that could make a difference in environmental 
stewardship and energy security right now.
    The notion of a federal leadership role in developing a hydrogen 
economy is rooted in the Partnership for a New Generation of Vehicles, 
established during the1990s. That program provided the foundation for 
substantial government investments in fuel cell research, as part of a 
broader effort to improve the energy efficiency of motor vehicles and 
the sustainability of America's transportation systems.
    The challenge now is to build on that foundation, and today's 
hearing is an important step in that process. Additional hearings are 
necessary to ensure that the development and commercialization of 
hydrogen technology are advanced as quickly and effectively as 
possible.
    I look forward to the testimony of our witnesses.

                                 ______
                                 
Prepared Statement of Hon. Bobby L. Rush, a Representative in Congress 
                       from the State of Illinois

    Thank you, Mr. Chairman, for holding today's hearing on the 
promising future of hydrogen energy and technology. Though the 108th 
Congress has legislatively addressed this issue in H.R. 6, the Energy 
Policy Act of 2003--by way of authorizing the FreedomCAR and Hydrogen 
Fuel Initiative programs--I believe it is useful for this subcommittee 
to follow-up and further deliberate on the prospects of a hydrogen-
based economy; and to discern the obstacles to a full-fledged 
transformation down the road. The benefits of hydrogen energy are 
almost too good to be true: it is an abundant, efficient source of 
energy that has virtually no adverse environmental impact.
    Having said that, and while I share my colleagues' optimism and 
enthusiasm on the benefits of hydrogen fuel technology, I also 
acknowledge the obvious fact that we are many, many years away from any 
sort of viable and commercial application of hydrogen energy. First, 
our nation lacks the fundamental infrastructure to produce, store and 
regulate hydrogen. Second, the commercial feasibility of hydrogen based 
products--such as hydrogen fuel cells--is still riddled with 
substantial cost-of-production and technological glitches.
    I point out these obvious obstacles not to be a pessimist or cynic, 
but only to put things in perspective. While the Energy Policy Act is a 
solid attempt to speed along the transformation process, hydrogen 
energy remains a long-term solution to our energy needs. We can 
envision and boldly articulate a promising and distant future, but we 
mustn't lose track of our immediate problems in the present day. As 
such, Congress must continue to encourage the development of productive 
interim strategies and technologies that will serve as a bridge between 
our present fossil-fuel based economy and our future hydrogen-based 
economy. That is, in our enthusiasm to embrace the long-term, we must 
not lose sight of the short-term.
    So thank you again, Mr. Chairman, for this oversight hearing on an 
exciting subject-matter, and I look forward to hearing the testimony of 
our panelists. I yield back the balance of my time.

                                 ______
                                 
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan

    Mr. Chairman, thank you for holding this hearing on a very 
important topic for the future of automobiles and American energy 
supplies. Hydrogen fuel cells will someday provide Americans with cars 
and trucks that produce few emissions and consume less fuel. As we will 
hear from our witnesses today, there is still much work to be done.
    It is, however, an exciting time for the development of this 
technology. Earlier this month, the Chairman and CEO of General Motors 
brought a variety of impressive hydrogen powered vehicles to 
Washington. And just yesterday I was in Ann Arbor for the announcement 
of a new program sponsored by the Environmental Protection Agency 
(EPA), United Parcel Service (UPS), and Chrysler. The automaker will 
provide hydrogen powered delivery vehicles to UPS, and the EPA and 
Chrysler will monitor the real world issues that these vehicles will 
face, such as varying weather conditions and stop-and-go traffic. We 
must continue to encourage public-private partnerships that will lead 
to the widespread commercialization of this technology, making it 
available to all Americans.
    While we continue to develop fuel cell technologies for the long-
term, we must not forget the advanced vehicles we can produce in the 
near-term. With a little help, clean diesel vehicles and hybrid-
electric vehicles can be widely available to consumers sooner than you 
may think. In particular, I want to help diesel technology along by 
improving the quality of diesel fuel and providing consumer incentives 
that will increase understanding and acceptance of this new technology. 
By significantly improving the fuel economy of the least efficient 
vehicles, clean diesel holds great promise for reducing our dependence 
on foreign oil in the near-term.
    As we further the development of all advanced vehicles, we must 
make sure that American researchers, American manufacturers, and 
American workers are well equipped to produce these vehicles for the 
entire world. We must bring our universities into this collaborative 
process early and often. I note the attendance today of Dr. Schwank 
from the University of Michigan and Dr. Samuelsen from the University 
of California. They will have valuable insights into how we can use the 
resources of our academic institutions to develop this technology and 
produce the next generation of hydrogen scientists.
    In addition to public-private partnerships, we must encourage our 
manufacturers to produce these advanced technologies here in the United 
States. We will not benefit if we shift from a dependence on foreign 
oil to a dependence on foreign technology and manufacturing. Grant 
programs and tax incentives should be provided to convert existing 
manufacturing facilities into advanced technology facilities. 
Encouraging the domestic development and production of hydrogen fuel 
cells and other advanced technologies will bring us one step closer to 
true energy independence.

    Mr. Barton. Our first witness representing the 
administration is the Honorable David Garman, who is the 
Assistant Secretary for Energy Efficiency and Renewable Energy 
in the Department of Energy. You have testified before this 
subcommittee before. We are glad to have you again. We are 
going to recognize you for such time as you may consume. 
Welcome to the subcommittee.

  STATEMENT OF HON. DAVID K. GARMAN, ASSISTANT SECRETARY FOR 
  ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF 
                             ENERGY

    Mr. Garman. Thank you, Mr. Chairman and members of the 
committee. I appreciate this opportunity. And in keeping with 
the committee's letter of invitation, I will focus on 
FreedomCAR and the Hydrogen Fuel Initiative.
    As the chart to your right shows, there is an imbalance 
between domestic oil production and transportation's demand for 
petroleum. This imbalance, now around 11 million barrels a day, 
is projected to keep growing. And we will not close this 
imbalance with regulation, new domestic production, or even 
both.
    Although promoting efficiency in the use of oil and finding 
new domestic sources of oil are important short-term 
undertakings, over the long term, over the very long term, a 
petroleum-free option is eventually required. We ultimately 
want a transportation system that is free of dependence on 
foreign energy supplies and free of all harmful emissions.
    But we also have to maintain and preserve the freedom of 
consumers to purchase the kind of vehicles they want to drive. 
That is the concept behind the FreedomCAR partnership and the 
President's Hydrogen Fuel Initiative, which are designed to 
develop the technologies necessary for hydrogen fuel cell 
vehicles and the infrastructure needed to support them.
    A transportation system based on hydrogen provides several 
advantages. First, hydrogen can be produced from diverse 
domestic resources, freeing us from a reliance on foreign 
imports. And, second, when hydrogen is used to power fuel cell 
vehicles, the combination results in more than twice the 
efficiency of today's gasoline engines, with none of the 
harmful air emissions. In fact, the only byproducts of the 
operation of fuel cells are pure water and waste heat.
    But to bring about the mass market penetration of hydrogen 
vehicles, government needs to partner with the private sector 
to conduct the research and development needed to advance 
investment in a hydrogen fuel infrastructure that performs as 
well as the petroleum-based infrastructure that we have today, 
and that is going to be a difficult task.
    Our current gasoline infrastructure has been forged over 
the last 100 years in a competitive market. It is remarkably 
efficient. It can deliver refined petroleum products that began 
as crude oil a half a world away to your neighborhood for less 
than the cost of milk, drinking water, or most other liquid 
products that you can buy at the supermarket.
    We are currently bound to a petroleum infrastructure, and 
before drivers will purchase a fuel cell vehicle they have to 
have confidence in a hydrogen refueling infrastructure. That is 
why the President, in his State of the Union address, made a 
new national commitment backed over the next 5 years by $1.7 
billion for the FreedomCAR partnership and Hydrogen Fuel 
Initiative.
    Government is not going to build the hydrogen 
infrastructure. The private sector will do that as the business 
case becomes clear. But as we develop the technologies needed 
by the vehicles, we will also develop the technologies required 
by the infrastructure.
    Some of the technology challenges we face are significant. 
For example, we must lower by a factor of four the cost of 
producing and delivering hydrogen. We also have to develop more 
compact, lightweight, lower-cost hydrogen storage systems. And 
we also have to lower by a factor of at least 10 the cost of 
materials for fuel cells themselves.
    Fortunately, we are not starting from scratch. Beginning 
back in November 2001, DOE began working with industry, 
academia, the stakeholders on a comprehensive technology 
roadmap, and we have achieved a remarkable level of consensus 
on what needs to be done.
    As important as hydrogen is for the long term, we have 
maintained a robust research and development program in non-
hydrogen transportation technologies as well. Under the 
FreedomCAR partnership, we have proposed a funding increase in 
fiscal year 2004 for our hybrid technology as well as increases 
in materials technologies.
    Many of these technologies will deliver fuel savings, both 
prior to and after the introduction of fuel cell vehicles, 
since lightweight materials and hybrid technologies will be 
incorporated into fuel cell vehicle designs as well as the 
conventional and hybrid models that precede them.
    Auto makers are introducing the technologies that have 
resulted in part from DOE's work in this area in the past. At 
the recent Detroit auto show, the major U.S. auto makers 
announced that they would have a variety of new, hybrid 
gasoline electric models entering the market in the 2004 to 
2008 timeframe.
    Of course, hybrid vehicles are more expensive compared to 
conventional vehicles, which is why the President proposed a 
tax credit for hybrid vehicles in his national energy plan and 
in subsequent budget submissions, and we urge that Congress 
adopt this important incentive for more efficient vehicles.
    Mr. Chairman, with that, I would like to end and ask that 
the rest of my testimony be entered into the record as if read, 
and would be pleased to answer any questions the committee may 
have, either now or in the future.
    Thank you.
    [The prepared statement of Hon. David K. Garman follows:]

  Prepared Statement of David K. Garman, Assistant Secretary, Energy 
       Efficiency and Renewable Energy, U.S. Department of Energy

    Mr. Chairman and members of the Subcommittee, I appreciate this 
opportunity to testify today.
    The President's National Energy Plan, entitled ``Reliable, 
Affordable and Environmentally Sound Energy for America's Future,'' is 
the blueprint for the energy future we seek, and it makes several 
recommendations with regard to hydrogen.
    Specifically, it directs the Secretary to develop next generation 
energy technology, including hydrogen; it recommends that our research 
and development (R&D) programs related to hydrogen and fuel cells be 
integrated; and it recommends that legislation reauthorizing the 
Hydrogen Energy Act enjoy the support of the Administration.
    Since the release of the President's energy plan in May 2001, the 
President and Secretary Abraham have unveiled several exciting new 
initiatives related to hydrogen. Most notable are:

 The FreedomCAR partnership announced in January 2002;
 The President's Hydrogen Fuel Initiative announced during the 
        State of the Union address in January 2003; and
 The ``FutureGEN'' zero-emission coal-fired electricity and 
        hydrogen power plant initiative announced in February 2003.
    Each of these initiatives plays a particularly important role in a 
hydrogen energy future. Each will help make possible a future in which 
the principal ``energy carriers'' are hydrogen and electricity, 
eventually generated using technologies that do not emit any pollutants 
or carbon dioxide.
    Today, we are highly dependent on coal, natural gas and nuclear 
energy for the majority of our electricity. We depend on oil, a growing 
percentage of which is imported, to power our transportation needs. 
Through the FreedomCAR and Hydrogen Fuel Initiative we can eventually 
build a light duty transportation system that requires no petroleum, 
and is comprised of vehicles that emit nothing other than water vapor.
    As illustrated in my first chart (Figure One) the ``gap'' between 
domestic production and transportation demand is growing--and is 
projected to keep growing. The current gap between total U.S. 
consumption and net production of oil is roughly 11 million barrels per 
day. Promoting efficiency in the use of oil, and finding new domestic 
sources of oil, are both important short-term undertakings. But over 
the long-term, a petroleum-free option is eventually required.
    Our energy challenge is further complicated by another important 
factor--the pollutants and carbon dioxide emissions resulting from our 
use of energy. We have made tremendous progress in reducing pollutant 
emissions from our cars and trucks as well as our stationary power 
sources, and we will continue to make incremental gains through 
regulatory approaches such as the Tier II standards. But for true 
efficiency gains, we must reach to develop a wholly new approach to 
energy.
    In his recent State of the Union address, President Bush announced 
a groundbreaking plan to transform our Nation's energy future from one 
dependent on foreign petroleum, to one that utilizes the most abundant 
element in the universe--hydrogen.
    Hydrogen can be produced from diverse domestic sources, freeing us 
from a reliance on foreign imports for the energy we use at home. 
Hydrogen can fuel ultra-clean internal combustion engines, which would 
reduce auto emissions by more than 99 percent. And when hydrogen is 
used to power fuel cell vehicles, it will do so with more than twice 
the efficiency of today's gasoline engines--and with none of the 
harmful air emissions. In fact, fuel cells' only byproducts are pure 
water and some waste heat.
    But ultimate success in the mass-market penetration of hydrogen 
fuel cell vehicles requires a hydrogen-based infrastructure that 
performs as well as the petroleum-based infrastructure we now have.
    Our current gasoline/hydrocarbon infrastructure has been forged in 
a competitive market. It is ubiquitous and remarkably efficient. It can 
deliver refined petroleum products that began as crude oil half a world 
away to your neighborhood for less than the cost of milk, drinking 
water, or many other liquid products you can buy at the supermarket. We 
are currently bound to that infrastructure. Eventually replacing it 
with something different will be extremely challenging. But that is 
what we must do if we expect to achieve success with the FreedomCAR 
partnership. Drivers must be able to go anywhere in America and to 
refuel their hydrogen-powered vehicle before they will be comfortable 
purchasing one.
    That is why the President, in his State of the Union address, 
proposed that we in the federal government significantly increase our 
spending on hydrogen infrastructure R&D, including hydrogen production, 
storage, and delivery technologies, as well as fuel cells. Over the 
next five years, we plan to spend an estimated $1.7 billion on the 
FreedomCAR partnership and Hydrogen Fuel Initiative, $1.2 billion of 
which is for the Hydrogen Fuel Initiative, which includes resources for 
work on hydrogen and fuel cells. Of the $1.2 billion figure, $720 
million is ``new money.''
    We will not build the infrastructure. The private sector will do 
that as the business case becomes clear. But as we develop the 
technologies needed by the vehicles, we will also develop the 
technologies required by the infrastructure. In cooperation with the 
U.S. Department of Transportation (DOT), we will convene the parties 
needed for technology partnerships, we will collaborate on the needed 
codes and standards, and we will promote international cooperation in 
this effort. On April 28, during a presentation to the International 
Energy Agency, Secretary Abraham called for an ``International 
Partnership for the Hydrogen Economy'' to collaborate on research and 
deployment of hydrogen technologies.

                                BENEFITS

Energy Diversity
    Hydrogen can be supplied in large quantities from domestic fossil, 
nuclear and renewable resources. This mix of currently available and 
developing technology could provide a transition from traditional to 
next generation energy technologies benefiting society with reliable 
and affordable energy in the near and long terms. Hydrogen and fuel 
cells can catalyze the establishment and utilization of a viable 
transportation market for nuclear energy, domestic coal supplies, and 
renewables. Carbon capture and sequestration will be needed, however, 
for all carbon-based sources of hydrogen such as coal. The fact 
remains, though, that our Nation possesses the necessary resources to 
produce large quantities of hydrogen.

Transportation
    Every day, eight million barrels of oil are required to fuel the 
over 200 million vehicles that constitute our light duty transportation 
fleet. By 2025, the Nation's light vehicle energy consumption is 
projected to grow to as much as 14 million barrels per day of petroleum 
or its energy equivalent. Fuel cell vehicles could provide more than 
twice the efficiency of conventional vehicles. Hydrogen fueled fuel 
cell vehicles could make dramatic reductions in petroleum use possibly 
resulting in 11 million barrels per day savings by 2040.
    I would like to point out that the government does not have vehicle 
market penetration goals. The manufacture and marketing of hybrid, fuel 
cell or other advanced vehicles will be industry's responsibility. 
Instead, our plan lays out the activities that will accelerate hydrogen 
and fuel cell development to enable industry to make a 
commercialization decision by 2015. The government's role, however, can 
be broader than the removal of technical barriers and the reduction of 
technology costs. The government can also contribute to the pace of 
both industry and market acceptance by overcoming institutional 
barriers, such as those associated with achieving common codes and 
standards necessary for safe use of hydrogen and fuel cell 
technologies.

Fuel Cells for Stationary Power
    Hydrogen can also be used in stationary fuel cells, engines and 
turbines to produce power and heat. In order to meet our growing 
electrical demands, it is estimated that electricity generation will 
have to increase by two percent per year (reference: DOE, Energy 
Information Administration, Annual Energy Outlook 2002). At this rate, 
1.5 trillion kWh of additional electricity generation capacity will be 
needed by 2020. Along with aging infrastructure, requirements for 
reliable premium power, and market deregulation, this increasing demand 
opens the door for hydrogen power systems and potential societal 
benefits. For example, using ten million tons of hydrogen per year to 
provide 150 billion kWh of the Nation's electricity (just ten percent 
of the added generation) could avoid 20 million tons per year of carbon 
dioxide emissions. DOE will also support work in the area of fuel cells 
for portable power. While not important to overall petroleum reduction, 
these units will provide early operating and manufacturing experience, 
and should contribute to the reduction of fuel cell cost for polymer 
electrolyte membrane (PEM) fuel cells.

                         TECHNOLOGY CHALLENGES

    Achieving the Hydrogen Economy will require a combination of 
technological breakthroughs, market acceptance, and large investments 
in a national hydrogen energy infrastructure. Success will not happen 
overnight, or even over years, but rather over decades; it will require 
an evolutionary process that phases hydrogen in as the technologies and 
their markets are ready. Success will also require that the 
technologies to utilize hydrogen fuel and the availability of hydrogen 
occur simultaneously.
    Some of the significant hurdles to be cleared include:

 Lower by a factor of four the cost of producing and delivering 
        hydrogen;
 Develop more compact, light weight, lower cost, safe, and 
        efficient hydrogen storage systems that will enable a greater 
        than 300 mile vehicle range;
 Lower by a factor of ten the cost of materials for advanced 
        conversion technologies, especially fuel cells;
 More effective and lower cost (by a factor of at least ten) 
        carbon-capture and sequestration processes (a separate program 
        critical to fossil-based production of hydrogen);
 Designs and materials that maximize the safety of hydrogen 
        use; and,
 Finally, we must solve the overarching infrastructure 
        challenges to develop a hydrogen-based delivery and refueling 
        infrastructure comparable to the petroleum-based one we have 
        today. The development of needed codes and standards as well as 
        the education of consumers relative to the use of hydrogen can 
        help safely establish this hydrogen infrastructure.
    The Department has drafted a work breakdown structure associated 
with each of the critical areas (production, delivery, storage, 
conversion, and end-use) identified in the National Hydrogen Energy 
Roadmap unveiled by the Secretary last November. We have developed 
critical milestones and decision points that will help us gauge 
technology progress. Examples of key program milestones that support 
FreedomCAR and achievement of a hydrogen economy include the following:

 On-board hydrogen storage systems with a six percent capacity 
        by weight by 2010; more aggressive goals are being established 
        for 2015;
 Hydrogen production at an untaxed price equivalent to $1.50 
        per gallon of gasoline at the pump by 2010; and
 Polymer electrolyte-membrane automotive fuel cells that cost 
        $45 per kilowatt by 2010 and $30 per kilowatt by 2015 and meet 
        100,000 miles of service life.
    We are beginning to partner with energy companies to establish more 
specific goals related to technology and components needed to produce 
and distribute hydrogen using various fossil, nuclear and renewable 
pathways. In this exercise, we will be looking at the full range of 
hydrogen technology areas covered in the Roadmap.
    In the near- to mid-term, most hydrogen will likely be produced by 
technologies that do not require a complete hydrogen distribution 
infrastructure (i.e., using existing distributed natural gas 
infrastructure). As RD&D progresses along renewable, nuclear, and clean 
coal and natural gas production pathways (including techniques for 
carbon sequestration) a suite of technologies will become available in 
the mid- and long-term to produce hydrogen from a diverse array of 
domestic resources. The economic viability of these different 
production pathways will be strongly affected by regional factors, such 
as feedstock availability and cost, delivery approaches, and regulatory 
environment.
    Detailed analysis of life-cycle costs and benefits for alternative 
hydrogen production pathways, carbon sequestration, and other elements 
will continue. ``Well-to-Wheels'' analyses conclude that the energy and 
environmental benefits depend greatly on how hydrogen is manufactured, 
delivered and stored, and on the economic feasibility of sequestration 
for fossil feed stocks. The results of these studies will help in 
making down-select decisions and to ensure that the relative merits of 
specific hydrogen pathways are evaluated properly and in comparison 
with other energy alternatives. In fact, we are now following up on a 
National Academy of Sciences recommendation to establish a more robust 
systems analyses effort so that we can optimally prioritize areas for 
R&D, as well as understand the ramifications of future R&D successes 
and disappointments. Out-year planning will identify needs for RD&D on 
production and storage technologies, delivery infrastructure, and 
education and safety/codes and standards. Public education of consumers 
and local code officials must also be pursued concurrently with the 
RD&D.
    Finally, industry must develop and construct the infrastructure to 
deliver hydrogen where it is needed. We will work with the DOT to help 
industry develop a safe, efficient, nation-wide hydrogen 
infrastructure. The hydrogen distribution infrastructure can evolve 
along with the conversion and production technologies, since much of 
the infrastructure that is developed for fossil-based hydrogen will 
also be applicable to renewable- and nuclear-based hydrogen. We will 
partner with industry to develop infrastructure in pilot projects, and 
industry will expand locally, regionally, and ultimately nationally.

                           INTERIM STRATEGIES

    As important as we believe hydrogen is for the long term, we are 
still working, in cooperation with other federal agencies, to maintain 
a robust, and in some areas growing, research and development program 
in non-hydrogen transportation technologies.
    Under the FreedomCAR partnership we have proposed a funding 
increase in fiscal year 2004 for our hybrid technology, as well as 
increases in materials technology. We believe many of these 
technologies will deliver fuel savings both prior to and after the 
introduction of fuel cell vehicles, since lightweight materials and 
hybrid technologies are expected to be incorporated into fuel cell 
vehicle designs. Therefore, these investments are expected to pay off 
in the interim, as well as over the long term.
    In addition, we had a number of interim strategies in mind as we 
established specific, measurable performance goals for our program. And 
our FY 2004 budget is aligned with these goals. For example:

 We are working to develop technologies for heavy vehicles by 
        2006 that will enable reduction of parasitic energy losses, 
        including losses from aerodynamic drag, from 39 percent of 
        total engine output in 1998 to 24 percent;
 The 2006 goal for Transportation Materials Technologies R&D 
        activities is to reduce the production cost of carbon fiber 
        from $12 per pound in 1998, to $3 per pound; and,
 The 2010 goal for Hybrid and Electric Propulsion R&D 
        activities is to reduce the production cost of a high power 
        25kW battery for use in light vehicles from $3,000 in 1998 to 
        $500, with an intermediate goal of $750 in 2006, enabling more 
        cost competitive market penetration of hybrid vehicles.
    Automakers are introducing technologies that have resulted in part 
from DOE's work in this area. At the recent North American 
International Auto Show in Detroit, the major U.S. automakers announced 
that they will have a variety of new hybrid gasoline-electric models 
entering the market in the 2004-2008 timeframe.
    Of course, hybrid vehicles are more expensive compared to 
conventional vehicles, which is why the President proposed a tax credit 
for hybrid vehicles in his National Energy Plan, and subsequent to that 
in his 2004 budget submission. We urge that Congress adopt this 
important incentive for more efficient vehicles.
    And we will continue support for our Clean Cities program, a 
unique, voluntary approach supporting more than eighty local coalitions 
that deploy alternative fuel vehicles (AFVs) and promote supporting 
infrastructure.
    The Administration strongly supports a renewable fuels standard 
(RFS) that will increase the use of clean, domestically produced 
renewable fuels, especially ethanol, which will improve the Nation's 
energy security, farm economy, and environment.
    As important as the RFS and the Clean Cities program are, their 
goals illustrate the daunting challenges we face. Taken together, the 
RFS and Clean Cities are expected to offset about four billion gallons 
of petroleum use per year by 2010. That sounds impressive until it is 
compared to the demand for petroleum for transportation uses. In the 
year 2000, we used approximately 130 billion gallons of gasoline and 
over 33 billion gallons of diesel (highway use only). With that 
realization, the critical importance of the FreedomCAR partnership and 
Hydrogen Fuel Initiative as a long-term strategy becomes clear.
    And, if we are to achieve real progress in the near term and our 
ultimate vision in the long term, we must continue to nurture 
productive partnerships with the private sector. It is the private 
sector that will make the major investments necessary for the 
transition to a radically different transportation future. Those 
investments will not be made in the absence of a clear-cut business 
case.

                    TRANSITION TO A HYDROGEN ECONOMY

    We consider the transition to the hydrogen economy as occurring in 
four phases, each of which requires and builds on the success of its 
predecessor, as depicted in Chart 2. The transition to a hydrogen-based 
energy system is expected to take several decades, and to require 
strong public and private partnership. In Phase I, government and 
private organizations will research, develop, and demonstrate 
``critical path'' technologies and safety assurance prior to investing 
heavily in infrastructure. This Phase is now underway and will enable 
industry to make a decision on commercialization in 2015.
    The FY 2004 budget currently before Congress is consistent with 
completion of the technology RD&D phase by 2015.
    Phase II, Transition to the Marketplace, could begin as early as 
2010 for applications such as portable power and some stationary 
applications, and as hydrogen-related technologies meet or exceed 
customer requirements. If an industry decision to commercialize 
hydrogen fuel cell vehicles is made in 2015, mass-market penetration 
can begin to occur around 2020. Consumers need compelling reasons to 
purchase new products; public benefits such as high fuel use efficiency 
and low emissions are not enough to overcome the market advantages of 
the incumbent technology and infrastructure. The all-electronic car 
powered by hydrogen fuel cells is one example of an approach to greater 
value delivery; it could offer the consumer greater amenities, improved 
performance through elimination of mechanical parts and greater design 
flexibility.
    As these markets become established, government can foster their 
further growth by playing the role of ``early adopter,'' and by 
creating policies that stimulate the market. As markets are established 
this leads to Phase III, Expansion of Markets and Infrastructure. The 
start of Phase III is consistent with a positive commercial decision 
for vehicles in 2015. A positive decision will attract investment in 
infrastructure for fuel cell manufacturing, and for hydrogen production 
and delivery. Government policies still may be required to nurture this 
infrastructure expansion phase.
    Phase IV, which should begin about 2025, is Realization of the 
Hydrogen Vision, when consumer requirements will be met or exceeded; 
national benefits in terms of energy security and improved 
environmental quality are being achieved; and industry can receive 
adequate return on investment and compete globally. Phase IV provides 
the transition to a full hydrogen economy by 2040.

                               CONCLUSION

    Mr. Chairman, it will take a great deal to achieve this vision of a 
hydrogen energy future we are all talking about this morning. It will 
require careful planning and coordination, public education, technology 
development, and substantial public and private investments. It will 
require a broad political consensus and a bipartisan approach. Most of 
all, it will take leadership and resolve.
    The President has demonstrated his leadership and resolve. ``With a 
new national commitment,'' said the President during his State of the 
Union address, ``our scientists and engineers will overcome obstacles 
to taking these cars from laboratory to showroom, so that the first car 
driven by a child born today could be powered by hydrogen and pollution 
free.''
    A few days later at an event on energy independence featuring new 
uses for fuel cells including automobiles, the President reiterated his 
commitment to his new Hydrogen Fuel Initiative stating, ``The 
technology we have just seen is going to be seen on the roads of 
America. And it's important for our country to understand that by being 
bold and innovative, we can change the way we do business here in 
America; we can change our dependence upon foreign sources of energy; 
we can help with the quality of the air; and we can make a fundamental 
difference for the future of our children.''
    We believe that the benefits the President envisions are attainable 
within our lifetimes and will accrue to posterity, but they will 
require sustained work and investment of public and private financial 
resources. We at the Department of Energy welcome the challenge and 
opportunity to play a vital role in this Nation's energy future and to 
support our national security in such a fundamental way.
    This completes my prepared statement. I would be happy to answer 
any questions you may have, either now or in the future.

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[GRAPHIC] [TIFF OMITTED] T7487.002

    Mr. Barton. Thank you, Mr. Secretary.
    The Chair would recognize himself for the first 5 minutes, 
so we are going to use the clock for this. The first thing is, 
is the Department of Energy, under the President's hydrogen 
initiative, the lead agency in the administration?
    Mr. Garman. Yes, sir.
    Mr. Barton. Which other cabinet agencies are involved in 
the initiative?
    Mr. Garman. We will work very closely with the Department 
of Transportation, as they play a very critical role in terms 
of safety of vehicles, and certification of vehicles. We will 
work very closely with the Environmental Protection Agency. We 
will work with the Department of Commerce. There is a role for 
the NIST on standards and technology. And we think that all of 
this is going to be coordinated through our work and the work 
of the Office of Science and Technology Policy at the White 
House.
    Mr. Barton. What about the Environmental Protection Agency?
    Mr. Garman. Absolutely. If I failed to mention them, they 
are a part of this effort as well.
    Mr. Barton. And the Department of Defense?
    Mr. Garman. Yes, sir. Actually, I think both in stationary 
and transportation applications, as well as work in the heavy 
truck technologies. We have been a partner in the past with the 
Department of Defense, and we will continue to be a partner 
with DOD in the future.
    Mr. Barton. Within the Department of Energy, which 
Assistant Secretary has primary responsibility? I know that you 
kind of coordinate it, but which of the assistant secretaries 
is involved? Or if there is more than one, which ones?
    Mr. Garman. Absolutely. We actually have a draft 
departmental posture plan under the guidance of the 
Undersecretary, Robert Card, for Energy, Science, and 
Environment. Under Mr. Card, the assistant secretaries or 
office directors that are involved in the hydrogen initiative 
include myself, the Office of Science, the Office of Nuclear 
Energy, the Office of Fossil Energy.
    We are all working closely together on a coordinated plan, 
because, just as an example, the value of hydrogen is that it 
can be produced from diverse resources. And we want to make 
sure that we are leveraging our fossil resources, and our 
nuclear resources. We also have a great deal of synergy with 
the Office of Science doing basic research in such areas as 
microbes that actually produce hydrogen, or different types of 
material science that can really pay benefits in the work we 
are trying to do.
    Mr. Barton. How many different working group levels are 
there? Is there a senior policy level that you would 
participate in with the other cabinet agencies? And then, are 
there working groups at the professional SES staff level? And, 
you know, how often do they meet?
    Mr. Garman. There is a couple of different working groups. 
The primary working group is run out of the White House and the 
Office of Science and Technology Policy. They have been meeting 
at least once a month, sometimes more frequently. I or members 
of my staff participate in that working group.
    We also have, as an example, weekly meetings on 
international collaborations on hydrogen that occur in my 
office. Undersecretary Card has at least a quarterly review, 
and quite often more often than that.
    Mr. Barton. Do you feel that there is adequate coordination 
and organization within the Bush administration for this 
initiative? I mean, the President listed it as one of his 
priorities. Is it being given that type of preferential 
importance/emphasis in the administration, given the high 
priority the President gave it in his State of the Union 
address?
    Mr. Garman. Yes, sir. I think that it has the almost-daily 
attention of the Secretary. We have worked very closely with 
Dr. Marburger at the White House, with the Council on 
Environmental Quality, Mr. Conniton, the Chairman of CEQ, on 
the policy coordination activities that usually the White House 
leads. We have not been lacking for resources or high-level 
attention to this at all.
    Mr. Barton. I have got time for probably one more question. 
The hydrogen that is produced today is primarily produced from 
natural gas using a steam reforming technology. Does the Bush 
administration have a preference on the source of hydrogen, or 
are you open to all kinds of sources?
    Mr. Garman. Yes, sir. As you mentioned, virtually all of 
the hydrogen that we produce today is produced from natural 
gas. And the value of hydrogen, the fundamental value that we 
see, is that it can be produced from a variety of resources. 
That is what is so compelling about the hydrogen vision.
    We would like to have a future where we have a multitude of 
resources and processes available to us that produce hydrogen. 
This can include renewables, of course. It can include nuclear 
energy. It can include fossil energy. It is--we have a vast 
supply of coal in this country. It is possible to do integrated 
combined cycle coal gasification.
    Mr. Barton. My time has expired.
    Mr. Garman. Yes, sir.
    Mr. Barton. I don't want to cut you off, but my time has 
expired. But the basic position of the Bush administration on 
fuel source for hydrogen is open.
    Mr. Garman. We are looking at all sources.
    Mr. Barton. Okay. My time has expired. I would recognize 
the gentleman from Maryland for 5 minutes.
    Mr. Wynn. Thank you very much, Mr. Chairman, and thank you, 
Mr. Garman. I really appreciated your testimony.
    A couple of questions. You state on page 4 that only $720 
million is actually new money. Is that correct?
    Mr. Garman. That is correct.
    Mr. Wynn. Okay. I don't want to appear adversarial, but 
after all of the ballyhooing between the State of the Union and 
other speeches, are we really down to $720 million, this fuel 
cell initiative and FreedomCAR, beyond what we were going to do 
anyway?
    Mr. Garman. The $720 million is above and beyond what we 
had planned to do in these programs anyway.
    Mr. Wynn. Okay.
    Mr. Garman. This is truly new money. And that is just over 
a 5-year commitment. We anticipate there will be a funding 
beyond that timeframe. We are just talking about the 5-year 
timeframe.
    Mr. Wynn. At the risk of putting you on the spot, is it 
fair to say you could use more money?
    Mr. Garman. The question is----
    Mr. Wynn. If you answer no, I am going to be incredulous.
    Mr. Garman. Well, actually, this is a question we are asked 
a lot. And the question is: Could you accelerate the timeframe 
if you were provided more money? And the answer is perhaps, but 
we would also increase the risk. There is a value of time in 
the discovery process and of research and demonstration that 
feeds back into the R&D.
    Mr. Wynn. What is the risk?
    Mr. Garman. For instance, if we were to have to actually 
field vehicles in the 2010 or 2015 timeframe, we would have to 
settle on some technologies very early that might not turn out 
to be the correct technologies.
    Mr. Wynn. So your proposal would be to experiment with 
technologies over a period of time. Let me ask you a second 
question. Could you chart out a timeline for us? You've 
introduced a very interesting argument, which is we are going 
to have to have an experimental phase regarding the 
technologies. Could you chart out a timeline? How long is that 
phase likely to take?
    Mr. Garman. Actually, I do have a chart. Jodi, if you could 
just flip that chart. This gives a notional timeline of--and 
you probably can't see that from there, but it----
    Mr. Barton. Do we have that on the big screen? Can we get 
it up on video? Because if we can, it is bigger.
    Mr. Wynn. Since my time is running pretty rapidly, just 
give me a date. About how many years are we going to use to 
experiment with technologies?
    Mr. Garman. Well, we expect to be in a position so that 
automakers and energy companies can make business decisions in 
2015 to commercialize a vehicle. That means we are going to be 
trying demonstrations and activities prior to that time.
    We actually have a 2010 goal for most of our key component 
technologies. We would like to be able to say that by 2010 we 
will have, if you will, broken the code on the key fundamental 
technologies that we have got in terms of the cost of fuel 
cells, hydrogen storage, and some of the other technology 
challenges we face.
    Mr. Wynn. Okay.
    Mr. Garman. Now, the business case sometimes takes a little 
longer.
    Mr. Wynn. Okay. Let me move on. Between vehicle development 
and infrastructure development, can you tell us how these 
issues are prioritized, and what role will the Federal funding 
play in each? What role will Federal funding play, for example, 
in reducing the storage capacity requirements, lowering the 
cost factor for production, versus what contribution Federal 
funding will make toward infrastructure development? I guess 
which really is, storage is more infrastructure, and related 
infrastructure needs.
    Mr. Garman. You have touched on a number of very important 
needs in all of these areas. I mean, I can give you some 
examples. For example, in storage the technical challenge is 
storing enough hydrogen onboard the vehicle that gives the 
vehicle the kind of range that a consumer will require between 
refuelings.
    And right now we don't have a technology that will enable 
enough hydrogen to be stored onboard the vehicle to deliver 
that kind of range. You want 300 to 350 miles before you need 
to refuel the vehicle.
    For some technologies on solid metal hydride storage, 
chemical hydride storage, and other methods of storing 
hydrogen, including high pressure storage, more work needs to 
be done on materials to do that. Hydrogen is a very tricky 
material. You just can't put 10,000 psi in a metal cylinder, 
for instance, because the tiny size of the hydrogen will 
actually start migrating into the matrix of the metal. So you 
have some special challenges with hydrogen.
    Mr. Wynn. About how long do you think it will take us to 
work through some of these infrastructure challenges?
    Mr. Garman. It is difficult to foresee. We are certain--we 
think that in terms of the cost of fuel cells we see a path 
forward that doesn't require a big technology breakthrough. It 
just takes time.
    On the issue of storage, we think we are probably going to 
need a technology breakthrough. There is going to have to be a 
discovery in a lab where somebody finds a hydride or another 
material that will store hydrogen, hopefully at ambient 
temperatures and pressures, and we don't have that today. And 
it is hard to put a timeline on a scientific discovery.
    What we do want to do is to put the Federal funding out 
there, get the national labs involved, and make sure that 
different pathways are being explored fully.
    Mr. Wynn. Thank you very much.
    Mr. Barton. We are going to do two rounds of questions for 
the administration witness, so the gentleman will have plenty 
of time to get in more questions.
    The gentleman from Idaho is recognized for 5 minutes.
    Mr. Otter. Thank you, Mr. Chairman. Mr. Chairman, I had an 
opening statement, which I realize I--without objection, I 
would like that to be submitted into the record.
    Mr. Barton. It is already not objected to being put in the 
record.
    Mr. Otter. Assistant Secretary Garman, can you tell me how 
the hydrogen program is being coordinated between all of the 
various agencies that are going to be dealing with ``energy and 
energy production''? For instance, the Office of Energy 
Efficiency, the Department of Energy. And, in particular, how 
the hydrogen budget is going to be handled by all of these 
varying agencies?
    Mr. Garman. Let me start with the Department of Energy, and 
then I will move up. At the Department of Energy, we have a 
coordinated plan between my office, the Office of Energy 
Efficiency and Renewable Energy, the Office of Science, the 
Office of Fossil Energy, and the Office of Nuclear Energy. We 
all report to Undersecretary Card, who is playing the 
coordinating role in our hydrogen posture activities.
    The Office of Energy Efficiency and Renewable Energy is 
sort of the subleader of this. We have the most money involved, 
and we do most of the work on both hydrogen production and the 
vehicle technology work. But we are very well coordinated. We 
have a posture group that meets frequently.
    Above the Department of Energy in ensuring coordination 
with other Federal agencies, of course, are the White House 
groups, the Office of Science and Technology Policy, and the 
Council on Environmental Quality. They are both exercising a 
policy coordinating role, as is the Council of Economic 
Advisors out of which a lot of domestic policy derives from the 
White House.
    We have a very tight and close group. We are in nearly 
constant communication, and that is how the general policy 
effort is coordinated.
    Mr. Otter. Mr. Secretary, who is the boss? Where does the 
buck stop?
    Mr. Garman. I think the buck stops primarily with Secretary 
Abraham. Secretary Abraham looks to me and Undersecretary Card, 
because the way this initiative was developed included a lot of 
policy time with the President. And the Secretary laid this out 
for the President, and I think the President looks to the 
Secretary to deliver on the promises and the assurances that 
the President was given.
    Mr. Otter. Well, you know, I appreciate the high level of 
folks that are involved in this. But as you know, the grunts 
are the ones that are going to do the work, and they are the 
ones that are also going to come up with the problems, and the 
resolution of those problems has got to be fairly fast in order 
for a program that is this important and holds this much 
promise for us to be able to go forward.
    And has there been any scheme or any notion presented where 
that is all coordinated in just one office and put in one 
office, and all of the answers come from that office, and all 
of the coordination comes from that office?
    So many times I have found--and I appreciate the fact that 
I have only been here for 3 years now, or less than 3 years--
but so many times it seems to me when you go to one agency that 
is supposed to have the responsibility for coordination between 
some government program you end up with, ``Well, that is not in 
our pay grade, and that is not our responsibility.''
    I think that this is way too important to us for energy 
self-sufficiency and also for energy independence for us to 
scatter amongst the many bureaus and departments and not have 
one place that we can go to and say, ``You are simply not doing 
the job. You are going to be replaced.''
    Now, I have met with Secretary Card, and I think he is 
doing a tremendous job. And I love his enthusiasm for the hope 
and for where he wants to go, and especially, of course, for my 
part being from Idaho where the Argonne National Laboratory is, 
I hope, going to play, could play, will play a major role in 
this.
    But on the other hand, I have seen so many times where we 
spend a lot of money, we get a lot of motion, and precious 
little progress. And I would just hate to see it scattered so 
far and wide that nobody knows where the hell to go to 
surrender when they have got a problem.
    Mr. Garman. I think there is a couple of things that we 
have working for us in this regard. First of all, and this is 
part of the President's management agenda and the importance 
that he places on linking budget and performance, we have set 
very specific technology goals that are measurable and for the 
achievement of which we are accountable.
    These technology goals for FreedomCAR can be understood, 
they can be measured, and our performance against those goals--
these are expressed in terms of 2010, what we want to achieve 
between now and 2010--can be evaluated on how well we are 
doing, where we are falling behind, and where we are ahead.
    We expect, because this is a high level Presidential 
initiative, we expect to be subjected to scrutiny, not only by 
the White House but the Congress on a regular basis on how we 
are achieving these goals. And we welcome that scrutiny, and we 
think we are up to the task.
    Mr. Otter. Thank you.
    Thank you, Mr. Chairman.
    Mr. Barton. Thank you.
    The gentleman from Louisiana is recognized for 5 minutes.
    Mr. John. Thank you, Mr. Chairman, for holding this 
hearing. And I want to thank the Assistant Secretary for coming 
and starting off a debate on an issue that is really going to 
be critical to the future of America.
    I want to follow up on a line of questioning from the 
chairman as it relates to the feedstock issue. You had 
mentioned in your last remarks to the chairman, that the Bush 
administration is open, because it is intriguing, in your own 
words, to the variety of options that we have to produce 
hydrogen.
    And as I look down, there are several things that I notice. 
First of all, I am a firm believer that money follows 
priorities in this body in Congress and really everywhere we 
go. And if you look at the fiscal year 2004 and the 
administration request, I think it itemizes and prioritizes the 
different types of feedstock by placing dollars in different 
kinds of feedstock.
    If you look at them, of course, nuclear is $4 million, coal 
is $5 million, natural gas is $2.2 million, and, of course, 
renewables is $17.3-.
    Mr. Garman. Actually, $12.2. If----
    Mr. John. $12.2. What did I say? I am sorry.
    Mr. Garman. $2.2. I am sorry.
    Mr. John. I am sorry. Yes, I have it written. I just didn't 
say it correctly. So I think that that kind of gives us an 
indication of where we want to put our emphasis on technologies 
on research.
    What I would like for you to do is to talk to me a little 
bit about the economies of each one of those, and then we will 
talk about the challenges of each one of those, and then try to 
end in my 5 minutes about, why you believe that, over $10 
million was put in renewables as opposed to nuclear, coal, or 
something else.
    Mr. Garman. Part of the reason that you see that split is 
in part because government likes to--and it is more appropriate 
that we engage in very long-term R&D. If you want a fully 
sustainable energy system, you would like over the long term to 
be able to depend on renewables and have renewables the basis 
of your hydrogen production.
    Mr. John. And I agree with that. And while we are there, 
help educate me on the renewables. What is the renewable 
feedstock of choice for a variety of reasons?
    Mr. Garman. One method is simply using electrolysis from a 
renewable produced electricity--for instance, wind power--
producing electricity from which you use electrolysis to split 
the water. That is one process. You can use any form of 
electricity to do advanced electrolysis.
    Another is gasifying biomass. Were we to have, for 
instance, 600 million metric tons a year of biomass, that could 
take the form of corn stove or wheat straw, different kinds of 
things that farmers generally leave in the field today.
    Mr. John. Rice hulls?
    Mr. Garman. Rice hulls, you name it. And we can convert 
that, gasify that. That is also a hydrogen source. We are 
hoping that we can, for instance, get the price of biomass down 
to around $2.60 a kilogram in terms of the cost of the hydrogen 
produced from the biomass. That will depend on a number of 
things, but that is, for instance, a kind of notional 2010 
target that we have in mind.
    We have to do a lot better than that. A kilogram of 
hydrogen is roughly equivalent to a gallon of gasoline. So 
$2.60 gasoline doesn't quite cut it for us.
    Mr. John. Okay. We only have about a minute. Talk to me 
about the economies of each one of those.
    Mr. Garman. Sure.
    Mr. John. I mean, good, bad, challenging, not there?
    Mr. Garman. As I said, biomass via gasification we think we 
can get by 2010 in for $2.60 per kilogram. Advanced 
electrolysis, we think by 2010 maybe we can get close to $2.50 
a kilogram. Solar high temperature thermochemical cycles, that 
is where we use very high temperatures, on the order of 1,000 
degrees Centigrade, using high temperature and a chemical cycle 
to split water. That is relatively expensive. We think that is 
probably around $4 a kilogram.
    In theory, if we have a high temperature gas reactor, which 
we do not have in this country, you could use that same heat 
offput from a high temperature gas reactor to do the same 
thing--thermochemical water-splitting. Theoretically, we think 
we can get around $2 a kilogram with that approach.
    There are other approaches, including something we call 
photolytic. It is very long term. It uses photons directly from 
the sun, kind of like a solar cell, but instead of converting 
the photons to electricity and then using the electricity to 
make hydrogen, the conversion is direct. We think we are 
probably above $20 a kilogram in that area. But it still is a 
long-term play, if you will.
    Natural gas, we think we can get natural gas derived 
hydrogen down to $1.50 per kilogram in 2010. It is currently 
around $5 or $6.
    Mr. John. If you could--Mr. Chairman, I would like to maybe 
ask for an additional minute, so we can get through this, or 
should we wait until the next round?
    Mr. Barton. No, go ahead.
    Mr. John. Okay. I would like to ask for another minute and 
a half.
    Mr. Barton. Without objection, let us give you 2 more 
minutes.
    Mr. John. Okay. Thank you.
    Mr. Barton. When the clock gets to----
    Mr. John. This is very----
    Mr. Barton. When the clock gets to three. How about that?
    Mr. John. That is fine.
    Mr. Barton. All right.
    Mr. John. Thank you, Mr. Chairman.
    Mr. Garman. Natural gas we think is the near-term supplier 
for a couple of reasons. First of all, we make around 9 million 
metric tons of hydrogen each year today for a variety of 
purposes. We need 40 million metric tons to fuel a fleet of 
about 100 million vehicles, and we are already making 9 million 
metric tons.
    Natural gas has an advantage in that we already have a 
distribution system in place that is delivering the natural gas 
to fueling stations and locations all over the country. We have 
already demonstrated the fact that we can take natural gas at a 
fueling station, convert it to hydrogen, run a stationary fuel 
cell, and store the hydrogen to fuel vehicles. We have such a 
station in Las Vegas.
    We have other stations in California and elsewhere, where 
we are demonstrating this technology today. So we know that 
works, and we know that that is one pathway for a near-term 
hydrogen infrastructure that won't depend on large central 
manufacture of hydrogen and dedicated hydrogen pipelines.
    Over the long term, we will probably want to achieve the 
economies of scale possible from central large manufacture and 
production of hydrogen and the use of hydrogen pipelines. So 
that is the thinking--near term, natural gas; long term, 
diverse resources.
    Mr. John. Okay. We are out of time. I would like to 
continue this maybe in the next round of questions.
    Thank you, Mr. Chairman.
    Mr. Barton. Thank you.
    Does the gentleman from Indiana, Mr. Buyer, wish to ask 
questions?
    Mr. Buyer. I have one I was thinking about on a safety--
from the safety standpoint. Some years back, there were some 
workers in the shuttle program--when the shuttle had returned, 
they went in and they were doing an inspection. The worker 
collapses. The second worker goes in really concerned, and then 
he collapses. They both died. And as it turns out, it was a 
hydrogen--some leakage.
    I have always remembered that, because how awful that must 
have been if it was a small quantity, and they didn't know, 
and, bang, it got them. So from a safety standpoint, could you 
talk about that, if you have leakage and at what quantities? If 
that is part of the considerations? Obviously, it should be.
    Mr. Garman. Absolutely. And the real safety concern with 
hydrogen is not toxicity. It is flammability. But there is also 
an advantage of hydrogen, which makes this not a great concern. 
I think those NASA workers that you spoke of probably 
encountered this hydrogen in a very enclosed space where it was 
highly concentrated, and the real danger to them is it 
displaced the oxygen that they would normally have available.
    Hydrogen is the lightest element on the periodic table, 
and, as a consequence, you will not find free hydrogen on the 
planet anywhere. It is always bound up in a compound, such as 
water or coal or some hydrocarbon or some other chemical. And 
the reason is, it is so lightweight it can actually escape the 
gravitational pull of the earth.
    So when you do have a release of hydrogen, it dissipates 
very quickly and disperses, and that minimizes any problem you 
would have such as the NASA workers, and it also minimizes the 
problem inherent of its flammability. Like any fuel, hydrogen 
has a high energy content. It is flammable, but----
    Mr. Buyer. Well, let us break it down to--I am Bubba, okay? 
I don't work with this compound. So with NASA workers obviously 
going into a tank that is a closed, confined area, leakage--you 
can understand perhaps why they died.
    Now we are advanced in the future, and I have got my fuel 
cell automobile, and we go in to have it refueled. Is that 
something that you envision somebody else doing?
    Mr. Garman. No, sir.
    Mr. Buyer. Or is that something that I could do on my own?
    Mr. Garman. You would do it on your own.
    Mr. Buyer. And if there were some kind of leakage or if--or 
even from--say you had an auto accident, and it began to leak. 
You don't anticipate any problems?
    Mr. Garman. Not from a toxicity standpoint. In fact, 
because we are so attuned to safety and ensuring that there is 
no leakage of hydrogen, either on board the vehicle or during 
the refueling process, every hydrogen vehicle you see today has 
a very sensitive and redundant system to detect hydrogen leaks 
and alert the driver if they do exist. And, again, your concern 
is not so much toxicity but flammability.
    Mr. Buyer. All right.
    Mr. Garman. And in that, were you to have an accident in a 
hydrogen vehicle, I think you actually have an advantage over a 
gasoline vehicle, and here is why. Should you have a breach in 
the hydrogen container, the hydrogen being far lighter than air 
is going to move up and away from the vehicle.
    Contrast that with the situation you have when you have an 
accident in a gasoline vehicle. If you have a breach in the 
tank, the gasoline spreads below the vehicle. And, of course, 
if it engulfs, it engulfs the vehicle and its occupants. So I 
think I would rather drive my family in a hydrogen vehicle than 
a gasoline vehicle, and the safety issues are--while very 
serious, something that we and the Department of Transportation 
will be taking a close look at.
    Mr. Buyer. Let me ask this, switching gears. When you close 
your eyes and you try to envision what the future may be, how 
do we here in Congress ensure that the marketplace is open, 
fair, and competitive, when we try to eliminate these vertical 
integrations that could possibly occur? How do you envision the 
marketplace?
    Mr. Garman. I think we have to look----
    Mr. Buyer. And when I say that, competitively in 
infrastructure as well as others.
    Mr. Garman. We are in the process right now of inviting 
major vertically integrated oil companies, if you will. They 
usually don't refer to themselves that way anymore. They start 
to refer to themselves as energy companies now, because they 
realize the hydrogen age is coming, and they want to be in a 
position not only to sell you the gasoline you buy in your 
vehicle, or the Slurpee that you go in and get when you go in 
and buy your gas, but they also want to be the ones to provide 
you with the hydrogen or whatever it is going to take to fuel 
your vehicle.
    That is the business they are in, so they are engaged with 
us. They are working with us. They are excited about this 
possibility. And if we don't use market forces to help make 
this transition, then we are really missing out on the greatest 
force for change that we have available to us.
    The reason that I think the hydrogen economy and hydrogen 
vehicles are going to come about is not only because of the 
commitment the President made, it is because it is going to 
make available to consumers a better car than the kind of car 
they can buy today, which has advantages that the car today 
that they have can't provide.
    That is going to be an intriguing market driver, and I 
think that is what we want to take advantage of. It is a little 
bit like the government's involvement in the creation of the 
internet. We created the basic technology, and we developed 
standards and protocols, but it was the market that built the 
internet, driven by consumer demand and consumer dollars. And I 
see the hydrogen infrastructure operating very similarly to 
that.
    Mr. Buyer. Thank you.
    Mr. Barton. The gentleman from Maine is recognized for 5 
minutes for questions.
    Mr. Allen. Thank you, Mr. Chairman.
    And thank you, Mr. Garman, for being here. This is an 
interesting and important subject.
    I wanted to come back to, you know, where the fuel comes 
from. Is there something called the national hydrogen energy 
roadmap?
    Mr. Garman. Yes, there is.
    Mr. Allen. Yes. And is that prepared by the administration?
    Mr. Garman. This is a copy of the roadmap, and I will be 
happy to provide it to you or for the staff for the record, 
however you want it. It was prepared, actually, by a couple 
hundred folks. The administration convened it, but we invited 
everyone from Exxon Mobil to the National Resources Defense 
Council to come and gather in a room and start to think about 
the technology challenges and the technology roadmap we needed 
to develop.
    Mr. Allen. I haven't seen the whole thing, but I was told 
that in the roadmap 90 percent--the plan is, at least in that 
document, for 90 percent of all the hydrogen for this program 
to be refined from oil, natural gas, and other fossil fuels, 
with the remaining 10 percent cracked from water using nuclear 
energy. Is that an inaccurate statement or----
    Mr. Garman. The reason that that would be a difficult 
statement is it depends on the timeframe.
    Mr. Allen. Yes. Well, the near term--I take what you say 
and accept what you say about the near term, that natural gas 
is the only logical place to get hydrogen. But one of my 
questions is--the long term is harder to predict. And in 
particular, natural gas is now the fuel of choice for our 
electric utilities.
    And when I talk to people in the energy industry, at least 
some of them, you know, are concerned about the long-term 
supply. If basically both our electric generation and our 
automobiles are going to be--ultimately go back to, you know, 
another fossil fuel to be sure of the cleanest fossil fuel, 
natural gas, but that has--there is a question about, you know, 
how much of it is there over the long term, and also what the 
price will be, because part of the goal here to make a hydrogen 
car affordable has a lot to do with whatever the market price 
happens to be.
    Would you mind making just a couple of comments on that 
pricing issue and how we can--and just if you could add in one 
thing. As I understand the program that we passed, there is 
really no requirement that Detroit ever put a vehicle on the 
road. I mean, this is all a research project essentially.
    Mr. Garman. Okay. First of all, with respect to 
availability, we believe that there are a variety of methods 
that we have available to us to make sufficient amounts of 
hydrogen. And I will just give you an example. If, as a Nation, 
we made a determination that we wanted to make 40 million 
metric tons of hydrogen, enough to fuel a fleet of 100 million 
vehicles, and we wanted to make it solely from wind power, we 
could do it with the wind capacity of the State of North Dakota 
alone.
    That is a possibility. I am not sure that the market would 
evolve that way, but that is a possibility, and it illustrates 
the fact that we have a diverse amount of resources that can 
produce the necessary hydrogen that we need.
    So availability we think is there. If we can get the 
technologies to produce wind power at an affordable price, we 
would have very affordable power, and wind power has been 
getting more and more and more competitive. And so I am 
bullish, as a long-term play, on hydrogen from wind-generated 
electrolysis. I think there is something in that, and I think 
we can do it, and I think we as a Nation have the capacity to 
do it.
    On the question of price--price is, of course, a driver. I 
went through some of the numbers a little bit earlier. The 
thing you do have to remember is that because a fuel cell 
vehicle is 2 to 3 times more efficient than a gasoline vehicle, 
you will get more work out of an equivalent amount of hydrogen 
than you do gasoline.
    Mr. Allen. If I could just follow that--relate that to the 
car I drove to New York this weekend. I drove to New York from 
Portland, Maine, and back this weekend, 550 miles. I got 48 
miles to the gallon. I was in a Toyota Prius that I own that I 
bought because I couldn't buy a hybrid from Detroit.
    And I know that the emissions from that car are about 10 
percent, I think, of the emissions from the, you know, ordinary 
new car on the road. How does that hybrid technology, which is 
already there for people who want to buy it in this country, 
relate to this hydrogen project? And if you can, say why the 
administration didn't do more. I know there are incentives, but 
why not do more to encourage hybrid technology?
    Mr. Garman. That is a terrific question, and I want to 
start, as a Prius owner myself--point out that I am a huge 
believer, and we are a huge believer in hybrid technology. That 
is why the President asked for a tax credit for purchasers of 
hybrid vehicles, in order to help promote that technology. And 
it is a great near-term technology.
    Over the long term, the total system efficiency of a fuel 
cell vehicle is much, much greater than that of even a gasoline 
hybrid electric vehicle, even when you take into account the 
energy inputs you have to make to make the hydrogen, and 
compress the hydrogen. I am talking about a total well-to-
wheels efficiency number.
    A gasoline hybrid electric vehicle, on a well-to-wheels 
basis, is 15 percent efficient. That includes the efficiency of 
the fuel chain and the vehicle itself.
    A fuel cell vehicle fueled with hydrogen produced from 
natural gas is 22 percent efficient, and that includes the 
energy inputs you need to create the hydrogen, compress it, and 
the rest. So that is a huge efficiency increase that can't be 
denied.
    And the great thing about hybrid technology is that it is a 
pretty good bet that you will employ hybrid technology in a 
future fuel cell vehicle as well, so that you will hybridize 
that vehicle. And most of the fuel cell vehicles we drive today 
are hybridized to give the drivability that you want.
    Mr. Allen. Thank you very much.
    Mr. Barton. The gentlelady from California is recognized 
for 5 minutes.
    Ms. Bono. Thank you, Mr. Chairman. I actually have no 
questions at this time. I just want to thank the Secretary for 
all of your hard work, and your staff as well, and I look 
forward to working with you. And I yield back.
    Mr. Barton. The gentleman from Illinois, Mr. Rush, is 
recognized for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Garman, this question might have been asked and 
answered in my absence, but I want to try to get to it again if 
it has been. Implicit in any government subsidy is the 
assumption that unfettered market forces alone is inadequate--
they cannot inadequately achieve public good or outcome.
    In other words, by investing $1.7 billion over 5 years for 
FreedomCAR and for hydrogen fuel initiative programs, we in the 
Congress assume that the private sector alone was incapable of 
developing a hydrogen-based fuel economy. Can you tell us 
exactly how DOE will use these funds, this $1.7 billion, over 
the next 5 years to overcome natural private sector market 
barriers that exist to developing hydrogen energy?
    Mr. Garman. Yes. And we will be doing work on--in a variety 
of different areas, including production and delivery of 
hydrogen. Let me back up a little bit. Right now, as you point 
out, there is not a financial incentive for General Motors, for 
instance, to build a fuel cell car, or Exxon Mobil, for 
instance, to put hydrogen in at the corner filling station.
    There are some terrific public benefits that could be 
garnered--lower dependence on petroleum, cleaner air, but those 
benefits are not monetized in the marketplace, such that 
consumers would pay for them or that people would make money 
delivering that benefit.
    As a consequence, we believe that we can apply R&D 
activities in a few key areas, including production and 
delivery, storage, safety codes, standards, utilizations, 
technology validation. We are going to have to do some 
demonstrations to demonstrate the technology. Some of these 
demonstrations are occurring today at small levels, such as, in 
California, SunLine Transit.
    What we need to do is to scale these up a bit, put more 
cars on the road, understand what the shortcomings are, feed 
back into the R&D activity to address those shortcomings, and 
get the confidence that we need that the fuel cell vehicle can 
be as good as, and, in fact, better, than the vehicles that 
consumers can choose and drive today, because ultimately, you 
know, we are focused like a laser beam on that consumer choice 
test that will confront all of us in the 2015/2020 timeframe.
    We have tried different mandates and formulas and 
incentives in the past, but at the end of the day if you really 
want this technology to succeed, you have to offer the consumer 
something better than they can drive today. And that is part of 
our thinking. We think that there is a benefit for automakers 
with this technology, and there are benefits for consumers that 
will drive both automakers and consumers in this direction.
    Mr. Rush. It seems as though this--and a hydrogen-based 
economy is at least some decades away. And in the meantime, we 
have to face pragmatically our various energy needs, and we 
have to face them in an innovative and creative way. And what 
is DOE doing in the interim to bridge the gap between the 
fossil fuel-based economy and the hydrogen-based economy?
    Mr. Garman. Well, the most inexpensive way of reducing 
energy use is to make current energy use more efficient. And 
that is the primary goal, if you will, of my office in DOE, and 
we spend more money on enhancing energy efficiency, through the 
weatherization program, through vehicle technologies programs, 
through partnerships with industries, and a whole host of other 
programs, than we do on anything else in my office, because 
efficiency--improving the efficiency of current use is job one.
    And I think that is reflected in the work of this committee 
in the energy bill. So I think in the short term the answer is 
efficiency. That is your quickest and cheapest way to reduce 
the demands of energy use on the environment and our 
pocketbooks.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Barton. Thank you. The other gentleman from Illinois, 
Mr. Shimkus, is recognized for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chair, and I apologize for 
being late. But this is a great hearing, and, of course, this 
is something my friend from Maine and I have discussed ad 
nauseam at different forums. But I think the thing--even though 
there are sometimes things that separate us, I think what 
unites us is this is exciting, and we--the sooner we can get 
here, the better.
    I would also be interested in getting a copy of the 
national hydrogen energy roadmap, because a lot of discussion 
will be about, you know, the fuel. Since I am a conservative, 
market-driven individual, instead of the government eventually 
trying to pick winners and losers on the fuel, what we--I think 
what would be best to do is to set the standards and allow the 
different--the market force to then move to produce the best 
competitive fuel for the particular use.
    I always talk about natural gas quite a bit, because 
natural gas, I don't think, is a choice for most electricity 
generators. It is a higher cost, and we use it for peaking. We 
use--for the most part in this country use coal. We use 
nuclear. We use a lot of options. In the midwest, natural gas 
is best used for home heating. That is not true in the 
northeast, but it is probably the most efficient way to use 
natural gas.
    When we, as a government, try to distill policies to pick 
winners and losers on the commodity end, we, in essence, 
disenfranchise all of the other folks out there. So that is why 
I am interested in the energy roadmap and what has been 
discussed about the possible input fuel.
    I know there is great research going on at Southern 
Illinois University at Carbondale with coal and the production 
of hydrogen from that fossil fuel, which we find is exciting. I 
will be also interested in biomass issues with--of course, with 
my focus on corn and soybeans, which is no surprise of my 
chairman here.
    But we want to make sure that as we move to this that all 
of the input, the commodities, are given a goal, and then we 
allow technology to flow in that direction to let the market 
choose the best fuel for the best use, which will also allow us 
to--for the best fuel for the best use in other arenas, whether 
that is home heating or whether that is electricity generation. 
That is this whole reason why we have the big energy debate 
that we have to some extent. So I just wanted to get that on 
the record.
    We also are excited about--and I know we have got panelists 
in the next group with what will be planned here with the cars 
and the fueling station with the Shell consortium and GM, which 
has a real world application upfront, close and personal.
    I don't think my three boys who are growing and our luggage 
will fit in the Prius on a drive from Maine to Washington, DC. 
But I think there are some hydrogen vans that I observed that 
might be able to fit us all in there, which, again, just lends 
itself to the great opportunities for the future.
    I guess the biggest hurdle and the question I have had is 
the--and you have probably addressed it, and I apologize if you 
have--but obviously, for that fueling station to be placed on 
the hill, there is going to be concern--first of all, there 
would be the concern of the cost for the individual, and you 
had mentioned that a little bit also. It was in the tail end on 
the security issues from my colleague from Indiana.
    How do we go about alleviating those fears and concerns? 
And how do we incentivize the placement of infrastructure to 
provide the fueling stations for this new technology?
    Mr. Garman. The cost and the safety and the security 
aspects are part of our research, development, and 
demonstration activities now. We actually just put a 
competitive solicitation on the street offering up to $150 
million in cost-shared activities related to demonstration and 
technology validation, to actually get cars and stations on the 
road in prototype, in different geographical areas, so that we 
can see what works, what doesn't work, how to drive the costs 
down.
    We have already done a little bit of work. We probably 
have, what, 10 or 15 hydrogen refueling stations in the country 
now. In each one we make more and more improvement in lowering 
the cost. That is indeed very important.
    In terms of incentives, I think it is too early to talk 
about incentivizing the placement of fueling stations in a 
market setting, because, frankly, we want to make some progress 
on the technology.
    But Congress, in its wisdom at some point, says, ``Well, 
let us do a production tax incentive, or a tax credit to 
incentivize.'' But we are not there yet on the hydrogen 
vehicles or the infrastructure. When the technology and the 
costs get in the ballpark, then I think it is ripe to start 
talking about how we incentivize the placement.
    Mr. Barton. The gentleman's time has expired.
    We are going to start our second and last round of 
questions for the administration witness, and the Chair is 
going to recognize himself.
    I am going to feed on what--a little bit what Congressman 
John was asking and Congressman Allen, and also Congressman 
Shimkus. I want to try to get some definition on the base case 
model or the base case goals for the efficiency or the cost of 
hydrogen.
    In my congressional district, my town meeting reference 
case for cost of gasoline is somewhere between $1 a gallon and 
$1.25 a gallon. When gasoline is at that price level, I don't 
have too many complaints. But when it gets above it, you know, 
my town meeting reference model people start, ``Congressman, 
what are you doing about the cost of gasoline?''
    So is there a goal for the reference case of what the 
equivalent cost per whatever of hydrogen should be to make it 
accepted in the marketplace as you were talking to Congressman 
Allen? And what is the unit of measure? Is it--you said 
kilogram. Is it kilogram? Is it MM BTU? Is it--you know, who 
knows? What are we--if the Congress set a target to the 
administration, ``We want fuel cells, hydrogen mobile source 
fuel cells for cars and trucks, to cost no more than the 
equivalent cost of, say, $1.50 a gallon gasoline,'' what would 
that be?
    Mr. Garman. You have just expressed our 2010 R&D goal for 
the cost of hydrogen from natural gas. Our published FreedomCar 
goal is $1.50 per gallon of gas equivalent.
    Mr. Barton. And what is that in hydrogen?
    Mr. Garman. It is roughly a kilogram.
    Mr. Barton. So you want hydrogen to be no more than $1.50 
per kilogram.
    Mr. Garman. Roughly. And that is untaxed. We haven't talked 
about taxing.
    Mr. Barton. We don't allow any talk about taxing in this 
subcommittee.
    Mr. Garman. Very good, sir. I won't get into that, then.
    Mr. Barton. This is not the Ways and Means Committee.
    Mr. Garman. But our R&D goal for 2010 is $1.50 per gallon 
of gas equivalent from natural gas.
    Mr. Barton. And is there--again, when you were referring to 
Congressman John, he kind of led you through the different 
sources and their costs. Is there any reason to believe that 
some of the non-conventional sources of hydrogen, i.e., you 
know, some of the renewables and perhaps even nuclear, can they 
get to that level? Is there any reason to believe they can't 
with enough technology research?
    Mr. Garman. I don't think they can get to that level by 
2010.
    Mr. Barton. But at some point in time.
    Mr. Garman. At some point, breakthroughs make a multitude 
of things possible.
    Mr. Barton. So you see a transition starting with natural 
gas as the choice of fuel to get to hydrogen.
    Mr. Garman. Yes.
    Mr. Barton. But over time some of these more non-
conventional renewable sources kicking in----
    Mr. Garman. Yes, sir.
    Mr. Barton. [continuing] if we invest in them.
    Mr. Garman. If we make hydrogen from coal, we want to be 
careful to also be able to develop the carbon capture and 
sequestration technology that makes that possible, because we 
don't want to taint hydrogen as a clean energy carrier with a 
dirty method of production. We do not want to do that, despite 
what some I think of the administration's critics have said.
    But it is possible, if we are making hydrogen from coal, 
and we have sequestration technologies that are $15 per ton of 
carbon emissions avoided, we might be able to get the price of 
hydrogen down below $1 from coal. And, of course, that is a 
very big ``if,'' being successful on the sequestration side, 
and that is a very important part of this equation over the 
long term.
    Mr. Barton. But if we could do that, that would be a good 
thing, since we have----
    Mr. Garman. That would be a----
    Mr. Barton. [continuing] a lot of coal resources in this 
country.
    Mr. Garman. Your constituents would be happy about the 
price.
    Mr. Barton. We all want happy constituents.
    Mr. Garman. Yes, sir.
    Mr. Barton. That is a non-partisan goal is happy 
constituents on both sides of the aisle. Talk a little bit 
about the government role in infrastructure investment. I used 
to have a natural gas-powered vehicle, and I finally gave up on 
it, because it was a real pain in the bottom to fuel it.
    Mr. Garman. That is right.
    Mr. Barton. I had to get the post office to put in a 
fueling station in Ennis, Texas, because there were no 
commercial gas--natural gas stations. And then, TXU put in 
fueling stations in the Dallas Metroplex, but you couldn't go 
up and use your Visa card. You had to get a special natural gas 
credit card from TXU, and they didn't really know how much you 
were using.
    You had to estimate each month how much you used, and it 
was just an accounting nightmare, because I couldn't have a 
corporate--I couldn't allow a corporation to subsidize the cost 
of the fuel or I would break the ethics rules. I mean, it was 
just--so I finally said the heck with it. Plus, I didn't have a 
trunk in the car because of the tank.
    Mr. Garman. Right. It is full of the tank, yes.
    Mr. Barton. So is there a Federal Government role in the 
infrastructure side of the hydrogen issue?
    Mr. Garman. There is, not only in developing the 
technologies, but we will see over time what kind of incentives 
might be necessary for that. We have had a lot of experience 
through the Energy Policy Act goals related to natural gas 
vehicles.
    Fundamentally and honestly speaking, I think the real issue 
with natural gas vehicles, and the reason I don't think they 
are going to catch on is because they don't offer a consumer 
something markedly different than the car they are driving 
today.
    You purchase a natural gas vehicle, you are going to 
probably pay a little bit more up front, you are going to have 
a more difficult time refueling it, as you have experienced, 
and you are probably going to get a little less money for it 
when you sell it. And it is going to drive very similarly, 
almost precisely like your current car.
    So what is really in it for you? Why would you, as a 
consumer, do that? Natural gas vehicles have superb 
applications in fleets, which is terrific. But this is not the 
case for personally owned, light-duty vehicles. And the reason 
I think that hydrogen is different is some of the concepts that 
some of the automakers are unveiling on hydrogen vehicles.
    It is truly something revolutionary and remarkable that 
gives you a different kind of driving experience and a 
different kind of opportunity than anything you can have today. 
And a case in point is the General Motors vehicle that they 
call the autonomy or the hy-wire. You can think of it as a 
vehicle on a 6-inch chassis with all of the electromechanical 
components you need for the vehicle in this chassis with a very 
low center of gravity, and on top of that vehicle you can put 
any variety of body styles you want--SUV, roadster, sports car, 
it doesn't matter.
    And not only does that make it easier for the automaker, 
because instead of having to have a variety of platforms to 
offer a variety of models, the automaker can just have one or 
two platforms to offer a variety of different models for 
different niches of the market.
    And you can even have one chassis with two different bodies 
if that is what you want, depending on what you want you drive 
on a given day. And that is something----
    Mr. Barton. Have one for the wife, one for you, and one for 
the teenage son and daughter.
    Mr. Garman. Or maybe you want to keep the chassis for 20 
years and get a new body every 2 or 3 years. This is the 
concept that GM has unveiled as just one example, and there are 
others as well.
    Mr. Barton. My time is way over, so I am going to have to 
cut it off. But we appreciate the answer to that, and we look 
forward to working with you.
    The gentleman from Maryland is recognized.
    Mr. Wynn. Thank you, Mr. Chairman.
    Mr. Garman, I take it that there will be multiple sources 
of generation of hydrogen, based on the President's allocation 
of resources that Mr. John has indicated. Now, there is $5 
million in for coal in 2004. Is that restricted to clean coal 
technology?
    Mr. Garman. Yes. It would be restricted, really, to 
gasification technologies, which lend themselves to a good 
cleanup and----
    Mr. Wynn. Clean coal.
    Mr. Garman. [continuing] sequestration, yes.
    Mr. Wynn. Is there any prioritization? Is natural gas No. 
1? Followed by coal? Followed by alternatives? Or is it some 
other order?
    Mr. Garman. I don't believe there is.
    Mr. Wynn. Okay.
    Mr. Garman. I think it is a question of timing.
    Mr. Wynn. Okay.
    Mr. Garman. The near-term priority is natural gas, just 
because that is what we will need----
    Mr. Wynn. Okay. The government contribution to the 
sequestration process, is that where we really come in with 
Federal grants?
    Mr. Garman. I understand that is a topic of a later hearing 
in this committee, but sequestration technology is very 
important if you want to use coal to make hydrogen.
    Mr. Wynn. So that is another step that would be required.
    Mr. Garman. If you want to make hydrogen without emitting 
carbon dioxide into the atmosphere, that is what you need to 
do.
    Mr. Wynn. Do you have a recommended figure for the 
government's contribution to that process?
    Mr. Garman. The FutureGen project, which my colleague in 
fossil energy who is not here today, is more----
    Mr. Wynn. Just a ballpark. I am not trying to pin you down.
    Mr. Garman. What the President is trying to do is he has 
announced a billion dollar initiative called FutureGen, and----
    Mr. Wynn. Is that all sequestration and recapture?
    Mr. Garman. That is focused on both electricity generation 
and hydrogen generation on a net zero emissions basis, 
meaning----
    Mr. Wynn. Is that above the $5 million for coal that is 
provided in the 2004 budget?
    Mr. Garman. That is right.
    Mr. Wynn. Okay. Do you believe that as part of the phase-
one government investment that there ought to be a commitment 
to a government fleet of hydrogen vehicles when they are not 
commercially available but when the technology makes them 
available?
    Mr. Garman. I think that government, at the appropriate 
time--and I can't tell you when I think that appropriate time 
will be--but I think it is very important for government to be 
a good first customer of this technology.
    Mr. Wynn. What would be the size of the vehicle fleet you 
would envision for the government commitment?
    Mr. Garman. I can't make that estimation. And if you would 
like, I might want to take that question for the record and do 
some thinking about that.
    Mr. Wynn. Okay. You make a comment that the 
administration's plan to accelerate hydrogen and fuel cell 
development will enable industry to make a commercialization 
decision by 2015. What does the government have to do in order 
for the industry to make that decision by 2015?
    Mr. Garman. Well, I think we have to, again, in a 
partnership, in a cost-shared basis with industry, we have to 
achieve all of our technology goals that we have set forth. And 
we hope to achieve all of these technology goals by 2010.
    Mr. Wynn. So if we do that by 2010, are we then in a 
position for the industry to start making its commercialization 
goals?
    Mr. Garman. If we achieve all of the technology goals by 
2010, I think that industry would be hard-pressed to say they 
can't make the car unless there was some kind of problem with 
the hydrogen infrastructure.
    Mr. Wynn. Okay. In the next panel, both the University of 
Michigan and the University of California testify that current 
hydrogen fuel cell programs are not adequately utilizing our 
universities to the fullest extent. They also talk about the 
loss of young talent from the schools to industry. Is this an 
area that you believe the government has a role?
    Mr. Garman. We just put $150 million on the table last week 
on inviting universities to partner with other partners to help 
move some of this dollar into research labs, not only in 
universities but in national labs, the private sector, and 
elsewhere. We think universities----
    Mr. Wynn. So it is not solely universities. They are 
competing against private labs again. I am speaking 
specifically of universities.
    Mr. Garman. Right.
    Mr. Wynn. How much for just universities?
    Mr. Garman. I will have to provide that for the record.
    Mr. Wynn. Would you----
    Mr. Garman. Yes, sir.
    Mr. Wynn. [continuing] provide that information?
    Mr. Garman. But in general, we like to offer research on a 
competitive basis.
    Mr. Wynn. Okay. Finally, looking at your map there, the 
government's role is infrastructure support. What do you 
envision us doing in terms of infrastructure support to address 
the concern the chairman raised about how you fuel up your new 
hydrogen car?
    Mr. Garman. Part of that is in the technology validation or 
demonstration activities for which we just put $150 million on 
the table. We think that there is a lot of learning that needs 
to be done, and we have already done a lot of work.
    For instance, we have safe hydrogen refueling available 
today at several locations around the country. We are still 
working on what is the right kind of vehicle fueling 
infrastructure interlock that makes sure that no hydrogen 
escapes when you are refueling the vehicle. We are still making 
sure that we have a totally safe and convenient refueling 
experience for a customer when they go to refuel a hydrogen 
vehicle.
    And, of course, we are still working on bringing down the 
costs of compressors, storage technology, and other things that 
would be associated with a hydrogen infrastructure. Cost and 
reliability are some of our major drivers in this R&D work.
    Mr. Wynn. All right. Thank you very much.
    Mr. Garman. Thank you, Congressman.
    Mr. Shimkus [presiding]. The Chair recognizes the 
gentlewoman from California. Mary, do you seek time to----
    Ms. Bono. No, thank you, Mr. Chairman.
    Mr. Shimkus. Then, the Chair recognizes the gentleman from 
Maine, Mr. Allen, for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman. I will try to be brief.
    Mr. Garman, I think this is a good project. I mean, there 
are benefits from a hydrogen-based economy and a hydrogen-based 
vehicle fleet that are obvious--cleaner air, emission from 
auto--from vehicle emissions is the most obvious. I have a 
couple of concerns.
    No. 1, there is the concern we have already talked about, 
which is how much emissions, particularly how much in the way 
of carbon emissions, come from creating the hydrogen itself. 
And I am also wondering about the arguments you make to--the 
arguments you make for--not you, but anyone might make for a 
hydrogen-based economy.
    So I have two questions there. One is, can you say whether 
or not the kind of conversion to a hydrogen-based vehicle, 
fleet of vehicles that you are anticipating, would that reduce 
our dependence on fossil fuels? And, two, would it reduce our 
dependence on foreign sources of fossil fuels? I mean, those 
are the two questions that remain in my mind.
    Thank you.
    Mr. Garman. If we look back on this first chart, you see 
that what we portray there is the entire amount of oil demanded 
by transportation. And if you look at automobiles and light 
trucks specifically, this is our target. This is the market for 
which we think fuel cells are most suited. Heavy trucks, rail, 
shipping, air--these are not a fuel cell market, except in some 
niche applications.
    So you can see the petroleum reduction benefit that would 
accrue were you to change the entire light-duty fleet over to 
hydrogen fuel cells.
    Mr. Allen. Mr. Garman, I missed your comment when this 
chart went up at the beginning of the hearing. Could you 
explain that to me?
    Mr. Garman. Sure.
    Mr. Allen. How do I see that?
    Mr. Garman. That chart basically portrays declining 
domestic production of petroleum against the ever-increasing 
demand for petroleum in the transportation sector. And that is 
projected out to 2020. And were I to have a bigger chart, you 
just see that there is really no end to the growth that is 
projected.
    So what this tells you--if we are fully successful, we 
believe that by--and I have to caveat this heavily, because 
when you are talking about predicting the future there is a 
wrath of uncertainty.
    Mr. Allen. I am with you on that.
    Mr. Garman. But we think that it is possible that by 2040 
light-duty vehicle oil consumption could be reduced by 11 
million barrels per day. And we predict that by 2040 light-duty 
vehicle carbon emissions are reduced by more than 500 million 
metric tons of carbon equivalent. So this is the brass ring, 
Congressman. This is the method.
    We have done some other analyses where we try to map the 
impact of increased CAFE or drilling in the Arctic National 
Wildlife Refuge. And while we think both of these things are 
important, they don't change the game. This is the only 
technology we know of that can change the game and still make 
available to individual consumers and Americans this freedom of 
personal mobility that they have come to expect.
    Mr. Allen. One quick question. The line for domestic 
production, that is the domestic production for oil?
    Mr. Garman. Yes, sir.
    Mr. Allen. And is the assumption in drawing the line that 
that is the trend that you expect? I mean, that is not a line 
that is affected by decisions about hybrids or hydrogen 
vehicles, or anything like that.
    Mr. Garman. No.
    Mr. Allen. That is just the line you expect for----
    Mr. Garman. Domestic production is on a downward trend, and 
we have a relatively mature petroleum province here in the 
United States where a lot of the petroleum that is available 
has been explored.
    Mr. Allen. Okay. Good. Thank you.
    Mr. Shimkus. Thank you. And I am going to just follow up 
with a couple questions. On the chart there, domestic 
production, does that refer to the crude storage of reserves in 
the United States? Or does that include imported crude? And 
does that include refinery? What does that tell me?
    Mr. Garman. That is just simply domestic crude oil 
production in million barrels per day.
    Mr. Shimkus. Domestic, not----
    Mr. Garman. Domestic.
    Mr. Shimkus. So you are not addressing imported.
    Mr. Garman. No, sir.
    Mr. Shimkus. Okay. And I am glad to see you have got your 
able assistant Jodi Hansen working. We are know her well, and 
that is good.
    The last question is: the future gen project--you should be 
receiving a letter--DOE should be receiving a letter from 
Congressman Costello, my colleague, with an invitation to visit 
Southern Illinois University at Carbondale to go over all of 
the stakeholders in our desire to obviously promote, we think, 
a very suitable location for the DOE to look at.
    That has my full support, and I am using this opportunity 
to formally lobby you in front of millions of Americans that we 
have a good place for that to be located, and that is in 
Southern Illinois. So if you would follow up on that.
    And with that, having no other individuals here, we would 
like to thank you for your time, and then we will call the 
second panel.
    Thank you, Mr. Garman.
    Mr. Garman. Thank you, Mr. Chairman.
    Mr. Barton. The second panel can be seated. We want to 
welcome our second panel from the private sector. The Chair is 
going to recognize Congresswoman Bono to make a personal 
introduction of one of her constituents.
    Ms. Bono. Thank you, Mr. Chairman. I am happy to welcome 
Catherine Rips today. She is from my district, California's 
45th Congressional District, and she is a leader in the field 
of alternative fuel research and development. She is 
representing SunLine Agency, and she has been with them since 
1997. In her current capacity, she is responsible for hydrogen 
advocacy, public education, and project development.
    Welcome to Washington, DC. I hope you enjoyed the commute. 
I do it every week, so hopefully you will have some sympathy 
for me now. Glad to have you here.
    Thank you, Mr. Chairman. And you very much for inviting 
her.
    Mr. Barton. Thank you.
    The Chair also wants to briefly, on behalf of Congressman 
Chris Cox, recognize Dr. Scott Samuelsen. Congressman Cox had 
hoped to be here to introduce you to the panel, but he is 
Chairman of the Homeland Security Select Committee and he is 
involved in a hearing with that committee.
    But I asked his staff to put together a small introduction, 
and they gave us a page of single-spaced comments. Professor 
Scott is from the University of California at Irvine. He 
directs various research projects on clean and renewable energy 
sources, including hydrogen refueling research for the South 
Coast Air Quality Management District and hydrogen-fueled 
vehicle market research with the University of California 
Institute for Transportation Studies.
    He has just recently directed the introduction of the first 
commercial hydrogen fuel cell vehicle into the United States. 
Over the next 6 months, he is going to oversee the installation 
of two public refueling stations in Orange County. So he has 
got a distinguished career in the issue before us, and we are 
very happy on behalf of Congressman Cox to welcome you to the 
subcommittee.
    We also have Mr. Byron McCormick, who is the Executive 
Director of Fuel Cell Activities for a small company called 
General Motors. We are glad to have you.
    We have introduced Ms. Rips. We have Dr. Francis Preli--is 
that----
    Mr. Preli. Preli.
    Mr. Barton. Preli. Who is Vice President of Engineering for 
UTC Fuel Cells. We have Mr. Greg Vesey.
    Mr. Vesey. Vesey.
    Mr. Barton. Vesey. See, my staff told me how to pronounce 
these, and I have already botched two of them. So I apologize. 
The staff got it right. I can't read their hieroglyphics here. 
He is President for Technology Ventures for the ChevronTexaco 
Corporation.
    We have introduced Dr. Samuelsen, and we have Dr. Johannes 
Schwank. Did I get that right? One out of three is not too bad. 
Dr. Schwank is with the University of Michigan, the Department 
of Chemical Engineering.
    Lady and gentlemen, we are going to recognize each of you, 
and we are going to start with Mr. McCormick. We are going to 
ask that you try to summarize your testimony in 5 minutes. And 
if you go a little bit over, you know, that is acceptable. So 
welcome to the subcommittee.

STATEMENTS OF J. BYRON McCORMICK, EXECUTIVE DIRECTOR, FUEL CELL 
 ACTIVITIES, GENERAL MOTORS RESEARCH & DEVELOPMENT; CATHERINE 
RIPS, DIRECTOR OF HYDROGEN PROGRAMS, SUNLINE; FRANCIS R. PRELI, 
 JR., VICE PRESIDENT, ENGINEERING, UTC FUEL CELLS; GREGORY M. 
         VESEY, PRESIDENT, TECHNOLOGY VENTURES, CHEVRON
 TEXACO CORPORATION; SCOTT SAMUELSEN, UNIVERSITY OF CALIFORNIA 
      AT IRVINE, MECHANICAL, AEROSPACE, AND ENVIRONMENTAL 
   ENGINEERING; AND JOHANNES SCHWANK, DEPARTMENT OF CHEMICAL 
              ENGINEERING, UNIVERSITY OF MICHIGAN

    Mr. McCormick. Mr. Chairman, members of the committee, 
thank you for the opportunity to be here to testify on behalf 
of General Motors. I am Byron McCormick, the Executive Director 
of General Motors, Fuel Cell Activities. And I guess put 
simply, I head the team that is developing both our hydrogen 
and fuel cells, as well as the vehicles that use them.
    Fuel cells and hydrogen are the core of GM's advanced 
propulsion strategy. We are improving fuel economy and 
emissions of our vehicles by executing a comprehensive, three-
phase strategy, including advanced internal combustion engines, 
new transmissions, as well as hybrid vehicles.
    But the ultimate and most important initiative we have is 
to establish leadership in hydrogen and fuel cells. And so 
today I would like to tell you why General Motors believes 
hydrogen and fuel cells are so critically important.
    I think as Secretary Garman said, fuel cells running on 
hydrogen fuels are ultimately the most environmentally friendly 
vehicles, because their emission is only water. Fuel cell 
vehicles are on the order of twice as efficiency as the 
internal combustion engine, have no pollution, have no 
pollutant emissions, and are quiet.
    The fuel cell vehicles enable, very importantly, energy 
feedstock diversity, which will increase energy independence 
and introduce competition in energy pricing. And so to some of 
the questions we heard earlier, once you get that competition 
and some of the volatility that we think about in the petroleum 
markets certainly has dissipated, and then hydrogen fuel cells 
also can substantially reduce greenhouse gas emissions.
    Fuel cell vehicles, on a well-to-wheel basis, using current 
technology demonstrate the potential to greatly reduce the 
greenhouse emissions, and over time we think we can really 
drive that down to a very low number.
    Fuel cells also enable innovative vehicle designs that show 
promise of being more compelling, affordable, and, in the end, 
sustainable than today's vehicles. I think the important point 
that I want to make around this subject is that for all the 
technology we talk about, it doesn't do any good if the 
consumers don't buy it. And so this notion of the compelling 
vehicle is absolutely critical to this transition we are 
talking about.
    Finally, fuel cells are potentially not only the source of 
transportation power but electric power, and I want to expand 
on that a bit in several dimensions. The development of this 
technology will create more environmentally compatible 
distributed electric power generation possibilities.
    And, in fact, an extension of that is that the automobile 
could provide electric power for some homes and work sites, 
particularly during peak times. For example, if only 1 of 25 
cars in California today were a fuel cell vehicle, their 
generating capacity would exceed that of the electric utility 
grid, because a typical car has maybe 50 to 75 kilowatts of 
electrical power, where a typical house uses 7 to 10 kilowatts 
at peak load.
    GM's commitment to fuel cells is clear. We have spent more 
than $1 billion to date, and the number is growing.
    The investment in our fuel cell program has yielded 
outstanding results. In the last 4 years, we have decreased the 
size and weight of our fuel cell stack for a given power by a 
factor of 10. With each new generation of technology, we have 
also greatly reduced the cost and complexity of our stacks, and 
we are now able to start fuel cells in freezing conditions, 
down to minus 40 Celsius, in less than a minute, which is, of 
course, one of those critical parameters if you are going to 
have cars out there on the road.
    We have also created the autonomy fuel cell concept, which 
Secretary Garman referred to, and a drivable version of that 
called the hy-wire. These vehicles combine fuel cells and what 
we call by-wire electronics--that is, sort of aerospace 
technology--in a revolutionary way that genuinely reinvents the 
automobile.
    These designs could make vehicles both more affordable and 
more compatible for our customers, because they enable 
substantially enhance functionality with fewer vehicle 
components, a longer life chassis, and a smaller number of 
vehicle architectures. And all of that actually leads to a 
better business proposition for us in terms of the capital 
intensity of our business.
    As several people have noted, we are also testing fuel cell 
vehicles in the real world. Over the next few years, we will be 
fielding several small--and I want to emphasize small--
demonstration fleets, because while the technology is immature, 
I don't think you want to put too many out there.
    And, of course, as somebody noted earlier, GM and Shell 
recently began a joint demonstration program here in 
Washington, DC to test fuel cell vehicles and the hydrogen 
fueling technology. This is a 2-year program, which began 
earlier this month, and it will give government officials like 
yourselves and your staffs the chance to experience first hand 
not only driving fuel cell vehicles but, in fact, fueling them.
    These milestones represent remarkable progress. In fact, we 
believe our rate of progress will allow us to market stationary 
fuel cells mid-decade, and we have already started to do that, 
and introduce hydrogen fuel cell vehicles by 2010.
    Now let us talk about the challenges, and I guess there are 
three in general--hydrogen storage, cost, and the fuel 
infrastructure. Relative to hydrogen storage--this is really an 
important issue--GM has demonstrated both cryogenic liquid and 
compressed hydrogen storage tanks in our prototype vehicles, 
and, in fact, here in Washington you will be able to experience 
both.
    While these methods will definitely suffice for early 
market introduction and early volumes, over the long term we 
should seek solid storage technology, such as chemical or metal 
hydrides, which will more efficiently and cost effectively 
store progressively more hydrogen on board the vehicle.
    Relative to cost, inside General Motors are key challenges 
costs. Our goal is to attain a cost target of $50 per kilowatt 
for our fuel cell propulsion system That is not just the fuel 
cell; that is hydrogen in to torque at the wheels by 2010. And 
this equates to the cost of a conventional internal combustion 
engine.
    As we reduce the cost, you get automotive scale 
applications. Many attractive business opportunities for 
stationary fuel cells are, in fact, developed. In fact, we see 
distributed electric generation as a key stepping stone to the 
introduction of fuel cell vehicles.
    Working with our strategic partner, we have developed 
several fuel cell generators using the same fuel cell 
technology we are using in our vehicles. Earlier this month--
again, here in Washington, DC--we announced an agreement by 
which Dow Chemical will purchase 35 megawatts of fuel cell 
power from General Motors.
    Under the 7-year agreement, 500 fuel cell units will 
convert--and this is one of those cases, where does the 
hydrogen come from? This is a co-product of their chemical 
industry, and we will convert that directly into electricity in 
Freeport, Texas.
    Real-time power markets and common interconnection 
standards, therefore, are really key for these small-scale fuel 
cell power units to roll out of the lab, and, by extension, 
help us with the fuel cell vehicles. And I think it should be 
really emphasized here as we talk about the infrastructure that 
a hydrogen fuel cell distributed electric generator is a 
potential hydrogen filling station, since hydrogen, by 
definition, is available at that location, which means that the 
distributed electric generation grid is a critical stepping 
stone to creating the hydrogen infrastructure.
    The third challenge we have to overcome is developing and 
implementing business models for the deployment of the hydrogen 
infrastructure. We talk about central manufacture and 
distribution, but I think we should emphasize that hydrogen can 
as well be generated at local filling stations from gasoline, 
natural gas, using an appliance-like device called a reformer.
    Hydrogen also offers the potential for home refueling using 
either an electrolyzer or natural gas at home, and this takes 
advantage of the fact that water, electricity, and natural gas 
are readily available at our homes and businesses.
    Relative to natural gas, there should be sufficient 
supplies of natural gas to produce hydrogen in the early years 
of fuel cell introduction. We estimate that if we had 1 million 
fuel cell cars on the road, and all of the hydrogen of those 
cars came from reformed natural gas, it would demand above our 
current usage of natural gas two-tenths of 1 percent.
    If you had 10 million fuel cell vehicles, it would increase 
the current demand by about 2 percent. And I might note that 
the desulfurization of gasoline that is used in our cars uses a 
lot of hydrogen generated from natural gas. That is the way you 
actually get the desulfurization. If you use that, it turns out 
you could power 10 percent of the fleet just by converting the 
hydrogen that is used to desulfurize today to hydrogen that you 
could power vehicles with.
    So where is General Motors? We recognize that to make this 
transition is going to require a three-way partnership 
involving certainly the auto industry, certainly energy 
companies, or people who may become energy companies--I don't 
want to restrict it to just the folks that are there--and 
government certainly to successfully commercialize hydrogen 
fuel cell vehicles, and, importantly, stationary applications.
    There are a number of areas where the government could have 
an immediate impact. We would welcome an extension of the 
national R&D initiative on hydrogen storage, and, again, 
leverage government labs, universities, and industrial research 
organizations.
    We would like to see an aggressive similar R&D program 
focused on breakthrough fuel cell materials, but those beyond 
the 2010/2015 timeframe that we are commercializing. We also 
believe that Department of Transportation should undeclare 
hydrogen as a hydrogen material and treat it as a fuel.
    And since the Federal and State agencies will have a role 
in transition to the hydrogen economy, they should begin that 
process by evaluating the use and impact of hydrogen fuel cell 
technologies on their operation.
    And finally, and perhaps most importantly, the government 
should take a lead in developing national templates of code 
standards that will be required for hydrogen fuel cells and, 
again, importantly, electric distributed generation.
    To summarize, we see that fuel cells are the long-term 
power source. We see hydrogen is the long-term fuel. With 
continued progress in the technology, we think fuel cell 
vehicles will be cost competitive by the end of this decade. We 
think stationary fuel cells will pave the way for fuel cell 
vehicles. We think that the hydrogen--when we think of the 
hydrogen infrastructure, we think of appliances, not just 
pipeline.
    We are focusing on small demonstration projects for the 
next 3 to 5 years. And in the 5- to 10-year timeframe, we see 
industry cooperating with government on larger scale, rail 
commercial projects as opposed to demonstrations, that will 
lead the legacy of an infrastructure.
    In closing, hydrogen and fuel cell based transportation is 
the future. The pace of technical progress is accelerating. The 
U.S. cannot be left behind or sitting on the sidelines. It is 
clear that we have intense global competition for leadership in 
this race to establish and commercial hydrogen and fuel cell 
technologies, and we think now is the time for the government, 
U.S. industry, U.S. universities, to create the partnership 
that will lead the world in the change.
    General Motors and our partners are driving to bring first 
generation fuel cell technology to market as quickly as 
possible.
    I thank you, and I look forward to responding to your 
questions.
    I might also add that a more expansive view of what I have 
just talked about was published in Scientific American October 
2002. And if you would like, we could enter it into the record.
    [The prepared statement of J. Byron McCormick follows:]

Prepared Statement of J. Byron McCormick, Executive Director, Fuel Cell 
                 Activities, General Motors Corporation

    Mr. Chairman and Members of the Committee. Thank you for the 
opportunity to be here today to testify on behalf of General Motors. I 
am Byron McCormick, Executive Director of GM's Global Fuel Cell 
Activities, and I head the team that is developing our hydrogen-powered 
fuel cell vehicles.

                   THE PROMISE OF HYDROGEN FUEL CELLS

    Fuel cells and hydrogen are core to GM's advanced propulsion 
strategy. We are committed to improving the fuel economy and emissions 
performance of our vehicles by executing a comprehensive three-phase 
technology plan that includes advanced internal combustion engines and 
new transmissions in the near term, followed by hybrid vehicles . . . 
but our ultimate vision is to establish leadership in hydrogen fuel 
cells.
    Today, I would like to tell you why General Motors believes 
hydrogen fuel cell vehicles are so important.

 Fuel cell vehicles running on hydrogen fuel are the ultimate 
        environmentally friendly vehicles because their only emission 
        is water. The fuel cell supplies electricity to an electric 
        motor that powers the wheels. The fuel cell produces 
        electricity by stripping electrons from hydrogen that travels 
        through a membrane to combine with oxygen to form water.
 Fuel cell vehicles are on the order of twice as energy 
        efficient as the internal combustion engine, have no pollutant 
        emissions, and are quiet.
 Fuel cell vehicles enable energy feedstock diversity, which 
        will increase energy independence and introduce competition 
        into energy pricing--potentially bringing down fuel and energy 
        costs in the long term and making prices more stable.
 Hydrogen fuel cells can substantially reduce greenhouse gas 
        emissions. When we look at fuel cell vehicles on a ``well-to-
        wheel'' basis, they demonstrate outstanding potential to reduce 
        or eliminate well-to-wheel greenhouse gas emissions and improve 
        overall energy efficiency, even taking into consideration how 
        we make hydrogen today. In the future, we can do even better, 
        producing hydrogen using methods that are renewable and have no 
        adverse environmental impact.
 Fuel cells also enable innovative vehicle designs that show 
        promise of being more compelling, affordable, and sustainable 
        than today's vehicles. Today, there are over six billion people 
        in the world. By the end of this century, that number will 
        approach 10 billion. Most of these people will reside in 
        emerging economies where the demand for personal transportation 
        is expected to escalate rapidly. Since only 12 percent of the 
        world's population currently own automobiles, if we are to 
        fulfill the aspirations of the remaining 88 percent for the 
        personal freedom that the automobile provides, we must find the 
        means to make our vehicles sustainable, more functional, and 
        more affordable.
 Finally, fuel cells are a potential source not only of 
        transportation power, but also of electrical power. The 
        development of this technology will create new, more 
        environmentally compatible distributed electric power-
        generation possibilities. The automobile could provide 
        electrical power to homes and worksites. Power on today's 
        electrical grid could be supplemented by the generating 
        capacity of cars in every driveway. For example, if only one 
        out of every 25 cars in California today was a fuel cell 
        vehicle, their generating capacity would exceed that of the 
        utility grid. A typical midsize fuel cell vehicle would produce 
        50 to 75 kilowatts of electrical power, where a typical 
        household may use 7 to 10 kilowatts at peak load.

             GENERAL MOTORS' FUEL CELL DEVELOPMENT PROGRAM

    Recognizing the potential of fuel cell technology, approximately 
six years ago General Motor consolidated and accelerated its fuel cell 
activities. The GM fuel cell team was given an important directive by 
management: Take the automobile out of the environmental debate. 
Regardless of whether the environmental debate is focused on air 
quality, climate, or overall sustainability, GM leadership recognized 
that global conditions must inspire bold, thoughtful actions. Our 
commitment to fuel cells is clear in the significance of our 
investment--we have spent more than a billion dollars to date, and 
growing.
    This investment in our fuel cell program has yielded outstanding 
results:

 In the last four years, we have decreased the size and weight 
        of our fuel cell stack for a given power by a factor of ten.
 With each new generation of technology, we have also reduced 
        the cost and complexity of our stack.
 We also are now able to start fuel cells from freezing--minus-
        40 deg. Celsius (minus-40 deg. Fahrenheit)--in substantially 
        less than a minute.
 We have developed a series of hydrogen fuel cell vehicles, 
        which demonstrate how fuel cell propulsion can be optimized for 
        the existing automobile. Our HydroGen1 prototype holds 15 fuel 
        cell vehicle performance records and has been demonstrated 
        around the world. HydroGen3 is our first fuel cell vehicle able 
        to dispense with a buffer battery, needed in previous 
        generations to meet performance peaks. With an improved 
        electric drive and optimized fuel cell system architecture, 
        HydroGen3 has outstanding acceleration and is capable of easily 
        cruising at 100 miles per hour.
 We also have created the AUTOnomy fuel cell concept and a 
        drivable prototype called Hy-wire. These vehicles combine fuel 
        cells with by-wire electronics and other advanced technologies 
        in a revolutionary design that ``reinvents'' the automobile. 
        These designs could make vehicles both more affordable and more 
        compelling for our customers because they enable substantially 
        enhanced functionality with fewer vehicle components, a longer-
        life chassis, and a smaller number of vehicle architectures--
        all of which have the potential to reduce manufacturing costs.
 We also are testing our fuel cell vehicles in the real world. 
        Over the next few years, we will be fielding several small 
        demonstration fleets. GM and Shell Oil recently began a joint 
        demonstration program here in Washington, D.C. to test fuel 
        cell vehicles and hydrogen fueling technology. The two-year 
        program, which began earlier this month, will give government 
        officials--like you and your staffs--the chance to experience 
        firsthand what driving a fuel cell vehicle is like. Next month, 
        in partnership with FedEx, we will begin our first commercial 
        trial of a fuel cell vehicle. This program, which will take 
        place in Japan, will run for one year. Our HydroGen3 vehicle is 
        being used in both demonstration programs.
    These milestones represent remarkable progress. In fact, we believe 
our rate of progress will allow us to market stationary fuel cell units 
by mid-decade and to introduce hydrogen fuel cell vehicles by 2010. But 
even as we are encouraged by our progress to date, it is crucial to 
recognize that the race for fuel cell development is a marathon, not a 
sprint. No one should overlook that major economic and technical 
obstacles must be conquered before these vehicles can be brought to 
market and can become commercially successful.

                 FUEL CELL COMMERCIALIZATION CHALLENGES

    Hydrogen storage, cost, and fuel infrastructure are the major 
barriers to commercialization.
    Hydrogen Storage: With respect to the vehicle, hydrogen storage is 
the toughest hurdle. GM has demonstrated both cryogenic liquid and 
compressed hydrogen storage tanks in our prototype vehicles. While 
these methods will suffice for early market introduction, over the long 
term, we should seek ``solid'' storage techniques such as chemical or 
metal hydrides, which will more efficiently and cost-effectively store 
significant amounts of hydrogen on board the vehicle.
    Cost: The key economic challenge over the coming years is to reduce 
cost. Our goal is to attain a cost target of $50 per kilowatt for our 
fuel cell propulsion system (from stored hydrogen to torque at the 
wheels) by 2010. This equates to the cost of a conventional internal 
combustion engine. To this end, we have achieved a cost improvement 
with each new generation of fuel cell stack technology, and we have a 
good understanding of the additional progress we must make in reducing 
the cost of each subsystem to achieve total system affordability.
    As we reduce cost to get to automobile-scale applications, many 
attractive business applications for stationary fuel cells are 
developing. In fact, we see distributed generation as a key 
steppingstone to the introduction of fuel cell vehicles. Working with 
our strategic partners, we have developed several fuel cell power 
generators using the same fuel cell stack technology as we are 
developing for our fuel cell vehicles. Earlier this month, here in 
Washington, we announced an agreement by Dow Chemical to purchase 35 
megawatts of fuel cell power from GM. This is the largest contract to 
date in the fuel cell industry. Under the seven-year agreement, 500 GM 
fuel cell units will convert co-product hydrogen from Dow's chemical 
manufacturing processes into electricity and heat for its facility in 
Freeport, Texas. Dow is also considering using fuel cell power at 
several of its other plants worldwide.
    We also recently announced that we will conduct a demonstration of 
a 75-kilowatt direct-hydrogen unit in both the U.S. and Japan. We 
expect to be able to market these units in the 2005 timeframe. Early 
units are intended to provide backup electricity for uninterruptible 
power supply systems, such as hospitals and high-reliability data 
communications networks, and to handle peak power demands. Real-time 
power markets and common interconnection standards for small-scale fuel 
cell power units could be a key enabler to the early roll out of 
stationary applications of our fuel cell technology and, by extension, 
the early rollout of fuel cell vehicles. It should be emphasized that 
every hydrogen-fuel cell distributed electric generator is a potential 
vehicle filling station, since the hydrogen is by definition available 
at that location--which means that distributed electric generation is a 
critical steppingstone to the hydrogen refueling infrastructure.
    Fueling Infrastructure: The third challenge we have to overcome is 
developing business models for the deployment of a hydrogen 
infrastructure and piloting technologies to support it.
    One of the more exciting aspects of hydrogen is that there are many 
scenarios for producing and delivering it. Hydrogen could be generated 
at local filling stations from gasoline or natural gas, using an 
appliance-like devise called a ``reformer.'' Hydrogen also offers the 
potential for refueling at home using an electrolyzer or natural gas 
reformer. This takes advantage of the fact that water, electricity, and 
natural gas are already available in our homes and businesses.
    Initially, hydrogen will likely be produced from many sources. 
Steam reforming of natural gas will probably be the first source 
because industry already uses this technique to produce large amounts 
of hydrogen--nine million tons per year. This process does produce 
carbon dioxide--about half as much as gasoline on a well-to-wheel 
basis. The cost of natural gas would presumably go up due to limited 
supply. However, it is doubtful that hydrogen demand will increase so 
rapidly as to adversely affect the supply of natural gas. There should 
be sufficient supplies to produce hydrogen for the early years of fuel 
cell introduction. We estimate that if we had one million fuel cell 
cars on the road and all of the hydrogen for those cars came from 
reformed natural gas, it would increase the current demand for hydrogen 
by 0.2 percent. If you had ten million fuel cell vehicles, it would 
increase current demand by 2 percent.
    Petroleum companies have said that hydrogen can be generated from 
natural gas today at approximately the same cost as conventional fuel. 
A key issue will be implementation of an efficient new hydrogen 
distribution system. Implementation would include ``on site'' creation 
of hydrogen from various feedstocks via electrolysis and reformer 
technologies. Again, a key ingredient will be nationally uniform codes 
and standards to ensure rapid implementation.

                             CALL TO ACTION

    GM has always believed that it will take a three-way partnership 
involving the auto industry, energy companies, and government to 
successfully commercialize hydrogen fuel cells for vehicles and 
stationary applications. There are a number of areas where government 
could have an immediate impact:
    We would welcome a major new national R&D initiative on hydrogen 
storage and production that would leverage the creative capabilities of 
our government labs, universities, and industrial research facilities.
    We would also like to see a similar aggressive R&D program focused 
on breakthrough fuel cell materials.
    We believe the Department of Transportation should ``undeclare'' 
hydrogen as a hazardous material and treat it as a fuel.
    And since federal and state agencies will have a role in the 
transition to the hydrogen economy and they should begin that process 
today by evaluating the use and impact of hydrogen and fuel cell 
technologies in their operations.
    Finally, the government should take the lead on development of a 
national template for the codes and standards that will be required for 
hydrogen, fuel cells, and distributed electric generation.

                                SUMMARY

    To summarize GM's position on the emerging hydrogen economy:

1. We see fuel cells as the long-term power source. GM's global fuel 
        cell program seeks to create affordable, full-performance, 
        exciting fuel cell vehicles that meet or exceed customer 
        expectations and emit only water vapor from their tailpipes. We 
        believe that customers will want to buy these vehicles.

2. We see hydrogen as the long-term fuel.

3. With continued progress on technology, we think fuel cell vehicles 
        could be cost competitive by the beginning of the next decade.

4. We think stationary fuel cells will pave the way for fuel cell 
        vehicles. By taking our vehicle fuel cell technology to the 
        stationary power market, we are learning how to improve fuel 
        cell reliability and durability, move further down the cost 
        curve, build the required manufacturing and supply base, and 
        accelerate infrastructure development.

5. When we think of hydrogen infrastructure, we think of appliances not 
        just pipelines. Traditional infrastructure such as pipelines 
        and centralized plants is not the only means to provide 
        hydrogen for fuel cell vehicles, although it will be part of 
        the solution. If hydrogen is made from natural gas at fueling 
        stations or homes, it will not be necessary to transport 
        hydrogen. We will need cost-effective and efficient reformer 
        appliances. Similarly, if hydrogen is made via electrolysis, we 
        will need practical and affordable electrolyzer appliances. 
        This is an area ripe for entrepreneurial exploration and rapid 
        implementation. For this reason, we are stressing the need for 
        governmental action on nationally uniform standards for 
        distributed electric generation, hydrogen storage, and safety 
        codes.

6. We are focusing on small demonstration projects for the next 3-5 
        years, to gain engineering knowledge that we will apply to 
        technology development still needed for the vehicle and to 
        increase our cycles of learning with respect to infrastructure 
        requirements and the codes and standards that need to be 
        addressed to enable the use of hydrogen as our future 
        automotive fuel. I would just caution that demonstration 
        projects are costly and require many of the same resources we 
        are using to refine fuel cell technology, particularly on the 
        vehicle side. In the next couple of years, the goal should be 
        to have a limited number of small-scale--but integrated--
        demonstration projects and then expand those projects later in 
        this decade.

7. In the 5-10 year timeframe, we see industry cooperating with 
        government on larger-scale, real commercial projects that leave 
        a legacy of infrastructure.
    In closing, I believe hydrogen and fuel cell-based transportation 
are the future. The pace of technical progress is accelerating. The 
U.S. cannot be left behind or sitting on the sidelines. It is clear 
that we are in an intense global competition for leadership in this 
race to establish and commercialize fuel cell technologies. In Japan, 
the kyogikai (which are companies operating under government auspices) 
are developing a program for the implementation of fuel cell 
technology. Now is the time for the U.S. government, U.S. industry, and 
U.S. universities to create a partnership that can lead the world in 
the charge to achieve this vision.
    General Motors and our partners are driving to bring first-
generation fuel cell technology to market as rapidly as possible.
    Thank you.
    I look forward to responding to your questions.

    Mr. Barton. Thank you, sir. We are going to give you the Ed 
Markey Award. It took you 11 minutes and 16 seconds. Somebody 
once said what is good for General Motors is good for the 
country.
    So we are going to give the rest of the panelists the same 
amount of time if they wish. Hopefully, they will give a little 
of that back. So we will see if the rest of them can summarize 
their testimony in less than 11 minutes. And let us start as a 
goal around 5 minutes. But, again, we want to hear what you 
folks have to say, so--and General Motors has set the standard.
    And if Congressman Markey were here, he would be very proud 
of you. You have doubled the time that we allotted.
    So, Ms. Rips, we welcome you, and we hope that you can 
summarize your testimony in 5 or 6 minutes. But, again, we want 
to hear what you have to say.

                   STATEMENT OF CATHERINE RIPS

    Ms. Rips. Thank you. If I could have 6, I will be happy.
    Mr. Barton. You have 6.
    Ms. Rips. Okay. Well, thank you very much for that. I 
greatly appreciate the opportunity to appear before you today. 
The use of hydrogen in transportation applications is a subject 
near and dear to my heart. It is something that we live and 
breathe on a daily basis.
    I represent SunLine Transit Agency, the only public transit 
agency in the country to generate hydrogen onsite and use it in 
both fuel cell and hythane buses. Hythane, in case you are not 
familiar with the term, is an ultra-clean blend of hydrogen and 
natural gas that can be used in natural gas engines that are 
commercial available today.
    For the past 3 years, we have tested natural gas reformers, 
operated electrolyzers off of grid and renewable solar power, 
demonstrated storage and dispensing systems. We have also 
actively participated in the California fuel cell partnership, 
since its inception in 1999.
    Ours is a relatively small transit property located in 
Coachella Valley or the Palm Springs area. You may know it as 
the ``Playground of Presidents'' or the ``Golf Capital of the 
World.'' Those tag lines have a great deal to do with why we 
became clean air champions.
    Eleven years ago, our board of directors--all elected 
officials--passed a resolution mandating our wholesale 
conversion to alternate fuels. Their decision was motivated by 
a commitment to clean air, public health, and a desire to 
reduce oil imports. Since 1994, we have operated our public 
transit, paratransit, and regional streetsweeping fleets 100 
percent on clean fuels. We currently operate over 150 vehicles 
on natural gas, hydrogen, and hythane.
    We established the Nation's first clean fuels mall, where 
all of our fuels are available to the public 24 hours a day. We 
also established the SunLine Beta Test Center for Advanced 
Energy Technologies, where in partnership with industry, 
government, and academia, we test and demonstrate prototype 
vehicles, distributed generation, and infrastructure 
technologies to help advance their commercialization.
    We have well over 25 million miles of experience on 
alternate fuels, mostly on natural gas. We have created what we 
consider a highly replicable model where public transit becomes 
a regional clean air catalyst.
    By launching a public-private partnership with Entergy, a 
builder and operator of natural gas stations, we were able to 
build seven public-access natural gas stations. Then, having 
made fuel available in our area, we took the lead in the DOE's 
Clean Cities Program and helped local fleet operators take 
advantage of incentives.
    As a result, over 1,000 alternate fuel vehicles now use the 
CNG stations we developed. We have every reason to believe the 
same model will work with the transition to hydrogen.
    Our approach since day one has been to remove barriers. We 
stress training, public education, and a top-down commitment. 
Because of our expertise, we have hosted visitors from 30 
countries, including foreign energy ministers and Ambassadors 
and dozens of transit properties worldwide.
    And while, fortunately, we have experienced no significant 
problems of our own, we truly believe most can be avoided 
through proper training.
    We wholeheartedly support the President's commitment to 
hydrogen. However, we respectfully request your help with a few 
problematic issues. First, we see the lion's share of emphasis 
being placed on light-duty vehicles. But based on past 
experience, we know it is the heavy-duty sector, and transit in 
particular, that is most successfully adapted to advance 
natural gas and hybrid technologies.
    We believe transit is the key place to begin the transition 
to hydrogen. That said, we know that it will take multiple 
generations before a fuel cell engine can withstand the rigors 
of 19-hour a day transit service. To achieve commercialization, 
we need committed, long-term funding for the continued 
development of a limited number of multi-year demonstration 
projects.
    Without top-down commitment to what we call the path of 
continuous improvement, the United States will lose this 
important industry to an international market that appears more 
ready to support it. Japan, Europe, Singapore, Korea, China, 
and others are currently outspending us by hundreds of millions 
of dollars.
    Second, because fuel cell technology is not ready for 
immediate commercialization, we urge you to endorse the Clear 
Act incentives for natural gas vehicles and infrastructure, and 
to extend those benefits to blends of natural gas and hydrogen. 
We can't ignore the present in favor of an uncertain future.
    We also enthusiastically support incentives for fuel 
efficiency and the use of other alternate fuels. We believe 
there are many paths to reduced consumption of oil, and America 
needs to ambitiously pursue them all. This is not the time to 
limit options. It is the time to open doors to innovation.
    Last, and critical from our standpoint, we urge you to 
support early adapters of new advanced vehicle technologies, 
regardless of whether they are natural gas hybrid or hydrogen. 
Those of us who take the risk and make the investment to 
purchase cleaner, new technologies, and improve our energy 
security and our air quality, have a way of being left with the 
most expensive version of the least-reliable technology. We 
need ongoing support to upgrade when improvements become 
available.
    So I would like to leave you with these thoughts. To best 
support the President's plan, we need to build a program under 
the FTA with committed funding for fuel cell bus development 
that runs concurrent with the DOE and DOD program that 
recognizes R&D for light-duty and heavy-duty vehicles and 
infrastructure.
    We need to address and remove barriers to utilizing 
hydrogen such as clarifying codes and standards, and we need to 
improve opportunities for public education, technician 
training, and technology transfer.
    Finally, the private sector has invested billions of 
dollars in hydrogen vehicle and related technologies. At 
present time, none of those efforts have generated a profit. We 
feel incentives are needed to motivate consumers to buy the 
clean vehicles that are already on the market and encourage 
infrastructure developers to keep building stations.
    While we have all the faith in the world that our 
technology partners will be successful in bringing down costs 
and improving reliability, we believe government must ensure 
its sustained support to encourage the private sector to 
continue investing.
    And last, any time you are near Palm Springs please visit 
us in Thousand Palms. We will be delighted to give you a tour 
and show you how these exciting technologies work in a real 
environment.
    Thank you.
    [The prepared statement of Catherine Rips follows:]

      Prepared Statement of Catherine Rips, SunLine Transit Agency

    To reduce dependency on imported oil and increase national 
security, America must reduce demand, increase supply and develop 
sustainable alternative. SunLine Transit Agency, Thousand Palms, CA, is 
committed to advancing the commercialization of clean fuel and clean 
energy technologies. A valuable national resource, SunLine is beginning 
its fourth year of producing hydrogen on site and using it in prototype 
vehicles, and in its ninth year of operating transit, paratransit and 
street sweeping fleets powered 100% by alternate fuels.
    The agency has the most hydrogen experience of any transit property 
in the country is actively working with fuel cell manufacturers, bus 
manufacturers, system integrators, energy providers, the Federal 
Transit Administration, U.S. Department of Defense, U.S. Department of 
Energy, State of California, California Fuel Cell Partnerships and 
others to create and test the next generation of heavy-duty fuel cell 
engines and vehicles, hydrogen generation, and distributed generation 
technologies.
    In conjunction with its hydrogen test program and ongoing alternate 
fuels projects, the agency established the SunLine Beta Test Center for 
Advanced Energy Technologies at its Thousand Palms headquarters. There, 
hydrogen generated on site from renewable solar power and reformed from 
natural gas is used to fuel ultra-low and zero-emission vehicles and 
stationary fuel cells; prototype advanced transportation/clean energy 
technologies are demonstrated; and compressed natural gas, liquefied 
natural gas, Hythane ' and hydrogen are available to the 
public 24 hours a day.
    It's one of a kind in the world, and as such, has drawn top-level 
visitors from 30 countries during the past three years. Delegations 
have included foreign energy ministers, ambassadors, energy department 
officials, regulators, automakers, global energy providers and a dozen 
TV news crews from the U.S., Japan, Germany and Italy.
    Since 1994, SunLine has logged 25 million clean air miles and 
displaced more than 5.5 million gallons of imported fossil fuel. The 
agency has earned 24 local, state and national awards for environmental 
leadership and efforts to advance clean fuels technology.

Summary of SunLine's Hydrogen Fleet and Infrastructure Technologies
    During the past three years, SunLine has demonstrated and/or 
performed hot weather testing on a variety of prototype vehicles 
including: two Hythane ' buses (with two additional engines 
now on test stands at Westport); the Ballard (XCELLSiS) P4 ZEbus; the 
Ballard P5 Citaro fuel cell bus; the ThunderPower LLC hybrid fuel cell 
bus; the Georgetown University methanol fuel cell bus; SunBug, the 
country's first street-legal neighborhood fuel cell vehicle; three 
hydrogen fuel cell powered golf carts; a pickup powered by a hydrogen 
internal combustion engine (ICE); five California Fuel Cell Partnership 
vehicles; and a Shelby Cobra race car with a hydrogen ICE.
    At the same time, SunLine demonstrated an HbT/Gaz de France natural 
gas reformer; a Stuart Energy Systems P3 grid-powered electrolyzer; a 
Teledyne Energy Systems Altus solar-powered electrolyzer; compression 
and storage systems; hydrogen and Hythane ' dispensers at 
3,600 psi. The agency is currently expanding its capabilities to add 
fueling at 5,000 psi, is awaiting delivery of a new Hydradix natural 
gas reformer utilizing state of the art autothermal recovery 
technology, and is a partner in a project to generate hydrogen from 
wind power. Thanks to the support of Congressman Jerry Lewis and 
Congresswoman Mary Bono, SunLine is likewise under contract by the 
National Automotive Center to introduce fuel cells to a Class 8 tractor 
in a phased approach, with the ultimate goal of demonstrating a diesel 
fuel reformer/fuel cell/hybrid electric drive train. SunLine partnered 
with UC-Riverside and is now working with Southwest Research Institute 
in Texas on this important project. The agency is also under contract 
by South Coast Air Quality Management District (AQMD) to create station 
templates for multiple hydrogen infrastructure technologies, and to 
outline considerations for building natural gas stations for future 
compatibility with hydrogen; and to test insulated Type III tanks to 
store both compressed gases and associated cyrogenic liquids.
    As a result of our experience, we offer the following strategies/
suggestions:
Heavy-Duty Sector Launches Transportation Transition
    While we wholeheartedly endorse the President's FreedomCar program 
and Hydrogen Fuel Initiative, we believe the heavy-duty sector is a 
more likely launch pad for the transition to hydrogen in transportation 
applications. Though the sector represents just 6% of the vehicles on 
the road today, heavy-duty vehicles produce 60% of the NOX 
and more than 80% of the harmful PM emissions. By starting the 
transition in the heavy-duty sector, greater gains can be made with 
fewer vehicles; heavy-duty engines developed for transit applications 
can then be used in heavy trucks.

Transit Leads Development, Demonstration and Deployment
    Public transportation is perfectly positioned to lead the 
development and testing of advanced fuels and drive trains, development 
of public access hydrogen infrastructure, training and public 
education. Transit has historically adopted advanced low emission 
technologies. Over the last decade, for example, the market share for 
natural gas transit buses has increased from zero to 25%. Today, over 
6,000 natural gas transit buses and over 500 hybrid electric buses have 
been deployed or are on order. No such parallel exists in the light-
duty sector. If however, the rest of the transportation sectors 
followed transit's lead, according to information provided by CalStart/
WestStart, one of nine corsortia created by RSPA, dependence on OPEC 
oil would be reduced by half.
    Transit districts are the ideal proving ground for new fuels as 
they operate the buses on fixed routes, utilize centralized refueling 
facilities, have highly trained mechanics, ongoing safety programs, and 
a subsidized purchasing system. In addition, transit buses have fewer 
packaging and weight constraints than passenger cars, and as the photo 
on Page 2 aptly displays, buses serve as mobile billboards to 
familiarize huge numbers of people with clean fuels, thus paving the 
way for acceptance of hydrogen-fueled consumer vehicles.
    SunLine's tagline is ``Today's Model for Tomorrow's World.'' When 
the agency converted overnight to a fleet powered 100% by natural gas 
in 1994, it created a model that can be used by public transit to speed 
the transition to hydrogen. The agency worked with a private sector 
partner, ENRG, a Southern California developer of natural gas fueling 
infrastructure, to build seven public access refueling stations 
throughout the Coachella Valley. As a result, natural gas fueling is 
available 24 hours a day, and no fleet operator is more than a 10-12 
minute drive from a station.
    Having removed the barrier of lack of availability of fuel, SunLine 
took the lead in the Coachella Valley's Department of Energy Clean 
Cities program, and together with ENRG, worked to help public and 
private fleets access available incentive and grant funds. There are 
now over 1,000 vehicles utilizing natural gas stations in SunLine's 
service territory.
    While we hear repeatedly the dilemma of ``the chicken and the 
egg''--that automakers can't sell cars until stations are built and no 
private sector business can build infrastructure for which there is no 
use--this model, using transit to develop public access 
infrastructure--can help solve the stalemate.

Efforts Coordinated at Federal Level
    A multi-year program with guaranteed funding coordinated by DOE, 
FTA and DOD must be supported from the top down to ensure the speedy 
commercialization of heavy-duty fuel cell engines, fuel cell buses and 
infrastructure technologies. Legislation recently introduced by 
Congresswoman Mary Bono advances this goal by directing the Department 
of Energy to provide a minimum of $10 million in funding for six years 
to support the consortia-based Advanced Vehicle Program to accelerate 
the commercialization of fuel cell bus technology. We strongly support 
this legislation as well as the National Heavy-Duty Fuel Cell Bus 
Initiative, which authorizes guaranteed funding at the level of $25 
million per year for fuel cell bus development and multi-year 
demonstration projects under the Reauthorization of TEA 21. We do not 
advocate creating a new program. Rather, we support modifying the 
Department of Transportation's existing Advanced Vehicle Program to 
focus exclusively on the development of fuel cell buses.
    Both programs support our belief that field-testing of fuel buses 
is essential. Both likewise recognize that because of the current state 
of technology and expense to taxpayers, demonstrations need to be 
limited to a small number of transit properties that are thoroughly 
committed to the success of such programs. Rather than deploying large 
numbers of test buses, these programs support using funds to improve 
and demonstrate multiple generations of the technology at designated 
test sites with a goal of reaching commercialization at the end of the 
six-year period.

Early Adapters Supported
    As previously stated, to reach commercialization in the timeliest 
way, a limited number of early adapters must be supported through the 
testing of multiple generations of fuel cells and related technologies. 
However, most funding mechanisms conflict with this approach. Grantors 
and appropriators understandably seek to ``spread funds around.'' 
Unfortunately, in this particular situation, that approach does not 
best serve the country's objectives.
    What we see in the field and have experienced ourselves is that 
those who take the risk and make the investment to purchase cleaner, 
new technologies that improve our energy security and our air quality 
are generally left with the most expensive version of the least 
reliable technology. As, regardless of its benefit to the country, FTA 
capital and operating funds cannot be used to support research and 
demonstration of fuel cell technology and infrastructure, early 
adapters need ongoing support from some other source to upgrade when 
improvements become available.

ICE's Play an Important Role
    In the case of heavy-duty transit applications, to reach 
commercialization, the cost of a fuel cell bus needs to be reduced from 
over $3 million per bus to $300,000, and its life expectancy needs to 
increase from 1-2 years to 12. Clearly, that is not going to happen 
overnight. Until such time as fuel cell vehicles are commercially 
viable and available, those alternatives that reduce our dependence on 
OPEC oil and improve air quality and public health should be 
aggressively pursued and incentivized. Among them are vehicles with 
natural gas, blends of hydrogen and natural gas, and hydrogen internal 
combustion engines.
    We hear but don't understand arguments against continued support 
for natural gas vehicles and infrastructure. Expanding the use of 
natural gas vehicles is a logical and practical progression toward 
developing a hydrogen transportation network. NGV deployment requires 
commercialization of systems for storing, transporting and delivering 
gaseous vs. liquid vehicle fuel. Broader use of natural gas requires 
expanded pipeline fuel delivery systems that, when adapted, can supply 
the hydrogen needed to fuel the first generation of hydrogen-powered 
consumer vehicles.
    In addition, NGV standards serve as a valuable starting point for 
the development of comparable codes and standards for hydrogen 
infrastructure and vehicles, including fuel cell vehicles. There is 
also widespread agreement that natural gas is the fossil fuel from 
which it is easiest and least expensive to extract hydrogen and will 
remain so until renewable sources become economical.
    There are currently more than 200 natural gas fueling stations in 
California and several thousand worldwide. As natural gas 
infrastructure continues to develop, it will be a simple matter to add 
equipment dispensers for blends of hydrogen and natural gas (such as 
Hythane '). By co-developing natural gas, blended fuel, and 
hydrogen infrastructure, customers are given a gaseous fueling option 
to meet any specific engine and/or duty-cycle requirement.
    Natural gas vehicles in the heavy-duty sector are meeting/
surpassing the most stringent emissions standards today. Heavy-duty 
ICEs burning hydrogen and natural gas blends could have an immediate 
environmental impact while fostering a better understanding of natural 
gas and hydrogen among commercial users.
    SunLine has and continues to work with the natural gas vehicle 
industry to test engines using fuel with increased hydrogen content by 
blending compressed natural gas with variable amounts of hydrogen. 
Based on emissions tests, even blends with relatively small amounts of 
hydrogen (20% by volume) have shown dramatic reductions in engine 
emissions.
    Vehicles with internal combustion engines burning hydrogen-natural 
gas blends are practical, achievable and affordable with existing 
technology. Most important, they create the only conceivable economic 
justification for building hydrogen infrastructure in advance of the 
commercial availability of fuel cell vehicles. This infrastructure 
growth will catalyze much needed development and refinement of the 
necessary codes and standards for deploying hydrogen vehicles.

Lessons Learned
    Since converting to alternate fuels in 1994, and since the 
Department of Energy and other funders helped SunLine open its hydrogen 
facilities in 2000, the agency has accomplished a number of goals and 
learned valuable lessons. Primary among them are:

 Leadership by elected officials is the most important 
        ingredient. Given clear policy directives and support, 
        implementation is achievable. But follow-through is essential. 
        EPAct is a case in point where policy goals were exemplary but 
        federal agencies didn't follow through. EPAct didn't fail. 
        Those who served as watchdogs failed.
 Training is key to success in any alternate fuel program. 
        Before its natural gas buses arrived, SunLine trained every 
        employee on property to be familiar with the properties and 
        benefits of the new fuel. To train its mechanics and operators, 
        the agency partnered with College of the Desert, it's local 
        community college, to create the first training curriculum for 
        alternate fuels technicians. All mechanics and operators have 
        completed the intensive course and continue to attend regular 
        training sessions. SunLine repeated the successful model with 
        hydrogen. The agency contracted the Schatz Energy Research 
        Center at Humboldt State University to teach a workshop on 
        hydrogen to every employee and board member. Working with 
        private sector and education partners, with funding from FTA, 
        SunLine co-produced the first training manual on Heavy Duty 
        Fuel Cell Engines and Related Technologies. Posted on the 
        National Renewable Energy Laboratory's (NREL) Alternate Fuels 
        Data Center website, within the first two months of its 
        appearance, the downloadable curriculum logged 132,000 hits--
        the most ever recorded in that period of time by NREL.
 Public education is a must. To gain buy-in from your 
        community, you must bring the public along. SunLine conducts 
        outreaches, participates in community events, offers weekly 
        public tours of its clean fuels facilities, operates a 
        speaker's bureau, hosts a website with a clean fuels section. 
        The agency also created an Education Collaborative with private 
        sector partners and South Coast Air Quality Management District 
        to maximize the educational value of its hydrogen facilities. 
        Museum-style interpretive signage explains various 
        technologies; collateral brochures further define tour 
        highlights. The interior of the agency's Zweig Education 
        Building, used for industry and community events, is wrapped in 
        an exhibit that invites those viewing it to be part of the 
        national security/clean air solution.
 Partners are essential. SunLine is a small agency with limited 
        funds and human resources. We could not have achieved all we 
        have without many talented and dedicated partners. Nor could we 
        have achieved as much without the steadfast support of our 
        Congresswoman, Mary Bono, who has championed our clean fuels 
        efforts since taking office. Many of our important partners are 
        listed below:

Education Partners
    Advanced Transportation Technologies Initiative (ATTI), College of 
the Desert--Energy Technology Training Center, Department of 
Environment /Urban Consortium Energy Task Force, Georgetown University, 
Humboldt State University--Schatz Energy Research Center, National 
Science Foundation, University of California--Riverside, CE-CERT

Government Partners
    California Air Resources Board, California Energy Commission, City 
of Palm Desert Coachella Valley Association of Governments, Federal 
Transit Administration, Imperial Irrigation District, Palm Springs 
International Airport, South Coast Air Quality Management District, 
U.S. Department of Defense, U.S. Department of Energy

Technology Partners
    Air Products, Allison Transmission, American Public Transportation 
Association, Ballard (formerly XCELLSIS), California Fuel Cell 
Partnership, California Hydrogen Business Council, California Natural 
Gas Vehicle Coalition, California Transit Association, Clean Air Now, 
Coachella Valley Economic Partnership, Cummins Engine Company, DCH 
Technology, Detroit Diesel, Dynetek, Engelhard Corp., ENRG, Federal 
Mogul, FIBA Technologies, Fueling Technologies, Gaz de France, HbT, 
Hydrogen Components, Inc., ISE Research, John Deere, National Hydrogen 
Association, Natural Gas Vehicle Coalition, Orion Industries, Ltd., 
Quantum Technologies, QuestAir, Shell Hydrogen, Southern California Gas 
Co., Southwest Research Institute, Stuart Energy Systems, Teledyne 
Energy Systems, Thunderpower LLC, TotalFinaElf, TIAX, UOP, UTC Fuel 
Cells, Wintec.

Challenges to Fuel Cell Commercialization
    Among the impediments to commercialization SunLine has identified 
are:

 Cost
 Reliability of fuel cells
 Availability/affordability of liability insurance
 The lack of uniform/reasonable codes and standards
 The need for comprehensive public education/outreach programs
 The lack of coordinated programs with sustained funding at the 
        federal level
 The lack of consistency by the government. (For example, CAFE 
        standards were passed and rescinded; the Clean Cities Program, 
        though very effective, is in danger of having its budget 
        slashed. Manufacturers and consumers are confused by the 
        changes and now wary of committing to any alternate fuel path.)

Prior Questions Posed by Senate Energy Committee Members
    Richard Cromwell III, general manager/CEO of SunLine, participated 
in a hearing held by the Senate Energy and Natural Resources Committee 
on April 25, 2003. Following the hearing, we were asked to respond to a 
number of questions that are likely salient. For that reason, we 
include them here as they were submitted to the Senate committee.
    Q. What are the advantages of using natural gas or another hydrogen 
carrier fuel as the feedstock for hydrogen in the short term? How will 
this increased demand for natural gas impact natural gas supply and 
prices?
    A. No technology that exists today can compete on a cost basis with 
reforming hydrogen from natural gas. Proven reforming technology 
exists, is cost-effective, and when combined with carbon sequestration, 
begins to be competitive with electrolysis from a greenhouse gas 
perspective. If we define ``short term'' as present day--2020 to 2030, 
there would be no negative impact on natural gas supplies. Rather, as 
demand increased, it would become economic to increase production. 
Beyond 2020-2030, it might be necessary to supplement U.S. natural gas 
supplies with imported liquefied natural gas (LNG).
    All that aside, every possible program should be put in place to 
make renewables cost competitive for hydrogen production. SunLine has 
demonstrated solar electrolysis since 2000. It works. We're about to 
demonstrate wind-hydrogen production as well. But until demand is 
sufficiently high to lower the cost of production, it will never be 
competitive. Another ``chicken and egg'' scenario. The solar and wind 
industries need incentives and large orders to increase production.
    Q. Is it more likely that we will have hydrogen fueling stations, 
or we will see hydrogen generated in our garages from distribute energy 
resources?
    A. Based on what we're hearing today, it is unlikely home 
electrolysis units would be cost competitive. However, a home reformer 
may be feasible. If manufacturers solve the technology issues that 
currently exist and home reformers become available, there could be a 
mix of home fueling and stations, but the primary method of delivery 
will likely be fueling stations.
    Q. Should the EPAct alternative fuel vehicle mandate program be 
continued? If so, how should it be fixed? Should we offer credits 
toward compliance for investments in fueling stations or use of fuel?
    A. Yes, the EPAct mandate program should be continued. It could be 
improved as follows: Include a study provision intended to promote 
trading of emissions credits between mobile and stationary sources; 
provide double EPAct credits for fleets acquiring dedicated heavy-duty 
alternative fueled vehicles; provide credits for companies that make a 
significant contribution to the development of alternative fuel 
infrastructure; and require the GSA to allocate the incremental cost of 
an alternative fuel vehicle over the entire federal fleet. Currently, 
GSA charges an agency the entire incremental cost of an NGV.
    Substitute language, endorsed by our partners in the Natural Gas 
Vehicle Coalition, follows:
    ``Sec. 13265. The Secretary shall establish an optional program 
under which fleets subject to the requirements of sections 13251 or 
13257(o) of this subchapter may opt out of the requirements of those 
sections by making a demonstration to the satisfaction of the Secretary 
that the fleet or covered person is in good standing with the 
regulations issued pursuant to sections 13251 or 13257(o) and that the 
fleet will achieve reductions in the use of petroleum fuels if it is 
permitted to opt-out of the requirements of these sections. The program 
established by the Secretary shall by rule:

(a) Establish a measurable annual petroleum reduction requirement for a 
        covered fleet equal to the amount of alternative fuel the fleet 
        would use if at least 60 percent of the annual amount of fuel 
        used in all light duty motor vehicles owned or otherwise 
        controlled by the fleet was alternative fuel.
(b) Allow a fleet that opts into the program to achieve petroleum 
        reduction in any manner it chooses, except that reductions in 
        the size of the fleet shall not be considered in determining 
        the total amount of petroleum reduction by the fleet.''
    Q. If we are moving to a fuel-cell based transport fleet, should we 
still be interested in ethanol, biodiesel, natural gas, etc., or should 
we just use them to make hydrogen?
    A. We should absolutely still be interested in and provide 
incentives for purchase of alternative fueled vehicles (AFVs) powered 
by ethanol, biodiesel, natural gas, and hydrogen-natural gas blends, as 
well as for hybrid vehicles that dramatically increase fuel efficiency. 
As, if not more important, we should provide incentives for purchase of 
alternative fuels at the pump. AFVs can't reduce foreign oil and lower 
emissions unless they alternate fuels are consumed.
    Unlike SunLine, which parked a fleet of diesel buses and went into 
service overnight with a new fleet powered by natural gas, as a 
country, we will never see a wholesale conversion at any point in time 
to a new fuel (hydrogen or otherwise). What we've seen repeatedly this 
past 10 years is that different clean fuels fit different circumstances 
and what works in one location/situation may not in another. Options 
should never be limited. Our goals (displacing imported petroleum and 
improving air quality) should be fuel neutral. What should be mandated 
or regulated is the outcome--not the fuel type.
    Q. Aside from new R&D funding, what can/should Congress do to 
hasten development of hydrogen-fueled vehicles?
    A. Revise DOE's timetable from 2020 back to 2010-2015; increase the 
purchase and use of hydrogen vehicles by federal fleets; pass 
sustained, guaranteed funding for research, development and 
demonstration of heavy duty fuel cell transit buses; offer incentives 
for infrastructure development.
    Q. Which policy actions are more important for deployment of 
advanced technology vehicles--R&D, tax incentives, demonstration 
projects or regulations?
    A. No one action can be singled out. A coherent program is needed 
that addresses all of the above. Transitioning to a hydrogen economy 
has been likened to putting a man on the moon. Many in the industry 
think it will be more difficult! We have to do everything possible as a 
concerted, coordinated effort to move the technology forward.
    Q. Give the focus on hydrogen as the transportation fuel of the 
future, how much effort should we expend on using other alternative 
fuels? For example, should we use natural gas directly for transport or 
convert it to hydrogen first?
    A. We will never see a wholesale conversion at any point in time to 
a new fuel (hydrogen or otherwise). Use of all alternative fuels should 
be encouraged/rewarded. Every gallon we use (or gas gallon equivalent) 
reduces our dependency on imported oil, reduces airborne pollutants and 
reduces greenhouse gases.
    Q. Where is the U.S. compared to Europe and Japan in terms of 
competitiveness for the emerging hydrogen market? Will this new 
initiative push the U.S. ahead of its competition?
    A. While this question was likely directed toward the passenger car 
market, my answer addresses the heavy-duty transit bus market. There 
are currently seven fuel cell transit buses on order in the U.S. 
compared to 30 buses that will be delivered to 9 European cities and 
Australia through the EU's multi-national CUTE program. Japan, 
Singapore, and a group of undeveloped nations working with the World 
Bank and UNDP likewise have programs underway. Despite the fact that 
transit buses are the most visible vehicles on the road, and that 
public transit is the ideal launch pad for a fuel cell program (because 
of centralized fueling, bus size/shape, and having trained mechanics 
and operators), the U.S. has no committed, sustained funding for the 
ongoing development/refinement of heavy-duty fuel cell buses. Through 
our experience, we've learned it will take several generations of 
engines before a fuel cell can withstand the rigors of the public 
transit environment. Without a multi-year commitment to technology 
development and demonstration, the U.S. will absolutely not be 
competitive with Europe or Japan in this market.
    Q. What kind of coordination is occurring between the Department of 
Transportation and Department of Energy regarding the demonstration 
fleet vehicles including transit buses?
    A. From our standpoint, in the past, there has been little 
coordination between the two departments. We recently attended an 
industry meeting where a DOT rep stated his department's role began at 
the point where new technologies were ready for deployment. DOE, 
however, does not fund heavy-duty transit bus R&D--which leaves transit 
operators in a crack in the system. We need a coordinated program for 
research, development and demonstration of multiple generations of fuel 
cell buses and corresponding funding for continuing hydrogen 
infrastructure upgrades in order to have a success. We have the same 
problems with early generations of hydrogen generating, storage and 
dispensing technologies as we do with early generations of fuel cell 
bus engines. The early generations can't withstand the daily rigors of 
the transit environment over a multi-year period. We need continued 
funding for early adapters to upgrade to each next generation to 
improve reliability, efficiency, and cost.
    Q. What makes us think the Hydrogen Fuel Initiative will be any 
more successful than programs in the past to deploy alternate fuels and 
displace petroleum?
    A. The U.S. government has the opportunity to correct all prior 
mistakes in regard to transitioning to a new, cleaner fuel. For the 
first time, efforts could truly be coordinated between the Departments 
of Defense, Energy, and Transportation so each has a pre-planned role 
in reaching the same end point. In addition, the government can look to 
successful models between government, industry, energy providers, OEMs, 
and transit agencies such as the California Fuel Cell Partnership to 
learn how to leverage the efforts of multiple stakeholders. One final 
thought is that the RFP process and the earmark process don't 
particularly support the advancement and deployment of emerging 
technologies. The Consortia-based Advanced Vehicle Program was far more 
successful in bringing new technologies to the marketplace than other 
government programs.
    Earmarks tend to fragment funds and no coordination between 
projects is required. RFPs are very specific and exclude many very 
viable and necessary projects (and in some cases, manufacturers) 
because of technicalities that often contribute little to the outcome. 
A better system is to establish a pool for projects of a certain type 
and rank them on what they add to the country's objectives, which is 
how the Consortia-based program brought hybrid technologies to the 
marketplace. While every consideration should of course be given to 
U.S. technologies, it is self-defeating to exclude or penalize foreign 
automakers, bus makers, and/or manufacturers whose products perform 
better than similar American products. The goals are to reduce foreign 
oil imports and improve air quality--not subsidize American industry.
Legislators at SunLine
    Among our many recent visitors were Senator Barbara Boxer, who 
presented SunLine with a Conservation Champion Award in February 2002, 
Congresswoman Mary Bono, who attended the October 2002 launch of the 
ThunderPower hybrid fuel cell bus into revenue service (and actually 
drove the bus!), and Senator Byron Dorgan, who attended a hydrogen 
briefing conducted by CalStart/WestStart and SunLine March 2003.
    We extend the same invitation to all House Energy and Commerce 
Committee members to visit ``Today's Model for Tomorrow's World''--
SunLine Clean Fuels Mall.

    Mr. Barton. Thank you.
    Mr. Preli, you are recognized for 5 minutes plus.

               STATEMENT OF FRANCIS R. PRELI, JR.

    Mr. Preli. Thank you, and good morning. My name is Frank 
Preli. I am Vice President of Engineering for UTC Fuel Cells, a 
business of UTC Power, which is a unit of United Technologies 
Corporation.
    I appreciate the opportunity to participate in today's 
hearing. UTC Fuel Cells is one of the largest and most 
experienced fuel cell companies in the U.S. and the world. We 
are the only company addressing space, stationary, and 
transportation markets. UTC Fuel Cells employs a total of 850 
individuals with a team of 350 engineers and scientists focused 
solely on fuel cell research and technology development. Over 
the years, our employees have amassed more than 550 U.S. 
patents relating to fuel cell technology.
    UTC Fuel Cells produced its first fuel cell in 1961 for 
space application, and then we have supplied all of the fuel 
cells for the U.S. manned space missions. UTC Fuel Cells has 
also led the way with terrestrial fuel cell applications. We 
have sold 255 stationary 200-kilowatt size units, known as the 
PC25, to customers in 25 States, 19 countries, 5 continents. 
This also includes the powerplant that Congressman Wynn 
referred to, the police station in New York City.
    Our installed base of PC25's has generated over 6 million 
hours of clean energy. We are also a leader in the development 
of fuel cell systems for the transportation market. We count 
Nissan, Hyundai, and BMW among our transportation fuel cell 
partners. In addition, California's only hydrogen fuel cell 
transit bus and revenue service, operated by SunLine Transit, 
is powered by one of our powerplants.
    Great progress has been made in fuel cell technology. For 
example, in the past 5 years, the life of the PEM-type fuel 
cell stacks has been extended from 100 hours to 1,000 hours, 
and recent laboratory testing has demonstrated lives of 10,000 
hours. Costs have also come down dramatically, albeit from a 
very lofty starting point of $600,000 per kilowatt for space 
applications to $4,500 per kilowatt for our current stationary 
products introduced in 1992.
    Our next generation stationary product is targeted at an 
initial cost of around $2,000 per kilowatt, and we have also 
achieved 50 percent reductions in size since 1997, and the 
weight has decreased by approximately the same amount. But we 
still have a very long way to go.
    The automotive application is the most challenging based on 
cost, durability, and performance requirements. The internal 
combustion has a 100-year head start and benefits from the huge 
volumes produced today. Therefore, it will take longer for fuel 
cells to successfully compete in this market, but the auto 
market also offers the largest payoff in terms of environmental 
benefits and our ability to reduce the Nation's dependence on 
foreign oil.
    We believe fuel cells will be deployed first in stationary 
devices, and then fleet vehicles such as transit buses, and 
only later in the personal auto market. Transit buses are a 
strategic enabler on the path to autos powered by fuel cells. 
Hydrogen fueling stations can be made available, given the 
relatively small number of inner city bus stations, and the 
powerplant size and weight requirements are less demanding than 
those associated with automobiles.
    We need to walk before we run and gain experience in real-
world operating conditions. Fleet vehicles represent a perfect 
candidate for this type of practical experience. As the 
industry gains experience in deploying fuel cells for 
stationary, inner city buses, and fleet applications, these 
successes can pave the way for zero emission fuel cell cars and 
serve as benchmarks to measure progress.
    A team effort that involves original equipment 
manufacturers, powerplant component and raw material suppliers, 
energy companies, and governments, will be required, with 
substantial, sustained global investment by public and private 
partners.
    Our recipe for successful fuel cell commercialization is 
included in my written statement, but the top ingredients here 
are: 1) development of a comprehensive long-term national 
strategy with sustained national commitment and leadership; 2) 
robust investment by the private and public sector focused on 
research, development, and demonstration programs for both fuel 
cells and hydrogen infrastructure, with an emphasis on 
renewable sources of hydrogen; 3) financial incentives and 
government purchases; 4) elimination of regulatory barriers; 
and 5) harmonized codes and standards that permit global 
involvement with open access to markets.
    We have covered a lot of distance in the past few years, 
but we engaged in a marathon, not a 100-yard dash. If the 
technical challenges are met, the private and public sector 
make robust investments, suppliers perform as predicted, 
customer acceptance is won, and the necessary infrastructure 
develops as required, we anticipate the earlier adopter vehicle 
fleets will result in significant fuel cell cars, trucks, and 
buses on the road by 2010, and a substantial amount of 
stationary fuel cell generation capacity deployed. Mass 
production of fuel cell vehicles could then begin starting in 
the 2012/2015 timeframe.
    UTC Fuel Cells believes that in order to meet the 
automotive challenge a national strategy for fuel cell 
commercialization must focus on stationary and fleet vehicles 
to ensure our success in the automotive market and get us there 
sooner. At UTC Fuel Cells, we are proud of our past 
accomplishments and excited about meeting the challenges and 
opportunities that lie ahead, so that many benefits of fuel 
cells can be enjoyed not just by the lucky few but on a global 
scale.
    We look forward to working with you, Mr. Chairman, and 
other Members of Congress to ensure the fuel cell agenda noted 
above becomes a reality, and the fuel cell promise of fuel cell 
technology is realized.
    Thank you.
    [The prepared statement of Francis R. Preli, Jr. follows:]

      Prepared Statement of Francis R. Preli, Jr., Vice President 
                      Engineering, UTC Fuel Cells

    Good morning, Mr. Chairman. My name is Frank Preli. I am Vice 
President of Engineering for UTC Fuel Cells (UTCFC), a business of UTC 
Power, which is a unit of United Technologies Corporation (UTC). UTC is 
based in Hartford, Connecticut, and provides a broad range of high 
technology products and support services to the building systems and 
aerospace industries. UTC Power is focused on the growing market for 
distributed energy generation to provide clean, efficient and reliable 
power. One of UTC Power's businesses is UTC Fuel Cells, a world leader 
in the production of fuel cells for commercial, space and 
transportation applications. I appreciate the opportunity to 
participate in today's hearing on ``The Hydrogen Energy Economy''.
    UTC Fuel Cells is one of the largest and most experienced fuel cell 
companies in the US and the world. We're the only company addressing 
the space, stationary and transportation markets. UTC Fuel Cells 
employs a total of 850 individuals and I lead a team of 350 engineers 
and scientists focused solely on fuel cell research and technology 
development. Over the years our employees have amassed an impressive 
list of more than 550 US patents related to fuel cell technology.
    UTC Fuel Cells produced its first fuel cell in 1961 for the space 
application and since then we've supplied all the fuel cells for every 
US manned space mission. UTC Fuel Cells has also led the way with 
terrestrial fuel cell applications. We've sold 255 stationary 200-
kilowatt size units known as the PC25( to customers in 25 states and 19 
countries on five continents. Our installed base of PC25s has generated 
six million hours of clean energy.
    We're also a leader in the development of fuel cell systems for the 
transportation market. We count Nissan, Hyundai and BMW among our 
transportation fuel cell partners. In addition, California's only 
hydrogen fuel cell transit bus in revenue service today is operated by 
SunLine Transit and is powered by one of our power plants.
    In 1839 Sir William Grove discovered that combining hydrogen and 
oxygen in the presence of a catalyst could generate electricity. For 
many years the potential of fuel cells was untapped. Its use in the 
space program to generate electricity and provide drinking water for 
the astronauts represented its first practical application.
    More recent technical advances plus the growing appreciation of the 
benefits of fuel cells including their clean, efficient, quiet 
operation and ability to reduce our dependence on foreign oil have 
captured the interest of not just the President of the United States, 
but also auto manufacturers, Fortune 500 companies, small business 
entrepreneurs, Wall Street, Congress, foreign governments and the 
general public.
    The automotive application is the most daunting challenge and 
therefore it will take longer for fuel cells to successfully compete in 
this market. It's the most demanding in terms of cost, durability and 
performance. On the other hand, the auto market offers the largest 
payoff in terms of reducing toxic air emissions and greenhouse gas 
emissions related to global warming, achieving oil import independence 
and providing incentives for supplier investment due to the huge volume 
of cars produced each year.
    The vision of an economy fueled by hydrogen generated from 
renewable energy sources is a revolutionary concept that will require 
evolutionary, incremental progress. We believe fuel cells will be 
deployed first in stationary devices and fleet vehicles such as transit 
buses and only later in the personal auto market. Transit buses are a 
strategic enabler on the pathway to autos powered by fuel cells. 
Hydrogen-fueling stations can be made available more readily given the 
relatively small number of inner city bus stations and the power plant 
size and weight requirements are less demanding than those associated 
with autos.
    We need to walk before we run and gain experience in real world 
operating conditions. Fleet vehicles represent a perfect candidate for 
this type of practical experience since they offer an opportunity to 
enhance the range of operation for the vehicle, gain experience with 
heavy-duty cycles and train a core group of technicians.
    As the industry gains experience in deploying fuel cells for 
stationary, inner city buses and fleet applications, these successes 
can pave the way for zero emission fuel cell cars and serve as 
benchmarks to measure progress towards the goals of the 
Administration's FreedomCAR and Fuel initiative. Similarly, we believe 
it is wise to continue the investments being made in electric drive 
train technology for hybrid cars and buses since fuel cell vehicles 
will incorporate this same technology and benefit from the technical 
advances and experience gained from these earlier vehicles.
    Fuel cells must meet certain technical and performance criteria if 
they are going to be commercially viable and accepted in the 
marketplace. These metrics vary depending on the application, but 
automobiles represent the most daunting challenge. We believe consumers 
will demand that fuel cell power plants deliver cost, durability and 
performance equivalent to the internal combustion engine.
    From a technical perspective, we've made tremendous strides in 
reducing the cost, size, and weight of fuel cells while increasing 
efficiency, and substantially improving durability. But we still have a 
long way to go.
    For example, in the past five years we've seen extraordinary 
improvements in the life of the fuel cell stack, which is where the 
electricity is produced and represents the heart of the power plant. In 
1998, proton exchange membrane (PEM) fuel cell stacks had a life of 100 
hours. By 2001, our fuel cell stacks experienced a tenfold improvement 
to 1,000 hours and just recently UTC Fuel Cells demonstrated close to 
10,000 hours of durability in laboratory tests.
    Perhaps the most remarkable aspect of this significant progress is 
that it's been accomplished not in decades, but in a matter of years. 
Building on fuel cell experience from the 1960s, 70s and 80s, the use 
of sophisticated computer simulations, custom designed testing 
equipment and the extraordinary talent of dedicated and experienced 
engineers has made this possible. We're very optimistic that with 
continued investment in public private partnerships and focused 
demonstration programs to verify and validate our laboratory findings, 
we'll meet our durability target by 2010.
    Fuel cell costs have also seen a dramatic decline. Fuel cells used 
in the space application cost $600,000 per kW; our 200 kW PC25 
stationary unit introduced in 1992 costs $4,500 per kW; and our next 
generation stationary product that will be introduced next year is 
targeted at an initial cost of around $2,000 per kW. We've achieved 
similar dramatic reductions in size and weight that also have 
contributed to the reduction in costs. For example, fuel cell stack 
size has been reduced by 50 percent since 1997 and weight has decreased 
by approximately the same.
    So while we've made substantial progress, we still have some 
challenges ahead if we are going to be competitive with the one hundred 
year old internal combustion engine technology that is produced in high 
volume. The cost improvements made to date have been achieved through a 
variety of strategies including improved use and performance of exotic 
materials, reduced number of parts, and enhanced manufacturing 
processes, but further development is required. Ultimately, we need to 
couple these technical successes with higher volumes to reduce unit 
costs.
    At UTC Fuel Cells we're confident about meeting the technical 
challenges that lie ahead. Our forty years of experience in this 
business has taught us that there will be surprises (both good and bad) 
along the way and that the best way to learn is by doing. We're 
encouraged by progress to date, but we also know that the last 
percentage points of improvement are sometimes the most difficult to 
achieve and the most costly.
    But there are other factors beyond our control that can influence 
the future of the hydrogen fuel cell. For example, we must ensure that 
similar progress is made in the development of the necessary hydrogen 
infrastructure including hydrogen production, storage and distribution. 
Codes and standards and safety procedures must be developed and 
uniformly adopted. Consumer confidence and acceptance must be won. The 
supplier base must be developed and must meet demanding specifications.
    A team effort that involves original equipment manufacturers, 
component and raw material suppliers, energy companies and governments 
will be required with substantial, sustained global investment by 
public and private partners. Our recipe for successful fuel cell 
commercialization includes the following key ingredients:


1. Articulation of a comprehensive, long term national strategy that 
        addresses stationary, portable and transportation applications;

2. Sustained national commitment and leadership;

3. Robust investment by the private and public sector;

4. Public private partnerships for research, development and 
        demonstration programs for both fuel cells and hydrogen 
        infrastructure with a focus on renewable sources of hydrogen;

5. Development and deployment of hydrogen production, storage and 
        distribution infrastructure;

6. Financial incentives and government purchases;

7. Elimination of regulatory barriers;

8. Harmonized codes and standards in the US and globally;

9. Global involvement with open access to markets; and

10. Education and outreach to ensure consumer acceptance.
    We've covered a lot of distance in the past few years, but we are 
engaged in a marathon not a 100-yard dash. Fuel cell technology has 
experienced a long gestation period and will not reach its full 
maturity for some time. We anticipate the early adopter vehicle fleets 
will result in at least 10,000 fuel cell cars, trucks and buses on the 
road by 2010 and a substantial amount of stationary fuel cell 
generation capacity deployed.
    This assumes that the technical challenges are met, the private and 
public sector make robust investments, suppliers perform as predicted, 
consumer acceptance is won and the necessary infrastructure develops as 
required. If all these efforts come together successfully, we can see 
mass production of fuel cell vehicles starting in the 2012-2015 
timeframe. We envision a bright future for fuel cells, but recognize 
the challenges and uncertainties that we must address collectively.
    My testimony today has focused on the progress made to date and the 
challenges facing the automotive market since this is both the most 
challenging and rewarding application. But UTC Fuel Cells believes that 
in order to meet the automotive challenge, a national strategy for fuel 
cell commercialization must focus on stationary and fleet vehicles to 
ensure our success in the automotive market and get us there sooner.
    At UTC Fuel Cells we're proud of our past accomplishments and 
excited about meeting the challenges and opportunities that lie ahead 
so the many benefits of fuel cells can be enjoyed not just by a lucky 
few, but on a global scale. We look forward to working with you, Mr. 
Chairman and other Members of Congress, to ensure the fuel cell agenda 
noted above becomes a reality and the full promise of fuel cell 
technology is realized.
    Thank you Mr. Chairman for the opportunity to testify.

    Mr. Barton. Thank you, sir.
    Now we want to hear from Mr. Vesey.

                  STATEMENT OF GREGORY M. VESEY

    Mr. Vesey. Thank you, Chairman Barton, Congressman Wynn, 
and members of the subcommittee. ChevronTexaco is pleased to 
have the opportunity to testify before the Energy and Commerce 
Subcommittee on Energy and Air Quality.
    My name is Greg Vesey, and, as President of ChevronTexaco's 
Technology Ventures, I oversee many facets of our company's 
advanced energy and technology development and 
commercialization, including hydrogen generation and hydrogen 
infrastructure, and can share our experience as well as our 
views regarding the critical steps required in the development 
of this technology.
    Just by way of background, ChevronTexaco is an integrated 
global energy company that produces oil, natural gas, 
transportation fuels, and other energy products. We operate----
    Mr. Barton. We have heard of ChevronTexaco.
    Mr. Vesey. We operate in 180 countries and employ more than 
53,000 people worldwide. 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.
    With regards to fuel cell technology, 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, and there are transportation 
demonstrations underway. We, in fact, have two stationary fuel 
cells, one powering a data center in our California office and 
one powering laboratories in Houston, Texas.
    To meet the challenges involved with this new technology, 
we are involved in partnerships, participating in government 
and private workshops, and privately fund basic and applied 
research for hydrogen fuels, storage, and refueling sites. 
These efforts were underway prior to President Bush's 
announcement of the hydrogen initiative in this year's State of 
the Union address, and, subsequently, DOE's solicitation on 
infrastructure.
    The administration's actions provide an impetus for the 
private sector to focus more attention on the development of 
this technology. We view new DOE programs as an excellent 
opportunity to work in partnership with auto companies and the 
U.S. Government, especially with regard to fuel production and 
distribution infrastructure.
    Developing a hydrogen infrastructure requires the 
cooperative efforts of government, auto manufacturers, major 
energy companies, and others. Hydrogen is a fuel, not a natural 
resource. 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 fuel processing business.
    The current level of discretionary capital spending on the 
refining business segment by integrated oil companies has been 
close to zero, and investments are being minimized. Integrated 
energy companies have generally been reducing their exposure to 
this business because of our inability to achieve an adequate 
return on capital.
    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 
for this risk.
    The introduction of fuel cell cars must be coordinated with 
the introduction of infrastructure. We know that the 
infrastructure must be in place before customers buy these 
cars. We also know that this will require significant 
investment, and to be successful the auto companies and energy 
companies must work together to co-develop solutions and 
support government in private-public partnerships.
    Hydrogen must be available when and where it will be 
needed. We understand that customers must be confident that 
hydrogen be available before they will buy cars that are 
powered by hydrogen. It is a significant task to develop 
technology, to produce the hydrogen at a reasonable cost, to 
make it available on a broad geographic area, to store it at 
the sales point, to fuel the cars. And, in addition, the 
technology must be employed in a safe manner to achieve total 
consumer confidence, much as we have discussed today.
    There are 9 million tons per year of hydrogen produced and 
used in the United States. This is equivalent to only 1 percent 
of the crude oil produced in America. 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 
if it is to be used for transportation.
    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. 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.
    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 
may be achievable once the demand for hydrogen is substantial. 
But as of yet, this has not been demonstrated. The ability to 
economically supply hydrogen to the market while the demand is 
low is difficult. One opportunity in this area would be for the 
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.
    A few public policy recommendations--we believe that there 
are several areas that are critical to the development of this 
technology and recommend the following. Support the technology 
development and validation for hydrogen infrastructure. We see 
the DOE-sponsored controlled hydrogen fleet and infrastructure 
demonstration and validation project as a positive step that 
will create opportunities to move the technology forward.
    Public education. It is important that the public 
understand the market drivers, environmental benefits, costs, 
and challenges associated with each stage of transition. We 
must leverage private industry stakeholders. We believe that 
this will help make the technology commercial, and also focus 
government priorities on areas where there is most need. The 
only way to accelerate efforts toward commercialization of this 
market is for the private industry and government to share the 
development costs.
    And we must monitor market signals. Often we see that 
factors can change the need for a particular technology, either 
increasing or decreasing demand. To embark on a long-term major 
government initiative without doing mid-course reviews would be 
a mistake. Periodic reviews will be necessary to assess 
progress and steer or change policy as needed and implement 
appropriate mid-course corrections.
    Thank you for the opportunity to testify. I look forward to 
questions.
    [The prepared statement of Gregory M. Vesey follows:]

Prepared Statement of Gregory M. Vesey, President, Technology Ventures, 
                             ChevronTexaco

    Chairman Barton, Ranking Member Boucher, and Members of the 
Subcommittee: ChevronTexaco is pleased to have the opportunity to 
testify before the Energy and Commerce Subcommittee on Energy and Air 
Quality on DOE's hydrogen programs and the future of advanced energy 
technologies.
    As ChevronTexaco's President of Technology Ventures, I oversee many 
facets of our company's new energy technology development and 
commercialization, including hydrogen generation and hydrogen 
infrastructure, and can share our experience as well as our views 
regarding the critical steps required in the development of this 
technology.
    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 53, 
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 ChevronTexaco's Worldwide Power and 
Gasification business unit is a world leader in gasification technology 
which is a reliable, efficient, and clean technology that converts 
hydrocarbons, such as coal, for the production of power, fuels, 
chemicals and industrial gases, such as hydrogen. Commercial examples 
of the use of our technology include Tampa Electric Power Company's 
Polk facility that produces electricity and Eastman Chemical Company's 
Kingsport, Tennessee facility that produces chemicals.
    With regards to fuel cell technology, 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 and there are transportation demonstrations underway.
    ChevronTexaco has installed two stationary fuel cells at our 
facilities in San Ramon, California and Houston, Texas. These fuel 
cells convert hydrogen from natural gas into electricity, clean water 
and usable heat, and provide secure digital-grade power to select 
information technology systems and laboratories. We undertook these 
projects 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. We are working on hydrogen infrastructure 
development issues, including production, storage, and distribution.

          CHEVRONTEXACO'S RESEARCH AND DEVELOPMENT INITIATIVES

    We continue to support development of hydrogen generation and 
hydrogen storage systems. We are active in research and development to 
create safe methods for storing and delivering hydrogen. New 
opportunities to develop the technology may be presented through 
demonstrations, including the DOE's recently announced ``Controlled 
Hydrogen Fleet and Infrastructure Demonstration and Validation 
Project.'' To meet the 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, storage, and refueling sites. These efforts were underway prior 
to President Bush's announcement of the Hydrogen Initiative in this 
year's State of the Union address and subsequently, DOE's solicitation 
on infrastructure. The Administration's actions provide an impetus for 
the private sector to focus more attention on the development of this 
technology. We view new DOE programs as an excellent opportunity to 
work in partnership with the auto companies, States, the U.S. 
government and other critical parties, especially with regard to fuel 
production and distribution infrastructure. Developing a hydrogen 
infrastructure requires the cooperative efforts of the government, auto 
manufacturers, major energy companies, and others.
    An example of the type of activity that we are involved in 
includes:
    California Fuel Cell Partnership: We continue to work with auto 
companies, other energy partners and government agencies, to provide 
hydrogen to operate a project facility that safely delivers high-
pressure hydrogen to demonstration vehicles.
    In addition, as part of this effort ChevronTexaco engages and 
supports important R&D initiatives including:
    Hydrogen Production: 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. This includes understanding 
the total environmental consequences and costs of making hydrogen from 
many different sources. Though many fuel cell systems include reformers 
that convert natural gas or other fuels to hydrogen at the site, cost 
effective hydrogen production and distribution technologies will enable 
a wider range of fuel-cell systems to operate. We are also looking at 
electrolysis to produce hydrogen from water, however as we focus on the 
transition to a hydrogen based market it is clear that making hydrogen 
from readily available hydrocarbon fuels is currently far more cost 
competitive with today's fuels. We have developed relationships with 
leading fuel-cell developers, utilities and technology companies in an 
effort to introduce competitive fuel-cell systems into the market. We 
have hydrogen generators in long term testing that will convert a 
hydrocarbon feedstock, such as natural gas or liquid hydrocarbons, into 
hydrogen.
    Delivery of Hydrogen: One other challenge is how hydrogen would be 
distributed in a decentralized manner. We are working to design a 
delivery infrastructure that is economic and safe. We are developing 
infrastructure systems to incorporate and integrate a range of new 
technologies including hydrogen extraction from natural gas, safe-site 
storage technologies, and advanced hydrogen detection and control 
systems to ensure safe handling and use. This is an array of technical 
challenges that will require involvement of many industry technology 
providers as well as public and government agencies.
    Hydrogen Storage: Hydrogen storage is a critical part of the 
infrastructure development. Distribution of fuels for commercial use 
must provide for hydrogen storage. We are currently engaged in the R&D 
and commercialization of new hydrogen storage technology through 
partnerships and internal efforts. Our objective is to provide safe 
reliable products capable of meeting a wide range of applications 
including small portable, automotive, and bulk storage applications.

                COMMERCIAL AND INFRASTRUCTURE CHALLENGES

    We have operated in the refining and marketing business segment for 
over 100 years. The financial investment has been very large. The 
current level of discretionary capital spending on the refining 
business segment by integrated oil companies has been close to zero and 
investments are being minimized. Integrated energy companies have 
generally been reducing their exposure to this business because of our 
inability to achieve an adequate 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 and that to be successful the 
auto companies and energy companies must work together to co-develop 
solutions with support of government in private/public partnerships.
    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. make it available 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. This is equivalent to only 1% of the crude oil 
produced in America. 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 if it is to be used for transportation.
    Storing hydrogen in the car, at the refueling station and 
throughout the delivery infrastructure is a sizable challenge that is 
unmet thus far. 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. We are working to develop this technology, but 
there is still more work to be done before a standard is embraced.
    Eventually the hydrogen market may be big enough that we can make 
hydrogen in large centralized plants, similar to refineries today. But 
then the hydrogen still needs to be distributed across the country. 
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 overcome.
    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 be strengthened to ensure safe maintenance facilities. 
Through research and demonstration of hydrogen generation and storage 
technology we will be able to gain the necessary safety knowledge which 
will lead to data driven codes and standards that do not currently 
exist.
    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 may be achievable once 
the demand for hydrogen is substantial, but as of yet this has not been 
demonstrated. The ability to economically supply hydrogen to the market 
while the demand is low is difficult.
    Coordination between the auto companies and energy companies for 
decisions on optimal geographic demonstration fleets of fuel-cell cars 
and buses will 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 this technology. We recommend the following:

1. Support the Technology Development and Validation For Hydrogen 
        Infrastructure: We see DOE's sponsored ``Controlled Hydrogen 
        Fleet and Infrastructure Demonstration and Validation Project'' 
        as a positive step that will create opportunities to move the 
        technology forward. It is essential that DOE integrate the 
        infrastructure issues simultaneously with fuel cell vehicle 
        development. Major energy companies that already support this 
        nation's fuel infrastructure have a key role to play in the 
        development of hydrogen based energy. ChevronTexaco is 
        committed to helping the U.S. move towards safe and cost 
        competitive solutions. This should be a high priority in terms 
        of DOE and other government R&D support.

2. Public Education: 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. As the hydrogen market evolves 
        over the next few decades, technology breakthroughs will change 
        the way hydrogen is made and supplied to the consumer. It is 
        important that the public understand the market drivers, 
        environmental benefits, costs and challenges associated with 
        each stage of the transition.

3. Leverage 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. ChevronTexaco 
        has already invested in R&D efforts in the areas of hydrogen 
        generation and storage, however the private sector alone can 
        not provide the resources and capital necessary in a technology 
        that may not see any sort of return for decades. The only way 
        to accelerate efforts towards commercialization of this market 
        is for private industry and government to share the development 
        costs.

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 and public opinion. To 
        embark on a long-term major government initiative without doing 
        mid-course reviews would be a mistake. Periodic reviews will be 
        necessary to assess progress and steer or change policy as 
        needed and implement appropriate mid-course corrections.
    I should note that this year's energy bill, H.R. 6, passed by this 
Committee and the House does include several provisions to address 
infrastructure issues with this energy 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. Barton. Thank you, sir.
    We now want to hear from Dr. Samuelsen.

                  STATEMENT OF SCOTT SAMUELSEN

    Mr. Samuelsen. Mr. Chairman, and members of the committee, 
thank you for the opportunity to provide testimony today on the 
hydrogen energy economy. I direct the National Fuel Cell 
Research Center and serve as a Professor of Mechanical, 
Aerospace, and Environmental Engineering, at the University of 
California at Irvine.
    The National Fuel Cell Research Center is deeply engaged in 
the hydrogen infrastructure and fuel cell vehicle. Last 
December, for example, the Center deployed the first commercial 
hydrogen-fueled fuel cell vehicle into the marketplace and 
commissioned a hydrogen fueling station. In the next 6 months, 
working with the South Coast Air Quality Management District, 
the Center will deploy in two cities in Southern California 
additional hydrogen fueling infrastructure.
    The frenzy generated by the President's State of the Union 
address has dramatically accelerated the otherwise controlled 
and competitive emergence of the hydrogen future. While 
exciting, this acceleration demands of Congress leadership, I 
believe, in order to assure a safe, sensible, and successful 
evolution of the new paradigm.
    If you will allow, let me identify 5 examples of 
congressional leadership opportunity. The first is 
congressional leadership to assure university research programs 
that both advance the technologies and basic understanding 
needed for both hydrogen and fuel cells, but also train 
undergraduate and graduate students to meet the demands of the 
emerging industries, some of whom you are hearing from today.
    A second area of leadership is needed to prioritize the 
renewable technologies that will be needed for large volume 
hydrogen generation. I commend the Office of Energy Efficiency 
and Renewables, and the leadership of David Garman as we 
witnessed this morning, for providing the early planning and 
initial studies and research demonstrations in this area.
    Third, recognizing that renewable energy is not sufficient, 
the congressional leadership needs to facilitate a 20-year 
roadmap for the development and deployment of fossil fuel-based 
hydrogen generation technologies that are both energy efficient 
and environmentally responsible.
    The President Future Gen Program is a hallmark step in this 
roadmap, undoubtedly. Also, the Vision 21 Program that has been 
successfully initiated by the Department of Energy.
    The fourth example is especially profound and may catch you 
a bit off guard. It is the assurance of the development and 
deployment of stationary hybrid fuel cell gas turbine 
combinations. This hybrid--stationary hybrid now--is a 
synergism that is showing a performance not before seen in 
engineering of ultra high conversion efficiencies. Fueled 
electrical conversion efficiencies, for example, of over 75 
percent on natural gas.
    The leadership of the Department of Energy, Office of 
Fossil Energy, under the direction of Assistant Secretary 
Michael Smith, for the development and deployment of such 
systems will undoubtedly change the manner by which electricity 
is generated in the future and how hydrogen is generated 
throughout the world.
    Fifth, congressional leadership is needed to provide a path 
to national standardized codes and standards. We have 
outstanding codes and standards for industrial use of hydrogen, 
such as generation and distribution, but not for the public 
use, such as dispensing and utilization.
    The industry and technical societies have done a remarkable 
job in developing the industrial standards, but this frenzy and 
acceleration of the hydrogen future creates a responsibility, I 
believe, for congressional leadership to assure a coordinated 
evolution of national-based standards that is also integrated 
into the international community, which is also, of course, not 
only within the market base but developing standards as we 
speak.
    In conclusion, I thank the committee for the opportunity to 
comment. The President's leadership has opened a window of 
opportunity for the hydrogen initiative as outlined in the 2004 
budget. But the time to act is limited, and the opportunity for 
congressional leadership will rapidly close.
    I look forward to the questions. Thank you for this 
opportunity.
    [The prepared statement of Scott Samuelsen follows:]

  Prepared Statement of Scott Samuelsen, Director, National Fuel Cell 
                    Center, University of California

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to provide testimony on hydrogen, hydrogen-fueled 
combustion and fuel cell vehicles, and regulatory encouragement for 
incorporating hydrogen fuel into the consumer-based energy economy. I 
direct the National Fuel Cell Research Center at the University of 
California, Irvine, and serve as a Professor of Mechanical, Aerospace, 
and Environmental Engineering.
    The National Fuel Cell Research Center was established by the U.S. 
Department of Energy and the California Energy Commission in 1998, 
along with a strategic alliance of industry, to accelerate the growth 
of fuel cell deployment in the nation and around the world. The 
principal focus of the Center is the development and deployment of 
stationary fuel cells systems for home, commercial, and industrial 
power, and for the fueling infrastructure in support of hydrogen 
powered vehicles. The stationary fuel cell represents a major role in 
the hydrogen fuel economy of the future.
    To investigate the future, the National Fuel Cell Research Center 
last December deployed the first commercial hydrogen-fueled fuel cell 
vehicle into the United States, and commissioned a hydrogen refueling 
station. Over the next six months, the Center will deploy two addition 
hydrogen refueling stations in Orange County. The Center conducts the 
anchor research for the U.S. Department of Energy for the design of 
stationary fuel cell systems in order to provide energy efficient and 
environmentally responsible co-production of electricity and hydrogen 
as a vehicle fuel.
    Until a few months ago, the hydrogen future was emerging at a 
controlled pace with international competitive forces creating both 
hydrogen-fueled vehicles, and a hydrogen fueling infrastructure. Both 
are remarkable in their own right as they represent dramatic paradigm 
shifts for the public: the power plant under the hood on the one hand, 
and the fuel to power the vehicular population on the other. We are 
witnessing and experiencing both in parallel.
    The gasoline engine has evolved over ninety years to become a 
reliable, safe, and inexpensive power plant. The gasoline fueling 
refining and distribution infrastructure has also experienced nearly a 
century of development to where we today park a vehicle with 20 gallons 
of liquid fuel in our home garage, often in the presence of natural gas 
flames that heat water, furnaces, and clothes dryers. We are in the 
1920's of the hydrogen fueling infrastructure and fuel cell engine.
    The frenzy generated since the State of the Union address has 
dramatically accelerated the otherwise controlled and competitive 
emergence of the hydrogen future. While exciting, this acceleration 
demands a parallel commitment on the part of Congress to provide key 
leadership and thereby assure a successful, sensible, and safe 
evolution of these two new paradigms. Allow me to identify five 
examples of Congressional Leadership Opportunities:

1. Assure a robust and active university research program that both 
        advances the state-of-the-art in fuel cell research and trains 
        the undergraduate and graduate students necessary to the meet 
        the demands of a growing hydrogen and fuel cell industry.

2. Prioritize the evolution of environmentally sensitive and efficient 
        renewable technologies for large scale hydrogen generation.

3. Recognizing that renewable energy will not be sufficient, facilitate 
        a twenty-year technology development and deployment roadmap for 
        energy efficient and environmentally responsible fossil fuel 
        based technologies for hydrogen production.

4. Assure U.S. leadership in the development and deployment of 
        stationary fuel cell/gas turbine hybrid technology that can co-
        produce electricity and hydrogen at efficiencies exceeding 70 
        percent, operating on either natural gas or coal.

5. Establish a path to establish national standardized codes and 
        standards for the public utilization of hydrogen.

(1) University Programs.
    The National Fuel Cell Research Center has over twenty graduate 
students, a staff of twelve, and over fifteen faculty. Through its 
outreach, over one hundred faculty from around the country participate 
in the ``Universities for Fuel Cells'' program sponsored by the U.S. 
Department of Energy, and the U.S. Department of Defense.The fuel cell 
was invented in 1839, over one hundred and fifty years ago. The first 
significant use of fuel cell technology was lead by NASA in the 1960's 
to power space vehicles. Similar to a car battery, fuel cells are fed a 
continuous flow of hydrogen fuel and oxygen. As a result, they produce 
a continuous and efficient flow of electricity with virtually no noise 
and near zero emission of criteria pollutants.
    Due to the investment of Congress and industry in fuel cell 
technology, we are now witnessing the emergence of commercial 
stationary fuel cells to power homes, commercial buildings, and 
industry, and the introduction of commercially designed automobiles. We 
also see the emergence of fuel cells for laptops and bio fuel cells for 
implantation in the body. The future is, indeed, remarkable and 
exciting.
    The irony is that, while the fuel cell is emerging to become 
pervasive throughout society over the next two decades, little 
attention is given to the fuel cell in today's engineering curriculum, 
and in today's university research. It is tantamount to the emergence 
of the transistor in the early 1960's. As a result, our graduate 
students are peeled out of our program by industry before they can 
conclude their theses and dissertations.
    The ``Universities for Fuel Cells'' program is designed to bring 
together key researchers from Universities and National Laboratories in 
order to focus on critical technology areas that are in need of 
research and development in order to hasten the advancement of fuel 
cells. The specific focus areas are: (1) materials, (2) systems and 
controls, (3) power electronics, (4) fuel processing, (5) 
manufacturing, and (6) simulation. Among its activities, Universities 
for Fuel Cells hosts workshops to prioritize needed R&D topics for the 
U.S. DOE, NSF and other state and federal agencies, and to establish 
collaborative R&D efforts between universities, national labs, industry 
and agencies. A long-term goal of this effort is to strengthen the 
university research community so that it may play a role as a full 
partner with industry and provide attractive career options for our 
most talented graduate students.
    If the national effort to capitalize on the full potential of 
hydrogen economy is to be successful, a leadership opportunity for 
Congress is to assure that federal mandates incorporate university 
contributions. University research not only brings fundamental research 
advances in engineering, the physical and biological sciences, social 
and business sciences in supporting the fuel cell and hydrogen future, 
but also assures that an educated workforce is developed to fill the 
requirements of industry and assure a strong U.S. presence in national 
and international fuel cell and hydrogen markets. The current 
solicitations in support of the hydrogen future do not include 
substantial university research opportunities. An example and model of 
a successful engagement of universities in support of a national 
mission is the recent Department of Energy Advanced Turbine Systems 
Program. [Congressional Leadership Opportunity #1]

(2) Hydrogen Production From Renewables
    The hydrogen future portends an opportunity use a fuel that 
produces only water as a by-product.
    This is the public perception by many and reflects a vision 
conveyed by the President in the 2003 State of the Union.
    In reality, water is not the only by-product. For fuel cells 
(either mobile or stationary) directly fueled by hydrogen, this 
statement is almost true. In addition to water, a small amount of 
nitric oxide (a criteria pollutant associated with the formation of 
photochemical oxidant in urban air sheds) is emitted. Emissions may 
also include degradation products of the fuel cell stack.
    For hydrogen used in combustion engines, the nitric oxide emission 
will be an order of magnitude higher and comparable to the best engines 
operating today on conventional natural gas and liquid fuels.
    In addition to these by-products that some might argue are minor, 
there is no argument that major pollutant and greenhouse gas by-
products can be emitted in the generation of hydrogen.
    While abundant, hydrogen is not available for use without a process 
to extract and transport the hydrogen from the point of generation to 
the point of use. If not addressed by Congress, the hydrogen generation 
to meet future demands will dramatically reduce U.S. energy efficiency, 
increase fuel dependence, and dramatically increase U.S. environmental 
impacts. No one of these outcomes is desirable. Congress has the 
opportunity to assure that a more desirable route emerges.
    For example, the most energy and environmentally benign generation 
of hydrogen is the electrolysis of water using electricity from 
renewable sources such as wind, sun, and water, captured by wind 
turbines, photovoltaic cells, and hydroelectric turbines. For these 
technologies, air pollutant emissions will be associated only with the 
transport of the hydrogen to the point of use. For transport by diesel 
truck, emissions will include NO, carbon monoxide (CO), hydrocarbons 
(HC), and particulate (PM). For transport by pipeline, emissions will 
be associated with the electricity needed to power compression of the 
hydrogen to elevated pressures.
    I commend the Office of Energy Efficiency and Renewables and the 
direction of Assistant Secretary David Garman on the planning and early 
initiatives in this area. Technology and policy to incentivize and 
sustain a major deployment of renewable energy for the production of 
hydrogen, and the use of pipelines to transport the hydrogen to the 
point of use should serve as a major focus for Congressional leadership 
to assure an environmentally responsible hydrogen future. 
[Congressional Leadership Opportunity #2]

(3) Hydrogen Production From Fossil Fuels
    The most optimistic projections of renewable energy technologies, 
however, will not produce the hydrogen demanded by societal demand. The 
rule of thumb for a most optimistic projection is \1/3\ of the total 
hydrogen by renewable sources, and \2/3\ from non-renewable sources 
such as natural gas, petroleum, coal, and nuclear.
    The principal non-renewable source for hydrogen today is the 
reformation of natural gas. In well-designed systems, the by-product 
emission will be limited to carbon dioxide (CO2). While not 
a criteria pollutant species, CO2 is a greenhouse gas and 
most closely aligned to global climate change. In reforming natural gas 
for the generation of hydrogen, care is required to assure that the 
overall emission of CO2 (gm/kw-hr) is equal to or preferably 
less than the direct fueling of a combustion engine. The goal should be 
a substantial reduction. But in the absence of Congressional 
leadership, the reality may well be a substantial increase.
    To assure fuel independence and to tap a major source of hydrogen, 
coal is the principal candidate. Today, the use of coal as a source of 
hydrogen would substantially degrade the environment. Technologies are 
under development to reverse this consequence, and the recently 
announced $1B program by the President to produce an environmentally 
sensitive coal plant for the co-production of electricity and hydrogen 
is one example. Under the Department of Energy ``Vision 21'' program, 
remarkably energy-efficient and environmentally responsible designs for 
the co-production of electricity and hydrogen have been established for 
both natural gas and coal. Leadership from Congress is required to 
assure that these early Congressional investments in Vision 21 are 
nurtured and sustained to assure the development of natural gas and 
coal technologies that are both energy-efficient and environmentally 
responsible in the co-production of both electricity and hydrogen. 
[Congressional Leadership Opportunity #3]

(4) Stationary Fuel Cell/Gas Turbine Hybrid Technology
    To maximize the energy efficiency promise of a hydrogen fuel 
economy, we must foster a key technology: the hybrid marriage of a 
stationary fuel cell and a gas turbine engine. The fuel cell produces 
electricity directly and also emits, as a byproduct, a high-pressure 
and high-temperature stream of water vapor and air which is used to 
turn a turbine generator, producing still more electricity. This so-
called ``hybrid'' technology has a synergism of performance never 
before witnessed in engineering. Rather than the 30 to 40% conversion 
of fuel energy-to-electricity (to which we are accustomed with 
conventional combustion technologies), conversion efficiencies 
approaching 80% appear possible. In addition to the high-electrical 
conversion efficiency, co-production of hydrogen is a major attribute 
of hybrid technology. The leadership of the Department of Energy Office 
of Fossil Energy, under the direction of Assistant Secretary Carl 
Michael Smith, to develop and demonstrate this technology will likely 
change the manner by which electricity is generated in the future, and 
the manner by which hydrogen is produced.
    Stationary fuel cell/gas turbine hybrid technology is a major key 
to:
    U.S. Fuel Independence. Hybrids provide a unique opportunity to 
generate electricity at remarkably high efficiencies, co-produce 
hydrogen, and utilize either natural gas or coal with zero emission of 
criteria pollutants and the production of a pure CO2-
sequesting ready stream. The range of application extends from 
distributed generation (up to 50 megawatts) to the Vision 21 Central 
Power (exceeding 300 megawatts).
    U.S. International Product Dominance in Future Energy Markets. 
Recent U.S. demonstrations with 200kW class units have confirmed the 
credibility of such systems. Based on these successful U.S. Department 
of Energy initiatives, three countries (three in the Pacific Rim alone) 
have been inspired to initiate multi-year development projects for 
hybrid technology. The United States has not established a hybrid 
technology road map.
    Capturing the U.S. leadership in hybrid technology will require 
Congressional leadership. [Congressional Leadership Opportunity #4]

(5) Codes and Regulations.
    Codes and standards for hydrogen have been developed for industrial 
applications of hydrogen, but not for public use of hydrogen. With the 
emergence of hydrogen into the public domain, attention is required to 
assure that codes and standards evolve in a timely fashion to assure 
public safety.
    To place this into perspective, the public use of hydrogen divides 
into four principal areas: generation, distribution, dispensing, and 
utilization.
    Generation. In the hydrogen consumer economy, hydrogen generation 
will occur at the site of dispensing (``on-site generation'') or at 
large sites in remote locations (e.g., coal fired power plants, wind-
farms) and the hydrogen transported by truck or by pipeline to the 
point of use.
    For large generation sites, the hydrogen generation will occur in 
classical industrial zoned locations and be operated as classical 
industrial plants. As a result, current industrial codes and standards 
are likely sufficient.
    For the on-site generation sites such as hydrogen fueling stations 
(and perhaps even home garages some day), safety codes and standards do 
not today exist.
    Distribution. Distribution is the transport of hydrogen from the 
point of generation to the point of use. In the case of automobile 
refueling, the point of use would be the dispensing station. On-site 
generation, by definition, does not require distribution. As a result, 
no additional codes or regulations are required.
    For large generation sites, transport of the hydrogen by truck or 
pipeline will be necessary. In both cases, codes and standards have 
been established. Due to the substantial expansion of the trucking 
(number of trucks, frequency of use) and pipelines (expanding from an 
existing 17 miles, for example, in southern California to hundreds of 
miles) associated with the hydrogen future, expanded codes and 
regulations will undoubtedly be appropriate
    Dispensing. Dispensing (``automobile refueling'') is a very public-
intensive activity, particularly with the evolution of the ``self-
serve'' era. Codes and regulations are in an embryonic stage, and 
requirements for standardization (for example, one ``nozzle'' for all 
vehicles; one hydrogen fuel state for all vehicles), while critical to 
the success of hydrogen deployment, are also in an embryonic state. 
``Dispensing'' is the first of two areas in which Congressional 
leadership is immediately required to assure (1) an efficient evolution 
of a robust market, (2) the evolution of a safe market that is accident 
scarce versus accident prone, and (3) the evolution of an 
internationally competitive market.
    Utilization. Utilization is the second of the two areas in which 
national leadership is immediately required for the same reasons noted 
above. Utilization encompasses the use by the public of vehicles fueled 
with hydrogen, and during many years of transition (ca. two decades) 
the interaction of the public driving conventional gasoline powered 
vehicles alongside hydrogen-fueled vehicles, and the parking of 
hydrogen-fueled vehicles in home garages, public parking spaces and 
parking structures.
    Up until January 28, the codes and standards for the public 
hydrogen economy were emerging following the traditionally successful 
process of industrial working groups and professional societies. While 
this continues, the State of the Union acceleration of the hydrogen 
future creates a need for Congressional Leadership to assure that the 
acceleration of the otherwise multi-year process does not compromise 
the final product, and the engagement of individual states in the 
creation of codes and standards does not adversely complicate the 
market or place the public at risk. The President's leadership has 
opened the window of opportunity with the Hydrogen Initiative as 
outlined in the 2004 budget, but the time to act is limited and the 
opportunity will rapidly erode. Already, states are introducing 
legislation. [Congressional Leadership Opportunity #5]
    In conclusion, I thank the committee for the opportunity to comment 
and to state my sincere encouragement of the committee in this 
important work. Regulations are often perceived as obstacles. However, 
a consistent, rational regulatory structure, which is predictable for 
industry and consumers, serves not as an obstacle but rather a well-
lighted pathway to our shared energy future. Thank you for listening to 
my testimony today and I welcome the opportunity to respond to your 
questions.

    Mr. Barton. Thank you, Dr. Samuelsen.
    Last, but certainly not least, we want to hear from Dr. 
Schwank.

                  STATEMENT OF JOHANNES SCHWANK

    Mr. Schwank. Thank you, Mr. Chairman, and members of the 
subcommittee. My name is Johannes Schwank. I am a Professor of 
Chemical Engineering at the University of Michigan, and I 
coordinate the hydrogen-related energy activities there.
    Today I would like to address the research challenges that 
we must overcome as we move to a hydrogen-based energy economy 
and touch on some of the ongoing activities at the University 
of Michigan. And, finally, I would like to propose a plan for 
better leveraging of our Nation's research universities to 
address this challenging problem.
    Today, we are at the key formative stage of the hydrogen 
economy. It is important to lay a sound scientific foundation 
that covers a broad spectrum of hydrogen-related research 
issues. We must better understand the pros and cons of all our 
technology options before deciding on winning technologies. 
This can best be accomplished by more effectively engaging the 
Nation's research university system.
    Current federally sponsored research efforts are a 
patchwork at best. While there have been a number of effective 
workshops and roadmap exercises like this hydrogen roadmap, 
there is no coordinated research program presently in place.
    While some universities, including the University of 
Michigan, have received Federal support for hydrogen-related 
research projects, the scope and scale of these academic 
programs is inadequate. If we as a Nation are going to succeed 
in leading the transition to a hydrogen economy, then we must 
create a more comprehensive and coordinated university-based 
research initiative.
    The magnitude of such a program should be on par with 
national science and technology initiatives like the 
information technology research initiative or the national 
nanotechnology initiative.
    Three of the most important research challenges in front of 
us are hydrogen generation, hydrogen storage, and hydrogen 
utilization. I have summarized some of the major research 
issues for each of these three areas in my written testimony.
    The first question is: where do we get our hydrogen? From 
fossil fuels or from water? Just like it takes money to make 
money, in the case of hydrogen energy it takes energy to make 
energy. This energy can come from a number of possible sources, 
such as fossil fuels, hydroelectric, nuclear energy, or solar. 
I submit that the jury is still out on which of these energy 
sources will dominate future hydrogen production.
    For the next couple of decades, we can still count on our 
supply of fossil fuel to make hydrogen. The U.S. has an 
enormous infrastructure investment from oil refineries to local 
gas stations. We must find a way to use this existing 
infrastructure to make hydrogen.
    At the University of Michigan, we have a DOE-funded 
research program to turn gasoline into hydrogen. For the long 
term, however, we have to turn to water as our hydrogen source. 
We must have a university-based research program on fossil fuel 
and on water-based hydrogen generation.
    The second question is: how do we store hydrogen? Finding 
safe and economical ways to store hydrogen is critical for fuel 
cell powered cars. At the University of Michigan, we are 
working on promising new storage materials. However, we have a 
long way to go. We must have a university-based research 
program to bring the storage capacity of materials to 
technically acceptable levels.
    The third question is: how do we make the best use of 
hydrogen? One of the reasons for making and storing hydrogen in 
large quantities is that we want to use it to power fuel cell 
stacks. A reasonable characterization of hydrogen fuel cell 
technology is that many of the engineering issues have already 
been solved.
    We have been hearing about practical applications in this 
hearing. However, major obstacles remain. Current fuel cells 
are still very expensive and have problems with durability. 
Most of today's fuel cell stacks do not even come close to the 
reliability we expect from household appliances or car engines. 
At the University of Michigan, we are working on these 
reliability problems.
    I note that hydrogen can also be burned in internal 
combustion engines. This lowers the emissions and gives better 
fuel efficiency. But further research is needed to better 
understand how hydrogen behaves under normal engine operating 
conditions.
    The University of Michigan has a large automotive research 
center working on the utilization of hydrogen. We must have a 
university-based research program on fuel cells and hydrogen-
powered combustion engines.
    We believe that today we have a tremendous opportunity, 
even a responsibility, to leverage the country's research 
universities in partnership with industry and government to 
build a robust and sustainable hydrogen economy. I propose that 
a university-based hydrogen energy research initiative, ERI for 
short, be established at either the National Science Foundation 
or the Department of Energy.
    This initiative would competitively select a group of 6 to 
10 universities to undertake an integrated set of basic 
research and education projects. Each center would work in 
partnership with industry and government, and more details 
about this are in the written testimony.
    For our Nation, it is of critical strategic and economic 
importance that the academic, industrial, and government 
sectors work together to assure that we lay a strong research 
foundation, permitting us to select the best pathways and 
technologies leading to our hydrogen-based energy future.
    I thank you, and I am looking forward to questions.
    [The prepared statement of Johannes Schwank follows:]

     Prepared Statement of Johannes Schwank, Professor of Chemical 
                  Engineering, University of Michigan

    Mr. Chairman and Members of the Subcommittee: Good morning. My name 
is Johannes Schwank. I am a Professor of Chemical Engineering at the 
University of Michigan, and coordinate the hydrogen research activities 
within the College of Engineering. I would like to thank you for the 
opportunity to appear before you today to provide a perspective from 
the University of Michigan concerning the importance of hydrogen--based 
energy technologies and the important role the academic community can 
play in their development.
    Let me begin by commending the Congress and particularly the House 
Subcommittee on Energy and Air Quality for its efforts to facilitate 
the better understanding of the science and technology challenges posed 
as we move to a hydrogen-based energy future.
    Today, I would like to address the significant research challenges 
that we must overcome if we are going to see a hydrogen-based economy. 
I will describe some of the ongoing activities at the University of 
Michigan. And finally, I will propose a plan for better leveraging the 
capabilities of our research universities in solving the Nation's 
energy and environmental problems.
    We find ourselves at the threshold of a worldwide shift from a 
fossil fuel economy to a hydrogen economy. Hydrogen-based energy, its 
supply and its use, will be a critical factor in economic growth, 
political stability, and the protection of our environment. This may be 
one of the greatest scientific, technical, and economic challenges our 
society faces in the coming decades. To bring this transition about 
will require significant technical advances and enormous investments in 
new materials, processes, and infrastructure. The consensus in the 
industrial and academic sector is that we must find economically and 
technically sound ways to produce, store, distribute, and utilize 
hydrogen.
    At this formative stage of the hydrogen energy economy, it is 
important to lay a sound scientific and technical foundation, 
encompassing a wide spectrum of hydrogen-related fundamental and 
applied research issues. We must better understand the pros and cons of 
all our technology options, before deciding on winning technologies. A 
broader approach placed at the beginning of the product/process 
development spectrum is required. This can best be accomplished by 
using the Nation's research university system. It is critically 
important that the Nation invest in a basic energy research program at 
the university level to address the inherent fundamental research 
challenges. Current federally sponsored research efforts are a 
patchwork at best. There is no coordinated research program presently 
in place. Although some universities, including the University of 
Michigan, receive federal support for research projects that address 
some aspects of hydrogen-based energy research, the scope and scale of 
the federal effort to overcome the important technical challenges is 
sorely inadequate. If we as a Nation are going to see the transition to 
a hydrogen economy as envisioned by this hearing, securing our 
technical leadership position in the world, then we must create a more 
comprehensive and coordinated program. The magnitude of such a program 
should be on par with national science and technology initiatives like 
the Information Technology Research initiative or the National 
Nanotechnology Initiative. I will briefly illustrate three of the key 
research challenges in front of us: hydrogen generation, hydrogen 
storage, and hydrogen utilization.

                          RESEARCH CHALLENGES

Hydrogen Generation
    The first question is: how do we secure an adequate hydrogen 
supply? Pure hydrogen does not occur naturally, and must be generated 
from other substances, for example coal, petroleum, natural gas, 
biomass, or water. This costs us some energy upfront that can come from 
a menu of possible sources: fossil fuel, hydroelectric or nuclear 
energy, solar, wind power, geothermal, or tidal energy. I submit that 
the jury is still out on which of these energy sources will dominate 
future hydrogen production.
    Let's look at our options for generating hydrogen. In the near term 
(perhaps for the next 20 years), much of the hydrogen will be generated 
from fuels like natural gas and gasoline. To convert natural gas or 
gasoline into hydrogen pure enough for fuel cells requires rather 
elaborate chemical processes involving catalysts. (A catalyst is a 
material that by its presence helps chemical reactions to proceed more 
easily.) To deal with different fuel qualities and compositions 
available in different parts of the country, better and more durable 
catalysts are needed than are presently available. The discovery of 
these new catalysts will require major advances in materials synthesis, 
surface science, computational chemistry, and reactor engineering. At 
the University of Michigan, we have a Department of Energy-funded 
research program to develop better performing gasoline fuel processors 
to make pure hydrogen for fuel cells. We are working to find ways to 
decrease the size and weight of the fuel processor system by more than 
half to make it small enough to fit into fuel cell powered passenger 
cars. This goal can only be reached by developing new catalysts that 
are at least twice as good as the best catalysts available today, and 
coming up with innovative system designs. (A list of energy-related 
research going on at the University of Michigan is provided in the 
appendix.)
    The alternative to processing fuels is making hydrogen from water, 
which is in abundant supply on the planet. You may remember your high 
school teacher doing an experiment called ``electrolysis'', where 
electricity is used to split water into hydrogen and oxygen. Lighting 
the gas bubbles coming out of the water produced a nice bang. In the 
long-term future, when our oil supplies start to dwindle, splitting of 
water may become important. To split water requires the expenditure of 
energy upfront and, currently, is not economical on a large scale. 
Major advances in technology may make this process economically more 
attractive. We need to work on more efficient methods to harness solar, 
wind, tidal, nuclear, and geothermal energy, new photocatalytic and 
photovoltaic materials, and improved thermochemical or biological 
processes. Thermochemical water splitting can be achieved using the 
heat from advanced nuclear reactors, but more research will be needed 
to fully develop these methods. It seems prudent to start now, while we 
can still count on fossil fuel supplies, on a coordinated research and 
development program in water-based hydrogen generation. Water, most 
likely, will become our long-term source for clean, large-scale 
hydrogen production.
    Further, while these and other technical issues need to be 
addressed, one must also take into consideration the existing economic 
infrastructure. The U.S. has an enormous investment in hydrocarbon 
infrastructure, from oil refineries to local gas stations. We must find 
a way to use the existing hydrocarbon-based infrastructure to 
transition within the next couple of decades to a hydrogen economy. 
However, as long as we produce hydrogen from fossil fuels, we are still 
emitting carbon dioxide into the environment. In essence, we would 
simply shift the environmental pollution problem to a different 
location, without really solving it. One possible solution to this 
problem could come from research into carbon dioxide capture and 
sequestration, which becomes a more realistic option in larger-scale, 
centralized fuel processing and hydrogen production facilities.

Hydrogen storage
    Once we have figured out how to make hydrogen in an efficient and 
economical way, the next question is how do we store and distribute it? 
Finding safe and economical ways to store hydrogen is arguably the key 
to the commercialization of fuel cell powered cars. Hydrogen can be 
stored as compressed gas, or as cryogenic liquid. It can also be stored 
or adsorbed in solid materials, such as carbon or hydride materials. 
However, none of the currently available methods is adequate for our 
technical needs. While some progress has been made over the last 
decade, the best hydrogen storage materials known today weigh at least 
twenty times more than the hydrogen they are storing. In contrast, a 
typical gasoline tank in a car weighs only a fraction of the weight of 
the gasoline inside. There is tremendous opportunity in developing new 
materials with larger hydrogen storage capacities. For example, at the 
University of Michigan, carbon nanotubes, graphite nanofibers, and new 
metal-organic framework (MOF) materials which show promise for hydrogen 
storage are under development. However, to bring the storage capacity 
to technically acceptable levels will require a great deal of 
fundamental research. To develop practical solid-state hydrogen storage 
materials requires a much better fundamental understanding of the 
storage mechanisms, materials properties, and synthesis and 
manufacturing methods.

Hydrogen utilization
    Hydrogen is attractive, since it can be efficiently and cleanly 
converted to electrical and thermal energy. One of the reasons for 
making and storing hydrogen in large quantities is that we want to use 
it to power fuel cell stacks. A reasonable characterization of hydrogen 
fuel cell technology is that many of the engineering issues have 
already been solved. There are several different types of fuel cells in 
existence, classified according to the type of membrane material used. 
The operational temperature range of each of the fuel cell types is 
limited by the type of material used in the membrane. You are hearing 
about practical applications in this hearing. However, major obstacles 
remain. Many unsolved fundamental research problems are in front of us, 
falling into the broad range of materials science, electrochemistry, 
and electrode catalysis. Current fuel cells are very expensive, but 
have problems with durability. For example, we expect a typical 
household appliance to last for many years without maintenance. 
Unfortunately, most of today's fuel cell stacks do not even come close 
to this expectation of reliability, primarily due to materials 
limitations. The catalysts on the electrodes are very sensitive to 
impurities in the hydrogen. The fuel cell membranes, depending on type, 
have their own, inherent weaknesses limiting their useful life. Fuel 
cell stacks pose challenging sealing problems. Hydrogen has a tendency 
to leak through most materials. These challenges represent a 
significant opportunity for materials and catalysis research. At the 
University of Michigan, we are working on several of these materials 
challenges, to develop a better understanding of failure mechanisms, 
and to come up with better membrane materials and electrode catalysts.
    Besides use in fuel cells, hydrogen can be burnt in internal 
combustion engines. However, since hydrogen has properties quite 
different from gasoline or diesel fuel, more research is needed to 
better understand how hydrogen behaves under engine operating 
conditions. The University of Michigan has one of the largest 
automotive engineering research centers in the country and is 
conducting research on the utilization of hydrogen in combustion 
engines. Laying the research foundation for using hydrogen in today's 
transportation systems is extremely important because so many jobs and 
industries are dependent upon these systems. Use of hydrogen in 
internal combustion engines may, in my opinion, facilitate the 
evolution to a hydrogen economy.
    Given these formidable research challenges, I submit that the 
verdict is still out which of the many energy utilization technologies 
(internal combustion, fuel cells, batteries, or hybrids) will power 
stationary or mobile systems in the future.

         A PROPOSED UNIVERSITY-BASED ENERGY RESEARCH INITIATIVE

    We believe that today we have a tremendous opportunity, even a 
responsibility, to leverage the country's research universities in 
partnership with industry and government to overcome the obstacles to 
achieving a robust and sustainable hydrogen economy. What is needed is 
a university energy research initiative specifically created to 
capitalize on the energy research expertise residing in our Nation's 
universities. This initiative should be on par with such national 
science and technology initiatives as the National Nanotechnology 
Initiative and Information Technology Research Initiative. It is easily 
as important as these initiatives and, I would argue, more important. 
While the DOE, the DOD and the NSF all have some programs to support 
individual or groups of university investigators, there is no 
strategically coordinated national initiative in place that engages the 
country's research universities in the transition to a hydrogen energy 
economy.
    I propose that a university-based Energy Research Initiative (ERI) 
be established at either the National Science Foundation or the 
Department of Energy. The primary focus of the ERI would be hydrogen-
based energy systems. Regardless of the federal agency home, basic 
research funds from all of the federal agencies promoting energy 
research should be used to supplement the program. The Energy Research 
Initiative would competitively select a group of 6-10 universities 
across the country to undertake an integrated set of basic research and 
education projects focusing on energy issues. Each center would work in 
partnership with industry and government.
    It is extremely important that promising developments and 
technologies move quickly to implementation. To promote this, we 
propose that ERI basic research activity be supplemented by 
``technology accelerator'' seed funding to encourage small businesses, 
in partnership with universities, to further develop promising 
technologies. Large companies could also play a role in this but would 
be asked to cost share their role in the activity.
    Finally, states can play a role as well by augmenting the federal 
funding for the ERI with a state-funded economic development program 
that would support the development of small energy-focused businesses 
and facilitate their linkage to larger companies within the state.
    I would recommend that $10M in federal funding be allocated to 
support each of the centers on an annual basis. Approximate breakdown 
would be: $8M for basic research and education, $2M for technology 
accelerator projects (not including any state contributions). Taking an 
approach similar to the National Science Foundation Engineering 
Research Center program, each Center could be funded for a five-year 
period with an additional five-year renewal based upon performance.
    I strongly believe that a university-based Energy Research 
Initiative that broadly focuses on the Nation's energy research and 
education needs will provide significant leveraging of federal research 
dollars. Basic research carried out in research universities provides 
the foundation for the research, development, and engineering 
continuum. Importantly, it facilitates technology transfer by moving 
new discoveries and innovations from the laboratory to the market 
place, and encouraging industry partnerships to develop promising 
technologies. For our Nation, it is of critical strategic and economic 
importance that the academic, industrial, and government sector work 
together to assure that we lay a strong research foundation, permitting 
us to select the best pathways and technologies leading to our 
hydrogen-based energy future.

                                Appendix

selected energy-related research programs at the university of michigan
    1. FUEL PROCESSORS FOR PROTON EXCHANGE MEMBRANE FUEL CELLS
    2. ADVANCED CATALYSTS FOR HYDROGEN GENERATION
    3. THERMAL TRANSIENT RESPONSE OF PROTON EXCHANGE MEMBRANE FUEL 
CELLS
    4. MICRO-FUEL CELLS AND NOVEL ELECTROCATALYSTS
    5. COORDINATION OF HYDROGEN AND AIR FLOW FOR TRANSIENT CELL LOADING
    6. SYSTEMATIC DESIGN OF PORE SIZE & FUNCTIONALITY FOR METHANE AND 
HYDROGEN STORAGE APPLICATIONS IN FUEL CELLS
    7. DEVELOPMENT OF HYDROGEN INFRASTRUCTURE FOR FUEL CELL VEHICLES
    8. MICROELECTRONIC GAS SENSORS AND GAS STORAGE MICRO-RESERVOIRS
    9. HYDROGEN STORAGE IN CARBON NANOTUBES AND CARBON NANOFIBERS
    10. HOMOGENEOUS CHARGE COMPRESSION IGNITION (HCCI) ENGINE RESEARCH 
CONSORTIUM
    11. SIMULATION-BASED DESIGN AND DEMONSTRATION OF NEXT GENERATION, 
ADVANCED DIESEL TECHNOLOGY
    12. ADVANCED HYBRID PROPULSION SYSTEM COMPONENT MODELING AND 
POWERTRAIN INTEGRATION
    13. DEVELOPMENT OF A PRESSURE REACTIVE PISTON FOR IMPROVED FUEL 
EFFICIENCY AND REDUCED EMISSIONS IN SI AND CIDI ENGINES
    14. ADVANCED BATTERY SYSTEMS AND MODELING FOR HYBRID ELECTRIC 
VEHICLES
    15. HYBRID ELECTRIC VEHICLE SYSTEM DESIGN OPTIMIZATION
    16. POROUS NANO- AND MICRO-ARCHITECTURED MATERIALS: BATTERY 
APPLICATIONS
    17. SAFETY ISSUES FOR HIGH POWER LI ION BATTERY ANODES
    18. THE UNIVERSITY OF MICHIGAN CENTER FOR INDUSTRIAL ENERGY AND 
ENVIRONMENTAL ANALYSIS
    19. IMPROVING PLATE GLASS QUENCHING TECHNOLOGY TO SAVE ENERGY
    20. DEVELOPMENT OF A HIGHLY PREHEATED COMBUSTION AIR SYSTEM WITH-
WITHOUT OXYGEN ENRICHMENT FOR METAL PROCESSING FURNACES TO 
SIGNIFICANTLY IMPROVE ENERGY EFFICIENCY AND REDUCE EMISSIONS

    Mr. Barton. Thank you, sir. And I want to thank the 
panelists for your excellent testimony. This really gives us 
kind of a breadth of analysis about where the research is and 
where the industry is.
    The Chair is going to recognize himself for the first 5-
minute questions.
    I want to go to you, Dr. Samuelsen. You mentioned that your 
fourth point was somewhat revolutionary, some sort of a hybrid 
hydrogen turbine that had efficiencies, if I understood 
correctly, of about 75 percent. Can you compare that to a 
combined cycle natural gas turbine today, what the efficiencies 
are?
    Mr. Samuelsen. Mr. Chairman, the combined cycle would be 
approaching 50, 55 percent. So it is a jump of 20 percentage 
points, 20, 25 percentage points.
    Mr. Barton. And would that be the same application that 
this research turbine that you have talked about would compete 
in the large base station powerplant generation sector?
    Mr. Samuelsen. It would be the same application in the 
center power. But in addition to that, it also has a very 
substantial application in the distributed generation market, 
the 100 kilowatts to 50 megawatt arena as well--a broader 
application.
    Mr. Barton. Okay. Mr. McCormick and Mr. Preli, you all were 
pretty optimistic. You all were kind of ``pedal to the medal, 
gung-ho, let us go for it.'' But Mr. Vesey was a little more 
``we ain't making any money, and we don't think we are going to 
get into this if we can't make some money.'' So what do you two 
guys need to do to Mr. Vesey to get him to show a little more 
enthusiasm for this program?
    Mr. Preli. I think maybe our enthusiasm stems from the fact 
that we have been working on this for 40 years, many times 
alone. And now there is a much larger effort--in fact, much of 
it is outside of the United States, and perhaps now is the 
timing between the technology that is being pulled by the 
automotive industry that also has applicability in other areas 
like stationary and fleet applications.
    So I think we are optimistic, because with so many people 
working on it, and so much investment going into it, progress 
will be made. Key issues, however, remain I think as we both 
pointed out. And that is, if you are moving toward a hydrogen 
economy, you need to have the hydrogen. And perhaps that is 
where some of this optimism needs to be tempered, because even 
if the technology is there, and even if the cost comes down, if 
you need to operate on hydrogen, then you still need to 
stimulate that and have hydrogen in your economy.
    What I will add, though, is that the first applications 
using stationary powerplants, which have been in service now 
for over 10 years, run directly on natural gas. You get around 
that infrastructure problem. You trade some of the powerplant 
efficiency, but you don't need the hydrogen. You can run them 
right on natural gas. You convert it right inside the fuel cell 
powerplant.
    Mr. Barton. Mr. McCormick, what do we need to do to make it 
possible for Mr. Vesey to make some money so that they will 
make the investments to create the hydrogen?
    Mr. McCormick. Well, a couple of general comments. As I 
mentioned, the progress on the fuel cell and propulsion 
technology is extraordinary. But very importantly, this notion 
that we can build vehicles that consumers will want to buy. And 
I think any prudent car company or any prudent fuel company 
ought to pay attention to the consumers, No. 1. And I think we 
are convinced that we will be able to do that.
    But the second thing--and I don't want to speak for 
ChevronTexaco or the energy companies--but there is a huge 
amount of capital that has to be mobilized in order to make 
this transition. We are faced between us with this chicken and 
egg issue that if we put the vehicles out there, is there an 
infrastructure? Or, conversely, if the infrastructure is there, 
will the vehicles be there?
    Particularly in the infrastructure issue, a lot of the cost 
of hydrogen that you have heard described today is attributable 
to return on capital. And so the issue of how actually capital 
is made available and how there is taxation or policies around 
that will be crucial, I think, to this transition.
    Mr. Barton. Mr. Vesey, do you want to comment on that?
    Mr. Vesey. Well, I didn't mean to come across as not 
optimistic on this, Mr. Chairman. What we have done is, in 
focusing on the business aspects of this, we have looked at 
alternative business models that might make this space 
attractive.
    So I think one of the ones you have heard some reference to 
here that we are very supportive of is a dual use, so to speak, 
of the hydrogen, where you have either a fleet, that you are 
also powering a fleet as well as filling some vehicles on the 
side, or whether you are providing distributed generated power, 
and then also fueling vehicles at the same location.
    So we are very excited about the space, but are very 
focused on proper business models for that.
    Mr. Barton. Okay. Dr. Preli, who else is involved in this 
technology in terms of creating and manufacturing the fuel 
cells? Who is our international competition?
    Mr. Preli. I think internationally it depends upon what 
market you are talking about. But in the small residential 
size, I think the major competition is coming from Japanese 
companies. There is a large effort in Japan to develop small 
systems. I think in fleet applications our No. 1 competition 
may be from Europe where they have a very large demonstration 
program looking at 30 buses in the near term in European 
cities.
    And then, in automotive, Japanese car companies like Toyota 
are developing their own technology. In the United States, GM 
and ourselves are developing technology for automotive. In 
Europe, DaimlerChrylser is one of the leaders.
    Mr. Barton. Okay. My time has expired.
    The gentleman from Maryland.
    Mr. Wynn. Thank you, Mr. Chairman.
    There seems to be a consensus that one of the first stops 
along this pathway is stationary fuel cells. Is that the 
consensus? What does the government need to do to facilitate 
the expansion of stationary fuel cells?
    Mr. McCormick. One of the issues with stationary fuel cells 
is they are, by and large, not big multi-megawatt baseload 
machines. They don't replace a nuclear powerplant, for example. 
And so when we go to place those distributed generation units, 
we have to start thinking about interconnection standards.
    And one of the issues is: how do you get the distributed 
generation systems put on the grid in various locations? And it 
turns out that the decisions around that are all local with 
public utility commissions and things. And so as we talk about 
rolling this technology out, we face an uncertain market, at 
least in the United States, because we are at the whims of each 
local community. That is not necessarily true in Japan where 
they are actually uniform in those codes.
    Mr. Wynn. Could you send me something on that? Just a brief 
statement of that particular issue----
    Mr. McCormick. Absolutely.
    Mr. Wynn. [continuing] to help us with it. Now, there 
seemed to be less agreement about whether the next step should 
be fleet vehicles in terms of buses, if I am understanding you 
right, versus light trucks. Is there a difference of opinion on 
that subject? I don't want to create one if it doesn't exist, 
but I have heard some people talking about buses.
    I know Ms. Rips was very interested in bus development, but 
I also heard maybe light trucks would be better. Mr. Vesey?
    Mr. Vesey. Yes. Thank you, Congressman. I really don't 
think so. I think it is that you have enough vehicles that when 
you are generating the supply of hydrogen there is adequate 
use. So the term ``fleet'' could be buses, it could be light-
duty vehicles. From our standpoint, it is that there is enough 
to use the hydrogen on a daily basis.
    Mr. Wynn. To what extent would a government fleet 
commitment, either trucks or buses or vehicles, passenger 
vehicles, facilitate the commercial growth? Mr. McCormick?
    Mr. McCormick. I think it is very, very important. What we 
don't want is demonstrations that leave no legacy. What we want 
are real commercial transactions where, in fact, we sell 
something. And most importantly, when we prepare those fleets, 
pick it in places where the infrastructure grows naturally. So 
some of the post office kinds of initiatives, the right 
selection of some DOD initiatives, would be very good, but 
there may well be others.
    What we want to do is pick the application to make sure 
that there is public refueling involved in that application, 
and then you get the dual leverage. The people can invest in 
the fueling station knowing that there is going to be usage.
    Mr. Wynn. So the public refueling would be the key there?
    Mr. McCormick. Yes.
    Mr. Wynn. Okay. Now, I was looking at a piece from 
something called India Car that said that Ford is getting ready 
to sell 50,000 units of passenger vehicles to Germany by the 
year 2010. Could anyone respond to that? Is that likely to 
happen, or is that specious?
    Fleet News reports that Ford is planning to sell a mass-
produced hydrogen fuel cell vehicle in the German fleet market. 
The reports says that from 2010 Ford believes it will be 
manufacturing at least 50,000 units of the vehicle per annum. 
Dr. Franz Martin Dubbell, Ford's Vehicle Alternative Power 
Trains Market Manager, told Fleet News at a media briefing and 
auction that Ford is planning to run its first vehicles with 
small fleets in Germany and California in 2004, with full 
launch slated for 2010.
    Is this smoke, or is this real? Coming from the 
competitors.
    Mr. McCormick. Well, I certainly wouldn't want to speak for 
Ford, but I think those are not unrealistic kinds of numbers. 
One of the things when we think about where vehicles are 
launched worldwide, and I think this is very important to the 
discussion, we have to think about----
    Mr. Barton. Look around at the audience. They are smiling 
right now.
    Mr. McCormick. We really have to think about where 
internationally are the codes and standards and the 
infrastructure going to happen. And so it may well be Europe, 
it may well be Japan, it may well be the United States. And I 
think we have to see how that develops.
    Mr. Wynn. With respect to codes and standards, because 
several witnesses mentioned it as well as Dr. Garman, can the 
industry help us--well, I know there is a self-regulation 
concept that is sometimes called into question. But can they at 
least get us started on the format or the template, if you 
will, rough template or draft template or something relative to 
codes and standards, so that the committee could begin to look 
at that issue in more detail and provide us with the input?
    Mr. Vesey. Yes, sir. I think the hydrogen roadmap that Mr. 
Garman referred to, codes and standards was a big piece of 
that, and the industry is working very closely with the DOE to 
get the proper codes and standards started.
    Mr. Wynn. Okay. Would you submit that to this committee as 
well?
    Mr. Vesey. Certainly.
    Mr. Wynn. Okay. Thank you.
    My time is up. Thank you.
    Mr. Barton. The gentlelady from California.
    Ms. Bono. Thank you, Mr. Chairman. Mr. Chairman, I actually 
had the opportunity to drive a fuel cell bus, and it was a 
scary moment, not for me as much as for everybody else on the 
road I think at that time. But I want to thank, again, SunLine 
for being such a leader in all of these future technologies.
    But my questions for Catherine really comes--or Ms. Rips, 
excuse me--I have known her way too long. People think of the 
desert, they think of all of our windmills and our solar 
capabilities. Can you explain a little bit how much solar and 
wind you are currently using in the production of your 
hydrogen?
    Ms. Rips. Yes. Thank you for the question. We have been 
generating hydrogen using solar power for the last 3 years at 
SunLine. We are currently using it to power an electrolyzer. I 
know Mr. Garman was talking about that as an option earlier, 
and I think that probably the biggest deterrent to the use of 
that technology is just the cost of it.
    And so, you know, there is a school of thought that if 
there was simply more orders placed for those kinds of systems 
that the cost would come down. So I know you had asked what the 
government could do to help, and perhaps being a purchaser of 
those systems might be something that would work.
    We are also involved in a wind project. The desert does 
have a lot of wind generation. The wind belt is the Banning 
Pass there. And we are working with South Coast Air Quality 
Management District and some other partners to do a project 
that should come online in a couple of months where we will be 
using power directly off of a wind turbine to generate hydrogen 
from an electrolyzer.
    So we will have a much better idea of what the relative 
costs are once that project is operating. But that, of course, 
would be the end goal.
    Ms. Bono. Thank you. When I drove the bus, I had an 
interesting question, too, and perhaps it is an offshoot of the 
direct hydrogen question. But when you deploy a bus that is a 
million dollar bus or so, how does the public feel about these 
buses being on the street? What has their reaction been, other 
than my driving?
    And is the insurance--I mean, how does the insurance model 
work when suddenly there is a liability factor? And if somebody 
were to take out one of these million dollar buses, can you 
explain to me how I guess the integration with the public is 
going to run with that on the street?
    Ms. Rips. Okay. Well, we think that it is very important to 
bring the public along in any conversion to an alternate fuel. 
So we really stress education and outreach and do activities 
that put our vehicles out into the community, so that people 
can get used to them. And we did definitely publicize the fuel 
cell bus and let people know that it was going to be out on the 
street.
    Prior to it actually going into revenue service, we had a 
different fuel bus out there just for a short time. And when we 
advertised it, people literally lined up to ride it. They were 
so excited about it. And we had comments constantly from our 
riders. We put the thunder power bus that Congresswoman Bono is 
referring to in revenue service for over 3 months, and 
passengers would call us and talk to the drivers about it and 
actual call the switchboard. And they are very impressed with 
it.
    We used the opportunity to educate them about the benefits 
of it, because we feel that, you know, one of the things that 
transit does is give you basically a mobile billboard for the 
technology. And by using the outside of the bus, and also by 
using the inside panels on it, you have an opportunity to 
educate a captive audience and let them know what the benefits 
of hydrogen fuel cell technology are.
    And what we have found is that the more you educate them, 
the more they appreciate what you are doing for the environment 
and also for their health. So it is a great vehicle to educate 
while it is actually transporting people.
    Ms. Bono. Thank you.
    Dr. Samuelsen, also, can you explain a little bit--again, 
the safety factor still I think rides on people's minds when 
you talk about hydrogen. But are hydrogen fuel cell vehicles 
able to drive through tunnels currently?
    Mr. Samuelsen. They are indeed able to drive through the 
tunnels currently. But it is in the absence of any regulation 
to prohibit them from doing that.
    The area where perhaps there is the largest challenge in 
the safety aspect--I think Assistant Secretary Garman addressed 
the safety aspects very well in terms of the diffusivity of the 
hydrogen relative to gasoline and the relative more safe 
conditions of being able to operate a hydrogen car compared to 
a gasoline car. But he also----
    Ms. Bono. So the garaging of this vehicle is going to be 
the same as we have today?
    Mr. Samuelsen. Well, that is the point I wanted to get to. 
There was a Congressman who referred to the NASA incident, and 
Assistant Secretary Garman referred to it probably being an 
enclosed space. And we do have, with public use, enclosed 
spaces--our garage, public parking structures, and other 
private parking structures.
    How those are established with appropriate sensing, if that 
is what is needed, appropriate ventilation, if that is what is 
needed, has not been addressed and will need to be because 
certainly we want to be able to garage our car as we do today 
with our gasoline car.
    Today we put a car into the garage with 20 gallons of 
gasoline, have natural gas flames about with the clothes dryer, 
the water heater as examples, and we need to evolve from that 
experience and confidence in safety with the current 
infrastructure to one that equals that with hydrogen as well.
    Ms. Bono. Thank you. I asked that question the other day. I 
was at a parking structure over by the Pentagon, and there was 
a car fire two levels down. And so you kind of really have to 
ask the question.
    But I know that my time has expired. So thank you, Mr. 
Chairman. Keep going?
    Mr. Barton. You can keep going. You didn't questions the 
first round, so----
    Ms. Bono. Well, thank you. I have got to go through my 
list.
    Back to Ms. Rips, then, you were among the first public 
transit agencies to convert your fleet entirely to natural gas. 
Do you see the conversion of other agencies going as smoothly 
as yours did and as timely?
    Ms. Rips. I am sorry. Could you say the last part of that 
again?
    Ms. Bono. You see, say when we do move to fuel cell 
entirely to your bus fleet--in the future, obviously--do you 
see the conversion going as well as other companies have 
followed with natural gas?
    Ms. Rips. Well, that is a very good question. And, you 
know, as I mentioned in my statement, we think that training 
has everything to do with how the conversion process goes. So 
when we converted to natural gas, we had actually trained every 
person on our staff, including the receptionist, I mean 
everybody, as far as the properties of natural gas and the 
benefits of it and the different things that they had to be 
aware of.
    We have done the same thing with hydrogen. We actually had 
the Schatz Energy Research Center at Humboldt State University 
come down and put on a series of seminars for everybody at our 
transit agency and our board members to educate them. We have 
worked with a number of partners, including a university system 
and our community college, to create the first curriculum for 
hydrogen fuel cells and related technologies.
    And we think that if people are properly trained and make a 
commitment to training and participate in the education 
process, we would like to see this ideally start at the high 
school level and go through community college and college-level 
courses, so that technicians are trained, that there is a 
skilled workforce in place. We don't think that there will be 
any problems that are not fairly easily solved.
    And I am sorry, I didn't answer your question about 
insurance. Liability insurance is definitely an issue that 
needs to be resolved. Like the codes and standards, it is 
different everywhere. And we were able to cover you on our 
policy, so you were safe driving. But it is definitely an issue 
that needs to be looked at.
    Ms. Bono. Thank you. I yield back, Mr. Chairman.
    Mr. Barton. We are now going to just have some wrap-up 
questions. And all members that wish to--we are not going to 
put the clock on. I have got two or three questions, and I 
think Congressman Wynn may, and Congresswoman Bono.
    Ms. Rips, you obviously--your community has put a lot into 
this program. But when Congresswoman Bono was talking about the 
million dollar bus, there are not many communities that would 
have public transit that could afford to put into service 
million dollar buses if they have to even come close to 
breaking even.
    So, I mean, again, your community is to be commended for 
taking the lead, but I would think that you are a fairly 
affluent community, somewhat above the national average in 
income levels, and probably above the national average in 
willingness to bear an extra burden to show progress on the 
environmental front. Is that correct or incorrect?
    Ms. Rips. Well, actually, it is an interesting community. 
There are nine cities in the Coachella Valley and several 
unincorporated areas. And while we do have a couple of cities 
that among the wealthiest in the United States, we also have 
several communities that are among the poorest.
    We have really an inordinate number of very poor residents, 
unfortunately. So it is true, and it is not true. I think that 
what you are seeing in the Coachella Valley is really 
commendable political leadership, and it is nothing but the 
leadership of our elected officials that caused our transition.
    And it was their commitment to the program and their desire 
to see a clean environment----
    Mr. Barton. Well, what kind of, in the best case, profit do 
you make? Or, in the worst case, how deep is the deficit?
    Ms. Rips. Well, let us say that we look forward to the day 
when the buses only cost a million dollars. That was really--
that is low for what they are costing these days. But, you 
know, as UTC pointed out, the cost of that technology is coming 
down. And we realize that--we are working with the FTA on some 
things, and their goal is to see--because of the increased 
efficiency in a fuel cell bus, their definition of 
commercialization is when a fuel cell bus costs twice what, for 
instance, a natural gas bus would cost. That would bring the 
cost down to about--or to a diesel bus. That would bring it 
down to about $600,000. So----
    Mr. Barton. And compare that to--what does a natural gas 
bus or a diesel bus cost today?
    Ms. Rips. About $300,000. So they are saying if a fuel cell 
bus costs $600,000 that--because of the increased efficiency it 
would be considered equal.
    The community has put a lot into it. We think that there 
are a couple of more generations of technology, of R&D on the 
technology, needed to get it down to the point where it is 
compatible on a cost basis. And that is the reason why we 
advocate a limited number of demonstration projects with 
multiple generations, because----
    Mr. Barton. I am very positive I don't want----
    Ms. Rips. [continuing] we clearly believe that we will get 
there.
    Mr. Barton. I am very positive on which you are doing. I 
just--I am not sure that my community of Ennis, Texas, would be 
willing to take the intangible satisfaction as opposed to the 
less intangible but more taxpayer-friendly existing technology 
that is available today. So----
    Ms. Rips. Well, and I think that is exactly the point, that 
the technology is not suited for every application at this 
point in time. And what we are trying to do is help it get to 
the point where it is. If we are successful in our efforts and 
working with our partners, you know, in perhaps 10 years it 
will be affordable for Ennis, Texas.
    Mr. Barton. Yes. Thank you.
    Dr. Samuelsen? And then I have a question for Dr. Schwank.
    Mr. Samuelsen. I just wanted to comment that I think one 
looks to mass volume production to bring down the price at some 
point in time. But what is not fully appreciated is the 
strategy among many manufacturers--and Mr. McCormick alluded to 
this with respect to using automobile technology and 
distributed generation--but it is also to use automobile 
technology in the outfitting of the bus with the fuel cell 
stack.
    So you will see fuel cell buses evolving that basically are 
operating on two automobile fuel cell stacks benefiting on the 
mass production that will eventually result and have this 
commonality between the automobile application and the bus 
application, rather than thinking of them as separate, distinct 
applications.
    Mr. Barton. Okay. And, Dr. Schwank, you talked about a 
university-based research component, 6 to 10 universities 
around the country. Is there any formal organization that has 
been developed among the universities, the research 
universities, to do that, or is that just a concept that you 
wanted to put on the table?
    Mr. Schwank. Thank you, Mr. Chairman. Our proposal 
recognizes that the task before us is enormous. I would compare 
it in terms of technological challenge almost to the moon 
shots. We have an incredible talent pool in our universities, 
but universities--the university research is not coordinated so 
that you can bring the powerful synergism together.
    The coordination of this has to be done by bringing 
together a partnership of the industrial sector, the government 
sector, and the academic community. We would be happy to 
provide an initial blueprint, some first draft, for further 
discussion, and then invite industry and government into--work 
on this and shape it. I think the task is too big for one 
individual constituency to do it all by themselves.
    Mr. Barton. Well, we would appreciate that. Just be sure 
that University of Maryland and Texas A&M University and 
University of California at Palm Springs are included in the 
discussion phase.
    Mr. Schwank. We will certainly take it into advisement.
    Mr. Barton. This is my last question, and then if any other 
members have a question.
    Mr. McCormick, what is the best case timeline--the Ford 
Motor Company people apparently have issued a press release 
that they are going to sell 50,000 hydrogen cars in Europe by 
the year 2010. I have been out to Detroit. I have been to your 
test facility several years ago with the Vice President.
    If everything that could go right did go right, you know, 
how soon does General Motors see a retail vehicle, a consumer 
vehicle, that is available in the showrooms around the country?
    Mr. McCormick. Well, I think we in Ford, and actually most 
of the auto companies, are looking at that 2010 date. A 
combination of a couple of reasons. We think the technology is 
moving at that kind of a rate that justifies looking at that 
date. And quite honestly, if we are not talking about a date 
like that, then probably as a business I am spending too much 
money on it.
    So we have to see it getting into the field in that 2010 to 
2015 timeframe to sustain the kind of investment that we are 
putting into it.
    Mr. Barton. So we are talking about let us get moving right 
now. And finally--I said that was the last question--but, Mr. 
Vesey, when you were in my office you talked about the need to 
develop a technology for onboard storage of hydrogen that 
wasn't yet in existence. And you talked about your best case 
was some sort of, if I understood you correctly, a solid-state 
storage model. Could you very briefly elaborate on that?
    Mr. Vesey. Yes. All it was referring to--the current 
technologies are high compressed gas form or liquid, which is 
at a very cold temperature. And there are experiments going 
away with metal hydrides, which if you can get the weight 
percent up to where it will give the vehicle a proper range it 
is not high pressure and it is ambient temperature. So it is a 
little more palatable from a consumer standpoint.
    Mr. Barton. And is that something that we need to encourage 
the Federal Government to invest more research dollars in, 
perhaps through Dr. Schwank's university-based research 
program?
    Mr. Vesey. I think we would all agree that storage is the 
key issue here, and any recommendations in helping those 
technologies would be good.
    Mr. Barton. Okay. Congresswoman Bono or Congressman Wynn, 
any final comments? Either one of you?
    Ms. Bono. Just one, Mr. Chairman, just to help my friend 
out. When you mentioned the wealthy, affluent Palm Springs 
area, our No. 1 industry is actually agriculture, and people 
believe it is a much different district than it is. And I know 
you have talked about coming out to visit, and I want to 
reextend my invitation for you to come out and----
    Mr. Barton. We are working on that.
    Ms. Bono. Thank you. I know that you are.
    Mr. Barton. I am looking forward to it, actually.
    Ms. Bono. I look forward to your visit. And with that, I 
yield back my time. Thank you.
    Mr. Barton. Mr. Wynn?
    Mr. Wynn. Mr. Chairman, I just want to thank you again for 
putting this hearing together. I learned a great deal. I also 
want to thank you for your support for the University of 
Maryland. That is duly noted.
    Thank all of the members of the panel. I will be contacting 
you individually, because I do have a couple other questions.
    Thank you, Mr. Chairman.
    Mr. Barton. We, again, appreciate this panel. There may be 
written questions for the record. We hope that you will reply 
expeditiously. We appreciate your time and testimony and look 
forward to working with you.
    This hearing is adjourned.
    [Whereupon, at 12:45 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

         Prepared Statement of the American Petroleum Institute

    The U.S. oil and natural gas industry is committed to meeting the 
nation's future transportation fuel needs. Since its beginning, the 
industry has been in a constant state of change, working to better 
serve its customers and a growing nation. Relying heavily on advanced 
technology, the industry has provided improved products to Americans 
with a steadily reduced impact on the environment, and we will maintain 
this commitment in the future.
    We believe that competition and the resulting push to innovate will 
mean that our children and grandchildren will be driving vehicles using 
fuels that, together, are safer, cleaner, and more efficient than ever. 
These improved cars and trucks may well be propelled by something other 
than today's internal combustion engine, whether it is an advanced 
version of that engine or electric hybrids or fuel cell vehicles. We 
believe the 21st century will be an exciting new era for personal 
transportation.
    While we expect conventional hydrocarbon fuels will remain the 
dominant energy source, at least through the mid-century, the oil and 
natural gas industry is committed to providing the fuels for the 
nation's transportation needs regardless of the fuel type. Future 
automobiles may be based on a variety of advanced technology engine-
fuel systems, including hydrogen-powered fuel cells. At least 
initially, all of these systems will likely rely heavily on hydrocarbon 
fuels either directly or indirectly. These advanced fuel/vehicle 
systems should be allowed to compete with each other in the marketplace 
and on a level playing field.

The Role of Hydrogen in Meeting Transportation Needs
    The American Petroleum Institute appreciates this opportunity to 
present the views of its member companies on the role of hydrogen in 
meeting the transportation needs of American consumers.
    In his State of the Union Address, President Bush announced a 
Hydrogen Initiative to hasten the development of hydrogen-powered fuel 
cells in motor vehicles. API believes that fuel cell vehicles are an 
exciting new technology that could figure prominently in America's 
transportation and energy future.
    As we understand the program, the Hydrogen Initiative will focus on 
pre-competitive research aimed at advancing the technology to produce, 
store, distribute, and deliver hydrogen for use in fuel cell vehicles 
and electricity generation. The Administration has indicated that the 
Hydrogen Initiative will complement the FreedomCAR initiative, which 
supports pre-competitive research in advanced automotive technologies 
for the mass production of a full range of affordable vehicles, 
including fuel cell vehicles.
    At the outset, we must all recognize that development of hydrogen 
as a viable transportation fuel source will take time. The U.S. 
Department of Energy's National Hydrogen Energy Vision and Roadmap 
reports envision a path for hydrogen development that would span 
between three and four decades. It is important to keep this timeframe 
in mind and recognize that hydrogen research will require a long-term 
commitment. We should also recognize that major technological 
breakthroughs are required before hydrogen can become a viable fuel 
source.
    The increased national interest in hydrogen as a transportation 
fuel is understandable. Hydrogen exists in nearly unlimited abundance 
and, when used in a fuel cell vehicle, generates zero emissions. 
However, it should be noted that hydrogen only exists in combination 
with other chemical elements, and significant energy and costs are 
required to produce, store, distribute and deliver hydrogen for use in 
fuel-cell vehicles.
    API believes that, in evaluating the pros and cons of any fuel/
vehicle system, it is vital to undertake a ``well-to-wheels'' analysis 
of the entire system. The ``well-to-wheels'' approach considers energy 
use and emissions for both ``well-to-tank'' (i.e., production and 
distribution of the fuel) and ``tank-to-wheels'' (i.e., use of the fuel 
in the vehicle). When using this approach, different fuel/vehicle 
systems can be analyzed on a comparable basis. The internal combustion 
engine is the benchmark against which the progress of emerging advanced 
fuel/vehicle systems should be measured.
    In considering future transportation fuel needs, there are near- 
and mid-term options for increasing fuel use efficiency and reducing 
emissions. Alternatives include hybrid engine systems--a combination of 
an electric motor and gasoline or diesel engine--and advanced gasoline 
and diesel engine technologies. The rate of market penetration for 
hybrids will likely depend upon price and performance; however, it 
should be recognized that gasoline hybrids are currently in the 
marketplace and numerous auto manufacturers have announced plans to 
introduce a variety of additional hybrid models over the next few 
years. Ongoing research and development continues to focus on reducing 
the component cost of hybrids. All of this suggests that there is 
substantial promise for hybrid technology playing an important role in 
improving efficiency and lowering emissions.
    When comparing greenhouse gas emissions on a well-to-wheels basis, 
a number of advanced vehicle and fuel options compare favorably with 
today's gasoline internal combustion engine. Diesel engines, gasoline 
and diesel hybrids, on-board gasoline reformer based fuel cells (i.e., 
systems where hydrogen is produced on-board the vehicle via extraction 
from gasoline-like fuels), and fuel cell vehicles powered by hydrogen 
produced from natural gas all have lower greenhouse gas emissions. In 
contrast, hydrogen produced via electrolysis of water using electricity 
from typical U.S. sources has very high greenhouse gas emissions. Thus, 
there are a variety of advanced systems that have the potential to 
lower greenhouse gas emissions, but none of these systems result in 
'zero' greenhouse gas emissions.
    To address the areas mentioned above, API member companies have 
undertaken substantial research activity in advanced technologies such 
as hydrogen production and storage, combustion fundamentals, exhaust 
aftertreatment, and improved hydrocarbon-based fuels that enable lower 
emissions and higher efficiency. Much of this work is done in close 
collaboration with automobile and engine manufacturers, the government 
and other partners.

Technological Breakthroughs Needed for Hydrogen and Fuel Cell Vehicles 
        to be Viable
    Technological breakthroughs are required to reduce fuel cell 
vehicle costs and to reduce production, distribution, delivery and 
storage costs of hydrogen for the system to be competitive against the 
ever-improving performance of advanced internal combustion engine and 
hybrid vehicle systems. Moreover, increased use of hydrogen as a 
transportation fuel involves other challenges, including safety, the 
potential need for a new distribution infrastructure, and a need for 
approaches that address potentially increased emissions due to hydrogen 
production.

Cost Reduction and CO2 Emissions Need To Be Addressed
    Breakthroughs are needed to lower the cost of fuel cells and fuel 
cell vehicles. For example, the cost of the fuel cell stack needs to be 
reduced substantially to compete with a conventional powertrain. The 
cost of fuel cells has dropped by about a factor of 100 over the last 
10 years, but automakers say that costs must still be reduced by more 
than a factor of 10 for the technology to become competitive.
    Like electricity, hydrogen is an energy carrier, not an energy 
source. To succeed in the market, hydrogen will need to be produced in 
large volumes at reasonable cost. But, without a major breakthrough in 
production technologies, most hydrogen would likely continue to be 
produced from natural gas, the most affordable source of hydrogen with 
current technologies. However, the United States is short of indigenous 
natural gas and, in order to provide large amounts of hydrogen, access 
to the potentially large natural gas reserves on government lands and/
or imported LNG will be needed. Hydrogen production is, therefore, an 
important research area.
    If hydrogen were made from natural gas or other fossil fuel 
sources, then CO2 would also be generated as a by-product. 
If low greenhouse gas emissions are to be achieved in that scenario, it 
would be necessary to separate, capture and store the CO2 
generated (i.e., CO2 sequestration). Thus, breakthrough 
research focusing on CO2 separation, capture and storage 
methods is also important. If, on the other hand, sufficient 
electricity could be generated by renewable or nuclear technologies to 
make hydrogen from water, then CO2 sequestration 
technologies would be less important. However, cost reduction 
breakthroughs in renewable and nuclear technologies would then be 
needed.

Distribution Infrastructure Issues Need To Be Addressed
    Hydrogen distribution could take one of two forms: pipelines or 
specially designed, very-low temperature tankers. Currently, high-
pressure tankers are limited in their energy-transporting volume. 
Because hydrogen has a much lower energy density than gasoline, it 
would require 19 hydrogen tankers to carry the energy value of one 
gasoline tanker assuming the hydrogen and gasoline tankers were of 
similar size. On the other hand, pipelines could move much greater 
volumes, but existing natural gas pipelines are not suited for hydrogen 
and new ones would be required. Regardless of whether hydrogen is 
distributed via retrofitted pipelines or new dedicated pipelines, 
technological issues need to be addressed. For example, leak detection 
technology is needed which requires research in the sensors and 
odorants areas. Breakthroughs in new materials and improvements in 
automated welding techniques are needed to lower pipeline costs. 
Improvements in compressor technology including seals are needed to 
improve compression efficiency and reduce costs. Improvements in 
hydrogen liquefaction technology are also needed to lower costs and 
increase energy efficiency.
    Developing a distribution infrastructure for hydrogen for direct 
fuel use would be costly. However, there are alternatives such as using 
the existing hydrocarbon fuels infrastructure and extracting the 
hydrogen with an on-board reforming system or producing the hydrogen at 
the retail station. These alternatives would help resolve safety and 
infrastructure issues needed for the initial introduction of fuel cell 
vehicles, provide time to advance breakthrough research, and provide a 
'bridge' to hydrogen should breakthrough research be successful. The 
on-board gasoline reformer faces a number of challenges that must be 
overcome as well. Reducing reformer start-up time and energy losses are 
key areas of improvement where R&D is and needs to be focused.

Safety and Storage Issues Need To Be Addressed
    Issues related to hydrogen production and distribution, retail 
delivery, storage and vehicle safety must all be addressed and the 
unique safety challenges should be addressed through the development of 
data-based codes and standards. Hydrogen storage will be needed 
throughout the entire infrastructure spanning from the production site 
through the distribution system to the fueling station. Providing 
sufficient cost effective, bulk storage, which is a method to address 
supply-demand balance, will require new technology. Hydrogen storage on 
board vehicles is an area requiring new materials breakthroughs. Areas 
of focus include advanced materials for low-pressure storage, 
technologies to extend driving ranges and reducing storage costs.

Looking Ahead
    As we move into this new century, the U.S. oil and natural gas 
industry will continue working with the automotive industry and 
government to keep improving our fuels and vehicles. Working together, 
we have made tremendous progress since the 1970s in reducing emissions 
and improving fuel economy while maintaining consumer satisfaction. 
Reduced auto emissions have contributed heavily to the dramatic 
reductions in overall emissions of major pollutants. Despite a 41 
percent increase in energy consumption in that time period, ambient 
levels of carbon monoxide have been reduced by 28 percent, sulfur 
dioxide by 39 percent, volatile organic compounds by 42 percent, and 
particulate matter by 75 percent. We will accomplish a great deal more 
this decade under existing standards of the Clean Air Act as well as 
new national vehicle emission and fuel standards that come into effect 
in 2004 and 2006.
    The auto and oil industries have made tremendous progress together 
over the years, introducing a range of improved vehicles and enabling 
fuels to reduce emissions, and increase fuel economy, and performance. 
We fully expect this trend to continue and strongly support R&D focused 
on achieving the full potential of advanced internal combustion 
engines, hybrids, and advanced fuels. We also recognize the long-term 
commitment required for R&D focused on the breakthroughs necessary to 
enable fuel cell vehicles and hydrogen fuel opportunities.
    Moreover, whatever role government plays in fuel cell development, 
it should be a broad one. Government should encourage a multi-faceted 
approach. We believe that government's research role should be focused 
on pre-competitive, breakthrough research, leaving it to the private 
sector to build on this research and move the outcomes into the 
commercial development phase. The government should not prematurely 
focus on one approach while discouraging other approaches that may have 
high potential. Advanced technologies should compete on a level playing 
field with the American consumer ultimately making the choice of which 
technologies will be successful.
    Our industry wants to work with government and others in the 
private sector to evaluate fuel cells and other advanced vehicle fuel 
systems from a well-to-wheels perspective. We believe that fuel cells 
may have an important role to play in the nation's transportation fuels 
future. We also believe that the fuel cell and hydrogen challenge 
should be viewed as a system. Each piece of the system, including the 
primary source of hydrogen, the production, distribution, retail 
delivery, and storage of hydrogen and the fuel cell vehicle itself, has 
challenges that must be overcome with innovative breakthroughs in order 
for the system to become competitive. We should take advantage of, and 
capture, the benefits of advanced gasoline and diesel technologies, 
including hybrid technology, in the near- and mid-term while the 
challenges of fuel cell and hydrogen technologies are being researched. 
The U.S. oil and natural gas industry is committed to playing a leading 
role in this important national effort.
                                 ______
                                 
                             University of Michigan
                                     College of Engineering
                                                       July 5, 2003
The Honorable Joe Barton
Chairman
Subcommittee on Energy and Air Quality
2125 Rayburn House Office Building
Washington, D.C. 20515
    Dear Congressman Barton: Thank you for the opportunity to appear 
before the Subcommittee on Energy and Air Quality on May 20, 2003 to 
testify regarding the hydrogen energy economy.
    Enclosed are my responses to questions from the Honorable 
Christopher Cox. The basic research initiative blueprint is also 
submitted in response to a request by the Committee during Question and 
Answers to provide a blueprint for a basic research initiative.
            Sincerely,
                                           Johannes Schwank
                                  Professor of Chemical Engineering

         RESPONSE TO QUESTIONS FROM CONGRESSMAN CHRISTOPHER COX

    Question 1. If I wanted to start a commercial hydrogen fueling 
station, what regulatory obstacles might prevent me from opening it?
    Question 2. Are hydrogen fuel cell vehicles allowed to drive 
through tunnels? What about trucks carrying compressed or liquid 
hydrogen cargo?
    Question 3. Can we trust ordinary people to fuel their own cars at 
a hydrogen pump, or do we need specially-trained technicians?
    Question 4. Is it safe to park a fuel cell vehicle inside a garage? 
Why or why not? What needs to change to make it safe?
    Response: The four questions address issues that are related to 
regulation of hydrogen transport and dispensing as fuel for fuel cell 
vehicles. The regulation of the transportation of hydrogen is not my 
particular area of expertise. I believe that the definition of 
standards and regulations is best left to the federal and state 
agencies enforcing them and industries most affected by them.
    I note that there are still many open questions regarding whether 
hydrogen should be generated centrally or on-site, and how to best 
store hydrogen (e.g. as compressed gas, liquid, or in solid-state 
storage materials). There are a number of possible alternatives for 
hydrogen generation, storage, and distribution that need to be 
researched and further developed before major decisions on 
infrastructure deployment can be made. Depending on the chosen hydrogen 
generation, storage, and distribution infrastructure, appropriate 
standards and regulations will then need to be developed. Therefore, it 
is essential that we not choose winning and losing technologies now. It 
is too early in the development process to assume that the best 
alternatives are to use liquid hydrogen centrally produced. Instead, we 
should focus our national efforts on exploring the vast array of 
alternatives.
    Thus, a great deal of basic research is still needed to insure that 
hydrogen energy can be efficiently used in a safe cost effective 
manner. This is why there is a pressing need for a national hydrogen 
energy basic research initiative. One possible approach for initiating 
and carrying this out is attached.
                                 ______
                                 
         A University-Based Hydrogen Energy Research Initiative
  Tapping the Nation's Research Universities to Achieve the Hydrogen 
                                Economy
  Johannes Schwank, Levi Thompson, Dennis Assanis, and James MacBain, 
   University of Michigan College of Engineering, Ann Arbor, Michigan
                             June 24, 2003

Introduction and Overview
    During 2002, the six billion people of the world used 13 trillion 
watts (13 terawatts) of energy. The major portion of this energy came 
from fossil fuels. By 2050, an estimated 8-10 billion people in the 
world will require 30 to 50 terawatts of power to sustain their homes, 
industries, and transportation systems. Over the last decades, we have 
seen a clear trend showing a transition from carbon-rich fossil fuels 
such as coal and petroleum to fuels containing less carbon and more 
hydrogen, such as natural gas. One of the major drivers for this trend 
has been the need to reduce carbon dioxide emissions into the 
atmosphere. This trend will culminate in eliminating carbon altogether, 
and building an economy based on hydrogen as the primary energy 
carrier.
    The world is on the threshold of entry into a hydrogen economy. To 
bring this transition about will require significant technical advances 
in new materials, processes, and infrastructure. It will also require a 
significant investment on the part of government and industry. The 
consensus in the industrial and academic sectors is that we must find 
economically and technically sound ways to produce, store, distribute, 
and utilize hydrogen. It is critical for the Nation's economy and its 
security that it be the global leader in developing the core 
technologies to accomplish this.
    It is important that we develop a sound scientific and technical 
foundation, encompassing a wide spectrum of hydrogen-related 
fundamental and applied research issues. We must better understand the 
advantages and disadvantages of all our technology options before 
selecting specific technologies. The Nation's research university 
system is ideally suited to the task of establishing a sound scientific 
basis for developing hydrogen technology. Unfortunately, current 
federally sponsored research efforts are a patchwork at best. There is 
no coordinated federal research program in place that engages U.S. 
universities to address hydrogen energy issues. Although some 
universities receive federal support for research projects that address 
some aspects of hydrogen-based energy research, the scope and scale of 
the federal effort to tackle the important technical challenges is 
sorely inadequate. If we as a Nation are going to secure our technical 
leadership position in the world by leading the transition to a 
hydrogen economy, we must create a more comprehensive and coordinated 
program.
    We propose that a Hydrogen Energy Research Initiative be 
established that effectively engages the intellectual capabilities of 
the Nation's universities. The magnitude of such a program should be on 
par with national science and technology initiatives like the 
Information Technology Research Initiative or the National 
Nanotechnology Initiative. The framework of such an initiative, its 
organization and research objectives, are described in the following 
sections.

The University-based Hydrogen Energy Research Initiative
Approach
    We, at the University of Michigan, propose that a university-based 
Hydrogen Energy Research Initiative or HERI be established at either 
the National Science Foundation or the Department of Energy. In either 
case, basic research funds from all of the federal agencies promoting 
energy research should be used to supplement the program. Using a 
competitive peer-review process, a group of 8-10 university-based 
consortia, in partnership with industry and government, would be 
selected to undertake an integrated set of basic research and education 
projects focusing on the various components of hydrogen as an energy 
carrier. Each university center would execute basic research projects 
and develop undergraduate and graduate educational programs focusing on 
hydrogen-based energy technologies. In addition to scientific and 
engineering analyses of promising candidate systems, economic, social 
and environmental issues would be investigated. This will facilitate 
benchmarking of candidate systems and multidisciplinary synergy.
    To facilitate the development and adoption of promising 
technologies, the HERI would provide supplemental ``technology 
accelerator'' seed funding to encourage technology development by 
businesses, in partnership with universities. States should be 
encouraged to augment technology accelerator programs with state-funded 
economic development programs that would further the development of 
small energy-focused businesses and facilitate their linkage to larger 
companies within the state.

Payoff
    A university-based center of excellence program that broadly 
focuses on the Nation's energy research and education needs will 
provide significant leveraging of federal research dollars. Because it 
is located at the beginning of the research, development and 
engineering continuum, it avoids the risky practice of picking 
``winners and losers.'' Importantly, it facilitates technology transfer 
by encouraging industry partnerships to develop promising technologies.

Funding
    Annual funding of at least of $11M per center would be necessary. 
An approximate breakdown would be: $8M for basic research and 
education, $2M for technology accelerator projects, and $1M (nominal 
state funding) for economic development facilitation. Each Center 
should receive federal funding for a 5-year period with an additional 
5-year renewal based upon performance. Ideally, the HERI would support 
8-10 such centers, requiring total federal funding of $80-100 million/
yr.

HERI Center Activities and Operation
    The HERI would provide an ideal platform to bring together 
academia, industry, and government to address hydrogen energy basic 
research issues. The participation of engineers and scientists from 
member companies and government agencies on specific research projects 
would be strongly encouraged. In brief, each university center would:

 Focus on precompetitive fundamental hydrogen energy research
 Educate and train students and industry practitioners about 
        hydrogen-related technologies.
 Foster technology transfer and economic development by 
        selecting projects based on technical merit and commercial 
        potential.
 Carry out joint research projects in collaboration with 
        industry and government partners.
 Facilitate technology transfer to industry partners.
 Provide a forum for engineers, scientists, and business 
        leaders to share ideas and develop collaboration.

HERI Basic Research Program
    Universities would carry out precompetitive fundamental research in 
areas that limit the use and adaptation of hydrogen energy 
technologies. Most projects would be done in partnership with industry. 
Hydrogen-based energy systems would be the primary focus of the 
research program. Research would be conducted in the general areas of:

 Hydrogen Generation
 Hydrogen Storage
 Hydrogen Distribution
 Hydrogen Utilization (stationary, mobile, micro)
 Business, Market and Economic Issues
    Hydrogen is the ideal future energy and power storage/transport 
medium for the nation and world. It has high energy density, the 
ability to be converted to electrical, and thermal energy via highly 
efficient, non-polluting processes, and the potential of being produced 
from water, an abundant, renewable natural resource. The transition 
from the present hydrocarbon economy to a hydrogen economy is one of 
the great challenges of this century and will require significant 
advances in a number of technical and business areas. In 2002, the 
National Hydrogen Energy Roadmap Workshop, a meeting of more than 200 
representatives from hydrogen energy industries, academia, 
environmental organizations, federal and state government agencies, and 
national laboratories, identified hydrogen production, delivery, 
storage, energy conversion, applications, and public education and 
outreach as the most important barriers and needs to be addressed in 
this quest.
    Hydrogen Generation. In the near term (perhaps for the next 20 
years), hydrogen will most likely be generated from natural gas or 
liquid fuels. To convert these fuels into hydrogen requires elaborate 
chemical processes carried out in a reactor system called a ``fuel 
processor''. Processing of hydrocarbon fuels inevitably leads to carbon 
dioxide as byproduct, in essence only shifting the point where carbon 
dioxide emission occurs without solving the environmental problem. 
Nevertheless, given the massive existing infrastructure for fossil 
fuels, we need to utilize this infrastructure to facilitate the gradual 
transition to a hydrogen economy. The large-scale, industrial 
production of hydrogen from natural gas or liquid fuels is a 
technically mature process, however this process does not properly 
scale for smaller-scale, distributed on-site hydrogen generation in gas 
stations or homes. To realize local hydrogen generation, new types of 
fuel processors with better catalysts need to be developed. Recent 
advances in the field of catalysis, leveraged by novel tools including 
combinatorial catalyst synthesis, high-throughput screening, and 
computational chemistry, promise to accelerate the discovery process.
    An alternative to fossil fuels is the use of renewable sources such 
as biomass. The foremost difficulty in utilizing biomass is its sheer 
bulk. Transportation to a central processing facility is prohibitively 
expensive and limits its use. Finding ways to reduce the size of 
process equipment would permit its use in mobile systems that could 
convert biomass directly in the field to a liquid bio-fuel. Liquid fuel 
is easy to transport to a central facility where it can then be 
processed to generate hydrogen. Currently, we lack the scientific basis 
for efficient, small-scale biomass conversion to hydrogen.
    Both biomass and fossil fuel-derived hydrogen causes carbon dioxide 
emissions into the atmosphere, unless we find efficient and economic 
methods for carbon sequestration. To avoid the carbon dioxide emission 
altogether, and free the Nation from the need to import oil, our 
ultimate goal has to be production of hydrogen from water, an abundant 
carbon-free source of hydrogen, relying on solar or nuclear energy to 
split water into hydrogen and oxygen. There are many existing methods 
to generate hydrogen from water, but at present, they are not 
economical on a large scale. There is tremendous opportunity for 
innovative basic research. For example, imagine the discovery of a new 
photocatalytic material that can efficiently split water and generate 
pure hydrogen, relying on ``free'' solar energy. The economic and 
strategic impact of such a discovery would be staggering! We have the 
finest academic research infrastructure in the world that can be 
engaged in this type of high risk/high reward research challenge.
    Storage. Hydrogen storage is arguably the key to the 
commercialization of fuel cell powered automobiles and light trucks. 
While some progress has been made over the last decade, the present 
practical storage limits of approximately 5 wt% are nearly a factor of 
two lower than targets established by the automobile industry. 
Materials that appear to hold promise for achieving hydrogen storage 
capacities near 10 wt% include carbon nanotubes, graphite nanofibers 
and metal-organic framework materials. Exploiting the potential of 
these materials will require a fundamental understanding of the 
hydrogen storage mechanisms.
    Fuel Cells. Most of the engineering challenges for fuel cells 
including the design of electrode assemblies, and fuel-oxidizer-water-
waste flows have been met. The major challenges that remain, including 
durability, efficiency, and tolerance to impurities, can only be 
addressed by discovering and developing new and better performing 
materials. These challenges represent a significant opportunity for 
catalyst and materials research. This research would benefit from the 
use of surface science and computational chemistry methods. Specific 
hydrogen fuel cell research challenges include the discovery and 
development of better performing, low cost cathode catalysts to reduce 
the over-potential at practical operating currents, and membranes with 
higher proton conductivities, better mechanical strength and longer 
life that do not require high pressures to maintain hydration above 
80 deg.C. It is also important to develop anode catalysts that have 
significantly reduced Pt loadings and are more tolerant to impurities 
in the hydrogen gas.
    Hydrogen Internal Combustion Engines. Hydrogen has great potential 
as an alternative fuel for internal combustion engines (ICE) operating 
either in the conventional, spark-ignition (SI) or compression ignition 
modes. Published results have shown that hydrogen burning ICEs can 
accomplish thermal efficiencies in the range of 45-50% with virtually 
no emissions other than NOX. With its extreme lean 
flammability and low ignition energy, H2 allows ultra lean 
combustion to be realized in SI engines at the low temperatures needed 
to minimize NOX production. In addition, engine load can be 
controlled by changing the charge quality thus removing throttling and 
significantly improving the part load efficiency. The very high octane 
value of hydrogen can be used to realize a higher compression ratio for 
high thermal efficiency without knocking. However, hydrogen's 
combustion properties also pose some significant challenges for 
utilization in ICEs. In particular, due to its low ignition 
temperature, hydrogen can lead to pre-ignition and backflash, 
especially as a lean fuel/air mixture approaches stoichiometric levels, 
thus limiting the output from hydrogen burning ICEs. The power density 
of a hydrogen ICE is also limited by volumetric efficiency 
considerations. Fundamental research is needed to demonstrate the 
improvement in thermal efficiency and reduction in pollutant formation 
as a result of hydrogen combustion in ICEs, and to address the 
associated scientific and engineering challenges through well 
coordinated experimental and modeling efforts. New technologies such as 
hydrogen direct injection, supercharging and hybridization also need to 
be investigated. In parallel, the potential for utilizing hydrogen-
augmented hydrocarbon fuels in compression ignition ICEs, and also 
hydrogen's role in reducing cold start emissions and enhancing the 
performance of after-treatment devices should be investigated.

Center Educational Program on Hydrogen Energy Technologies
    Each center would bring together faculty from multiple disciplines, 
including chemical engineering, materials science, mechanical 
engineering, chemistry, natural resources, business, and public policy. 
These disciplines would be the basis for a rich crosscutting 
educational program addressing energy-related issues. In addition, the 
joint research projects with industry will make them an ideal tool for 
exploring innovative approaches to engineering and business education, 
including electives that cut across traditional disciplinary 
boundaries. The ability to mix students with different backgrounds in 
team-oriented research is critical in educating future engineers, 
scientists, and business managers in the fast-breaking and rapidly 
changing area of alternative energy.
    Further, in both undergraduate and graduate programs, multi-
university multi-disciplinary distance learning and virtual-laboratory 
experiences should be employed in the development of special course 
sequences addressing alternative energy systems.

Industry and Government Outreach and Collaboration
    Strong industry and government involvement in the Centers is 
critical in terms of research relevancy and to facilitate technology 
transfer. Two key objectives of each center's industrial and government 
program will be a), to facilitate the timely transfer of promising 
research developments to industry and government and b), to support an 
active collaboration in each Center's research and education programs.
    Industry membership in the center implies an active working 
partnership in the research and development of the key technologies and 
major research issues that will enable the development of alternative 
energy technologies. In a typical center, members would be entitled to 
the following benefits:

 Early awareness of new developments in alternative energy 
        research
 Preferential access to center-generated intellectual property
 Facilitated access to students
 Web access to the Center's alternative energy information 
        clearinghouse
 Priority access to Center research facilities and personnel
 Potential membership on the Center Executive Committee
 Preferential access to distance learning and educational 
        programs
 Participation in a neutral forum for researchers, designers, 
        builders, suppliers, and end-users
 Significant leveraging of company R&D through federally funded 
        research programs
 Participation is topical technology workshops, seminars, and 
        conferences.
    Technology Transfer. When at all possible, Center research projects 
would be carried out with industry in order to accelerate the 
development and broad dissemination of challenging, high-risk 
alternative energy technologies that offer the potential for 
significant commercial payoffs and widespread benefits for the Nation.
    Where state support of research projects is available, ``technology 
accelerator'' grants could also be awarded to university-industry teams 
for the purpose of accelerating the development and implementation of 
emerging or enabling technologies within the given state. Thus, they 
would not only further the research but would promote economic 
development as well.
    To facilitate the transfer of center technology to industry and 
government application, all center research projects will be strongly 
encouraged to organize on a ``Quad'' concept. Essentially, this means 
that any individual research project undertaken by the Center at any of 
the participating universities shall require the active participation 
of four entities: faculty, students (graduate or undergraduate), 
industry engineers or scientists, and government engineers or 
scientists as depicted in Figure 1. The basic rationale for using the 
Quad is that technology is much more effectively transferred if all 
parties are involved in its development from inception to 
implementation.

Conclusion
    A university-based Hydrogen Energy Research Initiative that broadly 
focuses on the Nation's energy research and education needs will 
provide a significant intellectual impetus and capital to the country's 
pressing energy needs. It will also significantly leverage federal 
research dollars. Basic research carried out in research universities 
provides the foundation for the research, development, and 
commercialization continuum. Importantly, it facilitates technology 
transfer by moving new discoveries and innovations from the laboratory 
to the market place, and encouraging industry partnerships to develop 
promising technologies. For our Nation, it is of critical strategic and 
economic importance that the academic, industrial, and government 
sector work together to assure that we lay a strong research 
foundation, permitting us to select the best pathways and technologies 
leading to our hydrogen-based energy future.
                                 ______
                                 
                      National Fuel Research Center
                           University of California, Irvine
                                                       July 7, 2003
The Honorable Joe Barton
Chairman
Subcommittee on Energy and Air Quality
Committee on Energy and Commerce
U.S. House of Representatives
Washington D.C. 20515-6115
    Dear Representative Barton: In response to your letter dated June 
16, 2003, attached please find my response to the questions presented.
    Please advise me should you desire additional assistance.
            Sincerely,
                                  Scott Samuelsen, Director

  Professor of Mechanical, Aerospace, and Environmental Engineering

    Question 1: If one wanted to start a commercial hydrogen fueling 
station, what regulatory obstacles might prevent one from opening it?
    Response: While hydrogen filling stations have been established and 
are operating,1 use is restricted and not available to the 
general public. Commercial stations will emerge with conditional use 
this calendar year. The National Fuel Cell Research Center (NFCRC), for 
example, is under contract from the South Coast Air Quality Management 
District (AQMD) to establish two such stations.
---------------------------------------------------------------------------
    \1\ For Example, (1) City of Las Vegas Public Works; (2) California 
Fuel Cell Partnership, Sacramento, California; (3) Sunline Transit 
District, Palm Springs, California; (4) Toyota Motor Sales, Torrance, 
California; (5) National Fuel Cell Research Center, University of 
California, Irvine, California.
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    The regulatory obstacles that dissuade opening a commercial station 
are (1) the lack of codes and standards for public use of hydrogen 
dispensing, and (2) the lack of national coordination to assure 
standardization across the country of applicable codes. There are 
approximately 44,000 code jurisdictions within the United States. 
Today, local regulatory bodies, unfamiliar with a product or 
technology, request substantial and unique documentation which 
substantially delays approvals and affects competitive positions in the 
market.
    As a result, there is a strong need for nationally standardized 
codes and standards for public use of hydrogen dispensing that are 
coordinated on an international basis. The U.S. Department of Energy 
(DOE) has contracted with the National Hydrogen Association (NHA) to 
work on this process with its members from industry and government. 
Hydrogen has been safely generated, distributed, and utilized in 
industrial applications for decades. The challenge now is to establish 
codes and standards designed for public use of hydrogen.
    The NHA Hydrogen Codes and Standards Coordinating Committee was 
established to coordinate the diverse activities by the large number of 
organizations involved in developing and adopting codes for hydrogen 
technologies. In addition, The International Standards Organization 
Technical Committee 197 has been working to adopt international 
standards for hydrogen technologies. Ongoing efforts to establish 
standards are focusing on establishing safe handling practices, 
facilitating standard interfaces, eliminating barriers to international 
trade, and developing quality criteria and testing methods.
    The NFCRC supports these efforts but encourages Congress to 
establish a path that will assure hydrogen codes and standards for 
public use are deployed and standardized as a national initiative.
    Question 2: Are hydrogen fuel cell vehicles allowed to drive 
through tunnels?
    Response: The NFCRC is not aware of travel restrictions for driving 
hydrogen-fueled fuel cell vehicles through tunnels at the current time. 
The reasons are two-fold. There are neither restrictions nor permits 
for such travel due to the novelty of hydrogen-fueled vehicles. A 
similar question is raised with regard to parking hydrogen fuel 
vehicles in public structures or in residential garages. Such 
considerations are integral to the development of codes and standards 
for the public use of hydrogen, in this case the ``utilization'' of 
hydrogen versus the ``dispensing'' of hydrogen raised by Question 1.
    We expect the codes and regulations for hydrogen-fueled vehicles in 
tunnels to mirror the codes and regulations established for compressed 
natural gas (CNG) vehicles.
    Question 3: What about trucks carrying compressed or liquid 
hydrogen cargo?
    Response: There are restrictions on the transportation of hydrogen 
that vary from state to state. The Department of Transportation (DOT) 
standards are in place for transporting various gases and chemicals and 
can be superceded by local agencies such as the California Highway 
Patrol at their discretion.
    Question 4: Can we trust ordinary people to fuel their own car at a 
hydrogen pump, or do we need specially trained technicians?
    Response: Today, ordinary people with proper training refuel their 
vehicles with Compressed Natural Gas (CNG). The procedure is expected 
to be similar for hydrogen refueling. In the early stages, steps must 
be taken to educate the public on the procedures for compressed-gas 
refueling. While this is accomplished today for CNG refueling, CNG 
vehicles (with few exceptions) are operated within fleets and the 
training is thereby facilitated. As hydrogen-fueled vehicles become 
ubiquitous in society, special procedures will be required to assure 
public safety. For example, in licensing a hydrogen-fueled vehicle, the 
owner may be required to complete refueling training. In addition, 
professional staff may be necessary at hydrogen refueling stations for 
the first decade in order to assure a robust public education process.
    Question 5: Is it safe to park a fuel cell vehicle inside a garage?
    Response: With reasonable safety measures, such as adequate roof 
top ventilation, yes. However, codes and standards must be established 
to specify the ventilation required and assure that building codes 
accommodate the appropriate specifications.
    Question 6: Why or why not? What needs to change to make it safe?
    Response: Hydrogen has a long history of safe usage in the chemical 
and aerospace industries. As with any fuel (e.g., gasoline, natural 
gas, propane), an understanding of the properties, proper safety 
precautions and established rules are key to its successful safety 
track record.
    By their nature, all fuels have some degree of danger associated 
with them. The safe use of any fuel focuses on preventing situations 
where the four combustion factors--ignition source (spark or heat), 
oxidant (air) fuel, and confinement are present.
    Hydrogen has properties that make it safer to handle and use in 
many regards than the fuels commonly used today. For example, hydrogen 
is non-toxic. In addition, because hydrogen is much lighter than air, 
it dissipates rapidly should it be released, allowing for relatively 
rapid dispersal of the fuel in case of a leak. The properties of 
hydrogen that do require additional engineering and controls include 
its wide range of flammable concentrations in air and lower ignition 
energy than gasoline or natural gas, which means hydrogen can ignite 
more easily in the absence of appropriate ventilation. As a result, 
adequate ventilation and leak detection are important elements in the 
design of safe hydrogen vehicles and vehicle storage facilities. The 
unusually high fuel pressures associated with the early deployment of 
hydrogen-fueled vehicles will require aggressive codes and standards 
for the fuel tanks to assure controlled rupture in the case of an 
unscheduled penetration. Other commonly practiced safety issues, such 
as those associated with fuels used today would also apply, such as 
avoiding ignition sources.

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