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



                      REVIEWING THE HYDROGEN FUEL
                       AND FREEDOMCAR INITIATIVES

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

                                HEARING

                               BEFORE THE

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 3, 2004

                               __________

                           Serial No. 108-44

                               __________

            Printed for the use of the Committee on Science


     Available via the World Wide Web: http://www.house.gov/science



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                                 ______

                          COMMITTEE ON SCIENCE

             HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas                 BART GORDON, Tennessee
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California         LYNN C. WOOLSEY, California
KEN CALVERT, California              NICK LAMPSON, Texas
NICK SMITH, Michigan                 JOHN B. LARSON, Connecticut
ROSCOE G. BARTLETT, Maryland         MARK UDALL, Colorado
VERNON J. EHLERS, Michigan           DAVID WU, Oregon
GIL GUTKNECHT, Minnesota             MICHAEL M. HONDA, California
GEORGE R. NETHERCUTT, JR.,           BRAD MILLER, North Carolina
    Washington                       LINCOLN DAVIS, Tennessee
FRANK D. LUCAS, Oklahoma             SHEILA JACKSON LEE, Texas
JUDY BIGGERT, Illinois               ZOE LOFGREN, California
WAYNE T. GILCHREST, Maryland         BRAD SHERMAN, California
W. TODD AKIN, Missouri               BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois         DENNIS MOORE, Kansas
MELISSA A. HART, Pennsylvania        ANTHONY D. WEINER, New York
J. RANDY FORBES, Virginia            JIM MATHESON, Utah
PHIL GINGREY, Georgia                DENNIS A. CARDOZA, California
ROB BISHOP, Utah                     VACANCY
MICHAEL C. BURGESS, Texas            VACANCY
JO BONNER, Alabama                   VACANCY
TOM FEENEY, Florida
RANDY NEUGEBAUER, Texas
VACANCY
                            C O N T E N T S

                             March 3, 2004

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Sherwood L. Boehlert, Chairman, 
  Committee on Science, U.S. House of Representatives............    11
    Written Statement............................................    12

Statement by Representative Bart Gordon, Ranking Minority Member, 
  Committee on Science, U.S. House of Representatives............    13

Statement by Representative Judy Biggert, Chairman, Subcommittee 
  on Energy, Committee on Science, U.S. House of Representatives.    14
    Written Statement............................................    15

Prepared Statement by Representative Michael C. Burgess, Member, 
  Committee on Science, U.S. House of Representatives............    16

Prepared Statement by Representative Jerry F. Costello, Member, 
  Committee on Science, U.S. House of Representatives............    16

Prepared Statement by Representative Eddie Bernice Johnson, 
  Member, Committee on Science, U.S. House of Representatives....    17

Prepared Statement by Representative John B. Larson, Member, 
  Committee on Science, U.S. House of Representatives............    17

Prepared Statement by Representative Michael M. Honda, Member, 
  Committee on Science, U.S. House of Representatives............    18

                               Witnesses:

Mr. David Garman, Assistant Secretary, Energy Efficiency and 
  Renewable Energy, Department of Energy
    Oral Statement...............................................    19
    Written Statement............................................    20
    Biography....................................................    26

Dr. Michael P. Ramage, Chair, National Academy of Sciences 
  Committee on Alternatives and Strategies for Future Hydrogen 
  Production and Use
    Oral Statement...............................................    27
    Written Statement............................................    28
    Biography....................................................    37

Dr. Peter Eisenberger, Chair, American Physical Society, Panel on 
  Public Affairs, Energy Subcommittee
    Oral Statement...............................................    39
    Written Statement............................................    41
    Biography....................................................    42

Discussion.......................................................    43

             Appendix 1: Answers to Post-Hearing Questions

Mr. David Garman, Assistant Secretary, Energy Efficiency and 
  Renewable Energy, Department of Energy.........................    64

             Appendix 2: Additional Material for the Record

Hydrogen Posture Plan, An Integrated Research, Development, and 
  Demonstration Plan, U.S. Department of Energy, February 2004...    90

The Hydrogen Initiative, American Physical Society, Panel on 
  Public Affairs, March 23004....................................   143

Statement by Dr. Joseph Romm, Former Acting Assistant Secretary 
  of Energy......................................................   160

 
         REVIEWING THE HYDROGEN FUEL AND FREEDOMCAR INITIATIVES

                              ----------                              


                        WEDNESDAY, MARCH 3, 2004

                  House of Representatives,
                                      Committee on Science,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 2:28 p.m., in Room 
2318 of the Rayburn House Office Building, Hon. Sherwood L. 
Boehlert (Chairman of the Committee) presiding.



                            hearing charter

                          COMMITTEE ON SCIENCE

                     U.S. HOUSE OF REPRESENTATIVES

                      Reviewing the Hydrogen Fuel

                       and FreedomCAR Initiatives

                        wednesday, march 3, 2004
                          2:00 p.m.-4:00 p.m.
                   2318 rayburn house office building

1. Purpose

    On Wednesday, March 3, 2004, the U.S. House of Representatives' 
Committee on Science will hold a hearing to examine the Department of 
Energy's (DOE) Hydrogen Fuel and FreedomCAR initiatives. Specifically, 
the hearing will focus on two recent reports from the National Academy 
of Sciences (NAS) and the American Physical Society (APS) on DOE's 
hydrogen initiatives, and the Administration's response to the 
recommendations from the reports. The hydrogen program is one of the 
President's primary energy initiatives, and the two reports recommend 
changes to the program.

2. Witnesses

Mr. David Garman is the Assistant Secretary of Energy Efficiency and 
Renewable Energy at the Department of Energy. Prior to joining the 
Department, Mr. Garman served as Chief of Staff to Alaska Senator Frank 
Murkowski and has served on the professional staff of the Senate Energy 
and Natural Resources Committee and the Senate Select Committee on 
Intelligence.

Dr. Michael Ramage is the Chair of the National Academy of Sciences' 
(NAS), Committee on Alternatives and Strategies for Future Hydrogen 
Production and Use. Dr. Ramage is a retired executive vice president at 
ExxonMobil Research and Engineering Company.

Dr. Peter Eisenberger is the Chair of the American Physical Society's 
(APS) Panel on Public Affairs Energy Subcommittee. Dr. Eisenberger is 
currently a Professor of Earth and Environmental Sciences at Columbia 
University, and has extensive academic and corporate research 
experience at Harvard, Stanford, Princeton, Exxon, and Bell 
Laboratories.

3. Overarching Questions

    The hearing will address the following overarching questions:

          Are the Hydrogen Fuel and FreedomCAR initiatives on 
        track to provide a viable alternative to petroleum as a 
        transportation fuel?

          Are the goals of the Hydrogen Fuel and FreedomCAR 
        initiatives appropriate and realistic? Are the initiatives 
        designed to meet their goals?

          What are the most important recommendations from the 
        NAS and APS reports? How is the Department responding to the 
        recommendations?

          Will technology research alone lead to a transition 
        to hydrogen, or will it be necessary to apply policy tools? How 
        should a research and development effort take these policy 
        choices into account?

4. Overview

          In his 2003 State of the Union speech, President Bush 
        announced the creation of a new Hydrogen Fuel Initiative, which 
        built on the FreedomCAR initiative announced in 2002. Together, 
        the initiatives aim to provide the technology for a hydrogen-
        based transportation economy, including production of hydrogen, 
        transportation and distribution of hydrogen, and the vehicles 
        that will use the hydrogen. Fuel cell cars running on hydrogen 
        would emit only water vapor and, if domestic energy sources 
        were used, would not be dependent on foreign fuels.

          The recent reports from the American Physical Society 
        (APS) and the National Academy of Sciences (NAS) both recommend 
        changes to the hydrogen initiatives, particularly arguing for a 
        greater emphasis on basic, exploratory research because of the 
        significant, perhaps insurmountable, technical barriers that 
        must be overcome. The APS report strongly cautions DOE against 
        premature demonstration projects, saying such projects could 
        repeat the government's unhappy experience with the synthetic 
        fuels programs of the 1970s.

          The NAS study describes DOE's near-term milestones 
        for fuel cell vehicles as ``unrealistically aggressive.'' Both 
        reports note that it will require technical breakthroughs--not 
        just incremental improvements--to meet the goals of the overall 
        hydrogen initiative. For example, the APS study states, ``No 
        material exists today that can be used to construct a hydrogen 
        fuel tank that can meet the consumer benchmarks.''

          The NAS study finds that in the DOE hydrogen program 
        plan, the ``priorities are unclear.'' The NAS study calls for 
        ``increased emphasis'' on fuel cell vehicle development, 
        distributed hydrogen generation, infrastructure analysis, 
        carbon sequestration and carbon dioxide-free energy 
        technologies.

          The NAS report notes that DOE needs to think about 
        policy questions as it develops its research and development 
        (R&D) agenda: ``Significant industry investments in advance of 
        market forces will not be made unless government creates a 
        business environment that reflects societal priorities with 
        respect to greenhouse gas emissions and oil imports.. . .The 
        DOE should estimate what levels of investment over time are 
        required--and in which program and project areas--in order to 
        achieve a significant reduction in carbon dioxide emissions 
        from passenger vehicles by mid-century.''

          While the President's fiscal year 2005 (FY05) budget 
        request includes additional funding for hydrogen R&D, it 
        provides the money for hydrogen research by making cuts in 
        other energy efficiency and renewable energy R&D programs. The 
        APS report specifically argues against such an approach, and 
        the NAS report notes that research on other aspects of 
        renewable energy may be necessary for a successful transition 
        to a hydrogen economy.

          The APS report recommends that DOE continue research 
        into bridge technologies--such as gasoline or diesel hybrids 
        and hydrogen-fueled internal combustion engines--that could 
        provide benefits if the commercialization of fuel cell vehicles 
        is delayed.

5. Background

Report Recommendations
NAS report recommendations summary
    The NAS report raises ``four pivotal questions'' about the 
transition to a hydrogen economy:

          When will vehicular fuel cells achieve the 
        durability, efficiency, cost, and performance needed to gain a 
        meaningful share of the automotive market? The future demand 
        for hydrogen depends on the answer.

          Can carbon be captured and sequestered in a manner 
        that provides adequate environmental protection but allows 
        hydrogen to remain cost-competitive? The entire future of 
        carbonaceous fuels in a hydrogen economy may depend on the 
        answer.

          Can vehicular hydrogen storage systems be developed 
        that offer cost and safety equivalent to that of fuels in use 
        today? The future of transportation use depends on the answer.

          Can an economic transition to an entirely new energy 
        infrastructure, both the supply and the demand side, be 
        achieved in the face of competition from the accustomed 
        benefits of the current infrastructure? The future of the 
        hydrogen economy depends on the answer.\1\
---------------------------------------------------------------------------
    \1\ The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D 
Needs. NAS pre-publication copy, pp. 2-13.

    The report examines possible answers to the questions and 
recommends changes to the DOE hydrogen R&D program. The study concludes 
that, even under the most optimistic scenario, ``[T]he impacts on oil 
imports and CO2 emissions are likely to be minor during the 
next 25 years.'' The report goes on to add, ``[T]hereafter, if R&D is 
successful and large investments are made in hydrogen and fuel cells, 
the impact on the U.S. energy system could be great.''
    The report's recommendations are summarized below.
Major NAS Recommendations:

  Systems Analysis--DOE should undertake more systems analysis 
to better understand the challenges, progress, and potential benefits 
of making the transition to a hydrogen economy.

  Fuel Cell Vehicle Technology--DOE should increase funding for 
fundamental research and development of fuel cells focusing on on-board 
storage systems, fuel cell costs, and durability.

  Infrastructure--DOE should provide ``greater emphasis and 
support'' to research, especially exploratory research, related to the 
creation of a hydrogen infrastructure. DOE should ``create better 
linkages between its seemingly disconnected programs in large-scale and 
small-scale hydrogen production.''

  Infrastructure--DOE should accelerate work on codes and 
standards, particularly addressing overlapping regulation at the 
municipal, State, and federal levels.

  Transition--DOE should strengthen its policy analysis to 
better understand what government actions will be needed to bring about 
a hydrogen economy.

  Transition--DOE should increase investments in research and 
development related to distributed hydrogen production.

  Safety--DOE should make changes to hydrogen safety programs, 
including developing safety policy goals with stakeholders.

  Carbon Dioxide-Free Hydrogen--DOE should increase emphasis on 
electrolyzer development with a target of $125 per kilowatt with 70 
percent efficiency. In parallel, DOE should set more aggressive 
electricity cost targets for unsubsidized nuclear and renewable energy 
that might be used to produce hydrogen.

  Carbon Capture and Storage--DOE should link its hydrogen 
programs more closely with its programs on carbon sequestration (which 
are managed by Fossil Energy).

  RDD Plan--DOE should set clearer priorities for hydrogen R&D 
and better integrate related programs spread among several DOE offices. 
Congress should stop earmarking funds for hydrogen R&D.

  RDD Plan--DOE should shift work away from development and 
toward exploratory work and should establish interdisciplinary energy 
research centers at universities.

  Framework--DOE should give greater emphasis to fuel cell 
vehicle development, distributed hydrogen generation, infrastructure 
analysis, carbon sequestration and FutureGen, and carbon dioxide-free 
energy technologies.

APS report recommendations summary
    The APS recommendations are generally consistent with those of NAS. 
The primary recommendation of the APS report is that DOE should 
significantly increase the funding for basic research in the hydrogen 
initiative, while reducing the funding for demonstrations. The report 
outlines the various technical barriers facing each stage of hydrogen 
usage, and the fundamental research breakthroughs that are needed to 
make the initiative a success. APS concludes that large-scale 
demonstrations are generally premature because so many technological 
hurdles still must be cleared.
    The APS report also recommends that the Administration increase 
funding for ``bridge'' technologies--such as hydrogen internal 
combustion engines and gasoline and diesel hybrid vehicles--that would 
provide benefits sooner than hydrogen fuel cell vehicles, particularly 
if technical barriers slow the market penetration of the fuel cell 
vehicles. The APS report also argues that the hydrogen initiatives 
should not displace other efficiency and renewable energy research if 
the goals of the initiative are to be met. Renewable energy generation, 
APS argues, is crucial to supplying clean, domestic energy for hydrogen 
production.

Challenges

What are the technical challenges?
    Major advances are needed across a wide range of technologies if 
hydrogen is to be affordable, safe, cleanly produced, and readily 
distributed. The production, storage and use of hydrogen all present 
significant challenges.
    Hydrogen can be produced from a variety of sources, including coal 
and natural gas. But one goal of using hydrogen is to reduce emissions 
of carbon dioxide. If hydrogen is to be produced without emissions of 
carbon dioxide, then the technology to capture and store carbon dioxide 
(known as carbon sequestration) must improve significantly. The other 
main goal of using hydrogen is to reduce the use of imported energy. 
Today most hydrogen is produced from natural gas, but in order to 
supply the entire transportation sector significant imports of natural 
gas would be required. Other possible means of producing hydrogen are 
inherently cleaner than coal, but are far from affordable with existing 
technology. For example, the APS estimates that hydrogen produced 
through electrolysis is currently four to ten times more expensive than 
gasoline.
    Another major hurdle is finding ways to store hydrogen, 
particularly on board a vehicle. APS believes ``a new material must be 
discovered'' to develop an affordable hydrogen fuel tank.
    The NAS estimates that fuel cells themselves will need a ten- to 
twenty-fold improvement before fuel cell vehicles become competitive 
with conventional technology. Today's fuel cells also wear out quickly, 
and are therefore far short of the durability that would be required to 
compete with a gasoline engine. Finally, if hydrogen is going to be 
produced on a large-scale, dramatic improvements in pipeline and tanker 
technology are required to permit the efficient and safe transportation 
and distribution of hydrogen. Small-scale distributed production also 
needs improvement, and the NAS report recommends increased focus in 
that area because it may be the first to develop.
What are the non-technical challenges? (policy, regulatory, inertia, 
        public awareness)
    Even if the technology advances to a point at which it is 
competitive, the transition to a hydrogen economy will require an 
enormous investment to create a new infrastructure. Changes in 
regulation, training and public habits and attitudes will also be 
necessary. Estimates of the cost of creating a fueling infrastructure 
(replacing or altering gas stations) alone are in the hundreds of 
billions of dollars.
    The transition also won't happen quickly. According to the NAS 
study, significant sales of hydrogen vehicles are unlikely before 2025 
even under the most optimistic technology assumptions.

Technology

What is a Fuel Cell?
    Central to the operation of the hydrogen-based economy is a device 
known as a fuel cell that would convert hydrogen fuels to electricity. 
In cars, these devices would be connected to electric motors that would 
provide the power now supplied by gasoline engines. A fuel cell 
produces electricity by means of an electrochemical reaction much like 
a battery. However, there is an important difference. Rather than using 
up the chemicals inside the cells, a fuel cell uses hydrogen fuel, and 
oxygen extracted from the air, to produce electricity. As long as 
hydrogen fuel and oxygen are fed into the fuel cell, it will continue 
to generate electric power.
    Different types of fuel cells work with different electrochemical 
reactions. Currently most automakers are considering Proton Exchange 
Membrane (PEM) fuel cells for their vehicles.




Benefits of a Hydrogen-based Economy
    A hydrogen-based economy could have two important benefits. First, 
hydrogen can be manufactured from a variety of sources, including 
natural gas, biofuels, petroleum, coal, and even by passing electricity 
through water (electrolysis). Depending on the choice of source, 
hydrogen could substantially reduce our dependence on foreign oil and 
natural gas.
    Second, the consumption of hydrogen through fuel cells yields water 
as its only emission. Other considerations, such as the by-products of 
the hydrogen production process, will also be important in choosing the 
source of the hydrogen. For example, natural gas is the current 
feedstock for industrial hydrogen, but its production releases carbon 
dioxide; production from coal releases more carbon dioxide and other 
emissions; and production from water means that pollution may be 
created by the generation of electricity used in electrolysis. 
Production from solar electricity would mean no pollution in the 
generation process or in consumption, but is currently more expensive 
and less efficient than other methods.




Industry participation
    Although exact numbers on industry involvement are proprietary, the 
major automobile companies have invested billions of dollars in R&D and 
demonstrations of fuel cell vehicles. General Motors alone had spent $1 
billion as of June 2003, and estimated that its total investment by 
2010 could triple.

Legislation

    Language in the portion of the comprehensive Energy Bill (H.R. 6) 
produced by the Science Committee would authorize and guide the 
hydrogen initiative. The conference report on H.R. 6 is still pending 
in the Senate.

6. Questions to the Witnesses

    The witnesses have been asked to address the National Academy of 
Sciences' (NAS) and American Physical Society's (APS) recent reports 
and recommendations on the hydrogen initiatives in their testimony, and 
in addition the following specific questions.
Mr. David Garman:

        1.  The NAS report describes the goals of the initiatives as 
        ``unrealistically aggressive'' while the APS report highlights 
        the significant ``performance gaps'' between current technology 
        and the initiative milestones. Does the Department of Energy 
        (DOE) plan to adjust the goals based on the comments of these 
        reports? If not, how does DOE plan to respond?

        2.  Because of the significant technical challenges, both 
        reports criticized the current mix of funding for hydrogen 
        research, arguing that more emphasis should be placed on 
        fundamental research as opposed to demonstrations. Please 
        describe the hydrogen program's current demonstration and 
        deployment efforts, and how each technology element's current 
        costs and performance measure against the program goals. Does 
        DOE plan to adjust the balance of funding to match the 
        recommendations? If not, why?

        3.  The NAS report suggests that the research agenda should be 
        developed with future policy decisions in mind. How did the 
        Administration consider the impact of future policy decisions 
        in the development of the research agenda for the hydrogen 
        initiatives? Does DOE plan on increasing its policy analysis 
        capabilities as recommended by the NAS?

        4.  What are the key criteria for deciding that a technology is 
        ready for demonstration? Are there guidelines or rules of 
        thumb, such as 120 percent of cost goals, or 85 percent of 
        performance goals that indicate that a technology is ready for 
        demonstration-scale activities?

        5.  Using the definitions in OMB Circular A-11, what is the 
        proposed mix of funding in the FY05 budget request between 
        basic research, applied research, development, demonstration, 
        and deployment activities within the Hydrogen Fuel Initiative?
Dr. Michael Ramage:

        1.  Given the current state of hydrogen technology, what do you 
        feel the federal funding balance should be between 
        demonstration and research?

        2.  One of the recommendations included in the NAS report calls 
        for an expanded policy analysis program at the Department of 
        Energy. Please describe why the committee felt this was 
        important, and give more detail as to what such a program might 
        encompass.

        3.  In the penetration models included in the NAS study, the 
        committee assumes that the technical goals will be met, even 
        though they are deemed overly optimistic. What would be more 
        realistic goals? How would that affect the penetration models? 
        What would that imply for the delivery of public benefits such 
        as environmental improvements and reduced oil dependence?

        4.  What are the key criteria for deciding that a technology is 
        ready for demonstration? Are there guidelines or rules of 
        thumb, such as reaching 120 percent of cost goals, or 85 
        percent of performance goals, that indicate that a technology 
        is ready for demonstration-scale activities?

        5.  While the NAS report recommends shifting funding away from 
        ``bridge'' technologies such as gasoline and diesel hybrids and 
        hydrogen internal combustion engines, another recently released 
        report from the American Physical Society (APS) encourages DOE 
        to increase funding in these areas in light of their near-term 
        benefits. How would you respond to the APS recommendation? What 
        do you feel is the reason for the different opinions about 
        federal investment in bridge technologies?
Dr. Peter Eisenberger:

        1.  One of the major themes of the APS report is the lack of 
        funding for basic research. The report notes that the 
        Department's request of $29 million in the Office of Science 
        for fiscal year 2005 was a dramatic improvement, but says that 
        the amount of basic research is still inadequate at 13 percent 
        of the overall hydrogen funding. What do you feel the balance 
        should be? How should it change over time?

        2.  What are the key criteria for deciding that a technology is 
        ready for demonstration? Are there guidelines or rules of 
        thumb, such as reaching 120 percent of cost goals, or 85 
        percent of performance goals, that indicate that a technology 
        is ready for demonstration-scale activities?

        3.  While the APS report encourages DOE to increase funding to 
        ``bridge'' technologies such as gasoline and diesel hybrids and 
        hydrogen internal combustion engines, another recently released 
        report from the National Academy of Sciences (NAS) recommends 
        shifting funds away from bridge technologies. How would you 
        respond to the NAS recommendation? What do you feel is the 
        reason for the different opinions about federal investment in 
        bridge technologies?
    Chairman Boehlert. The Committee will be in order. Now 
prior to our hearing, I must ask your patience while I complete 
one brief administrative matter. Specifically, I would like to 
ask the Committee for unanimous consent to discharge House 
Joint Resolution 57, expressing the sense of Congress that the 
Congress recognize the contributions of the seven Columbia 
astronauts by supporting the establishment of a Columbia 
Memorial Science Learning Center in Downey, California. I know 
that there is strong bipartisan support for this resolution, 
and I understand the support of the entire California 
delegation. Therefore, without objection, so ordered.
    I want to welcome everyone here for this important hearing 
on one of the President's key initiatives. This hearing is 
important because what is at stake over the long-term is the 
security of our nation, the availability of resources for 
economic growth here and around the world, and the health of 
the environment, nationally and globally, not exactly minor 
issues. The President is to be congratulated for his foresight 
in proposing the Hydrogen Initiative. It will take at least a 
decade of focused effort to lay the foundation for a hydrogen 
economy.
    The question before us today is not whether to have a 
hydrogen initiative, but how to make sure we get the most out 
of what we are spending on this program. If we think of the 
Hydrogen Initiative as a car, which I think is an appropriate 
analogy, then I would say that the President has bought us the 
car and the Secretary of Energy has turned the ignition key, 
but everyone is still learning how to drive and no one has 
mapped out a clear travel plan yet.
    So we are at a critical juncture in the development of this 
initiative, and I am pleased that we will be able to get 
guidance today from two prestigious organizations: the National 
Academy of Sciences (NAS), and the American Physical Society 
(APS), represented here by two distinguished researchers. I 
found the recommendations in their two reports to be 
compelling, and I hope we will be able to hear some specifics 
today about exactly how the Department of Energy (DOE) is going 
to implement them. Clearly, this is a valuable program that 
could be better focused with greater emphasis on solving 
fundamental questions.
    I am pleased that we have Secretary Garman back with us 
today, a good friend, one who has appeared here many, many 
times, to tell us how DOE intends to proceed. He is a leading 
light in the Department and a true believer in these 
technologies. And he has his work cut out for him with this 
initiative. I also want to thank Secretary Garman for appearing 
before us during a week in which he has already made a number 
of congressional appearances, but I am sure that as a former 
Senate staffer he feels he just can't spend too much time up 
here.
    Before we hear from our witnesses, I want to highlight two 
points made in the reports I referred to earlier that go beyond 
the technical recommendations, points I have made in previous 
hearings on this subject. First, most reports acknowledge that 
there is no way to discuss the transition to a hydrogen economy 
or the research to get us there without dealing forthrightly 
with policy questions. No mysterious market force alone is 
going to produce a hydrogen economy. I would urge DOE again to 
make that acknowledgment itself and to plan accordingly. We 
can't, for example, have a sensible hydrogen R&D agenda without 
making some decisions about essential carbon sequestration, how 
that is going to be in a hydrogen economy. Personally, I think 
it has to be essential, but we need a decision by DOE. Second, 
both reports note that other work on energy efficiency and 
renewable energy is necessary for a hydrogen economy to be 
clean and affordable, and both reports are right.
    So I think it is unfortunate that the Administration 
proposes to pay for hydrogen research by cutting the rest of 
Secretary Garman's programs. We have been told in the past that 
such triage would not occur, and it shouldn't.
    Finally, let me say that I also agree with these reports 
when they point out that hydrogen is no panacea, especially in 
the short-term. Work on hydrogen should be not used an excuse--
as an excuse to avoid steps we need to take now, steps like 
stricter CAFE standards, like promoting hybrid vehicles, like 
conducting R&D on interim solutions to our energy dependence 
and pollution problems.
    Our focus at this hearing is on the Hydrogen Initiative 
itself. I hope we can reach some consensus today on how the 
research agenda can be reshaped to increase the likelihood that 
hydrogen can someday become the answer to our energy and 
environmental needs.
    Mr. Gordon.
    [The prepared statement of Chairman Boehlert follows:]
            Prepared Statement of Chairman Sherwood Boehlert
    I want to welcome everyone here for this important hearing on one 
of the President's key initiatives. This hearing is important because 
what's at stake, over the long term, is the security of our nation, the 
availability of resources for economic growth here and around the 
world, and the health of the environment, nationally and globally. Not 
exactly minor issues.
    The President is to be congratulated for his foresight in proposing 
the hydrogen initiative. It will take at least a decade of focused 
effort to lay the foundations for a hydrogen economy.
    The question before us today is not whether to have a hydrogen 
initiative, but how to make sure we get the most out of what we're 
spending on this program. If we think of the hydrogen initiative as a 
car--an appropriate analogy--then I would say that the President has 
bought us the car and the Secretary of Energy has turned the ignition 
key, but everyone is still learning how to drive, and no one has mapped 
out a clear travel plan yet.
    So, we're at a critical juncture in the development of this 
initiative. And I'm pleased that we'll be able to get guidance today 
from two prestigious organizations, the National Academy of Sciences 
and the American Physical Society, represented here by two 
distinguished researchers.
    I found the recommendations in their two reports to be compelling. 
And I hope we'll be able to hear some specifics today about exactly how 
the Department of Energy (DOE) is going to implement them. Clearly this 
is a valuable program that could be better focused, with greater 
emphasis on solving fundamental questions.
    I'm pleased that we have Secretary Garman back with us today to 
tell us how DOE intends to proceed. He is a leading light in the 
Department and a true believer in these technologies, and he has his 
work cut out for him with this initiative. I also want to thank 
Secretary Garman for appearing before us during a week in which he 
already has many Congressional appearances. But I'm sure that as a 
former Senate staffer he feels he just can't spend too much time up 
here.
    Before we hear from our witnesses, I want to highlight two points 
made in these reports that go beyond the technical recommendations--
points I've made in previous hearings on this subject.
    First, both reports acknowledge that there is no way to discuss the 
transition to a hydrogen economy--or the research to get us there--
without dealing forthrightly with policy questions. No mysterious 
market force alone is going to produce a hydrogen economy. I would urge 
DOE again to make that acknowledgement itself and to plan accordingly. 
We can't, for example, have a sensible hydrogen R&D agenda without 
making some decisions about how essential carbon sequestration is going 
to be in a hydrogen economy. Personally, I think it has to be 
essential, but we need a decision by DOE.
    Second, both reports note that other work on energy efficiency and 
renewable energy is necessary for a hydrogen economy to be clean and 
affordable--and both reports are right. So I think it's unfortunate 
that the Administration proposes to pay for hydrogen research by 
cutting the rest of Secretary Garman's programs. We've been told in the 
past that such triage would not occur. It shouldn't.
    Finally, let me say that I also agree with these reports when they 
point out that hydrogen is no panacea, especially in the short-term. 
Work on hydrogen should not be used as an excuse to avoid steps we need 
to take now--steps like stricter CAFE standards, like promoting hybrid 
vehicles, like conducting R&D on interim solutions to our energy 
dependence and pollution problems.
    But our focus at this hearing is on the hydrogen initiative itself. 
I hope we can reach some consensus today on how the research agenda can 
be reshaped to increase the likelihood that hydrogen can some day 
become the answer to our energy and environmental needs.
    Mr. Gordon.

    Mr. Gordon. Thank you, Mr. Chairman. I always enjoy 
listening to you, because I just agree with you so much on what 
you say. It is such a nice thing to have a sensible chairman. 
Thank you for giving me my opportunity also.
    In my part of Tennessee, we have a special interest in 
hydrogen fuel vehicles in the form of Dr. Cliff Rickets at 
Middle Tennessee State University. For many years, Dr. Rickets 
has been working with alternative fuels and has built cars that 
run on everything from corn to cow manure. Since the late 
'80's, he has been working with hydrogen fuel engines. In fact, 
in 1991, he built a car that set the world land speed record 
for hydrogen at the Bonneville speed trials at the Great Salt 
Flats in Utah. The next year, his team went back and broke his 
own record, a record that has now stood for more than 10 years.
    And in Tennessee, we come about our interests in hydrogen 
honestly and believe that in addition to going fast, we can 
also transition to a fuel that can be cleaner and reduce our 
need for imported oil. But we have to be sensible and smart 
about how we go about it, and that is the subject of this 
hearing. The importance of energy to society can not be 
overstated. Since prehistoric--or prehistory, the survival and 
the advancement of civilization has depended on the ability to 
secure energy resources. From the gathering of wood to the 
burning of fossil fuels to the fission of nuclear materials, 
our quest for energy has shaped the world, as we know it. The 
agricultural and industrial revolutions of the last two 
centuries would not have been possible had it not been for 
coal, oil, and natural gas.
    However, finding alternatives to fossil fuels is 
imperative. We have known this for a generation yet no viable, 
cost-efficient alternative has emerged. Hydrogen has developed 
as a potential solution to our energy puzzle, but will it work? 
And furthermore, will it work within the timeline and technical 
goals laid out by the Administration's Hydrogen Initiative. 
With over two billion internal combustion engines in the world, 
a switch to a hydrogen-based economy is no easy task, and that 
is why I am pleased that we have these very informed officials 
with us today. And I look forward to hearing from you and 
taking us further down this path.
    Thank you, Mr. Chairman.
    Chairman Boehlert. Thank you very much, Mr. Gordon.
    The Chair recognizes the distinguished Chair of the 
Subcommittee on Energy, Ms. Biggert.
    Ms. Biggert. Thank you very much, Mr. Chairman. And thank 
you for calling this hearing and giving this committee another 
opportunity to get an update on the work underway at the 
Department of Energy as part of the President's Hydrogen Fuel 
and FreedomCAR Initiatives. I also want to thank the witnesses 
for being so generous with their time and for agreeing to share 
with us their insight and expertise on the topic of fuel cells 
and hydrogen.
    I have a keen interest in both the fuel cell and Hydrogen 
Initiatives that President Bush announced in 2002 and 2003 
respectively. As a matter of fact, in June of 2002, I chaired a 
field hearing in Naperville, Illinois to examine the potential 
of hydrogen fuel cell technology. My District is, of course, 
home to Argonne National Laboratory, which has a strong fuel 
cell R&D program. My District is also home to small businesses 
like H2Fuels and various auto parts suppliers, corporations 
like BP, and research organizations like the Gas Technology 
Institute. In short, I have the privilege to represent a region 
that has much to contribute to the continuing development of 
fuel cells and the hydrogen needed to fuel them.
    As I have said many times before, I do not believe that 
affordable energy and a clean and safe environment are mutually 
exclusive. America has the ingenuity and the expertise to meet 
our nation's future energy demands and promote energy 
conservation. And we can do so in environmentally responsible 
ways that set a standard for the world. Most importantly, 
America now has the motivation, perhaps like no other time 
since the oil crisis of the '70's, to find newer and better 
ways to meet our energy needs.
    Let us look at the facts. Our dependence on foreign oil 
sources is up almost--to almost 60 percent. Violence in the 
Middle East and the War Against Terrorism will continue to 
cause more volatility in gasoline prices that any of us will 
find acceptable. The bottom line is that the United States is 
home to only two percent of the world's supply of oil. It 
doesn't take a chemical engineer or a foreign policy expert to 
understand what that equals: continued dependency on 
increasingly uncertain sources.
    There clearly are some compelling reasons to work toward 
our shared vision of a hydrogen economy. Today we will hear 
testimony about two recent reports, one prepared by the 
National Academy of Sciences, the other one by the American 
Physical Science Society, that raises questions about our 
progress in making that vision a reality.
    We are talking about a tremendously challenging endeavor. 
It will take us many years to reach our goal. It only makes 
sense that we will need to make a few mid-course corrections 
along the way, that is why we should be asking are the goals we 
initially set still the right goals. If so, we must next ask 
are we working to meet our goals in the best way that we can. 
For instance, many fundamental technical obstacles remain in 
hydrogen production, transport, and storage, not to mention the 
technical challenges that we must address before fuel cell 
vehicles become a common future of American life.
    To overcome these obstacles, the Federal Government must 
maintain a strong commitment to basic research. If the road we 
are on turns out to be a dead end, we should have an 
alternative route already mapped out. That is the reason a 
diverse portfolio of basic research is so important to long-
term technology initiatives like the ones we are discussing 
today. Our job at this hearing is to look at what we have 
learned in the first year or two of our efforts and to gain 
insight from NAS and APS reports. Both recommend greater 
emphasis on basic research, which I think is the right course 
of action, and both point out that a great deal of work lies 
ahead.
    I am confident that DOE is up to the task, and with the 
constructive input of groups like NAS and APS, we will move the 
Nation ever closer to realizing the promise and potential of 
fuel cells and hydrogen.
    Thank you very much, Mr. Chairman, and I yield back.
    [The prepared statement of Mrs. Biggert follows:]

           Prepared Statement of Representative Judy Biggert

    Thank you, Chairman Boehlert, for calling this hearing and giving 
this committee another opportunity to get an update on the work 
underway at the Department of Energy as part of the President's 
Hydrogen Fuel and FreedomCAR initiatives. I also want to thank the 
witnesses for being so generous with their time, and for agreeing to 
share with us their insight and expertise on the topics of fuel cells 
and hydrogen.
    I have a keen interest in both the fuel cell and hydrogen 
initiatives that the President announced in 2002 and 2003 respectively. 
As a matter of fact, in June 2002, I chaired a field hearing in 
Naperville, Illinois to examine the potential of hydrogen fuel cell 
technology. My district is, of course, home to Argonne National 
Laboratory, which has a strong fuel cell R&D program. My district also 
is home to small businesses like H2Fuels and various auto parts 
suppliers, corporations like BP, and research organizations like the 
Gas Technology Institute. In short, I have the privilege to represent a 
region that has much to contribute to the continued development of fuel 
cells and the hydrogen needed to fuel them.
    As I've said many times before, I do not believe that affordable 
energy and a clean and safe environment are mutually exclusive. America 
has the ingenuity and the expertise to meet our future energy demands 
and promote energy conservation, and we can do so in environmentally 
responsible ways that set a standard for the world. Most importantly, 
America now has the motivation--perhaps like no other time since the 
oil crisis of the 70's--to find newer and better ways to meet our 
energy needs.
    Let's look at the facts. Our dependence on foreign oil sources is 
up to almost 60 percent. Violence in the Middle East and the war 
against terrorism will continue to cause more volatility in gasoline 
prices than any of us will find acceptable. The bottom line is that the 
United States is home to only two percent of the world's supply of oil. 
It doesn't take a chemical engineer or a foreign policy expert to 
understand what that equals--continued dependence on increasingly 
uncertain sources.
    There clearly are many compelling reasons to work towards our 
shared vision of a hydrogen economy. Today, we will hear testimony 
about two recent reports--one prepared by the National Academy of 
Sciences, the other by the American Physical Society--that raise 
questions about our progress in making that vision a reality.
    We are talking about a tremendously challenging endeavor. It will 
take us many years to reach our goal. It only makes sense that we might 
need to make a few mid-course corrections along the way. That's why we 
need to be asking, ``Are the goals we set initially still the right 
goals?'' If so, we need to next ask, ``Are we working to meet our goals 
in the best way that we can?''
    For instance, many fundamental technical obstacles remain in 
hydrogen production, transport, and storage--not to mention the 
technical challenges that we must address before fuel cell vehicles 
become a common feature of American life. To overcome these obstacles, 
the Federal Government must maintain a strong commitment to basic 
research. If the road we're on turns out to be a dead-end, we should 
have an alternate route already mapped out. That's the reason a diverse 
portfolio of basic research is so important to long-term technology 
initiatives, like the ones we are discussing today.
    Our job at this hearing is to look at what we've learned in the 
first year or two of our efforts, and to gain insight from the NAS and 
APS reports. Both recommend greater emphasis on basic research, which I 
think is the right course of action, and both point out that a great 
deal of work lies ahead. I am confident that the DOE is up to the task 
and, with the constructive input of groups like the NAS and APS, will 
move the Nation ever-closer to realizing the promise and potential of 
fuel cells and hydrogen.
    Thank you.

    Chairman Boehlert. Thank you very much, Ms. Biggert.
    [The prepared statement by Mr. Burgess follows:]

        Prepared Statement of Representative Michael C. Burgess

    Thank you Mr. Chairman, and thank you for having this hearing.
    I believe that energy independence is a matter of national 
security. The United States is especially vulnerable to international 
price fluctuations since we import nearly 60 percent of the oil we 
consume daily from foreign sources, and this number is expected to 
increase to 75 percent by 2010. Most of this oil comes from the Middle 
East and politically unstable nations such as Algeria, Nigeria and 
Venezuela. When we met one year ago, to discuss this very issue, gas 
prices were soaring as a result of a two-month strike in Venezuela. 
This is merely one example of how international situations can affect 
the United States.
    Our economy depends on access to steady, affordable and reliable 
domestic energy supply; it is a matter of national security to have the 
United States be self-sufficient when it comes to our energy needs. To 
ensure America's energy independence, I believe that we need to 
implement a long-term, comprehensive energy policy. Furthermore, one 
component of this national energy policy must be alternative energy 
research and development.
    President Bush, during his 2001 State-of-the-Union Address, 
proposed a bold FreedomCAR and Hydrogen Fuel Initiative. The goal of 
this new FreedomCAR program is to make hydrogen fuel cell technology a 
viable, affordable and convenient technology that we can use to power 
our automobiles. There are many benefits, including a cleaner 
environment, greater energy independence, and the possibility that 
research can spur further technological innovation.
    As a member of both the Science and Transportation and 
Infrastructure Committees, I recognize the unique challenges that we 
face as we discuss the possibility of converting into a hydrogen-fueled 
economy. We must discuss the appropriate role for the Federal 
Government in this process and examine our focus on FreedomCAR and 
hydrogen-based infrastructure, but we must do so within the context of 
a comprehensive energy policy. A comprehensive energy policy will help 
ensure that the United States can achieve energy independence. In 
addition, we must also take seriously our responsibility to ensure that 
taxpayer dollars are spent wisely and must keep this in mind as we 
discuss the President's Hydrogen Initiative.
    So, again, Mr. Chairman, I thank you for this hearing in which we 
can address some our concerns.

    [The prepared statement by Mr. Costello follows:]
         Prepared Statement of Representative Jerry F. Costello
    Good afternoon. I want to thank the witnesses for appearing before 
our committee to discuss the President's Hydrogen Initiative and two 
recently released reports from the National Academy of Sciences (NAS) 
and the American Physical Society (APS) on DOE's Hydrogen Initiative. 
The hydrogen program is one of the President's primary energy 
initiatives, and the two reports recommend changes to the program.
    On February 27, 2003, the President announced the FutureGen 
project. This project is a $1 billion government/industry partnership 
to design, build, and operate a nearly emission-free, coal-fired 
electric and hydrogen production plant. The prototype plant will serve 
as a large-scale engineering laboratory for testing and will expand the 
options for producing hydrogen from coal and capturing CO2.
    I have led the effort to locate FutureGen in Illinois, including 
leading a bipartisan effort in the House to secure funding for the 
project. Further, last July, I hosted a roundtable discussion regarding 
FutureGen and what it means for Illinois with Governor Blagojevich, 
U.S. Senators Durbin and Fitzgerald, and U.S. Congressman John Shimkus. 
Dr. C. Lowell Miller, Director of the Office of Coal Fuels and 
Industrial Systems at the Department of Energy, made a presentation on 
the specifics of the project.
    I believe that Southern Illinois is the perfect place to locate the 
new plant. The region is rich in high-sulfur coal reserves and the Coal 
Center at Southern Illinois University Carbondale is located there. In 
addition, the geology of the region is well suited to the carbon-
trapping technology to be developed. Illinois is home to oil and gas 
reserves and deep saline aquifers that can permanently sequester carbon 
dioxide.
    I have been tracking this issue closely since its inception and I 
am anxious to see the Department's program plan. This Administration 
has touted FutureGen as one of the most important climate change 
technologies at our disposal and heightened its international 
visibility to extraordinary levels. If it is as important as the 
Administration has said, and I believe it is, I hope that the 
Administration will take a hard look at the program plan, your posture 
toward industry, and seek to move on a path forward that is 
technically, financially, and politically viable. We all want to make 
this work, but the program will go nowhere without a sound program plan 
upon which everyone agrees.
    Finally, I was pleased to see the NAS and the APS both placed the 
FutureGen project as a high priority task for advancing development of 
hydrogen from coal.
    I again thank the witnesses for being with us today and providing 
testimony to our committee.

    [The prepared statement by Ms. Johnson follows:]

       Prepared Statement of Representative Eddie Bernice Johnson

    Mr. Chair, I thank you for calling this very important hearing. Our 
honored witnesses, I thank you for appearing here today to discuss such 
a vital issue to our environment and our economy.
    I am pleased to speak today about the promising technology that 
could help protect our environment and safeguard our national security.
    During his State of the Union Address a year ago, President Bush's 
spelled out his plans for efficient cars running on clean, hydrogen 
fuel cells. In fact, the Energy Department included $318 million for 
both fuel cells and hydrogen production in its 2005 budget last month. 
However, according to a report by the National Academy of Sciences, 
this plan is decades away from commercial reality. While the Bush 
administration anticipates mass production of hydrogen cars by 2020, 
the academy calls the Energy Department's goals ``unrealistically 
aggressive.''
    If we don't concentrate on viable alternatives to now, the United 
States is expected to import 68 percent of the oil it consumes by 2025. 
Should hydrogen-powered fuel cells fulfill their promise, we could 
drastically reduce that figure and ensure our independence in a way 
that keeps our environment protected.
    Despite the great potential of this technology, there are 
significant obstacles to overcome. Usable hydrogen remains expensive to 
produce and difficult to store effectively. At present fuel cells can 
cost up to ten times more than conventional engines. There is important 
work to do in this field, and I am proud to say that there are over a 
dozen organizations in my home state of Texas hard at work on 
solutions. Often Texas is thought of as oil country, but our state has 
the opportunity to play a vital role in the development of viable 
alternatives.
    As a Ranking Member of the Research Subcommittee, I am very 
interested in any technology that could help keep our environment 
cleaner and our people more secure. I appreciate the opportunity to 
participate and look forward to ongoing involvement in this promising 
avenue of research.

    [The prepared statement by Mr. Larson follows:]

          Prepared Statement of Representative John B. Larson

    I wanted to thank you all for testifying before the Committee 
today, and I just would like to take a few moments to offer this 
opening statement.
    I've looked through the recent reports from the American Physical 
Society (APS) and the National Academy of Sciences (NAS), and both 
recommend changes to the hydrogen initiatives that argue for a greater 
emphasis on basic, exploratory research because of the technical 
barriers that must still be overcome, including cautions to DOE against 
premature demonstration projects.
    As the Ranking Member of the Energy Subcommittee, this is an issue 
that I have looked closely at over the years. During debate on the 
Energy bill last year, I specifically worked to support a balance 
between the need for basic R&D with demonstration programs that would 
put a limited number of vehicles from different sources with different 
technologies in real world operating conditions.
    While you are correct in identifying some of the technical hurdles 
that still face extensive real world deployment of fuel cell 
technology, especially in such areas as hydrogen storage and fuel cell 
freeze/cold start capability, these types of demonstrations will 
provide valuable benchmarking information and allow us to improve the 
performance of the power plants and their integration with the vehicle 
while longer-term efforts on hydrogen infrastructure are being pursued 
simultaneously.
    While in general I agree that deploying large numbers of vehicles, 
especially using the same technological approach, is inappropriate at 
this time, I do support demonstration programs using limited numbers of 
light and heavy-duty vehicles to benchmark the actual performance of 
these vehicles and address system integration issues. I also believe 
hydrogen fuel cell buses can represent a bridging strategy that can 
help us explore the use of this technology while more wide spread 
infrastructure are explored.
    For example, DOE's ``Controlled Hydrogen Fleet and Infrastructure 
Demonstration and Validation Project'' would do exactly that: put a 
limited number of light duty vehicles from different sources on the 
road to demonstrate their capabilities. In addition, I believe that the 
establishment of some form of a national fuel cell bus demonstration 
program would be equally important, since the hydrogen infrastructure 
requirements are minimal and the vehicles can perform useful work as 
part of the demonstration effort while providing valuable real world 
experience in technology development. While the National Academy 
suggests that DOE should give greater emphasis to fuel cell vehicle 
development, I would respectfully suggest that should also include the 
development of heavy-duty vehicles such as transit buses in cooperation 
with DOT and DOD.
    Finally, I would like to point out that while the reports we are 
discussing today look at current federal hydrogen initiatives in the 
Department of Energy and Department of Transportation, there are 
additional hydrogen and fuel cell research and development initiatives 
being conducted within the Department of Defense that amounted to 
roughly $50 million in FY04 alone, and to my knowledge those research 
and development activities have not been directly considered in the 
development of this study.
    I look forward to hearing your testimony, and to the opportunity 
for us to discuss these issues.

    [The prepared statement by Mr. Honda follows:]

         Prepared Statement of Representative Michael M. Honda

    I thank Chairman Boehlert and Ranking Member Gordon for holding 
this important hearing today to consider the findings of the National 
Academy of Sciences and American Physical Society reports on the 
hydrogen initiatives and the Administration's response to the reports.
    Both reports recommend that the Department of Energy shift the 
focus of work in the hydrogen program away from demonstration and 
towards more basic R&D because there are significant technical barriers 
to overcome. This raises several of questions that I hope this hearing 
will address.
    Prior demonstration programs have helped to identify some of the 
very technical barriers this increased emphasis on research would aim 
to overcome. I fear that we might miss more obstacles until after we 
have made significant investments of time and resources if we stop 
working on demonstration projects.
    I also wonder what role investments made in demonstration projects 
by other agencies can play. While not specifically directed at the 
light duty vehicles these reports address, I know that the Santa Clara 
Valley Transportation Authority's Zero Emission Bus program is funded 
by a transit sales tax, the Federal Transit Administration (FTA), the 
California Energy Commission (CEC), and the Bay Area Air Quality 
Management District. It will be useful to know whether DOE can work 
with programs like this to gain knowledge about infrastructure needs 
and identify potential technical obstacles that we will need to 
overcome.
    The recommendations in these reports do not address what will 
happen to those demonstration programs already underway. Will a 
priority shift leave communities that have begun these implementation 
plans out in the cold? Many of these communities undertook 
demonstration programs to conform to environmental regulations, which 
seems to tie in naturally with the recommendation in the NAS report 
that DOE think about national policy questions that will help bring 
hydrogen technologies along. I worry that by giving up on early 
demonstration projects, we will actually stifle opportunities to 
develop the necessary policies and shoot ourselves in the foot.
    I look forward to this hearing, and hope the witnesses can address 
some of these concerns.

    Chairman Boehlert. Our panel today, our sole panel, as is 
tradition of this committee, is composed of three very 
distinguished witnesses, all of whom serve as valuable 
resources for this committee. We are here to learn, but we are 
also here to probe and question. Our panel consists of: David 
Garman, Assistant Secretary, Energy Efficiency and Renewable 
Energy at the Department of Energy; Dr. Michael Ramage, Chair, 
National Academy of Science Committee on Alternatives and 
Strategies for Future Hydrogen Production and Use; and Dr. 
Peter Eisenberger, Chair, American Physical Society, Panel on 
Public Affairs, Energy Subcommittee.
    With that, I would ask all of you to try to summarize your 
opening statement. The Chair will not be arbitrary. And don't 
get nervous if you see that red light go on. That just 
indicates that you have exceeded five minutes, but if you want 
to complete a thought, or as former Secretary Richardson used 
to say, a paragraph, you can do so. But we are not going to be 
arbitrary, because what you have to say we need to hear.
    Mr. Garman.

  STATEMENT OF MR. DAVID GARMAN, ASSISTANT SECRETARY, ENERGY 
     EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF ENERGY

    Mr. Garman. Thank you, Mr. Chairman and Members of the 
Committee.
    President Bush announced his Hydrogen Fuel Initiative a 
little more than a year ago, and the President challenged us to 
transform the Nation's energy future from one dependent on 
foreign petroleum to one that utilizes hydrogen, a fuel that 
can be produced from a variety of abundant domestic resources. 
We asked the National Academy of Sciences to evaluate our plans 
to transform the President's vision into reality. They did an 
excellent job, and we are most grateful for their work. Their 
report validates the President's vision with its major 
conclusion found on page ES-2, and I quote: ``A transition to 
hydrogen as a major fuel in the next 50 years could 
fundamentally transform the U.S. energy system, creating 
opportunities to increase energy security through the use of a 
variety of domestic energy sources for hydrogen production 
while reducing environmental impacts, including atmospheric 
CO2 emissions and criteria pollutants,'' and that 
``there is a potential for replacing, essentially, all gasoline 
with hydrogen over the next half-century using only domestic 
resources and thus eliminating all CO2 and criteria 
pollutants from vehicular emissions.''
    Also, I was most gratified to see the Academy's recognition 
of the programmatic progress that we have made. On pages ES-11 
and 10-10, the report states, and I quote: ``The Committee is 
impressed by how well the hydrogen program has progressed.'' In 
all, the study made 43 key recommendations, and if you will 
allow me to dispense with nuance, at least for the oral 
statement, we fully concur with 35 of those 43 recommendations 
and are carefully considering the other eight. While we may not 
agree with every word of every statement and finding, the 
Committee said absolutely nothing that we dismiss out of hand, 
and that is truly remarkable.
    The only thing that I would quarrel with had been some of 
the media reports, which have portrayed the long transition 
time, technical obstacles, and the sheer difficulty of this 
effort as if they were some kind of surprise. This is, of 
course, something we have been saying all along. In fact, the 
reason this is a presidential initiative announced in the State 
of the Union Address is because it is a difficult undertaking 
requiring sustained effort, government leadership, and a 
bipartisan commitment to get the job done. And success is, by 
no means, guaranteed.
    There are two other points in the report that I wish to 
highlight in my oral testimony. First is the issue of funding. 
Last year, Congress underfunded the President's request for 
hydrogen funding in the Energy and Water Appropriations Bill by 
roughly $9 million and saddled us with $39 million in earmarks. 
Congress also underfunded the President's request for fuel cell 
work in the Interior Appropriations Bill by $19 million. In the 
Omnibus Appropriations Bill, Congress added another $5.5 
million for hydrogen, all of which was earmarked. So while the 
hydrogen and fuel cell programs at DOE appear well funded, we 
are about $67 million short of the amount of unencumbered 
funding we had hoped to receive in fiscal year 2004 that could 
be focused on our program plan. As an unfortunate consequence, 
we will have to delay some key work in hydrogen production, 
storage, and technology validation, some of the very same work 
the National Academy highlighted in its report. I think the 
Academy has recognized this problem and highlighted it on page 
ES-12 and elsewhere in the report.
    I also want to highlight one other aspect of the report, 
which has been largely ignored in the media and that is well 
known to this committee. As you know, some of my friends in the 
renewable energy community have criticized our hydrogen program 
plans, because, in addition to advancing ways to produce 
hydrogen using renewable energy, we are also exploring how to 
make hydrogen using nuclear and fossil energy resources, 
including coal. The Committee noted the importance of the 
carbon sequestration work in this endeavor, which we think is 
key. And it is noteworthy that the Committee also agreed with 
the critical need to explore methods of producing hydrogen from 
coal and nuclear. And this ought to put to rest, once and for 
all, the notion that advancing toward the hydrogen energy 
economy is only environmentally advantageous if and only if all 
of the hydrogen is derived from renewable energy.
    So with that, Mr. Chairman, I will stop. I look forward to 
the questions and discussions that will follow. Thank you very 
much.
    [The prepared statement of Mr. Garman follows:]

                   Prepared Statement of David Garman

    Mr. Chairman, Members of the Committee, I appreciate the 
opportunity to testify today on the President's Hydrogen Fuel 
Initiative and FreedomCAR Partnership. My testimony will focus on the 
recent National Academy of Engineering and National Research Council 
report: The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D 
Needs. I will also comment on the recent report of the American 
Physical Society, The Hydrogen Initiative.
    At the outset I want to express the Department's appreciation for 
the valuable work performed by the National Research Council which 
conducted this very comprehensive study at our request. Its carefully 
considered recommendations and conclusions have already helped 
strengthen and focus DOE's hydrogen program and increased the 
likelihood of its success. The report will also help DOE better focus 
its research, priorities and funding, given the broad slate of 
potential hydrogen activities and technology directions. We are 
especially pleased to see the Committee's conclusion that ``transition 
to hydrogen as a major fuel in the next 50 years could fundamentally 
transform the U.S. energy system, creating opportunities to increase 
energy security through the use of a variety of domestic energy sources 
for hydrogen production while reducing environmental impacts, including 
atmospheric CO2 emissions and criteria pollutants.''

Hydrogen Fuel Initiative

    Mr. Chairman, it was a little more than one year ago that the 
President announced a pioneering plan to transform the Nation's energy 
future from one dependent on foreign petroleum to one that utilizes the 
most abundant element in the universe--hydrogen. This solution holds 
the potential to provide virtually limitless clean, safe, secure, 
affordable, and reliable energy from domestic resources. To achieve 
this vision, the President proposed that the Federal Government 
significantly increase its investment in hydrogen infrastructure 
research and development (R&D), including hydrogen production, storage, 
and delivery technologies, as well as fuel cells, with the goal of 
enabling an industry decision by 2015 to commercialize hydrogen fuel 
cell vehicles.
    This vision is now shared around the world. Last fall, at the 
urging of Secretary Abraham, 15 nations, including the United States 
and the European Union, agreed to establish the International 
Partnership for the Hydrogen Economy (IPHE). The IPHE is providing a 
mechanism to efficiently organize and coordinate multinational 
research, development and deployment programs that advance the 
transition to a global hydrogen economy. The IPHE partners represent 
more than 85 percent of the world's gross domestic product and two 
thirds of the world's energy consumption and greenhouse gas emissions.
    At a March 5, 2003 hearing before this committee, I described in 
detail DOE's plans to help turn the concept of a hydrogen-based economy 
into reality. At the time we described how we would integrate our 
ongoing and future hydrogen R&D activities into a focused Hydrogen 
Program, and how we would integrate technology for hydrogen production 
(from fossil, nuclear, and renewable resources), infrastructure 
development (including delivery and storage), fuel cells, and other 
technologies. We also described how we would coordinate hydrogen 
activities within DOE and among the federal agencies to achieve the 
technical milestones on the road to a hydrogen economy.
    We discussed the challenges to be faced and how we believed they 
could be met. We said that achieving a hydrogen-based economy would 
require a combination of technological breakthroughs, market 
acceptance, and large investments in a national hydrogen energy 
infrastructure. We knew that success would not happen overnight, or 
even over years, but rather over decades. We knew it would be a long-
term process that would phase hydrogen in as the technologies and their 
markets are ready, and that success would require that the technologies 
to utilize hydrogen fuel and the availability of hydrogen fuel occur 
simultaneously.
    Also at that hearing, I presented the following timeline:

    
    

    As you can see, the timeline shows that we won't realize the full 
potential of a hydrogen economy for several decades. Phase I technology 
development will lead to a commercialization decision by industry only 
if government-sponsored and private research is successful in meeting 
customer requirements and in establishing a business case that can 
convince industry to invest. If industry makes a positive 
commercialization decision, we will be ready to take the next steps 
toward realizing the full potential of the hydrogen economy, a process 
that will evolve over several decades, and may include policy options 
other than research to catalyze infrastructure investment. The impact 
of hydrogen fuel cell vehicles will depend on how quickly the market 
introduces the new vehicles, the availability of production and 
delivery infrastructure, and the time it takes for a new fleet of 
hydrogen vehicles to replace the existing inventory of conventional 
vehicles.
    Our focus today is the research and development to overcome the 
technical barriers associated with hydrogen and fuel cell 
technologies--including lowering the cost of hydrogen production and 
fuel cell technologies, improving hydrogen storage systems, and 
developing codes and standards for hydrogen handling and use. The 
Department has requested $227 million in its FY 2005 budget request to 
support the Hydrogen Fuel Initiative. In addition, the Department of 
Transportation requested about $1.0 million.
    Over the past year our progress has increased confidence that the 
2015 goal is realistic and attainable. For example:

          Significant technical progress has been made in 
        reducing the cost of hydrogen production. We have verified the 
        ability to produce hydrogen from natural gas at $3.60 per 
        gallon of gasoline equivalent from an integrated hydrogen 
        refueling station that co-produces electricity from a 
        stationary fuel cell. This meets our 2003 interim milestone.

          In the very near future, we will announce selections 
        from two major competitive solicitations. The first is our 
        hydrogen storage ``Grand Challenge.'' Novel approaches, beyond 
        pressurized tanks, are needed in the long term to provide the 
        greater than 300 mile range that consumers expect. Our new 
        hydrogen storage selections have established three ``Centers of 
        Excellence'' where each center is composed of a national lab 
        teamed with seven or eight universities to research novel 
        materials for hydrogen storage.

          The second major solicitation is for our national 
        fuel cell vehicle and hydrogen infrastructure ``learning'' 
        demonstration. This ``demonstration'' is an extension of our 
        research and will provide us the necessary data to focus our 
        research on the most difficult technical barriers and safety 
        issues, as well as help us identify vehicle-infrastructure 
        interface issues that need to be worked out collectively by the 
        government, automotive manufacturers and energy industry.

          In the coming months, we will also be announcing 
        winners to our hydrogen production and delivery research 
        solicitation.

    To track the progress of our research, the Department and its 
industry partners jointly develop performance-based technical and cost 
milestones that reflect customer requirements and the business case 
needed for industry to invest. Our newly released Hydrogen Posture Plan 
details the Department's overall integrated plan, identifies key 
technology milestones, and includes timelines that provide clear and 
quantifiable measures to track and demonstrate progress. We do not 
believe that these milestones are unrealistic. They are, however, 
intentionally aggressive so that we ``set the bar high'' to try to 
stimulate revolutionary ideas in research. Having said that, we plan to 
evaluate all of the milestones based on the National Academies' report. 
Indeed, the Hydrogen Posture Plan already takes into account many of 
the report's comments.
    Our focus on hydrogen fuel cell vehicles does not come at the 
expense of support for conservation and gasoline hybrid vehicles as 
short-term strategy for reducing oil use, criteria pollutants and 
greenhouse gas emissions. Under the FreedomCAR Partnership, in addition 
to research on fuel cells, the Department requests $91 million to 
continue research to develop advanced, affordable hybrid component 
technologies. These technologies include energy storage devices, power 
electronics, lightweight materials, advanced combustion engines, and 
other technologies that have application for the gasoline hybrids of 
today, the fuel cell vehicles of tomorrow, or in many cases, both. The 
Department continues to implement robust programs in support of wind 
turbines, solar photovoltaic technology, Generation IV nuclear power 
systems, and solid state lighting, and many other energy technology 
program areas.
    However, as the National Academies' report notes, it will take a 
revolutionary approach like hydrogen fuel cells to provide the 
fundamental change that will allow us to be completely independent of 
oil and free of carbon in the tailpipe. Incremental changes available 
in the near term will not overcome the increasing demands for a limited 
supply of oil.
    This is demonstrated in the chart titled ``Oil Use by Light Duty 
Vehicles.'' The National Academies' National Research Council report 
shows a case where gasoline hybrid electric vehicles (HEV), the ``NRC 
HEV Case,'' penetrate the market. As you can see, under this scenario, 
petroleum use stays constant at best and we don't reduce our 
vulnerabilities associated with importing foreign oil since domestic 
production stays constant. When you consider the growth of petroleum 
use around the world, especially in developing countries, there will be 
an even greater demand for limited supplies.
    Fuel cell vehicle (FCV) market penetration scenarios developed by 
DOE and the National Academies' National Research Council (NRC) are 
similar. As shown in the chart, the petroleum use from the ``DOE FCV'' 
case is very similar to the ``NRC HEV + FCV'' case. This analysis also 
shows that in the long-term, increased fuel economy alone will not even 
reduce the amount of oil use compared to today's level. Simply put, if 
we are going to significantly reduce our dependence on foreign oil, we 
need to substitute for petroleum.




Response to National Academies Report

    DOE fully recognized the complexity and uncertainties involved in a 
transition to a hydrogen economy, and requested the National Academies 
to conduct an independent review of our hydrogen production and 
infrastructure options. We requested assistance in two major areas: (1) 
assessing strategies for hydrogen production from domestic resources in 
near-, mid-, and long-term; and (2) reviewing the Department's current 
research plans and making recommendations on research strategies.
    Last April, the committee provided us with four interim 
recommendations, which we acted upon immediately. They are:

        1.  The Department should establish an independent systems 
        engineering and analysis group. In response to this 
        recommendation we conducted a nationwide recruiting effort and 
        hired a lead systems integrator. The systems integrator has 
        been tasked to develop a model to assess the impact of various 
        technology pathways, identify key cost drivers and 
        technological gaps, and assist in prioritization of R&D 
        directions. A portion of the increase in the FY 2005 budget 
        request will be used to create this capability.

        2.  The Department should give exploratory and fundamental 
        research additional budgetary emphasis. As a result of this 
        recommendation, the DOE Office of Science is now directly 
        involved in supporting the President's Hydrogen Fuel 
        Initiative. Last May, the Office of Science hosted a workshop 
        to identify the basic research needs for a hydrogen economy. 
        The Office of Science created and filled a position for Senior 
        Advisor for Applied Energy Programs. This person has a broad 
        knowledge of the Science R&D programs at the National 
        Laboratories, and helps the applied programs in their search 
        for technological breakthroughs. The Department's FY 2005 
        budget request includes $29 million for the Office of Science 
        to conduct basic research in hydrogen production, storage and 
        use.

        3.  DOE should make a significant effort to address safety 
        issues. In response, we developed guidelines for safety plans 
        to be carried out on all projects and established a safety 
        review panel to evaluate implementation of these plans. In 
        addition, the Department's FY 2005 budget request includes a 
        three-fold increase in funding for safety-related research. We 
        have also worked closely with the Department of Transportation, 
        the National Institute of Science and Technology, and other 
        organizations to define roles and responsibilities for the 
        research and development of hydrogen codes and standards to 
        enable safe use of hydrogen.

        4.  DOE should integrate hydrogen R&D efforts across the 
        applied energy programs, the Office of Science, and appropriate 
        industry partners. The Department's Hydrogen Posture Plan 
        integrates the hydrogen activities supporting the President's 
        Hydrogen Fuel Initiative across the renewable energy, fossil 
        energy, science, and nuclear energy offices. This plan lays the 
        foundation for a coordinated response to the President's goal 
        for accelerated research on critical path hydrogen and fuel 
        cell technologies. We have also expanded our existing 
        FreedomCAR Partnership to include major energy companies 
        (ExxonMobil, ConocoPhillips, ChevronTexaco, BP and Shell) along 
        with all three major U.S. auto manufacturers.

    The final report of the committee presented us with two main 
themes:

Theme 1: There should be a shift away from some development areas 
towards more exploratory work.

    The Department has already begun shifting towards more exploratory 
research. A good example is in the hydrogen storage area, where we are 
establishing three ``Centers of Excellence'' led by national 
laboratories along with multiple university and industry partners. This 
could be a model for ``expert'' centers focusing on other priority 
research areas such as fuel cell costs and durability, distributed 
hydrogen production costs and efficiency, systems analysis for hydrogen 
delivery, and renewable hydrogen production methods such as 
photobiological, photo-electrochemical (direct solar conversion) and 
thermochemical (splitting water with heat processes).
    The Department's mix of funding according to OMB circular A-11 for 
the FY 2005 budget request is as follows:




    This mix reflects our shift towards more exploratory R&D in the 
hydrogen storage area. We are currently evaluating our fuel cell cost 
and durability research to see if more exploratory R&D is appropriate. 
I want to caution everyone that ``exploratory'' R&D is not synonymous 
with ``basic'' R&D. We believe the committee is recommending that we 
shift away from some development work that industry is capable of 
doing.

Theme 2: The hydrogen transition may best be accomplished through 
distributed production at fueling sites, from natural gas reforming or 
water electrolysis from wind or solar energy. The committee recommends 
increased R&D investments on these distributed hydrogen technologies, 
which will supply hydrogen for the early transitional period, and 
suggests allowing the long-term hydrogen economy to evolve.

    Based on this recommendation, the Department will increase its 
focus on exploratory research to reduce costs and increase efficiency 
of water electrolysis and distributed natural gas reforming. In this 
recommendation, we believe the National Academies' committee is telling 
us not to over manage the long term, that the longer-term hydrogen 
economy should ``evolve'' through greater emphasis on breakthroughs in 
technologies with longer time horizons for commercial application, such 
as carbon capture and sequestration to enable coal as a long-term 
resource, photoelectrochemical, photobiological, and thermochemical 
methods.
    In keeping with this recommendation, the Office of Science is now 
established as a direct participant in the President's initiative and 
we are directing our applied research into more exploratory 
technologies. As mentioned earlier, our hydrogen storage ``Grand 
Challenge'' will create three Centers of Excellence involving federal 
laboratories, universities, and private industry. We agree with the 
need to support exploratory research and will shift our program 
activities to a more basic and exploratory nature, as appropriate.

Response to American Physical Society Report

    The American Physical Society report on hydrogen calls for more 
spending on basic research and contends that demonstrations are 
premature. On the second part of this recommendation, DOE along with 
its industry partners believe there is a clear need for such 
``learning'' demonstrations. These demonstrations serve as extensions 
of our research, and are aimed at obtaining performance and durability 
data in real world environments. I want to stress that these are not 
demonstrations geared toward commercialization. There is no formula 
that can tell us that we have achieved a certain percentage of our 
target and that it is now time to conduct a demonstration to close the 
final gap. At this stage in the development, technology costs are 
reduced through research breakthroughs in materials, performance, and 
manufacturing technology, not ``commercial'' demonstrations.
    Learning demonstrations, however, will provide improved 
understanding of the impact of various climatic conditions on fuel cell 
performance and durability. Such data are crucial to resolving system 
barriers such as water and heat management within the fuel cell. At the 
conclusion of the five-year demonstration program, the pre-established 
targets of 2,000 hours durability, 250 mile range and $3.00 per gallon 
gasoline equivalent are to be met by industry. This demonstration 
effort will give us the statistical evidence that adequate progress is 
being made to meet the 2015 criteria of 5,000 hours durability, 300 
mile range and $1.50-$2.00 per gallon gasoline equivalent. These 
demonstrations will provide accelerated data that we will need to 
refocus our future R&D, and will provide the hard data needed to make 
difficult decisions should we experience a lack of research progress.
    In a hydrogen economy, we will need multiple and complex interfaces 
among production, delivery, storage, conversion and end-use. Auto 
manufacturers, energy companies, and component suppliers will need to 
work together over the next several years to resolve such issues as the 
vehicle-infrastructure refueling interfaces. If we are going to make 
the huge transformation to a hydrogen energy system, it will be private 
companies, not the government, to make the investment and build the 
automotive manufacturing infrastructure and hydrogen production and 
delivery infrastructure. This learning demonstration will reveal 
potential solutions to overcoming technical and economic hurdles to 
building infrastructure.
    The learning demonstration will also reveal potential safety issues 
and open a door to cooperation with local jurisdictions on uniform 
codes and standards. In summary, we believe that limited learning 
demonstrations, utilizing less than 15 percent of the overall hydrogen 
program budget and with industry cost-sharing at a 1:1 ratio, will 
provide us with the practical experience and critical data to ensure 
that our applied and exploratory research efforts are focused on the 
right problems.

Conclusion

    Mr. Chairman, all the panelists here today will agree that 
achieving the vision of the hydrogen energy future is a great 
challenge. 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. 
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. This committee 
in particular has been instrumental in providing that kind of 
leadership over the years, and we look forward to continuing this 
dialogue in the months and years ahead.
    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.

                       Biography for David Garman

    David Garman was nominated by President George W. Bush to serve as 
Assistant Secretary on April 30, 2001 and was confirmed unanimously by 
the United States Senate on May 25, 2001.
    Assistant Secretary Garman leads the Office of Energy Efficiency 
and Renewable Energy (EERE) comprised of over 500 federal employees in 
Washington, DC and six regional offices, supported by thousands of 
federal contractors both in and outside the National Laboratories. 
EERE's $1.2 billion technology portfolio is the largest energy 
research, development, demonstration and deployment portfolio at the 
Department of Energy.
    Assistant Secretary Garman was instrumental in the development of 
the FreedomCAR cooperative automotive research partnership and the 
President's Hydrogen Fuel Initiative. In recognition of his role, he 
was awarded the National Hydrogen Association's 2002 Meritorious 
Service Award, and the Electric Drive Vehicle Association's 2003 ``E-
Visionary'' Award. Concurrent with his duties as Assistant Secretary, 
Garman also serves as Chairman of the FreedomCAR Executive Steering 
Committee and as Chairman of the Steering Committee for the 15-nation 
International Partnership for a Hydrogen Economy.
    During his tenure at the Department, Mr. Garman has reorganized the 
Office of Energy Efficiency and Renewable Energy, replacing an outdated 
and fragmented organization with what is arguably the most innovative 
business model ever employed in the Federal Government. The new EERE 
organization is comprised of fewer management layers, is more agile, 
and is focused on results rather than process. The new organization has 
been recognized as a success by the White House and the National 
Association of Public Administration. In fully implementing the new 
business model in accordance with the President's Management Agenda, 
Assistant Secretary Garman is continuing his emphasis on increasing 
program manager accountability, reducing administrative overhead, and 
getting more work performed with each taxpayer dollar.
    Prior to joining the Department of Energy, Mr. Garman served in a 
variety of positions on the staff of two U.S. Senators and two Senate 
Committees during a career spanning nearly 21 years, including service 
on the Professional Staff of the Senate Select Committee on 
Intelligence and the Senate Committee on Energy and Natural Resources. 
Immediately prior to his current position, Mr. Garman was Chief of 
Staff to Frank Murkowski then Chairman of the Energy and Natural 
Resources Committee, now Governor of Alaska. In addition to his normal 
Senate duties, Mr. Garman represented the Senate leadership at 
virtually all of the major negotiations under the United Nations 
Framework Convention on Climate Change from 1995-2000.
    Assistant Secretary Garman has testified before Congress as an 
Administration witness on more than twenty-five occasions; and been 
featured as a key Administration spokesman on future energy 
technologies in print, television and radio. He holds a Bachelor of 
Arts in Public Policy from Duke University, and a Master of Science in 
Environmental Sciences from the Johns Hopkins University.

    Chairman Boehlert. Thank you very much.
    And Dr. Ramage, you are up next. And before you start, just 
let me say how much we appreciate the outstanding work of the 
Academy. And I can't say that often enough. I do appreciate it. 
The floor is yours, sir.
    Microphone, please.

STATEMENT OF DR. MICHAEL P. RAMAGE, CHAIR, NATIONAL ACADEMY OF 
 SCIENCES COMMITTEE ON ALTERNATIVES AND STRATEGIES FOR FUTURE 
                  HYDROGEN PRODUCTION AND USE

    Dr. Ramage. I am sorry.
    Good afternoon, Mr. Chairman. I serve as Chairman of the 
National Research Council Committee on Alternatives and 
Strategies for Future Hydrogen Production and Use.
    In the summer of 2002, the Department of Energy asked the 
NRC to examine the technical and policy issues, which must be 
addressed to attain the benefits of a hydrogen economy. Our 
committee reviewed the current and potential states of 
technologies for hydrogen production, distribution, dispensing, 
storage, and end use, and then we estimated cost, carbon 
dioxide emissions, and energy efficiencies based on that.
    We also developed economic models of the technologies and 
developed a framework of how hydrogen could transform the U.S. 
energy system, and we focused on light-duty transportation. And 
based on the above, we reviewed the DOE program and we made 
recommendations on R&D strategies and priorities and 
directions.
    The Committee reached four major conclusions in our 
February 2004 report. The first is that a transition to 
hydrogen as a major fuel could fundamentally transform the U.S. 
energy system, and hydrogen has the potential to replace 
essentially all gasoline and virtually all CO2 from 
vehicular emissions.
    The second, the Committee's analysis shows that there are 
significant hurdles on the path to a hydrogen economy. The 
hydrogen system must be economic. It must be safe and 
appealing, and it must offer energy security and environmental 
benefits. For the transportation sector, that means that it is 
essential that there is progress in fuel cell development and 
also in hydrogen storage, distribution, and production systems. 
And success is not certain, and success should not be assumed 
to be certain in some activity like this that has such a large 
benefit and also some major hurdles in front of it.
    The Committee's third major conclusion addresses the 
transition to a hydrogen fuel system, which will probably be 
lengthy. Since it will be difficult to stimulate investment in 
large, centralized hydrogen production and distribution systems 
without proven demand, the Committee strongly suggests that the 
transition be progressed with small, on-site hydrogen 
production systems at the filling station. These distributed 
production units could be natural gas reformers. They could be 
water electrolyzers. And this type of transition also allows 
for the development of new technologies and concepts for the 
eventual widespread use of hydrogen.
    The Committee's fourth major conclusion addresses how 
hydrogen could transform the energy system in the long-term, 
significantly reducing the energy imports and CO2.
    Switching to hydrogen will require four things. First, is 
that hydrogen fuel cells can penetrate the market and fully 
penetrate the market, that hydrogen distribution infrastructure 
can be developed. Hydrogen can be economically produced from 
coal coupled with CO2 sequestration and the 
CO2-free hydrogen production technologies can be 
developed from renewable sources or nuclear heat.
    While the impacts will probably be small for the next 25 
years, successful research and development coupled with large 
hydrogen and fuel cell investments will result in major impacts 
in the longer-term.
    And based on our analysis of the hydrogen economy and a 
review of the DOE program, the Committee recommended that five 
areas of the DOE program receive increased emphasis. And the 
first is that breakthrough research in fuel cell vehicle 
development, and I emphasize breakthrough research. This is the 
DOE program we are talking about. The second is development of 
a low-cost, distributed hydrogen generation system. The third 
is increased effort in infrastructure analysis and research. 
The fourth is an early evaluation of the viability of CO2 
sequestration, particularly with its importance to coal. And 
the fifth is hydrogen production directly from renewables and 
nuclear without going through the step of electricity.
    [The prepared statement of Dr. Ramage follows:]

                Prepared Statement of Michael P. Ramage

Mr. Chairman and Members of the Committee:

    My name is Michael Ramage and I served as Chairman of the National 
Research Council Committee on Alternatives and Strategies for Future 
Hydrogen Production and Use. The Research Council--known as the NRC--is 
the operating arm of the National Academy of Sciences, National Academy 
of Engineering, and the Institute of Medicine, chartered by Congress in 
1863 to advise the government on matters of science and technology. The 
National Research Council appointed the Committee on Alternatives and 
Strategies for Future Hydrogen Production and Use in the fall of 2002 
to address the complex subject of the ``hydrogen economy.'' In 
particular, the committee carried out these tasks:

          Assessed the current state of technology for 
        producing hydrogen from a variety of energy sources;

          Made estimates on a consistent basis of current and 
        future projected costs, carbon dioxide (CO2) 
        emissions, and energy efficiencies for hydrogen technologies;

          Considered scenarios for the potential penetration of 
        hydrogen into the economy and associated impacts on oil imports 
        and CO2 gas emissions;

          Addressed the problem of how hydrogen might be 
        distributed, stored, and dispensed to end uses-together with 
        associated infrastructure issues--with particular emphasis on 
        light-duty vehicles in the transportation sector;

          Reviewed the U.S. Department of Energy's (DOE's) 
        research, development, and demonstration (RD&D) plan for 
        hydrogen; and

          Made recommendations to the DOE on RD&D, including 
        directions, priorities, and strategies.

    The vision of the hydrogen economy is based on two expectations: 
(1) that hydrogen can be produced from domestic energy sources in a 
manner that is affordable and environmentally benign, and (2) that 
applications using hydrogen--fuel cell vehicles, for example--can gain 
market share in competition with the alternatives. To the extent that 
these expectations can be met, the United States, and indeed the world, 
would benefit from reduced vulnerability to energy disruptions and 
improved environmental quality, especially through lower carbon 
emissions. However, before this vision can become a reality, many 
technical, social, and policy challenges must be overcome. This report 
focuses on the steps that should be taken to move toward the hydrogen 
vision and to achieve the sought-after benefits. The report focuses 
exclusively on hydrogen, although it notes that alternative or 
complementary strategies might also serve these same goals well.
    The Executive Summary presents the basic conclusions of the 
report\1\ and the major recommendations of the committee. The report's 
chapters present additional findings and recommendations related to 
specific technologies and issues that the committee considered.
---------------------------------------------------------------------------
    \1\ The committee's final report--The Hydrogen Economy: 
Opportunities, Costs, Barriers, and R&D Needs--was released in 
February, 2004 and is available at www.nap.edu.
---------------------------------------------------------------------------

BASIC CONCLUSIONS

    As described below, the committee's basic conclusions address four 
topics: implications for national goals, priorities for research and 
development (R&D), the challenge of transition, and the impacts of 
hydrogen-fueled light-duty vehicles on energy security and CO2 
emissions.
Implications for National Goals
    A transition to hydrogen as a major fuel in the next 50 years could 
fundamentally transform the U.S. energy system, creating opportunities 
to increase energy security through the use of a variety of domestic 
energy sources for hydrogen production while reducing environmental 
impacts, including atmospheric CO2 emissions and criteria 
pollutants.\2\ In his State of the Union address of January 28, 2003, 
President Bush moved energy, and especially hydrogen for vehicles, to 
the forefront of the U.S. political and technical debate. The President 
noted: ``A simple chemical reaction between hydrogen and oxygen 
generates energy, which can be used to power a car producing only 
water, not exhaust fumes. With a new national commitment, 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.'' \3\ This 
committee believes that investigating and conducting RD&D activities to 
determine whether a hydrogen economy might be realized are important to 
the Nation. There is a potential for replacing essentially all gasoline 
with hydrogen over the next half century using only domestic resources. 
And there is a potential for eliminating almost all CO2 and 
criteria pollutants from vehicular emissions. However, there are 
currently many barriers to be overcome before that potential can be 
realized.
---------------------------------------------------------------------------
    \2\ Criteria pollutants are air pollutants (e.g., lead, sulfur 
dioxide, and so on) emitted from numerous or diverse stationary or 
mobile sources for which National Ambient Air Quality Standards have 
been set to protect human health and public welfare.
    \3\ Weekly Compilation of Presidential Documents. Volume 39, Number 
5. p. 111. Monday, February 3, 2003. Government Printing Office: 
Washington, D.C.
---------------------------------------------------------------------------
    Of course there are other strategies for reducing oil imports and 
CO2 emissions, and thus the DOE should keep a balanced 
portfolio of R&D efforts and continue to explore supply-and-demand 
alternatives that do not depend upon hydrogen. If battery technology 
improved dramatically, for example, all-electric vehicles might become 
the preferred alternative. Furthermore, hybrid electric vehicle 
technology is commercially available today, and benefits from this 
technology can therefore be realized immediately. Fossil-fuel-based or 
biomass-based synthetic fuels could also be used in place of gasoline.
Research and Development Priorities
    There are major hurdles on the path to achieving the vision of the 
hydrogen economy; the path will not be simple or straightforward. Many 
of the committee's observations generalize across the entire hydrogen 
economy: the hydrogen system must be cost-competitive, it must be safe 
and appealing to the consumer, and it would preferably offer advantages 
from the perspectives of energy security and CO2 emissions. 
Specifically for the transportation sector, dramatic progress in the 
development of fuel cells, storage devices, and distribution systems is 
especially critical. Widespread success is not certain.
    The committee believes that for hydrogen-fueled transportation, the 
four most fundamental technological and economic challenges are these:

        1.  To develop and introduce cost-effective, durable, safe, and 
        environmentally desirable fuel cell systems and hydrogen 
        storage systems. Current fuel cell lifetimes are much too short 
        and fuel cell costs are at least an order of magnitude too 
        high. An on-board vehicular hydrogen storage system that has an 
        energy density approaching that of gasoline systems has not 
        been developed. Thus, the resulting range of vehicles with 
        existing hydrogen storage systems is much too short.

        2.  To develop the infrastructure to provide hydrogen for the 
        light-duty vehicle user. Hydrogen is currently produced in 
        large quantities at reasonable costs for industrial purposes. 
        The committee's analysis indicates that at a future, mature 
        stage of development, hydrogen (H2) can be produced 
        and used in fuel cell vehicles at reasonable cost. The 
        challenge, with today's industrial hydrogen as well as 
        tomorrow's hydrogen is the high cost of distributing H2 
        to dispersed locations. This challenge is especially severe 
        during the early years of a transition, when demand is even 
        more dispersed. The costs of a mature hydrogen pipeline system 
        would be spread over many users, as the cost of the natural gas 
        system is today. But the transition is difficult to imagine in 
        detail. It requires many technological innovations related to 
        the development of small-scale production units. Also 
        nontechnical factors such as financing, siting, security, 
        environmental impact, and the perceived safety of hydrogen 
        pipelines and dispensing systems will play a significant role. 
        All of these hurdles must be overcome before there can be 
        widespread hydrogen use. An initial stage during which hydrogen 
        is produced at small scale near the small user seems likely. In 
        this case, production costs for small production units must be 
        sharply reduced, which may be possible with expanded research.

        3.  To reduce sharply the costs of hydrogen production from 
        renewable energy sources, over a time frame of decades. 
        Tremendous progress has been made in reducing the cost of 
        making electricity from renewable energy sources. But making 
        hydrogen from renewable energy through the intermediate step of 
        making electricity, a premium energy source, requires further 
        breakthroughs in order to be competitive. Basically, these 
        technology pathways for hydrogen production make electricity, 
        which is converted to hydrogen, which is later converted by a 
        fuel cell back to electricity. These steps add costs and energy 
        losses that are particularly significant when the hydrogen 
        competes as a commodity transportation fuel--leading the 
        committee to believe most current approaches--except possibly 
        that of wind energy--need to be redirected. The committee 
        believes that the required cost reductions can be achieved only 
        by targeted fundamental and exploratory research on hydrogen 
        production by photobiological, photochemical, and thin-film 
        solar processes.

        4.  To capture and store (``sequester'') the carbon dioxide 
        byproduct of hydrogen production from coal. Coal is a massive 
        domestic U.S. energy resource that has the potential for 
        producing cost-competitive hydrogen. However, coal processing 
        generates large amounts of CO2. In order to reduce 
        CO2 emissions from coal processing in carbon-
        constrained future, massive amounts of CO2 would 
        have to be captured and safely and reliably sequestered for 
        hundreds of years. Key to the commercialization of a large-
        scale, coal-based hydrogen production option (and also for 
        natural-gas-based options) is achieving broad public 
        acceptance, along with additional technical development, for 
        CO2 sequestration.
    For a viable hydrogen transportation system to emerge, all four of 
these challenges must be addressed.

The Challenge of Transition
    There will likely be a lengthy transition period during which fuel 
cell vehicles and hydrogen are not competitive with internal combustion 
engine vehicles, including conventional gasoline and diesel fuel 
vehicles, and hybrid gasoline electric vehicles. The committee believes 
that the transition to a hydrogen fuel system will best be accomplished 
initially through distributed production of hydrogen, because 
distributed generation avoids many of the substantial infrastructure 
barriers faced by centralized generation. Small hydrogen-production 
units located at dispensing stations can produce hydrogen through 
natural gas reforming or electrolysis. Natural gas pipelines and 
electricity transmission and distribution systems already exist; for 
distributed generation of hydrogen, these systems would need to be 
expanded only moderately in the early years of the transition. During 
this transition period, distributed renewable energy (e.g., wind or 
solar energy) might provide electricity to onsite hydrogen production 
systems, particularly in areas of the country where electricity costs 
from wind or solar energy are particularly low. A transition 
emphasizing distributed production allows time for the development of 
new technologies and concepts capable of potentially overcoming the 
challenges facing the widespread use of hydrogen. The distributed 
transition approach allows time for the market to develop before too 
much fixed investment is set in place. While this approach allows time 
for the ultimate hydrogen infrastructure to emerge, the committee 
believes that it cannot yet be fully identified and defined.
Impacts of Hydrogen-Fueled Light-Duty Vehicles
    Several findings from the committee's analysis (see Chapter 6) show 
the impact on the U.S. energy system if successful market penetration 
of hydrogen fuel cell vehicles is achieved. In order to analyze these 
impacts, the committee posited that fuel cell vehicle technology would 
be developed successfully and that hydrogen would be available to fuel 
light-duty vehicles (cars and light trucks). These findings are as 
follows:

          The committee's upper-bound market penetration case 
        for fuel cell vehicles, premised on hybrid vehicle experience, 
        assumes that fuel cell vehicles enter the U.S. light-duty 
        vehicle market in 2015 in competition with conventional and 
        hybrid electric vehicles, reaching 25 percent of light-duty 
        vehicle sales around 2027. The demand for hydrogen in about 
        2027 would be about equal to the current production of nine 
        million short tons (tons) per year, which would be only a small 
        fraction of the 110 million tons required for full replacement 
        of gasoline light-duty vehicles with hydrogen vehicles, posited 
        to take place in 2050.

          If coal, renewable energy, or nuclear energy is used 
        to produce hydrogen, a transition to a light-duty fleet of 
        vehicles fueled entirely by hydrogen would reduce total energy 
        imports by the amount of oil consumption displaced. However, if 
        natural gas is used to produce hydrogen, and if, on the margin, 
        natural gas is imported, there would be little if any reduction 
        in total energy imports, because natural gas for hydrogen would 
        displace petroleum for gasoline.

          CO2 emissions from vehicles can be cut 
        significantly if the hydrogen is produced entirely from 
        renewables or nuclear energy, or from fossil fuels with 
        sequestration of CO2. The use of a combination of 
        natural gas without sequestration and renewable energy can also 
        significantly reduce CO2 emissions. However, 
        emissions of CO2 associated with light-duty vehicles 
        contribute only a portion of projected CO2 
        emissions; thus, sharply reducing overall CO2 
        releases will require carbon reductions in other parts of the 
        economy, particularly in electricity production.

          Overall, although a transition to hydrogen could 
        greatly transform the U.S. energy system in the long run, the 
        impacts on oil imports and CO2 emissions are likely 
        to be minor during the next 25 years. However, thereafter, if 
        R&D is successful and large investments are made in hydrogen 
        and fuel cells, the impact on the U.S. energy system could be 
        great.

MAJOR RECOMMENDATIONS

Systems Analysis of U.S. Energy Options
    The U.S. energy system will change in many ways over the next 50 
years. Some of the drivers for such change are already recognized, 
including at present the geology and geopolitics of fossil fuels and, 
perhaps eventually, the rising CO2 concentration in the 
atmosphere. Other drivers will emerge from options made available by 
new technologies. The U.S. energy system can be expected to continue to 
have substantial diversity; one should expect the emergence of neither 
a single primary energy source nor a single energy carrier. Moreover, 
more-energy-efficient technologies for the household, office, factory, 
and vehicle will continue to be developed and introduced into the 
energy system. The role of the DOE hydrogen program\4\ in the 
restructuring of the overall national energy system will evolve with 
time.
---------------------------------------------------------------------------
    \4\ The words ``hydrogen program'' refer collectively to the 
programs concerned with hydrogen production, distribution, and use 
within DOE's Office of Energy Efficiency and Renewable Energy, Office 
of Fossil Energy, Office of Science, and Office of Nuclear Energy, 
Science and Technology. There is no single program with this title.
---------------------------------------------------------------------------
    To help shape the DOE hydrogen program, the committee sees a 
critical role for systems analysis. Systems analysis will be needed 
both to coordinate the multiple parallel efforts within the hydrogen 
program and to integrate the program within a balanced, overall DOE 
national energy R&D effort. Internal coordination must address the many 
primary sources from which hydrogen can be produced, the various scales 
of production, the options for hydrogen distribution, the crosscutting 
challenges of storage and safety, and the hydrogen-using devices. 
Integration within the overall DOE effort must address the place of 
hydrogen relative to other secondary energy sources--helping, in 
particular, to clarify the competition between electricity, liquid-
fuel-based (e.g., cellulosic ethanol), and hydrogen-based 
transportation. This is particularly important as clean alternative 
fuel internal combustion engines, fuel cells and batteries evolve. 
Integration within the overall DOE effort must also address 
interactions with end-use energy efficiency, as represented, for 
example, by high-fuel-economy options such as hybrid vehicles. 
Implications of safety, security, and environmental concerns will need 
to be better understood. So will issues of timing and sequencing: 
depending on the details of system design, a hydrogen transportation 
system initially based on distributed hydrogen production, for example, 
might or might not easily evolve into a centralized system as density 
of use increases.

Recommendation ES-1. The Department of Energy should continue to 
develop its hydrogen initiative as a potential long-term contributor to 
improving U.S. energy security and environmental protection. The 
program plan should be reviewed and updated regularly to reflect 
progress, potential synergisms within the program, and interactions 
with other energy programs and partnerships (e.g., the California Fuel 
Cell Partnership). In order to achieve this objective, the committee 
recommends that the DOE develop and employ a systems analysis approach 
to understanding full costs, defining options, evaluating research 
results, and helping balance its hydrogen program for the short, 
medium, and long term. Such an approach should be implemented for all 
U.S. energy options, not only for hydrogen.
    As part of its systems analysis, the DOE should map out and 
evaluate a transition plan consistent with developing the 
infrastructure and hydrogen resources necessary to support the 
committee's hydrogen vehicle penetration scenario or another similar 
demand scenario. The DOE should estimate what levels of investment over 
time are required--and in which program and project areas--in order to 
achieve a significant reduction in carbon dioxide emissions from 
passenger vehicles by mid-century.

Fuel Cell Vehicle Technology
    The committee observes that the Federal Government has been active 
in fuel cell research for roughly 40 years, while proton exchange 
membrane (PEM) fuel cells applied to hydrogen vehicle systems are a 
relatively recent development (as of the late 1980s). In spite of 
substantial R&D spending by the DOE and industry, costs are still a 
factor of 10 to 20 times too expensive, are short of required 
durability, and energy efficiency is still too low for light-duty-
vehicle applications. Accordingly, the challenges of developing PEM 
fuel cells for automotive applications are large, and the solutions to 
overcoming these challenges are uncertain.
    The committee estimates that the fuel cell system, including on-
board storage of hydrogen, will have to decrease in cost to less than 
$100 per kilowatt (kW)\5\ before fuel cell vehicles (FCVs) become a 
plausible commercial option, and it will take at least a decade for 
this to happen. In particular, if the cost of the fuel cell system for 
light-duty vehicles does not eventually decrease to the $50/kW range, 
fuel cells will not propel the hydrogen economy without some regulatory 
mandate or incentive.
---------------------------------------------------------------------------
    \5\ Cost includes fuel cell module, precious metals, fuel 
processor, compressed hydrogen storage, balance of plant, and assembly, 
labor and depreciation.
---------------------------------------------------------------------------
    Automakers have demonstrated FCVs in which hydrogen is stored on 
board in different ways, primarily as high-pressure compressed gas or 
as a cryogenic liquid. At the current state of development, both of 
these options have serious shortcomings that are likely to preclude 
their long-term commercial viability. New solutions are needed in order 
to lead to vehicles that have at least a 300 mile driving range; are 
compact, lightweight, and inexpensive; and that meet future safety 
standards.
    Given the current state of knowledge with respect to fuel cell 
durability, on-board storage systems, and existing component costs, the 
committee believes that the near-term DOE milestones for FCVs are 
unrealistically aggressive.

Recommendation ES-2. Given that large improvements are still needed in 
fuel cell technology and given that industry is investing considerable 
funding in technology development, increased government funding on 
research and development should be dedicated to the research on 
breakthroughs in on-board storage systems, in fuel cell costs, and in 
materials for durability in order to attack known inhibitors to the 
high volume production of fuel cell vehicles.

Infrastructure
    A nationwide, high-quality, safe, and efficient hydrogen 
infrastructure will be required in order for hydrogen to be used widely 
in the consumer sector. While it will be many years before hydrogen use 
is significant enough to justify an integrated national 
infrastructure--as much as two decades in the scenario posited by the 
committee--regional infrastructures could evolve sooner. The 
relationship between hydrogen production, delivery, and dispensing is 
very complex, even for regional infrastructures, as it depends on many 
variables associated with logistics systems and on many public and 
private entities. Codes and standards for infrastructure development 
could be a significant deterrent to hydrogen advancement if not 
established well ahead of the hydrogen market. Similarly, since 
resilience to terrorist attack has become a major performance criterion 
for any infrastructure system, the design of future hydrogen 
infrastructure systems may need to consider protection against such 
risks.
    In the area of infrastructure and delivery there seem to be 
significant opportunities for making major improvements. The DOE does 
not yet have a strong program on hydrogen infrastructures. DOE 
leadership is critical, because the current incentives for companies to 
make early investments in hydrogen infrastructure are relatively weak.

Recommendation ES-3a. The Department of Energy program in 
infrastructure requires greater emphasis and support. The Department of 
Energy should strive to create better linkages between its seemingly 
disconnected programs in large-scale and small-scale hydrogen 
production. The hydrogen infrastructure program should address issues 
such as storage requirements, hydrogen purity, pipeline materials, 
compressors, leak detection, and permitting, with the objective of 
clarifying the conditions under which large-scale and small-scale 
hydrogen production will become competitive, complementary, or 
independent. The logistics of interconnecting hydrogen production and 
end use are daunting, and all current methods of hydrogen delivery have 
poor energy-efficiency characteristics and difficult logistics. 
Accordingly, the committee believes exploratory research focused on new 
concepts for hydrogen delivery requires additional funding. The 
committee recognizes that there is little understanding of future 
logistics systems and new concepts for hydrogen delivery--thus making a 
systems approach very important.

Recommendation ES-3b. The DOE should accelerate work on codes and 
standards and on permitting, addressing head-on the difficulties of 
working across existing and emerging hydrogen standards in cities, 
counties, states, and the Nation.

Transition
    The transition to a hydrogen economy involves challenges that 
cannot be overcome by research and development and demonstrations 
alone. Unresolved issues of policy development, infrastructure 
development, and safety will slow the penetration of hydrogen into the 
market even if the technical hurdles of production cost and energy 
efficiency are overcome. Significant industry investments in advance of 
market forces will not be made unless government creates a business 
environment that reflects societal priorities with respect to 
greenhouse gas emissions and oil imports.

Recommendation ES-4. The policy analysis capability of the Department 
of Energy with respect to the hydrogen economy should be strengthened, 
and the role of government in supporting and facilitating industry 
investments to help bring about a transition to a hydrogen economy 
needs to be better understood.
    The committee believes that a hydrogen economy will not result from 
a straightforward replacement of the present fossil-fuel-based economy. 
There are great uncertainties surrounding a transition period, because 
many innovations and technological breakthroughs will be required to 
address the costs, and energy-efficiency, distribution and nontechnical 
issues. The hydrogen fuel for the very early transitional period, 
before distributed generation takes hold, would probably be supplied in 
the form of pressurized or liquefied molecular hydrogen, trucked from 
existing, centralized production facilities. But, as volume grows, such 
an approach may be judged too expensive and/or too hazardous. It seems 
likely that, in the next 10 to 30 years, hydrogen produced in 
distributed rather than centralized facilities will dominate. 
Distributed production of hydrogen seems most likely to be done with 
small-scale natural gas reformers or by electrolysis of water; however, 
new concepts in distributed production could be developed over this 
time period.

Recommendation ES-5. Distributed hydrogen production systems deserve 
increased research and development (R&D) investments by the Department 
of Energy. Increased R&D efforts and accelerated program timing could 
decrease the cost and increase the energy efficiency of small-scale 
natural gas reformers and water electrolysis systems. In addition, a 
program should be initiated to develop new concepts in distributed 
hydrogen production systems that have the potential to compete--in 
cost, energy efficiency, and safety--with centralized systems. As this 
program develops new concepts bearing on the safety of local hydrogen 
storage and delivery systems, it may be possible to apply these 
concepts in large-scale hydrogen generation systems as well.

Safety
    Safety will be a major issue from the standpoint of 
commercialization of hydrogen-powered vehicles. Much evidence suggests 
that hydrogen can be manufactured and used in professionally managed 
systems with acceptable safety, but experts differ markedly in their 
views of the safety of hydrogen in a consumer-centered transportation 
system. A particularly salient and under-explored issue is that of 
leakage in enclosed structures, such as garages in homes and commercial 
establishments. Hydrogen safety, from both a technological and a 
societal perspective, will be one of the major hurdles that must be 
overcome in order to achieve the hydrogen economy.

Recommendation ES-6. The committee believes that the Department of 
Energy program in safety is well planned and should be a priority. 
However, the committee emphasizes the following:

          Safety policy goals should be proposed and discussed 
        by Department of Energy with stakeholder groups early in the 
        hydrogen technology development process.

          The Department of Energy should continue its work 
        with standards development organizations and ensure increased 
        emphasis on distributed production of hydrogen.

          The Department of Energy systems analysis should 
        specifically include safety, and it should be understood to be 
        an overriding criterion.

          The goal of the physical testing program should be to 
        resolve safety issues in advance of commercial use.

          The Department of Energy's public education program 
        should continue to focus on hydrogen safety, particularly the 
        safe use of hydrogen in distributed production and in consumer 
        environments.

Carbon Dioxide-Free Hydrogen
    The long timescale associated with the development of viable 
hydrogen fuel cells and hydrogen storage provides a time window for a 
more intensive DOE program to develop hydrogen from electrolysis, 
which, if economic, has the potential to lead to major reductions in 
CO2 emissions and enhanced energy security. The committee 
believes that if the cost of fuel cells can be reduced to $50 per 
kilowatt (kW), with focused research a corresponding dramatic drop in 
the cost of electrolytic cells to electrolyze water can be expected (to 
$125/kW). If such a low electrolyzer cost is achieved, the cost of 
hydrogen produced by electrolysis will be dominated by the cost of the 
electricity, not by the cost of the electrolyzer. Thus, in conjunction 
with research to lower the cost of electrolyzers, research focused on 
reducing electricity costs from renewable energy and nuclear energy has 
the potential to reduce overall hydrogen production costs 
substantially.

Recommendation ES-7. The Department of Energy should increase emphasis 
on electrolyzer development, with a target of $125 per kilowatt and a 
significant increase in efficiency toward a goal of over 70 percent 
(lower heating value basis). In such a program, care must be taken to 
properly account for the inherent intermittency of wind and solar 
energy, which can be a major limitation to their wide-scale use. In 
parallel, more aggressive electricity cost targets should be set for 
unsubsidized nuclear and renewable energy that might be used directly 
to generate electricity. Success in these areas would greatly increase 
the potential for carbon dioxide-free hydrogen production.

Carbon Capture and Storage
    The DOE's various efforts with respect to hydrogen and fuel cell 
technology will benefit from close integration with carbon capture and 
storage (sequestration) activities and programs in the Office of Fossil 
Energy. If there is an expanded role for hydrogen produced from fossil 
fuels in providing energy services, the probability of achieving 
substantial reductions in net CO2 emissions through 
sequestration will be greatly enhanced through close program 
integration. Integration will enable the DOE to identify critical 
technologies and research areas that can enable hydrogen production 
from fossil fuels with CO2 capture and storage. Close 
integration will promote the analysis of overlapping issues such as the 
co-capture and co-storage with CO2 of pollutants such as 
sulfur produced during hydrogen production.
    Many early carbon capture and storage projects will not involve 
hydrogen, but rather will involve the capture of the CO2 
impurity in natural gas, the capture of CO2 produced at 
electric plants, or the capture of CO2 at ammonia and 
synfuels plants. All of these routes to capture, however, share carbon 
storage as a common component, and carbon storage is the area in which 
the most difficult institutional issues and the challenges related to 
public acceptance arise.

Recommendation ES-8. The Department of Energy should tighten the 
coupling of its efforts on hydrogen and fuel cell technology with the 
DOE Office of Fossil Energy's programs on carbon capture and storage 
(sequestration). Because of the hydrogen program's large stake in the 
successful launching of carbon capture and storage activity, the 
hydrogen program should participate in all of the early carbon capture 
and storage projects, even those that do not directly involve carbon 
capture during hydrogen production. These projects will address the 
most difficult institutional issues and the challenges related to 
issues of public acceptance, which have the potential of delaying the 
introduction of hydrogen in the marketplace.

The Department of Energy's Hydrogen Research, Development and 
        Demonstration Plan
    As part of its effort, the committee reviewed the DOE's draft 
``Hydrogen, Fuel Cells & Infrastructure Technologies Program: Multi-
Year Research, Development and Demonstration Plan,'' (DOE, 2003b) dated 
June 3, 2003. The committee's deliberations focused only on the 
hydrogen production and demand portion of the overall DOE plan. For 
example, while the committee makes recommendations on the use of 
renewable energy for hydrogen production, it did not review the entire 
DOE renewables program in depth. The committee is impressed by how well 
the hydrogen program has progressed. From its analysis, the committee 
makes two overall observations about the program:

          First, the plan is focused primarily on the 
        activities in the Office of Hydrogen, Fuel Cells and 
        Infrastructure Technologies Program within the Office of Energy 
        Efficiency & Renewable Energy, and on some activities in the 
        Office of Fossil Energy. The activities related to hydrogen in 
        the Office of Nuclear Energy, Science and Technology, and in 
        the Office of Science, as well as activities related to carbon 
        capture and storage in the Office of Fossil Energy, are 
        important, but they are mentioned only casually in the plan. 
        The development of an overall DOE program will require better 
        integration across all DOE programs.

          Second, the plan's priorities are unclear, as they 
        are lost within the myriad of activities that are proposed. A 
        general budget is contained in the Appendix for the plan, but 
        the plan provides no dollar numbers at the project level, even 
        for existing projects/programs. The committee found it 
        difficult to judge the priorities and the go/no-go decision 
        points for each of the R&D areas.

Recommendation ES-9. The Department of Energy should continue to 
develop its hydrogen Research, Development, and Demonstration (RD&D) 
Plan to improve the integration and balance of activities within the 
Office of Energy Efficiency and Renewable Energy; the Office of Fossil 
Energy (including programs related to carbon sequestration); the Office 
of Nuclear Energy, Science, and Technology; and the Office of Science. 
The committee believes that, overall, the production, distribution, and 
dispensing portion of the program is probably underfunded, particularly 
because a significant fraction of appropriated funds is already 
earmarked. The committee understands that of the $78 million 
appropriated for hydrogen technology for FY 2004 in the Energy and 
Water appropriations bill (Pub. Law 108-137), $37 million is earmarked 
for activities that will not particularly advance the hydrogen 
initiative. The committee also believes that the hydrogen program, in 
an attempt to meet the extreme challenges set by senior government and 
DOE leaders, has tried to establish RD&D activities in too many areas, 
creating a very diverse, somewhat unfocused program. Thus, prioritizing 
the efforts both within and across program areas, establishing 
milestones and go/no-go decisions, and adjusting the program on the 
basis of results are all extremely important in a program with so many 
challenges. This approach will also help determine when it is 
appropriate to take a program to the demonstration stage. And finally, 
the committee believes that the probability of success in bringing the 
United States to a hydrogen economy will be greatly increased by 
partnering with a broader range of academic and industrial 
organizations--possibly including an international focus\6\--and by 
establishing an independent program review process and board.
---------------------------------------------------------------------------
    \6\ Secretary Abraham, joined by Ministers representing 14 nations 
and the European Commission, signed an agreement on November 20, 2003 
to formally establish the International Partnership for the Hydrogen 
Economy.

Recommendation ES-10. There should be a shift in the hydrogen program 
away from some development areas and toward exploratory work--as has 
been done in the area of hydrogen storage. A hydrogen economy will 
require a number of technological and conceptual breakthroughs. The 
Department of Energy program calls for increased funding in some 
important exploratory research areas such as hydrogen storage and 
photoelectrochemical hydrogen production. However, the committee 
believes that much more exploratory research is needed. Other areas 
likely to benefit from an increased emphasis on exploratory research 
include delivery systems, pipeline materials, electrolysis, and 
materials science for many applications. The execution of such changes 
in emphasis would be facilitated by the establishment of DOE-sponsored 
academic energy research centers. These centers should focus on 
interdisciplinary areas of new science and engineering--such as 
materials research into nanostructures, and modeling for materials 
design--in which there are opportunities for breakthrough solutions to 
---------------------------------------------------------------------------
energy issues.

Recommendation ES-11. As a framework for recommending and prioritizing 
the Department of Energy program, the committee considered the 
following:

  Technologies that could significantly impact U.S. energy 
security and carbon dioxide emissions,

  The timescale for the evolution of the hydrogen economy,

  Technology developments needed for both the transition period 
and steady state,

  Externalities that would decelerate technology 
implementation, and

  The comparative advantage of the DOE in research and 
development of technologies at the pre-competitive stage.

    The committee recommends that the following areas receive increased 
emphasis:

          Fuel cell vehicle development. Increase research and 
        development (R&D) to facilitate breakthroughs in fuel cell 
        costs and in durability of fuel cell materials, as well as 
        breakthroughs in on-board hydrogen storage systems;

          Distributed hydrogen generation. Increase R&D in 
        small-scale natural gas reforming, electrolysis, and new 
        concepts for distributed hydrogen production systems;

          Infrastructure analysis. Accelerate and increase 
        efforts in systems modeling and analysis for hydrogen delivery, 
        with the objective of developing options and helping guide R&D 
        in large-scale infrastructure development;

          Carbon sequestration and FutureGen. Accelerate 
        development and early evaluation of the viability of carbon 
        capture and storage (sequestration) on a large scale because of 
        its implications for the long-term use of coal for hydrogen 
        production. Continue the FutureGen Project as a high-priority 
        task;

          Carbon dioxide free-energy technologies. Increase 
        emphasis on the development of wind-energy-to-hydrogen as an 
        important technology for the hydrogen transition period and 
        potentially for the longer-term. Increase exploratory and 
        fundamental research on hydrogen production by photobiological, 
        photoelectrochemical, thin-film solar, and nuclear heat 
        processes.

COMMITTEE ON ALTERNATIVES AND STRATEGIES FOR FUTURE HYDROGEN PRODUCTION 
                    AND USE

MICHAEL P. RAMAGE, NAE,\7\ Chair, ExxonMobil Research and Engineering 
        Company (retired), Moorestown, New Jersey
---------------------------------------------------------------------------
    \7\ NAE = member, National Academy of Engineering.

RAKESH AGRAWAL, NAE, Air Products and Chemicals, Inc., Allentown, 
---------------------------------------------------------------------------
        Pennsylvania

DAVID L. BODDE, University of Missouri, Kansas City

ROBERT EPPERLY, Consultant, Mountain View, California

ANTONIA V. HERZOG, Natural Resources Defense Council, Washington, D.C.

ROBERT L. HIRSCH, Scientific Applications International Corporation, 
        Alexandria, Virginia

MUJID S. KAZIMI, Massachusetts Institute of Technology, Cambridge

ALEXANDER MacLACHLAN, NAE, E.I. du Pont de Nemours & Company (retired), 
        Wilmington, Delaware

GENE NEMANICH, Independent Consultant, Sugar Land, Texas

WILLIAM F. POWERS, NAE, Ford Motor Company (retired), Ann Arbor, 
        Michigan

MAXINE L. SAVITZ, NAE, Consultant (retired, Honeywell), Los Angeles, 
        California

WALTER W. (CHIP) SCHROEDER, Proton Energy Systems, Inc., Wallingford, 
        Connecticut

ROBERT H. SOCOLOW, Princeton University, Princeton, New Jersey

DANIEL SPERLING, University of California, Davis

ALFRED M. SPORMANN, Stanford University, Stanford, California

JAMES L. SWEENEY, Stanford University, Stanford, California

Project Staff

Board on Energy and Environmental Systems (BEES)
MARTIN OFFUTT, Study Director

ALAN CRANE, Senior Program Officer

JAMES J. ZUCCHETTO, Director, BEES

PANOLA GOLSON, Senior Project Assistant
NAE Program Office
JACK FRITZ, Senior Program Officer
Consultants
Dale Simbeck, SFA Pacific Corporation

Elaine Chang, SFA Pacific Corporation

                    Biography for Michael P. Ramage
    Michael Ramage was born on July 29, 1943, in Washington, Indiana. 
He received a B.S. degree in 1966, a M.S. degree in 1969, and a Ph.D. 
in 1971, all in Chemical Engineering from Purdue University. He retired 
as Executive Vice President of ExxonMobil Research and Engineering 
Company in 2001. Mr. Ramage was formerly Chief Technology Officer of 
Mobil Oil Corporation and President, Mobil Technology Company. He was 
also member of the Board of Directors and Executive Committee of Mobil 
Oil Corporation.
    Ramage joined the Mobil Research and Development Corporation in 
1971, working at the Paulsboro Research Laboratory, where he held 
various technical and managerial positions until becoming Manager of 
Process Development for Mobil Chemical Company in 1980. He was named 
Manager of Planning Coordination for Mobil Chemical Company's domestic 
and international operations in 1981. He returned to the Paulsboro 
Research Laboratory in 1982 as Manager of the Process Research, 
Development, and Technical Service Division. He was named Vice 
President of Planning for Mobil Research and Development Corporation in 
1987. From 1989-1992 he managed Mobil's Dallas Research Laboratory, 
which was responsible for Mobil's geoscience and petroleum engineering 
research efforts. In 1992, he led a team that created Mobil Exploration 
and Producing Technical Center, and was appointed General Manager. In 
this capacity, he was responsible for research, development, and 
technical support for Mobil's worldwide exploration and producing 
activities. In 1994, he was appointed Vice President of Engineering for 
Mobil and was responsible for leading the Corporation's worldwide 
Engineering Organization. In 1995, Mr. Ramage again led a major 
corporate reorganization effort. The result was the creation of Mobil 
Technology Company, a worldwide organization of over 2000 people 
responsible for research, engineering, technical service, and capital 
project management for all Mobil business units. In September 1995, he 
was appointed Chief Technology Office and President, Mobil Technology 
Company. In 1998, he was appointed to the Board of Directors and 
Executive Committee of Mobil Oil Corporation. In 1999, he was a member 
of the Exxon Mobil merger transition team and was later appointed 
Executive Vice President, ExxonMobil Research and Engineering Company. 
Mr. Ramage retired from ExxonMobil in 2002 and continues to serve as a 
liaison between the company and outside research, academic, and 
professional organizations.
    Ramage did extensive research in reaction engineering and catalysis 
in his early career at Mobil and was awarded six U.S. patents, one New 
Zealand patent, and has thirteen publications for work related to those 
areas.
    Mr. Ramage is a member of the Board of Directors for the American 
Institute of Chemical Engineers, the International Symposium on 
Chemical Reaction Engineering, and Junior Achievement of Philadelphia. 
He serves on the Chemical Engineering Visiting Committee at Purdue 
University. In the past, he served on Advisory Boards at Stanford, 
University of California, Berkeley, University of Texas at Austin, and 
The Construction Industry Institute. Mr. Ramage is also a member of the 
National Academy of Engineering, the NAE Council, and The Government 
University Industry Research Roundtable. He received an Honorary Doctor 
of Engineering degree from Purdue in 1996.

    Dr. Ramage. Mr. Chairman, would you like me to answer the 
questions now?
    Chairman Boehlert. Yes.
    Dr. Ramage. Okay. With regard to the five questions, the 
first question regarded the appropriate balance of federal 
funds between demonstration and research. This issue was not 
directly addressed in our study, but our report does recommend 
a shift away from development in some areas, such as biomass 
gasification, or more exploratory research in areas such as 
direct hydrogen production using photo, biological, and solar 
methods.
    With regards to your second question on policy analysis, 
the DOE must have the capability not only to manage the 
technical programs, but also engage in policy discussions 
required to move the technology into the market. Policies such 
as incentives and government industry actions can impact the 
goals and directions of the technical program.
    With regard to your third question on market penetration 
and our model, the Committee's vision for how light-duty fuel 
cell vehicles will enter the U.S. market is plausible, but it 
is optimistic. And it is optimistic because it assumes two 
things. It assumes first that if--the technical barriers are 
overcome and second that the infrastructure barriers are 
overcome. If those two things happen, then it becomes plausible 
in our mind. Those are the two big areas. And this is the 
reason why. One of the major--our report was on the transition 
period and the transition period using small scale, at-site 
production systems so we can take the infrastructure issue out 
of the equation and let that develop over time.
    With regard to your fourth question regarding demonstration 
programs, this issue also was not addressed in our Committee, 
but let me give you some personal perspective. I believe that 
the need and timing for demonstrations varies with the type of 
technology. And I believe that there are three important 
criteria that must be met before technology is ready for 
demonstration. And here, I am really talking about large-scale 
demonstrations like building coal plants or natural gas plants 
to produce hydrogen. There are three areas. The first is the 
individual system components of the technology needs to meet 
commercial performance, not necessarily cost, but commercial 
performance. The second is that the scale of the components, to 
a large scale, should be performed one at a time in existing 
production facilities, if possible. And I would call these 
learning demonstrations. And the third is that a systems 
modeling approach must be used to be able, with a mathematical 
process, which must be completed, which you can predict 
commercial performance, risk, and synergies, those three areas.
    With respect to your fifth question, the non-hydrogen 
bridge technologies to a hydrogen economy, there are a number 
of strategies for reducing oil imports and carbon dioxide 
emissions in the short-, medium-, and long-term. The Committee 
recommends that the DOE keep a balanced program and that the 
systems approach be developed and employed to understand the 
trade-offs of all U.S. energy, including hydrogen. And this 
also could include, and should include, the analysis of bridge 
technologies to get us from one point to the next point.
    Mr. Chairman, this concludes my testimony, and I will be 
glad to answer any questions that you may have.
    Chairman Boehlert. Thank you very much, Dr. Ramage.
    Dr. Eisenberger.

 STATEMENT OF DR. PETER EISENBERGER, CHAIR, AMERICAN PHYSICAL 
     SOCIETY, PANEL ON PUBLIC AFFAIRS, ENERGY SUBCOMMITTEE

    Dr. Eisenberger. Mr. Chairman, Mr. Gordon, Members of the 
Committee, thank you for the invitation to testify today.
    I chair the Committee of the American Physical Society 
composed of scientists, industrial R&D managers, and energy 
economists. We analyzed the Hydrogen Initiative and released 
our report on Monday. I request that our report be entered into 
the record. [The information referred to appears in Appendix 2: 
Additional Material for the Record.]
    The bottom line is that major scientific breakthroughs are 
required for the Hydrogen Initiative to succeed. We made 
several management and funding recommendations that, in our 
opinion, will increase the chances for long-term success.
    As a starting point, let me say that currently there is 
only a very nascent technology base upon which to build a 
hydrogen economy. Currently, the U.S. industry provides 
hydrogen to meet the needs of a non-transportation sector that 
is only about three percent of what is needed for that 
transportation sector. Several hydrogen fueling stations are 
scheduled to open this year, and several models of hydrogen-
fueled cars have been demonstrated, but none of the current 
technologies are competitive options for the consumer.
    The most promising hydrogen engine technologies require 10 
to 100 times improvements in cost or performance in order to be 
competitive. As the Secretary of Energy has stated, current 
hydrogen production methods are four times more expensive than 
gasoline and significant challenges remain to satisfy both 
energy security and environmental objectives of converting to a 
hydrogen-based transportation sector. Finally, no material 
exists to construct a hydrogen fuel tank that meets the 
consumer benchmarks. A new material must be developed.
    These are very large performance gaps, and our committee 
concluded that incremental improvements to existing 
technologies are not sufficient to close all of the gaps. In 
particular, hydrogen storage is a potential showstopper.
    Simply put, for the Hydrogen Initiative to succeed, major 
scientific breakthroughs are needed. This will not be easy. We 
can not simply engineer our way to a hydrogen economy, but we 
can take several steps now to make success more likely.
    Without question, relevant basic science must have greater 
emphasis in both the planning and research program of the 
Hydrogen Initiative. This is not a controversial conclusion. 
The Bush Administration has already taken steps in this 
direction, but more must be done. We recommend that: one, the 
Hydrogen Technical Advisory Committee include members with 
strong research backgrounds who are familiar with key basic 
science problems; two, Principal-Investigator basic research 
should be increased, and this PI research should be 
complemented with competitively-bid, peer-reviewed 
multidisciplinary research centers that carry out basic 
research in key research areas of production, storage, and use. 
These university-based centers should have active industry and 
national laboratory participation.
    The issue of funding is, of course, a delicate one. 
Resources are not unlimited, and members of our Committee 
face--members of your committee face difficult decisions. 
Several members of our APS Committee have managed large-scale 
industrial technology programs. For what it is worth, I and the 
members of my committee feel your pain. We have faced difficult 
funding decisions in our own careers.
    Perhaps the most useful thing I can share with you is the 
manner in which industry approaches the difficult funding 
decisions you face. The main factors involve technological 
competitiveness and readiness, market acceptance, and rate of 
penetration. In the case of Congress, one needs to add the 
criteria of meeting national security objectives. Our 
evaluation is that for hydrogen there are very significant 
technology gaps, a lack of an existing infrastructure, and the 
inevitable slow rate of penetration for a new energy 
technology. This means that one would invest more resources in 
research and less, if at all, in development projects. Pilot 
projects to demonstrate specific components, like 
sequestrations, are more appropriate at this state of the 
Hydrogen Initiative. And a very important point is that 
premature investments in large demonstration projects have a 
history of not only failing but also damaging the overall 
objectives.
    However, national security objectives may argue for a more 
aggressive development plan than industry would follow, though 
still premature large-scale demonstration projects are unlikely 
to be helpful. In this regard, I will mention one additional 
point of view that the industrial managers on our APS Committee 
all shared: the need to hedge.
    In the event that the timeline for significant hydrogen 
vehicle market penetration slips beyond 2020, there could be, 
for energy security reasons, a greater need for technologies 
that serve as a bridge between the current fossil fuel economy 
and any future hydrogen economy. Also the likelihood is 
increased that continued investment in research will produce 
new discoveries that will identify a far superior way to meet 
our needs in the long-term. Increasing the focus on basic 
science and engineering that advances such technologies would 
serve as a sensible hedge and, at the same time, maintain the 
development of technologies that show clear, short-term 
promise.
    Similarly, the Hydrogen Initiative must not displace 
research into promising energy efficiency, renewable energy 
areas, and carbon sequestrations. These investments both 
complement and contribute to the goals of a hydrogen economy. 
And they become an increasingly important means for reducing 
CO2 and enhancing our energy security in the event 
that the significant technology hurdles for the Initiative are 
not met within the proposed timeline.
    I hope that our perspective has--our perspective and our 
recommendations help you in your oversight, and I am prepared 
to answer any questions you might have.
    Thank you very much.
    [The prepared statement of Dr. Eisenberger follows:]

                Prepared Statement of Peter Eisenberger

    Mr. Chairman, Mr. Gordon, Members of the Committee, thank you for 
the invitation to testify today.
    In January 2003, President Bush announced an Initiative to reduce 
the Nation's dependence on foreign oil through the production of 
hydrogen fuel and a hydrogen-fueled car. The Initiative envisions the 
competitive use of hydrogen in commercial transportation by the year 
2020.
    I chaired a committee of the American Physical Society that 
analyzed this Initiative--we released our report on Monday. The bottom 
line is that major scientific breakthroughs are required for the 
Hydrogen Initiative to succeed. We made several management and funding 
recommendations that, in our opinion, will increase the chances for 
long-term success.
    Before I get into the specifics, let me say a very brief word about 
our authors and methodology. Together, the authors and reviewers have 
considerable experience in bench science, the management of industrial 
technology programs from the laboratory to systems level, management of 
government R&D programs, and the economics of energy-commercialization 
programs. We did not carry out a new analysis of the scientific 
elements of the Hydrogen Initiative. Instead, we distilled the 
considerable work that is already available. Our sources included the 
DOE ``Report of the Basic Energy Sciences Workshop on Hydrogen 
Production, Storage and Use'', the Hydrogen Energy Roadmap, and 
numerous presentations by government officials managing the Hydrogen 
Initiative, including those for the just released NRC report.
    As a starting point, let me say that currently there is only a very 
nascent technology base upon which to build a hydrogen economy. 
Currently, the U.S. industry provides hydrogen to meet the needs of the 
non-transportation sector that is only about three percent of what is 
needed for the transportation sector. Several hydrogen-fueling stations 
are scheduled to open this year. And several models of hydrogen-fueled 
cars have been demonstrated. But, none of the current technologies are 
competitive options for the consumer.
    The most promising hydrogen-engine technologies require 10 to 100 
times improvements in cost or performance in order to be competitive. 
As the Secretary of Energy has stated, current hydrogen production 
methods are four times more expensive than gasoline, and significant 
challenges remain to satisfy both energy security and environmental 
objectives of converting to a hydrogen-based transportation sector. 
Finally, no material exists to construct a hydrogen fuel tank that 
meets the consumer benchmarks. A new material must be developed.
    These are very large performance gaps. And our committee concluded 
that incremental improvements to existing technologies are not 
sufficient to close all the gaps. In particular, hydrogen storage is 
the potential show-stopper.
    Simply put, for the Hydrogen Initiative to succeed, major 
scientific breakthroughs are needed. This will not be easy. We cannot 
simply engineer our way to a hydrogen economy. But, we can take several 
steps now to make success more likely.
    Without question, relevant basic science must have greater emphasis 
in both the planning and the research program of the Hydrogen 
Initiative. This is not a controversial conclusion. The Bush 
Administration has already taken steps in this direction, but, more 
must be done. We recommend that:

        1.  The Hydrogen Technical Advisory Committee include members 
        with strong research backgrounds who are familiar with the key 
        basic science problems.

        2.  Principal-Investigator basic research should be increased. 
        And this PI research should be complemented with competitively-
        bid, peer-reviewed multidisciplinary research centers that 
        carry out basic research in the key research areas of 
        production, storage and use. These university-based centers 
        should have active industry and national laboratory 
        participation.

    The issue of funding is, of course, a delicate one. Resources are 
not unlimited and Members of your committee face difficult decisions. 
Several members of our APS committee have managed large-scale 
industrial technology programs. As for myself, in an earlier life, I 
was Senior Director of the Corporate Research Laboratory for Exxon. For 
what it's worth, I and the members of my committee, feel your pain. We 
have faced difficult funding decisions in our careers.
    Perhaps the most useful thing I can share with you is the manner in 
which industries approaches these difficult funding decisions. The main 
factors involve technological competitiveness and readiness, market 
acceptance, and rate of penetration. In the case of Congress, one needs 
to add the criteria of meeting national security objectives. Our 
evaluation is that for hydrogen there are very significant technology 
gaps, a lack of an existing infrastructure and the inevitable slow rate 
of penetration for a new energy technology. This means that one would 
invest more resources in research and less, if at all, in development 
projects. Pilot projects to demonstrate specific components like 
sequestration are more appropriate at this stage of the Hydrogen 
Initiative. Premature investments in a large demonstration projects 
have a history of not only failing but also damaging the overall 
objectives.
    However, national security objectives may argue for a more 
aggressive development plan than industry would follow, though 
premature large-scale demonstration projects are unlikely to be 
helpful. In this regard, I will mention one additional point of view 
that the industrial managers on our APS committee all shared--hedging.
    In the event that the timeline for significant hydrogen vehicles 
market penetration slips beyond 2020, there could be, for energy 
security reasons, a greater need for technologies that serve as a 
``bridge'' between the current fossil-fuel economy and any future 
hydrogen economy. Also the likelihood is increased that continued 
investment in research will produce new discoveries that will identify 
a far superior way to meet our needs in the long term. Increasing the 
focus on basic science and engineering that advances such technologies 
would serve as a sensible hedge and at the same time maintain the 
development of technologies that show clear short-term promise.
    Similarly, the Hydrogen Initiative must not displace research into 
promising energy efficiency and renewable energy areas, and carbon 
sequestration. These investments both complement and contribute to the 
goals of a hydrogen economy. And, they become increasingly important 
means for reducing CO2 and enhancing our energy security in 
the event that the significant technology hurdles for the Initiative 
are not met within the proposed timeline.
    I hope that our perspective and our recommendations help in your 
oversight of the Hydrogen Initiative.

                    Biography for Peter Eisenberger

    Peter Eisenberger attended Princeton University from 1959 until 
1963 where he received a B.A. in Physics. He graduated in 1967 from 
Harvard with a Ph.D. in Applied Physics and remained at Harvard for one 
year as a Post-Doctoral Fellow. In 1968, Dr. Eisenberger joined the 
staff at Bell Laboratories. From 1974 to 1981, he was a department head 
at Bell Laboratories. He was a consulting professor at Stanford 
University's Applied Physics Department from 1981 to 1987. He became 
actively involved in the growth of National User facilities, including 
Chairship of the Advanced Photon Steering Committee and participation 
in National Academy of Science (NAS) and Department of Energy (DOE) 
studies. In 1981, he joined Exxon Research and Engineering Company as 
Director of their Physical Sciences Laboratory. In 1984, he was 
appointed Senior Director of their Corporate Research Laboratory. In 
1989, he was appointed Professor of Physics and Director of the 
Princeton Materials Institute at Princeton University. He is currently 
a Professor of Earth and Environmental Sciences at Columbia University, 
where form 1996 to 1999 he held the posts of Vice Provost of the Earth 
Institute of Columbia University and Director of Lamont-Doherty Earth 
Observatory of Columbia University. Dr. Eisenberger is a fellow of both 
the American Physical Society and the American Association for the 
Advancement of Science. Dr. Eisenberger was one of the authors of the 
National Action Plan for Materials Science and Engineering, and was a 
member of the Commission on the Future of the National Science 
Foundation (NSF). He was chair of the Advisory Committee in the 
Mathematical and Physical Sciences Division of the NSF. His recent 
activities include Chairman of the Board of the Invention Factory 
Science Center, Member of the Board of Trustees for New Jersey's 
Inventors Hall of Fame, Director of Associated Institutions for 
Materials Science, and organizer of NSF/DOE Conferences, ``Basic 
Research Needs for Vehicles of the Future,'' ``Basic Research Needs for 
Environmentally Responsive Technologies of the Future,'' ``Organizing 
for Research and Development in the 21st Century,'' and ``Basic 
Research Needs to Achieve Sustainability: The Carbon Problem.'' More 
recently, he has been appointed by Governor Whitman to the New Jersey 
Commission on Science and Technology and Co-chair of Flandrau Science 
Center Senior Advisory Board at the University of Arizona.

                               Discussion

    Chairman Boehlert. Thank you very much, Mr. Eisenberger.
    Mr. Garman, I appreciate the additional money that DOE has 
requested for exploratory hydrogen research in the Office of 
Science. That is definitely a positive step that demonstrates, 
I think, your responsiveness to outside guidance. You say in 
your testimony that you are evaluating some additional programs 
to see if more money should be shifted to exploratory R&D. On 
what basis will you make that decision and are there specific 
criteria?
    Mr. Garman. This is a very iterative process, Mr. Chairman. 
And one of the things that we did early on is share with the 
Committee our draft, hydrogen fuel cell infrastructure 
technologies program, program plan. This enabled the Committee 
to interact with us in some of these areas and was the reason, 
I will tell you, that in the President's 2005 budget submission 
we did ask for $29 million in the Office of Science to do some 
of this more fundamental work. We--there are--and so this is 
going to be an iterative process. I don't think there are any 
hard and fast rules of thumb about precisely when and how we 
will shift funding.
    But there is something very important that I think we need 
to get out on the table and understand, and it may be the basis 
of the Committee's misunderstanding in some of these areas. 
Nobody is talking about doing premature technology 
demonstrations. And in fact, we find this very report very 
useful in helping us to fend that off from those of us--or from 
those who are saying, some members in the other body, I might 
add, that we are not being aggressive enough and that we need 
to go more quickly to larger scale technology demonstrations, 
get certain numbers of cars on the road by certain target dates 
irrespective of whether the technology, the underlying 
technology, is ready. The commercial success has to be clear. 
The business case has to be clear.
    So I think it is very important to make that point that our 
demonstrations, when we say demonstrations or technology 
validation activities, we are talking about putting a very 
limited number of vehicles on the road that will produce data 
that goes right back into the R&D process, including the 
exploratory R&D process. We are not talking about building 
large facilities. We are not talking about doing large vehicle 
demonstrations that are designed to drive unit costs down. We 
are talking about learning, very small, limited learning 
demonstrations that produce data that go right back into the 
R&D process. So there is a lot of agreement on this panel on 
that subject, and I think that it is very important to make 
that point early on.
    Chairman Boehlert. The development of technology should set 
the pace then, that is what you are saying?
    Mr. Garman. Absolutely. You should--we should not be in a 
rush to deploy vehicles either in the context of a large 
demonstration or actually trying to force market adoption of a 
technology that is not ready.
    Chairman Boehlert. Well, do you agree with these experts, 
then, that we need to shift some more money to exploratory 
research?
    Mr. Garman. Exploratory, yes. And this is where we may have 
a nomenclature problem, and I want to be very careful. This 
program is on a razor's edge. Some would say we need to do more 
fundamental and basic science, and of course, we have some 
coming at us from the other side saying no, we need to rush to 
deploy the technologies we have got today, which would be a 
horrible mistake, because it would lock in those technologies 
at their current state of development. It would be premature 
before codes and standards and the other work that needs to be 
done are completed.
    So we are on a razor's edge here. We don't want this to 
become a basic research program of the kind that government can 
work on for 20 or 30 years before it produces results, but we 
don't want this also to become an effort where we start to 
deploy and push before we are ready. So we are on a razor's 
edge.
    Chairman Boehlert. Yeah. Yeah. And you always are very 
careful. I noticed that. Thank you, and I really appreciate it.
    Dr. Ramage and Dr. Eisenberger, let me ask you each in 
order, do you think that $29 million for the Office of Science 
is enough for the type of program you envision? Dr. Ramage.
    Dr. Ramage. Well, may I first tell you exactly what I think 
we recommended on this issue, and I think that will help me 
answer the question?
    We recommended that there were certain areas where there 
needs to be increased exploratory research. Hydrogen storage is 
one of them, particularly in direct hydrogen production and 
other ones, storage is a big issue. And you know, the $29 
million and the fact that that has been made, I think, is a 
very positive move. I can't tell you if that is the right 
amount of money, but I certainly think that is in the right 
direction.
    May I make another comment, though----
    Chairman Boehlert. Sure.
    Dr. Ramage [continuing]. On this issue? You know, I have 
managed research all of my life, and the worst thing you can do 
in a program is have a program that has too much basic research 
and you don't have the right balance, which is really what my 
first question was. And you really need programs where you have 
basic research, development, and learning demonstrations so you 
can constantly move your technologies through the programs. And 
you can be testing them and learning them at the same time. And 
you have to make sure that in your research program you are 
actually working on areas where you have major gaps in 
knowledge, and storage is one of those areas. But there are 
other areas, and we argue for a transition using distributed 
production. That is really a development effort. And it is 
not--and that effort, we think, is very important, but 
developing a small scale, at-site reformers is effort that is 
in the development and there are learning activities that are 
required to do that.
    So the answer to your question is we are very happy, and 
the Committee was very happy to see $29 million. But this is 
not an issue of basic research versus something else. There is 
a continuum of activities that have to take place to keep this 
economy moving toward a hydrogen economy. And in the end, a lot 
of things that we think will happen, we don't know what they 
are today.
    Chairman Boehlert. Dr. Eisenberger.
    Dr. Eisenberger. In answering the question, let me try to 
put this in a frame, which I think is contributing to part of 
the confusion. Let us say when President Kennedy committed us 
to go to the moon, he had just the need to accomplish the task. 
He didn't have to worry about--our country didn't have to worry 
about the cost or consumer acceptance of the particular way we 
went. And what we have here is a concatenation of both a 
national security need and a market need. And we are mixing up, 
in some cases, the drivers that would make one want to regard 
this as a national security objective with the way you would 
prudently address something that ultimately the consumer has to 
accept. And as much as the national security wants it, if the 
consumer doesn't accept it, it ain't going to happen. And I 
think it is in trying to understand which track we are on and 
keeping for sure that we know in the bottom line we have to be 
on the consumer track that would help us all stay on the same 
path.
    So I agree with the philosophy stated here in terms of the 
need to have this continuum, but my concern is viewing it as 
something that ultimately has to make the--meet the market. It 
is something that we would normally--I--my instincts, my 
judgment, I can't give you a number, because I would have to 
spend a lot more time to look into it, but I feel that we are 
putting too much of the resources downstream, right in that 
continuum that Dr. Ramage talked about, and not enough 
upstream, and that since the amount of money that goes into 
demonstration projects, in industry you know once you course 
the demonstration projects, they are the ones that cost you a 
lot of money. All right. They are very expensive. A $1 billion 
research program is unimaginable, right? We are talking about 
millions, but the demonstration projects are much more costly. 
So I would say notionally, I--there is a need to shift more. I 
couldn't give you a number. All right. But I can say that I 
think there is this confusion between whether we are doing this 
ultimately that it has to meet the marketplace or we are doing 
it because of national security.
    Chairman Boehlert. Secretary Garman wants to----
    Mr. Garman. And there is just--again, there is--I think 
there is a miscommunication going on here, so I want to try to 
correct it before it goes on too far. The $29 million in the 
science budget, that is what we are calling basic. That does--
we are doing much more exploratory research and plan to do more 
exploratory research. And I think I was negligent in failing 
to--partly for reasons of time, to answer the five Committee 
questions. But one of those five Committee questions is on 
point when you say, you know, using the definitions in OMB 
circular A-11, what is your split in the current funding 
profile between these different types of research? In basic 
research, we are around 13 percent; applied research, which 
includes a component of exploratory R&D, about 42.5 percent; 
development, 29.2 percent; demonstration, 13.4 percent, and 
that constitutes what we have. And the only deployment work we 
are doing is a tiny two percent, mainly related to education 
for the very long-term.
    Chairman Boehlert. Thank you for that clarification.
    Mr. Larson.
    Mr. Larson. Thank you. Thank you, Mr. Chairman. And I thank 
the panelists for being here for your--and for your fine 
testimony. And I thank the Chairman again for this hearing that 
is important to each and every one of us. It is rarely an 
opportunity in my years in government that you get to talk 
about a subject matter that embraces energy, the economy, the 
environment, and foreign policy all in one breath. And so I 
think the dynamic here is extraordinarily important, but never 
has there been such a great need, and in my estimation, so 
little funding toward that effort. And I think the hard truth 
is that if we are going to aggressively pursue a hydrogen 
economy, then we have got to aggressively put forward the 
funding that we are going to need. And I say that lauding the 
Administration in terms of the efforts it has made to date, but 
recognizing that even though these efforts are well intended, 
it is not nearly the amount of money that I believe is going to 
be necessitated if we are serious, in fact, about a number of 
the issues that you have raised and a number of the goals that 
the Committee has stressed to date.
    A couple of questions that I have, and I am wondering with 
respect to--Mr. Garman, with respect to this study and the work 
of--and your work whether or not there has been any 
coordination with the Department of Defense which already has 
put forward close to $50 million in studies and in actual 
projects.
    Mr. Garman. Yes, sir. We have worked with the Department of 
Defense both in the context of the stationary fuel cell work 
that they do, and we also interfaced with the Department of 
Defense in a program that we call Future Truck, which is 
looking at larger, heavier transportation. We have done some 
fuel cell work with them in that context and will continue to 
do so. It is very, very important. Their needs are sometimes a 
little different than ours, but we think there are a lot of 
avenues for collaboration, and we want to do even more.
    Mr. Larson. One of those collaborations I believe, and I 
would be interested in the panelists' views on this, is when 
you are talking about pilots, it seems to me that as a mode of 
transportation that, and you have all pointed out some of the 
problematic concerns raised in looking at individual vehicles, 
but when you talk about heavyweight vehicles, you mentioned 
trucks, I would focus on buses, primarily because of the mode 
of transportation, the fact that they are usually barned that 
even, the fact that they usually can accommodate some of the 
storage issues that were--that have been raised. And also, in 
terms of pure pilots and testing, seeing that this ought to be 
a clear focus of Department of Energy and Transportation. Would 
you respond, all of the panelists?
    Dr. Eisenberger. I think it makes--I would also like to 
echo in that regard to what Dr. Ramage said. You can't go from 
nothing to something. You have got to find ways to ease 
yourself into the market to get on the learning curve, to get 
things--some value out of it so that provides an economic 
motivation for your infrastructure to develop. And I have 
thought about it recently----
    Mr. Larson. That is a good point. And all of you have 
mentioned this with respect to the market, but isn't it also 
true that if we look out at our municipalities, as we look out 
at our states, as we look at our various schools that every 
single one of those schools has to transport kids back and 
forth to school via bus. Those plants and facilities all have 
to be heated and cooled. They are part of the marketplace, to 
be sure, but they are also part of a larger laboratory of 
government where, I believe, that we ought to spend a lot of 
our focus and emphasis, understanding that it is not the same 
as the commercial market. And in fact, as all of you have 
pointed out, we don't want to prematurely rush in areas that 
will be failings while we have the opportunity governmentally 
and in controlled pilots to take a look at these areas.
    Dr. Eisenberger. I just want to say one more thing, and 
then--as the Academy report said, and we also agree, that, for 
example, in addition to buses, distributed power gives you 
another way to get into this market. It gives you a way of 
dealing with fuel cells, providing an incentive to grow your 
production facilities.
    Mr. Larson. How much money is needed in bridge technology?
    Dr. Eisenberger. Well, to make a quantitative statement, 
one would really have to go into the details.
    Mr. Larson. Hypothetically, nothing that I would hold your 
feet to the fire about, but----
    Dr. Eisenberger. No.
    Mr. Larson [continuing]. Just give us some parameters. Is 
it bigger than a breadbasket?
    Dr. Eisenberger. Well----
    Mr. Larson. And this is the frustration on the part of 
Members, I think----
    Dr. Eisenberger. Right.
    Mr. Larson [continuing]. Is that in earnest, Members and 
this Chairman has been exceptional, want to help, but want to 
get realistic figures, because I think, both from a substantive 
and academic standpoint, the--in this case, I think the ends 
does justify the means.
    Dr. Eisenberger. Well, let me put--let me say it this way. 
I really agree very much with your comments that energy is so 
critical to what we do that to underfund it, to not give more 
resources, in general, to develop our options for our future 
and be able to pursue the bus idea that you made, distributed 
power, all right, is really, I think, penny-wise and pound-
foolish in the long-term. And because it is a major issue, 
this--the whole future of success of, as you pointed out, all 
of these things coming together here, requires, really, a very 
significant investment. And to some extent, we are 
underwhelming the problem. And I--my sympathy goes to Mr. 
Garman who has to manage a project where he has these great 
objectives and he is given not all of the resources to 
accomplish them.
    Mr. Larson. Believe me, our sympathies go to him, too. And 
it may not sound that, but I know--we know the difficult task 
that he is operating on.
    Dr. Eisenberger. Right.
    Mr. Larson. And Dr. Ramage.
    Dr. Ramage. Yes. Just specifically on the buses, I--our 
Committee felt very strong that in the early part of the 
transition to a hydrogen economy that the--you would actually 
use fleets, buses and other things, and you could use existing 
production capacity, so you don't have to worry about the 
infrastructure, and there is hydrogen out there, and you 
basically would do it. And that would allow you to enter the 
market with fleets, and buses would be a big part of that. And 
that allows you to move forward while you are doing your R&D 
program. It allows you to get commercial use. It allows 
consumers to get use. You get learning demonstrations. So, in 
our vision, that literally is the first part of this 
transition. Later on, you would have distributed production at 
sites when vehicles come in the market. But the buses and mass 
transportation would be the first part of this.
    Mr. Larson. What about the transmission? And I noticed in 
your comments, and I really do appreciate the talk about making 
the transition with coal and other entities, you didn't mention 
natural gas, which I would think, from a distribution 
standpoint and pipeline standpoint and transmission standpoint, 
might be critical to the future, although we note that that is 
a limited source as well.
    Dr. Ramage. Well, the--our issues on natural gas are we 
believe that during the transition, natural gas should be a 
primary source of hydrogen, but in the steady state, unless we 
have some major natural gas findings in this country. If you 
look at EIA and the amount of natural gas that we are 
importing, it becomes the same national energy security issue 
as oil. And so we separated and basically recommended that the 
DOE make--decrease the size of their program in large-scale 
natural gas, focus on using natural gas during the transition 
for small-scale reformers.
    Mr. Larson. How far away are we with coal and making that--
in being able to capture the hydrogen from that process?
    Dr. Ramage. I think you are probably--I mean in a coal 
plant, like the parameters in our future, are 15 or 20 years 
away. So it is a--coal is a long-term part of the steady state 
solution.
    Chairman Boehlert. The gentleman's time has expired. The 
Chair recognizes the Chairman of the Subcommittee on 
Environment, Technology, and Standards, a distinguished fellow 
of the American Physical Society, Dr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman. And I am very pleased 
to have another physicist at the table. And thank both of you 
for your work in this extremely difficult project. You have 
done a good job of identifying the problems, and I am--in my 
analysis of it, which incidentally is far less extensive than 
yours, but agrees with yours, there are so many different 
things that have to happen simultaneously. And it has to be an 
incredible governmental/industry cooperation to achieve the 
results that we want. Such simple matters as deciding how is--
well, you mentioned fuel storage in your study. It is not just 
storing it underground somewhere, but how are you going to 
store it in the car, because that influences the service 
stations of the future? Are you going to get in--go in and get 
a tank full of liquid hydrogen? Are you going to go in and 
exchange high-pressure cylinders? Tremendous decisions have to 
be made with major impacts upon industry, and it is going to 
take intense cooperation to get this done in any reasonable 
sort of time.
    In terms of the production of hydrogen, I will simply tell 
my colleague from Massachusetts, I personally think natural gas 
is too good to burn or to use for hydrogen. It is too precious 
as a petrochemical feed stock, and we should reserve it for 
that. I hope that nuclear power is an efficient way to produce 
hydrogen, but I haven't seen the evidence yet.
    So what I really appreciate is your pointing out the 
complexity. It can be done, perhaps more rapidly than you say, 
but it is going to have to be a national crash program. And I 
don't--and that leads to a question for Mr. Garman on the 
budget. I am very concerned about DOE's budget. Last year, when 
you testified, you said that this program is not going to gore 
anyone's ox. I think this year's budget shows that maybe you 
aren't goring them, but you are certainly bloodying them. But 
also, I am very concerned that you don't seem to have much 
money in the budget to deal with this in terms of the problems 
that have to be dealt with. And I wonder if you would give us 
some comment on those two issues.
    Mr. Garman. Thank you. And I----
    Mr. Ehlers. It appears that other alternative energy 
sources are suffering, and also, you are not getting enough.
    Mr. Garman. Thank you. And I appreciate that. And it goes 
also back to the Chairman's opening statement with respect to 
his observation or belief that it is unfortunate the 
Administration proposes to pay for hydrogen research by cutting 
the rest of Secretary Garman's programs. That hasn't happened, 
Mr. Chairman.
    Chairman Boehlert. That is good news. Tell me the rest of 
the story.
    Mr. Garman. I will tell you the rest of the story. Overall 
funding for the Office of Energy Efficiency and Renewable 
Energy is up. Our renewable energy program funding is up 4.8 
percent. Yes, there was a reduction of 2/10 of one percent in 
energy efficiency funding, and there were also some shifts in 
that funding, but our overall budget is up, particularly when 
you look at the impact of congressional earmarks that are 
funding that is not on our R&D planning. Our wind power is up. 
Hydropower is up. Geothermal is up. Solar power, if you remove 
the earmarks of about $1.5 million, solar power is up. Biomass, 
if you remove the $51 million worth of earmarks in biomass that 
do not contribute to our program planning, the program planning 
that we have come together with industry, with the Department 
of Agriculture to devise, our biomass is up some $30 million.
    Mr. Ehlers. You are beginning to sound like some radio 
announcer giving the stock quotes for the day.
    Mr. Garman. So, you know, I feel, actually, quite the 
opposite. I don't feel encumbered or savaged; I feel blessed 
that in a constrained budget environment, we have been given as 
much as we have been given. And that puts and awesome 
responsibility, I think, on us to perform in that context.
    Chairman Boehlert. That you attribute to the exceptional 
confidence people have in you.
    Mr. Garman. I hope so, Mr. Chairman. I hope it is 
something.
    Mr. Ehlers. But you would not object if the Congress gives 
you more.
    Mr. Garman. I think the President has submitted a very good 
budget, and let me say this, this is an important--and as I 
said before, and I know it is impolitic of me to say it in this 
forum, but we were saddled with $67 million worth of earmarks. 
I even have an earmark for hydrogen, Mr. Chairman, that doesn't 
have anything to do with hydrogen.
    Mr. Ehlers. Okay. We will try and take care of that this 
year.
    A quick question, Dr. Eisenberger. On the APS report, you 
talked about the storage problems. Could you give a quick 
rundown what you see those to be and what you think the most 
likely choice is going to be?
    Dr. Eisenberger. Well, you know, it is no accident we are 
running on gasoline, because it is a very unique fuel in terms 
of its capability in terms of energy density and ability to 
store in the automobile the amount of energy you need to travel 
what the consumer has learned to understand they can expect. I 
just turns out that currently hydrogen, given its basic 
properties, you can squeeze it, you can do various things to 
it, it is extremely difficult to, currently, have a material 
where you can imagine getting enough energy density in the 
automobile in a way that is safe so that you can give the sort 
of performance that the consumer has learned to--or that the 
transportation sector needs. And so right now, there is not a 
known answer to this. And so that is a gap that is a really 
serious problem. Now what I would say is, and it gets back to 
your comment and it is a thing that concerns us as well, to 
make this thing work, it is no better than the weakest link in 
the chain, right. You can't get there if--because it is a 
consumer-oriented thing, if something doesn't work. And it is 
that--the magnitude and the complexity that suggests to us that 
this idea of piloting, and I don't want to--and I agree that 
there is verbiage here that we could clean up, but piloting 
things that are ready to be piloted and then focusing very 
clearly on those gaps which really are serious in terms of not 
having, as Dr. Ramage said, even a commercial performance 
demonstration yet, that one has to make sure that one really 
focuses on those things, because one knows one can't go to 
market until one gets those things addressed.
    Mr. Ehlers. Right.
    Chairman Boehlert. The gentleman's time has expired.
    Mr. Costello.
    Mr. Costello. Mr. Chairman, thank you.
    Mr. Garman, I want to ask you a few questions about the 
FutureGen program. The Administration has made it very clear 
that it is the important program for this Administration. And 
when George Ruddins testified before our Committee, I think it 
was in November of 2003, he provided a tentative timeline for 
the FutureGen project. And you know, in the fiscal year 2004 
appropriations bill, DOE was directed to produce a program plan 
for the FutureGen project by December 31 of 2003, and I am 
wondering what the status of the plan is.
    Mr. Garman. I made sure we spoke to George right before I 
came up, and the program plan, which was promised to you, is in 
the final review process within the Administration. And I am 
told it will be transmitted to Congress shortly. And we hope to 
have that up to you as quickly as possible. That brings to mind 
the fact that I have promised this committee a hydrogen posture 
plan, which I produce right now. [The information referred to 
appears in Appendix 2: Additional Material for the Record.] I 
have done that. And I will have George follow up with your 
staff, but it is out of the building. It is out of DOE and 
undergoing interagency concurrence at the White House, I am 
told.
    Mr. Costello. When you indicate that it will be delivered 
to the Congress shortly, could you get a time frame on there, 
30, 60, or 90 days?
    Mr. Garman. I would hope it would be within a week or two.
    Mr. Costello. Let me ask another question about FutureGen 
and about funding for the project. The coal R&D budget provides 
$237 million of previously appropriated funding specifically 
for FutureGen. There are $233 million of new funding available 
for other coal R&D programs, which is almost a 50 percent cut 
in programs like fuel cell research, coal gasification, 
advanced research centers, and other important programs 
compared to last year. And as, I think, we all realize that 
FutureGen is not a replacement for these programs. And in fact, 
if anything, the program, FutureGen, can not succeed without 
them as a foundation. So I am wondering if you will address 
that issue. How do we expect FutureGen to be successful if, in 
fact, we are cutting the R&D funds for the other items that I 
have just mentioned?
    Mr. Garman. I would hope that the program plan would 
elucidate that for you. I am told that the project timeline for 
FutureGen remains on track for a fiscal year 2004 start and 
that there have been some changes in some of the out-year 
milestones consistent with assuring, and this may seem ironic 
in this context, but that some of the underlying science 
matches up well with the deliverables in the project. So that, 
since I am the energy efficiency and renewable energy guy and 
not the fossil guy, you have delved to about the limits of my 
knowledge on that specific point, but we will try to answer 
better than that for the record.
    [The information follows:]
                         Insert for the Record

FutureGen Funding and Funding for Other Coal R&D Programs

    The funding profile for FutureGen is complementary to and 
consistent with the Department's Coal R&D roadmap in key areas, as 
reported in the March 04, 2004 FutureGen Report to Congress. The 
schedule for the FutureGen project will allow the FutureGen industrial 
consortium sufficient time to assess the technical readiness of 
candidate technologies for inclusion in the FutureGen research project. 
The pace of the research being pursued should provide the opportunity 
to choose the technology best suited to meet the FutureGen project 
goals. Progress in the ongoing coal research, development, and 
demonstration program will provide the necessary technical foundation 
to help make FutureGen a success.

    Mr. Costello. The last question about FutureGen, and I 
realize you may not be the person to answer this, is where does 
the Administration with finding a partner in the private sector 
as anticipated and directed in this legislation?
    Mr. Garman. My notion is that we are finding many partners 
and a great deal of interest, not only in the domestic private 
sector, but also internationally through the Carbon 
Sequestration Leadership Forum. There has been a tremendous 
amount of interest from other nations, including Germany and 
Poland, in partnering with us and making FutureGen the first 
demonstration, hydrogen-producing, zero-emission coal plant in 
the world to enable that technology transfer to be universally 
adopted around the world and that the interest is there.
    Mr. Costello. They--have they mentioned that they will 
bring their checkbooks with them to participate?
    Mr. Garman. That is--it is well understood that that is 
part of the deal.
    Mr. Costello. Mr. Chairman, thank you.
    Chairman Boehlert. Thank you very much, Mr. Costello. I 
love the international cooperation where we do all of the work 
and they get all of the benefit without any of the burden of 
helping to finance it, so that is something--that is a question 
we are all interested in hearing the right answer to, and you 
gave the right one.
    Mr. Gutknecht.
    Mr. Gutknecht. Thank you, Mr. Chairman.
    I have a keen interest in this, because I also am the chair 
of a Subcommittee in the Agriculture Committee that deals with 
renewable fuels. And so we appreciate the opportunity to have 
you here today, and we are going to continue to look at this.
    First, and this you don't have to answer right now, but I 
would like to get a list of those earmarks from last year. That 
is problematic, I think. You know, historically, this committee 
has done a pretty good job of not recommending earmarks within 
NSF or other science research projects, and it seems to me we 
ought to try to apply that as well to the Department of Energy.
    Second, though, and I think this is a--also a very 
important issue, I want to raise the issue of collaboration 
with our universities. You know, we have a lot of pretty smart 
people and curious students and very good graduate students who 
could be extremely helpful in doing some of this research. And 
I guess the question is what portion of the Department of 
Energy's awards are directed toward university research to help 
develop some of these new technologies?
    Mr. Garman. Let me answer--I will give you a precise number 
for the record, but let me answer it this way, because it bears 
on a question asked earlier about the challenge of hydrogen 
storage on board the vehicle. And we fully appreciate, 
understand, and agree with that challenge. And in fact, this is 
one of the areas where the Academy, in its report, actually 
commended our hydrogen storage initiative as ``a strong program 
with the right balance of basic research''. And the reason I 
mention that is because it is our plan, in fact, we will, in a 
matter of days, be announcing winners of a hydrogen storage 
solicitation, which we have had on the street, composed of 
teams of universities and national labs. We thought it was so 
important that we make sure that the university component is 
included in this for a variety of reasons. First of all, it 
helps us make sure that there is the basic research component. 
Second, it avails you of that opportunity to take advantage of 
research at universities that can often be produced at a much 
lower cost than research at national labs because of the 
availability of graduate students and all of the other good 
things you have in universities. So----
    Mr. Gutknecht. Cheap labor.
    Mr. Garman [continuing]. We are very much looking forward 
to the opportunity to make that solicitation, get more 
universities involved in this fundamental research on one of 
the most, we agree, vexing problems that we have in making this 
initiative a reality. Not to beat this dead horse, we will 
probably have to delay the actual funding a little bit, because 
of the impact of the earmarks, but we are going to go ahead and 
make the selections, let the people know they have--they will 
be awarded these things just as soon as we can scrape up the 
funding and get it out to them.
    Mr. Gutknecht. The next question, and perhaps either Dr. 
Ramage or Dr. Eisenberger can jump in on this, and I think this 
is something I am keenly interested in, and that is using 
renewable energy sources, such as biomass or wind or other 
sources like that, to actually produce hydrogen. To what extent 
should our hydrogen-related efforts focus on deriving that 
hydrogen from some of these renewable sources? And let me give 
you an example. I mean, we have--there has been just an 
explosion of the latest and most efficient windmills in my 
District. I am amazed, with the modest amount of incentive from 
the Federal Government, we have seen just an explosion. Now in 
some respects, there is at least discussion out there about 
using those, when we don't need the power on the grid, to 
produce some other energy source, which could be storable. And 
hydrogen might make some sense. I would like to get your 
particular--particularly Dr. Ramage or Dr. Eisenberger, your 
particular point of view on that.
    Dr. Ramage. I think it is a very good question. And we 
strongly recommend in our report that wind energy play a major 
role in the transition and maybe in the steady state, and it is 
because wind energy today, in a lot of areas, has almost--is 
almost cost-competitive with grid electricity. And also, there 
has been a lot of--there is a lot of activity going on in 
industry to look at ways to improve it more.
    The second piece of this, and that is that we believe that 
electrolyzers, which are now a big component in generating 
hydrogen, will end up coming down greatly in cost. And so 
marrying wind energy with advances in electrolyzers will play a 
major role, probably, you know, in the early parts of the 
transition to generate hydrogen.
    With respect to the question about--you know, we recommend 
that biomass not be used directly for gasification as a source 
of hydrogen. It doesn't mean we don't think that biological 
processes are important. That is more of a fundamental 
research. But just looking at hydrogen, there is a lot of land 
required. In our report, we identify that, in fact, to use 
biomass to generate the hydrogen would take about half of the 
cropland in the United States. And it is just not a very 
efficient process. While it might be important if there are 
limited funds in the DOE, we believe that effort should be 
focused more on exploratory ways to look at--directly at 
biological means. We do fully support solar energy as a method 
to produce hydrogen, particularly direct--but wind is a very 
important key component, we think, in the transition. And the 
technology is ready. It is close.
    Dr. Eisenberger. My comments are along a similar line, but 
maybe I will try to take a slightly different cut at it. Part 
of the message I have tried to communicate is that in the 
understandable pressure in the short-term to try to come up 
with solutions to mitigate our dependence on foreign sources of 
energy and to deal with issues--environmental issues, we should 
recognize that the--in the long-term, there is no alternative 
but to find a solution that has some renewable energy source, 
some way of converting it into a storable fuel that can be used 
in various ways to meet our energy needs. That is the end game. 
There is no getting away from that. It is a matter of time. And 
some at some level, our concern has been that we need to 
balance that understanding of where you are going in the long-
term, and then each step of the way make sure you don't over-
commit your resources in things that are not going to get you 
there, and in the process of doing that, I mean I agree with 
everybody, like Dr. Ramage said, you can't ensure success. 
There are going to be failures, but we know in America what 
America does to failures: you leave it and then you don't talk 
about it for another 10 or 15 years. And so part of our concern 
is that if we focus too much on the short-term and try to 
commit to things that won't give what we expect from them and 
don't really solve the long-term problems that we have to face, 
we could set back the overall initiative. So being prudent is 
not because we don't believe hydrogen has a place to--a role to 
play, but our prudence is actually concerned that if we move--
get too far ahead of ourselves, we will hurt where we all know 
where we have to go.
    Chairman Boehlert. Thank you very much. The gentleman's 
time has expired.
    Mr. Akin.
    Mr. Akin. Thank you, Mr. Chairman.
    And Mr. Garman, I just wanted to appreciate just publicly 
that you came to our District, and there is a lot of interest 
and enthusiasm as a result of your stopping out and chatting.
    My question is a pretty fundamental one, and I guess it 
might be appropriate for Dr. Eisenberger. I guess the concern I 
have sitting here, the more I have listened the more I feel 
like I am about like a bottle of champagne, it seems like what 
we are doing is we are putting some sort of emphasis on 
hydrogen. It seems to be almost dictating the solution. We 
haven't defined what the problem is. It would be a little bit 
like if we are trying to get across a river, and I would 
commission you guys to work on suspension bridges. You know, 
well, maybe there is another way to build a bridge than a 
suspension bridge. It seems like here that is what precisely 
are we trying to do. And the big thing that I ask myself in 
hydrogen is as people talk about it, it is not like you can 
grab yourself by the bootstraps and fly around the room. There 
is some source of energy. It is either going to be--I mean, you 
can do it on the margin. You can do something with some solar 
and some wind and stuff, but when you look at the volume of 
energy that there is going to be, and that demand is only going 
to go up as nations become more industrial. You know, you have 
got basically nuclear, you have got coal, and you have got oil. 
Those are your big ones. And hydrogen doesn't change that 
equation. So I guess my question is aren't we putting the cart 
way before the horse? And shouldn't we be really addressing 
specifically what are the problems? Is it foreign oil? Okay. 
How do we deal with that? Is it emissions in cars today? Then 
how big a problem is that, and how do we deal with that? It 
seems like we are going completely backwards. What we should be 
doing is just specifically saying this is the problem, this is 
the goal, and now what technologies are available? Am I off the 
track? Or will you just please respond.
    Dr. Eisenberger. I will--you know, it is unusual to hear a 
politician describing an idealistic approach to a problem, 
right, but I agree with you that conceptually that is the way 
one should go about this problem. And that--but on the other 
hand, I would also say, as a pragmatist, that energy is so 
critical to our society that there is not one single answer. 
All right. And we have an interest in moving in hydrogen. You 
know. Forces have come together, as was mentioned in the 
introduction, where there is support from many sectors to 
advance this technology. It has a role to play. It is not the 
only answer, as I tried to say. We need other things as well. 
And we should not--we should be investing more in alternatives, 
and if we would do that, then we could take your approach. If 
we had a real commitment to say, look, we are going to solve, 
as you pointed out, the security aspects of it, the 
environmental aspects of it, then we could sit down and have a 
program that would be a lot more expensive than the program we 
are now committed to. It would require more options and more 
different directions than we are now pursuing.
    Mr. Akin. I--just one other--I promised I would try and get 
one of these. These are the, you know, questions distributed 
ahead of time that, you know, you have to--but this is a good 
question. And this is the first page of the NAS executive 
summary states: ``DOE should keep a balanced portfolio of R&D 
efforts and continue to explore energy supply and demand 
alternatives that do not depend on hydrogen. If battery 
technology improved dramatically, for example, all electric 
vehicles might become the preferred alternative, however, EERE 
funding for battery and electric vehicle technology has been 
drastically reduced over the last few years.'' Based on the NAS 
statement, might you increase funding for battery or non-fuel 
cell vehicle technology research?
    Dr. Eisenberger. That is along same lines as what I was 
saying before. You have got a problem, whoever wants to--and 
Dr. Garman--I mean, Mr. Garman, if you wanted to respond, 
that----
    Mr. Garman. I thank you for that question, because once 
again, it gives me the opportunity to correct. Our hybrid and 
electric propulsion vehicle program budget funding line is not 
down. It is up. We are not investing all of our eggs in the 
hydrogen basket. We are spending more on hybrid technology and 
energy storage technology. That is batteries. We think there is 
great promise in lithium ion batteries, and we think that is a 
very important technology. And the reason that it is such a 
good bet for us to be investing in those technologies is not 
only will those be used in fuel cell vehicles when they come to 
pass, but they could also be used in the interim. And so this 
is a no-brainer. We----
    Mr. Akin. You are disagreeing with the premise.
    Mr. Garman. I am disagreeing with the premise----
    Mr. Akin. You are saying--okay.
    Mr. Garman [continuing]. Of the question. Yes, sir.
    Mr. Akin. All right. Thank you very much. Anybody else? I 
have got another two seconds left.
    [No response.]
    Mr. Akin. No? Thank you. Thank you, Mr. Chairman.
    Chairman Boehlert. Thank you very much.
    Ms. Biggert.
    Ms. Biggert. Thank you, Mr. Chairman.
    Mr. Garman, a central theme of both reports is that there 
are hard technical problems that require basic research to 
solve. And I think both reports are clear in recommending that 
funding be shifted away from product development in large-scale 
demonstrations toward exploratory, fundamental research. And I 
was pleased to see that the Office of Science was included in 
the Initiative with $29 million in new and reallocated funding. 
Do you agree with the reports that more basic and fundamental 
research is needed to meet the goals of the Initiative? And 
while the funds of--for science is a good first step, is the 
Department planning any future increases in basic research?
    Mr. Garman. I think the key, and I will leave it to the--to 
Dr. Ramage to correct me if I am wrong, but first of all, on 
the issue of demonstrations, we are not proposing to do large-
scale demonstrations at this time. We don't think it is ready. 
We have not proposed that. We have proposed to do very small-
scale, learning demonstrations where we have vehicles, not in 
the millions, not in the hundreds of thousands, but in the 
tens, tens of vehicles to produce data and information that 
feeds back into the R&D process.
    Secondly, yes, we do agree with the proposition that there 
needs to be more basic and exploratory research. And as you 
noted in our fiscal year 2005 budget submission, we have 
involved the Office of Science in this work, and we are also--
you will be seeing us doing more exploratory research in our 
research that we are doing as well above and beyond that $29 
million. So we concur with the recommendations in the report.
    Ms. Biggert. Thank you.
    Then, Mr. Garman, again, we know that it is possible to 
produce a car that gets 50 miles or more to the gallon. And in 
fact, there are a few on the market today, such as the Toyota 
Prius. Rumor has it that you drive one?
    Mr. Garman. I bought two, in fact.
    Ms. Biggert. Okay. Well, thinking of one in the APS report 
shows in energy information Administration projection of the 
U.S. demand for imported oil increasing steadily while U.S. 
production is flat, producing a need for 16 million barrels per 
day of imports. And the same graph shows that a fuel economy of 
39 miles per gallon, only about 3/4 as efficient as the Prius, 
would save about five million barrels per day. But the fiscal 
year budget request for the hydrogen program has a goal of only 
1/10 of one million barrels per day in 2020. And why are we 
cutting programs? I think you just said we were not cutting 
programs, if that is true.
    Mr. Garman. We are not. And in fact, we are enthusiastic 
supporters of hybrid vehicles. The President has requested the 
passage of a tax credit for purchases of hybrid vehicles, which 
is in the energy bill, awaiting passage. He proposed that in 
May of 2001 with the issuance of his National Energy Plan. So 
we believe very strongly that hybrids are a wonderful bridge 
technology and even more so because some of those same hybrid 
technologies, the power electronics, the energy storage, the 
electric drive, will also be incorporated in the fuel cell 
vehicles of the future. So we are--on this graph, which you 
point out in the APS report, I think it is important to point 
out that that graph came from our office. And I think that 
even--the thing that is interesting to me is even if you have 
an immediate 60 percent increase in corporate average fuel 
economy standards and a much smaller increase was resoundingly 
defeated in the other body by a wide bipartisan margin, I have 
to point out, that curve still starts going up after a certain 
point in time. Yes, it does save oil, but it does not get us on 
that pathway of eventually delinking light-duty transportation 
and oil use. And Representative Akin really asked the million-
dollar question: What are we doing this for? And the answer is 
quite simple: we are doing this to eliminate and delink light-
duty transportation from petroleum use. The great thing about 
hydrogen is it is not an energy source; it is an energy 
carrier. And we can produce it from coal and nuclear and 
renewable energy and a lot of other things we have here. 
Because as this committee has pointed out, we don't have a lot 
of oil. We have two percent of the world's proven reserves, and 
the Persian Gulf nations have 64 percent. So we are doing this 
to get off of imported petroleum. We are also doing this to 
eliminate emissions of all kinds at the tailpipe and delink 
light-duty transportation from oil use. It is that simple.
    Chairman Boehlert. Thank you very much. The gentlelady's 
time has expired.
    Ms. Biggert. Mr. Chairman, I have one more question. Could 
I submit it and ask that I get a response?
    Chairman Boehlert. By all means, all Members will have the 
opportunity to submit questions in writing to our witnesses, 
and we would appreciate timely responses.
    The Chair is now pleased to recognize the distinguished 
Chairman of the Subcommittee on Space and Aeronautics, who is 
fresh from an overwhelming victory at the polls in California 
just yesterday, Mr. Rohrabacher.
    Mr. Rohrabacher. Yes, that is why I am the distinguished 
instead of the extinguished chairman.
    I would be happy to yield to Ms. Biggert for--to let her 
ask her question. Go right ahead. You only have two minutes.
    Ms. Biggert. Thank you very much, Mr. Chairman.
    This is for Dr. Ramage. One of the recommendations from 
your report is a greater emphasis on fundamental research on 
photosynthetic microbial systems. And my understanding is that 
the Office of Science Environmental Genome program is getting 
promising results as it examines hydrogen-producing microbes. 
Would you--could you expand a little bit on your recommendation 
and tell us more about the potential of the environmental 
genomics?
    Dr. Ramage. I am not sure. Let me--could I make a comment 
about why we recommended focusing directly on hydrogen 
production? If you think about most renewables make 
electricity, and when you make electricity with a premium fuel 
and you have to convert it to hydrogen, which is a commodity 
fuel, you are losing energy, and you spend money. And that led 
us, by looking at costs, the recommendation to look for ways 
directly in order to make hydrogen from biological and solar 
methods. There has obviously been a lot of progress made in 
genomics and metabolic type of activities in general and the 
ability to design organisms that can actually produce hydrogen 
has been increasing a lot. There is still a long way to go, but 
our Committee strongly felt that that is where a lot of the 
exploratory money should go and go away from, you know, 
traditional biomass, because there has been a lot of progress 
made.
    Ms. Biggert. Thank you. Thank you.
    Mr. Rohrabacher. All right. Well, let us see here. Just one 
note before I ask my question. I have been a Member of this 
committee long enough to remember the Partnership for a New 
Generation of Vehicles program, the PNGV. Do we all remember 
that? We spent about $1 billion in that, and then we just sort 
of walked away. And there was $1 billion that evaporated. I 
just hope that this isn't one of those types of things where 
there are a lot of press conferences and a lot of verbiage and 
then just nothing to show for the money that has been spent.
    And speaking of spending the money, I would--from the 
testimony, I understand that we don't even have a tank designed 
now for the automobile that could actually have hydrogen and 
use it as a hydrogen storage supply system that would then 
power the car. How much money is going into finding and 
designing one of those in the budget that you are asking for 
right now?
    Mr. Garman. We actually do have a tank, and the hydrogen 
fuel cell vehicles that are on the road in California and other 
place do carry hydrogen on board the vehicle, unfortunately, 
not enough, about the range of 150 to 175 miles.
    Mr. Rohrabacher. Right.
    Mr. Garman. And we need a 300-mile range or better.
    Mr. Rohrabacher. Okay. So how much are we spending on 
trying to develop that tank out of the money that is being--you 
are asking for this year?
    Mr. Garman. Our overall storage initiative is earmarked at 
about $150 million over five years.
    Mr. Rohrabacher. $150 million over five years?
    Mr. Garman. Yes, sir, around $30 million a year.
    Mr. Rohrabacher. Boy, that is a lot of money to design a 
storage tank.
    Mr. Garman. Well----
    Mr. Rohrabacher. $150 million----
    Mr. Garman [continuing]. If I can explain why, it is--what 
we are doing is looking at completely new materials----
    Mr. Rohrabacher. All right.
    Mr. Garman [continuing]. Including chemical hydrides, metal 
hydrides, allenates, carbon nanotubes, other more esoteric 
storage materials that can be used to store that hydrogen at 
near ambient temperatures and pressures. Today, the kind of 
hydrogen tank on board the vehicle is a 5,000 or 10,000 p.s.i. 
tank of compressed hydrogen. We think--and of course, 
cylindrical tanks are very bulky; they take up a lot of space 
on the vehicle. They cost a lot of money. So we are trying to 
come up with new designs in partnership with the private sector 
that can create a tank that will meet those performance 
standards----
    Mr. Rohrabacher. So there is no material that exists today 
that could be used to construct a hydrogen fuel tank that can 
meet the consumer benchmark?
    Mr. Garman. That is correct, that meets----
    Mr. Rohrabacher. As of right now?
    Mr. Garman [continuing]. Our cost targets. That is correct.
    Mr. Rohrabacher. So you are having to go straight to, you 
know, really fundamental science on this, and you are going to 
spend $150 million on that, and this is a--could I say it is a 
shot in the dark, because you don't really know if you are 
going to find it or not?
    Mr. Garman. I would say that it is--this is the one area, 
the primary area where we think we do need a technological 
breakthrough in order to meet that consumer demand.
    Mr. Rohrabacher. Okay. There is no technological 
breakthrough needed to make this fiscally responsible in terms 
of what type of fuel you will be using in order to create the 
hydrogen for fuel in the first place? That is not a--you 
don't--that is already decided in a----
    Mr. Garman. No, sir. I think the--again, the beauty of 
hydrogen is that you have a variety of different primary energy 
sources that you can use to make the hydrogen fuel. I think the 
early years, as it has been pointed out, that is most likely to 
be natural gas distributed at the station. And we believe we 
can meet that target with, you know, $1.50 per gallon of gas 
equivalent hydrogen, or $1.50 per kilogram by 2010.
    Mr. Rohrabacher. That is a pretty good----
    Chairman Boehlert. The gentleman's time has expired.
    That is a pretty good goal. Come up to the State of New 
York where the gasoline price is considerably higher.
    The Chairman now recognizes Dr. Burgess.
    Dr. Burgess. Thank you, Mr. Chairman.
    And actually, I am very relieved to hear that there is not 
being any diversion of funds from the hybrid system, because, 
like you, Mr. Garman, I believe very much in that technology. 
And in fact, I went out in January to buy a Prius, and in my 
part of the world, you can't buy one, and I guess that is 
because you bought two, so I wanted to make a note of that.
    The--and you have answered this question already, but I 
will go ahead and ask it, because it hasn't specifically been 
answered, but the idea of getting our hydrogen from natural 
gas, our--and I do recognize that there are other sources, and 
I am very glad to hear you talk about solar and wind sources 
for generating hydrogen in the future, but in the short-term, 
are we trading our dependence on foreign oil for our dependence 
on foreign natural gas?
    Mr. Garman. We--you have given me an opportunity--a very 
interesting point that I think has been lost. And we are, 
today, producing nine million metric tons of hydrogen each and 
every year from natural gas. We make a lot of hydrogen in this 
country, mainly for use at refineries and other locations for 
desulfurization of gasoline and diesel products. We would--if 
we wanted to fund our--or fuel our entire fleet using natural 
gas, we would need around 53 million metric tons, which is, you 
know, not a huge factor above that that we are already 
producing today. Now I--but I agree with the fundamental 
premise. We want to be careful. We do not want to trade a 
dependence on oil for a dependence on natural gas that has to 
be imported, which is why I think the point of the Academy is 
right on when they say plan for the transition period when you 
expect to be using natural gas, but do the fundamental work 
that provides the breakthrough in the other sources of hydrogen 
so that they can come on line soon after that point.
    Dr. Burgess. Mr. Chairman--I thank you very much.
    Mr. Chairman, I would just add that the work that this 
committee did on the nanotechnology bill last year, perhaps, 
can give rise to the technological breakthrough that they were 
asking for with the carbon nanotubes and the reinforced carbon 
concept that now is the leading edge of the wing of the Space 
Shuttle, which may someday come to the point where you could 
use it as your tank.
    Until we get to the point where we are making hydrogen from 
some other source, I look forward to seeing some hydrogen wells 
drilled in West Denton County. I would like that.
    Chairman Boehlert. Dr. Burgess, I just--thanks for bringing 
the National Nanotechnology Initiative up.
    And I would like to thank our witnesses. Let the record 
show that as Dr. Burgess was making his commentary, all of the 
witnesses nodded in the affirmative. So they are in agreement 
with him and talking about the good work of this committee.
    And I thank you very much. Do you have anything more?
    [No response.]
    Chairman Boehlert. Just one final question as we wrap this 
up. I think we have reached a consensus. And how do you--how 
will you evaluate, Dr. Ramage and Dr. Eisenberger, if they at--
Secretary Garman and his people have taken your recommendations 
to heart? Dr. Ramage.
    Dr. Ramage. Well, I think that I am encouraged by what Dave 
has said. And I very, very--I think it was an interactive 
process, and I am encouraged by what he said about what the 
issues are, and I am also encouraged by what he said about the 
balance of the program and also the fact that funding hasn't 
been decreased in other areas.
    I also know that they are moving toward developing a 
systems approach to managing their overall program, which is a 
very important part of our recommendation. So we have been very 
encouraged, and so I am pleased with what I have heard today.
    Chairman Boehlert. Dr. Eisenberger.
    Dr. Eisenberger. Again, I will answer in two ways. I think 
that within the constraints that Dr. Garman--I mean that Mr. 
Garman is working under, I think he is responding. But I think 
the constraints should be looked at. I think that some of the 
questions that were asked in this hearing require that we take 
a look at the project in a larger context of our needs and make 
sure that the program is not dictated by externalities that 
really have very little to do with any specific objective. And 
there is some indication that those distortions are part of the 
problem that we are trying to deal with.
    Chairman Boehlert. Thank you very much. And you have both 
confirmed by what you said in response to a number of questions 
something that the Chair has long felt, and I know Members of 
the Committee, who are familiar with Secretary Garman, feel 
that he has an extensive outreach program. He talks to people 
like you, but more importantly, he occasionally listens to 
people like you. And once in a while, he even listens to those 
of us in the Congress. So I want to commend you, Mr. Secretary, 
for the outstanding work you do. And I want to thank you for 
being resources for this committee, Dr. Eisenberger and Dr. 
Ramage. We go forward with a program that is important for 
America for a whole lot of the right reasons. And I feel it is 
in good hands. And I--but the good hands should know that we 
are watching.
    Thank you very much. This hearing is adjourned.
    [Whereupon, at 4:10 p.m., the Committee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions

Responses by David Garman, Assistant Secretary, Energy Efficiency and 
        Renewable Energy, Department of Energy

Q1.  Has funding for battery and electric vehicle technology declined 
over the last four years? Please provide a table for historical funding 
level (see example below) for hybrid vehicles, for electric vehicles 
powered completely by batteries, and for fuel cell vehicles, indicating 
any overlaps of funding between vehicle types, from fiscal year 1999 to 
the current request. Please exclude work that applies to all vehicles 
such as lightweight structural materials. Please provide a total for 
each vehicle type as well as documenting the amount from each budget 
line.




A1. Request levels for battery research and for electric-drive vehicle 
technology have risen over the past several years, but the research 
emphasis has shifted over the period, resulting in relatively more 
funding for hybrid and fuel cell vehicles and less for purely-electric 
vehicles. The following table provides summary budget data from FY 1999 
through FY 2005 for work on Hybrid, Battery Electric, and Fuel Cell 
Vehicles.




Q2.  Since both hydrogen fuel cells and batteries require scientific 
breakthroughs, what is the technical basis for the Department's strong 
preference for investment in fuel cells, versus high energy density 
batteries, for electric vehicle propulsion?

A2. Electric vehicle (EV) propulsion battery R&D has been curtailed due 
to two severely limiting attributes for which no clear research 
solution has emerged: energy density and recharging time. The low 
energy density of battery technology typically limits EVs to a range of 
approximately 100 miles, versus the range of a conventional vehicle of 
350-400 miles. The recharge time of an EV battery is up to six hours, 
versus the refueling time of a conventional vehicle of less than five 
minutes. The combination of these two negative attributes led to 
rejection of electric vehicles by the marketplace and by major 
automotive manufacturers.
    The Department continues a small effort in EV batteries to address 
these barriers, but has shifted the majority of vehicle battery R&D to 
focus on the high power application required by hybrid electric 
vehicles, including fuel cell vehicles. Hybrid vehicles do not suffer 
from range limitations and recharging is conducted continually during 
vehicle operation. The major focus areas of this activity are use 
tolerance, battery life, and cost reduction.
    Fuel cell technology is not inherently limited by range and 
refueling time in the manner batteries are. Current refueling takes 
less than five minutes (high pressure tank storage). Like a battery, 
fuel cells require two reactants, typically hydrogen and oxygen. But 
since fuel cells obtain oxygen from the air (essentially an infinite 
storage tank) the refueling and capacity of oxygen is not an issue. 
Therefore, the limiting factor in fuel cell vehicle range is hydrogen 
storage. Although our current ability to store hydrogen limits vehicle 
range to approximately 200 miles, this is mainly volume limited. On a 
weight basis, the entire fuel cell system, including hydrogen storage, 
has a specific energy (Wh/kg) approximately double that of today's 
advanced batteries.
    In the spring of 2003, DOE convened a ``think tank'' meeting of 
distinguished scientists, which determined that significant promise 
exists in improving on the current storage capability of hydrogen: 
``The group believes that while the problem is challenging. . .there 
are materials and structures that offer promise for hydrogen storage at 
higher capacities.'' While significant improvements are required to 
attain a vehicle range commensurate with conventional vehicles, 
projects are now in place to address this issue. We recently announced 
approximately $150 million in hydrogen storage awards, including the 
initiation of three Centers of Excellence.

Q3.  Please estimate the BTU's saved per federal dollar spent for 
Weatherization and for the Industries of the Future program.

A3. The Department understands the Committee's desire for clear cost-
benefit calculations across the EERE portfolio in order to make wise 
funding recommendations. It is problematic, however, to compare EERE 
programs using a straight Btu-saved-per-dollar-invested metric. The 
EERE program portfolio is designed to meet a variety of National needs 
and provide multiple benefits not fully captured on a Btu-saved-per-
dollar-invested basis. These include reducing energy bills of low-
income Americans, the primary focus of the Weatherization program.
    Comparisons are also complicated by differences in the composition 
of EERE costs across programs and in the time horizons of the expected 
benefits. For instance, Weatherization dollars pay for the cost of the 
technologies purchased, and the benefits begin to accrue immediately 
after installation. The Industrial Technologies Program (ITP) dollars 
pay mostly for research with potential benefits realized in the future.
    The cost and benefit estimates discussed below are based on 
detailed, individual program evaluations available to date. As part of 
its recent restructuring, EERE continues to improve the consistency of 
cost/benefit measures across its program portfolio; at this point, 
however, EERE cannot fully compare costs or benefits of the efficiency 
improvements enabled by these two programs. Specifically, EERE is 
developing ways of estimating private sector costs, as well as more 
thoroughly ``backing out'' energy savings that would have occurred 
without federal assistance.
    The Weatherization Assistance Program (WAP) funds energy efficiency 
improvements to low-income homes for Americans who lack the means of 
financing such capital investments. Energy price spikes can force these 
Americans to make painful tradeoffs between adequate heating, medical 
care, nutrition, and housing. Based on our most recent comprehensive 
analysis (conducted by Oak Ridge National Laboratory and published in 
2002), Americans' energy bills are reduced by $1.30 for every dollar 
spent on weatherization; these savings are even greater when energy 
prices rise. This program also provides associated benefits that are 
more difficult to quantify, such as providing local building expertise, 
decreasing homelessness, and reducing the risk of home fires.
    WAP has requested $291.2 million in the FY 2005 budget request. 
EERE has estimated that these dollars, in combination with leveraged 
funds provided by State and local utility partners will allow the 
program to weatherize over 200,000 homes (118,900 homes with DOE funds, 
and approximately 100,000 additional homes with leveraged funds). While 
federal dollars are projected to result in approximately 5.0 trillion 
Btu of source energy savings in 2005, federally-leveraged additional 
funding is projected to save a further 3.3 trillion Btu in source 
energy, for an annual total energy savings of 8.3 trillion Btu. 
Including leveraged energy savings, each federal WAP program dollar 
yields roughly 430,000 Btus in energy savings over the assumed 15-year 
life of these improvements.
    The Industrial Technologies Program (ITP) develops, manages, and 
implements a balanced portfolio that addresses industry requirements 
throughout the technology development cycle. As opposed to the WAP, 
ITP's primary strategy is to invest in high-risk, high-return R&D. 
Investments focus on technologies and practices that will provide clear 
public benefit but have market barriers preventing adequate private-
sector investment.
    From 1977 to 2002, ITP invested approximately $2.65 billion 
(constant 2002 dollars) supporting research, development, and 
demonstration (RD&D) projects that have produced over 160 technologies. 
EERE estimates that the cumulative benefits of the private sector 
investments made in these technologies are estimated at roughly 3,700 
trillion Btu, or roughly 1,400,000 Btu saved per federal dollar 
invested. Significant economic and environmental benefits are also 
achieved.

Q4.  In your testimony you stated that ``[W]e fully concur with 35 of 
those 43 recommendations. . .'' from the NAS report. Which were the 35 
recommendations DOE concurred with and what is DOE specifically doing 
to address each of them? What objections does DOE have to the other 
eight? Has DOE decided to reject them entirely?

A4. DOE has not explicitly rejected any of the NAS recommendations. 
Please refer to the attachment to this document that details the DOE 
response to each NAS recommendation, including the eight outstanding 
recommendations. The following two recommendations are examples of 
recommendations where DOE has not fully concurred, as further 
consideration is required:

          Recommendation 3-2 to discontinue PEM applied R&D for 
        stationary systems: DOE concurs with the concept of focusing 
        R&D to address fundamental barriers that face all fuel cell 
        applications. However, this recommendation would have 
        significant negative impact if not transitioned appropriately 
        (potentially eliminating important R&D of value to both 
        stationary and transportation applications), would send a 
        strong negative signal to the fuel cell community and 
        investors, would result in the loss of substantial industry 
        cost-share, and would not allow DOE to fulfill its current 
        obligations under several cooperative agreements. DOE feels 
        significant discussions with its stakeholders and development 
        of a transition plan is required before this recommendation can 
        be implemented.

          Recommendation 3-lb to end on-board fuel processing: 
        DOE is currently conducting a scheduled fuel processing ``go/
        no-go'' decision process, which includes input from an expert 
        panel on the feasibility of on-board reforming. This process to 
        examine on-board fuel processing was in place well before 
        release of the NAS report, and DOE feels that a final decision 
        on the NAS recommendation should not replace the formal ``go/
        no-go'' process. A public announcement on this ``go/no-go'' 
        process is scheduled to be released in July 2004.

        
        

Q5.  In your testimony, your response to the American Physical 
Society's (APS's) recommendation against funding large-scale 
demonstrations was that your demonstrations were ``learning 
demonstrations.'' What are the specific characteristics that 
distinguish a learning demonstration? How does it compare in terms of 
expense to a commercial-scale demonstration? Does this classification-
learning demonstration-only apply to the EERE hydrogen demonstrations? 
How does DOE respond to the APS recommendation against funding large 
demonstration projects in the context of other programs?

A5. The Department's vehicle and infrastructure learning demonstrations 
are an extension of our research and critical to meeting the goals of 
the President's Hydrogen Fuel Initiative, including the program's 
technical targets that support the 2015 industry commercialization 
decision. As pointed out during the discussion at the Science hearing 
by Michael Ramage, Chair of the National Research Council's Hydrogen 
Committee, ``a continuum of basic science, applied research, 
development, and learning demonstrations is necessary for the 
successful transition to a hydrogen economy.''
    The key characteristics of the hydrogen learning demonstrations 
are:

          Generation of important data that will be used to 
        guide and refocus future research and development efforts

          Identification of operating issues not previously 
        considered, e.g., technology performance in different climates

          Examination of system integration issues

          Evaluation of performance and durability under real-
        world operating conditions

          Teaming of auto companies and energy companies, which 
        is critical to the success of the initiative

          Leveraging by industry of 50 percent of the funding

    Learning demonstrations are not unique to the EERE hydrogen 
program. Any demonstration that has the characteristics described above 
would be classified as a learning demonstration. However, the approach 
of bringing together the automotive and energy industries, which are 
crucial to the development of a hydrogen infrastructure, is unique. 
This approach will allow the Department and the Congress to track the 
progress made and the future potential of this important technology. If 
the Department does not follow through with the hydrogen learning 
demonstrations, these essential partnerships will probably dissolve and 
we will lose valuable financial and technical leverage from industry.
    The characteristics of commercial-scale demonstrations are quite 
different. They involve mature technologies that are ready for market. 
Commercial demonstrations put the technologies in the hands of the 
public or fleet operators to encourage or incentivize consumer 
acceptance and to stimulate market development and expansion. 
Commercial demonstrations can also be used to subsidize production so 
that the necessary volumes can be achieved to lower cost. Without a 
specific program in mind and understanding of relevant policies 
approved by Congress, the cost of commercial demonstrations cannot be 
estimated.
    We believe that the American Physical Society's overemphasis on 
basic research is too limiting. Conducting stand-alone basic research 
is insufficient to achieve our 2015 goals; applied research and 
technology demonstrations are critical to meeting the technology 
milestones leading to the 2015 industry commercialization decision and 
to begin the transition to a hydrogen economy. Basic research is 
critical to understanding the underlying science that will lead to 
hydrogen and fuel cell technology improvements in the near-term and 
potentially ``breakthroughs'' in the long-term.
    Almost 85 percent of the hydrogen budget is for research and 
development efforts. The Department's mix of hydrogen funding according 
to OMB circular A-11 for the FY 2005 budget request is as follows:

         Basic Research: 12.9 percent

         Applied Research: 42.5 percent

         Development: 29.2 percent

          Demonstration: 13.4 percent

          Deployment: 2.0 percent (Education)

Q6.  What projects related to hydrogen might have been funded if 
additional funds were available?

A6. Additional funding would be used to address two major challenges 
facing the hydrogen economy--hydrogen storage capacity and hydrogen 
production cost. The most critical challenge facing the hydrogen 
economy is the development of a viable on-board hydrogen storage 
technology. No technology available today meets consumer requirements 
in terms of vehicle driving range, weight, volume, and cost. To address 
this challenge, an elite group of university scientists recommended the 
establishment of Hydrogen Storage Centers of Excellence to be led by 
DOE National Laboratories and to include university and industry 
partners.
    Funding for the Centers was requested in the FY 2004 budget. 
However, due to Congressionally-directed projects in the FY 2004 
hydrogen appropriation, no funds were available to start the 
competitively-selected Centers of Excellence and other university 
projects. In addition, funds requested in FY 2004 to start critical 
renewable hydrogen production and delivery R&D projects were not 
available due to the earmarks. The Department plans to start these 
storage and production projects with FY 2005 funds, subject to 
Congressional appropriation.

Q7.  In the Vehicle Technologies budget, the largest decrease is due to 
a completion of the light truck engine program. Given the increase in 
the size of the U.S. light truck fleet, this type of work would seem 
extremely relevant to reducing our foreign oil use. What programs or 
projects were selected as having greater benefits? How has technology 
improved over the course of the program? Are manufacturers 
incorporating the improved technology into their vehicles?

A7. The Light Truck Engine (LTE) program was initiated in 1997 to 
address the increasing fuel consumption in this growing vehicle 
segment. The primary focus was the development of advanced clean diesel 
engines that could increase the fuel economy of light trucks and SUVs 
by 50 percent over a comparable gasoline powered vehicle. Two state-of-
the-art diesel engines have been developed that have demonstrated the 
fuel economy goal and additional technologies have been developed to 
reduce emissions to Tier 2 levels in short-term testing. These 
significant advances have paved the way for introduction of advanced 
clean diesel engines into the light truck market.
    There are no other projects that will have a greater near-term 
impact on reducing oil consumption than the successful implementation 
of this technology in the light truck market. However, it is felt that 
federal R&D funding is no longer needed for these engines as final 
product development will be carried out by industry. One major LTE 
industry partner is reported to be negotiating the potential production 
and use of their advanced clean diesel engines with a major vehicle 
manufacturer (see Ward's Auto World, February 1, 2004). The focus of 
our efforts is shifting to longer-term higher risk research on advanced 
combustion regimes that have the potential for even higher efficiencies 
and lower emissions.
                              Appendix 2:

                              ----------                              


                   Additional Material for the Record




                 Prepared Statement of Dr. Joseph Romm

Author, The Hype about Hydrogen (Island Press, March 2004); Former 
        Acting Assistant Secretary of Energy

    Mr. Chairman and esteemed Members of the Science Committee, I thank 
you for the opportunity to submit this testimony. I wish to express my 
appreciation for the strong support this committee has shown for clean 
energy technology R&D over the course of several decades.
    Hydrogen and fuel cell cars are being hyped today as few 
technologies have ever been. In his January 2003 State of the Union 
address, President Bush announced a $1.2 billion research initiative, 
``so that the first car driven by a child born today could be powered 
by hydrogen, and pollution-free.'' The April 2003 issue of Wired 
magazine proclaimed, ``How Hydrogen can save America.'' In August 2003, 
General Motors said that the promise of hydrogen cars justified 
delaying fuel-efficiency regulations.
    Yet, for all the hype, a number of recent studies raise serious 
doubts about the prospects for hydrogen cars. In February 2004, a 
prestigious National Academy of Sciences panel concluded, ``In the best 
case scenario, the transition to a hydrogen economy would take many 
decades, and any reductions in oil imports and carbon dioxide emissions 
are likely to be minor during the next 25 years.'' And that's the best 
case. Realistically, as I discuss in my new book ``The Hype about 
Hydrogen: Fact and Fiction in the Race to Save the Climate,'' a major 
effort to introduce hydrogen cars before 2030 would undermine efforts 
to reduce emissions of heat-trapping greenhouse gases like carbon 
dioxide--the main culprit in last century's planet-wide warming of one 
degree Fahrenheit.
    As someone who helped oversee the Department of Energy's program 
for clean energy, including hydrogen, for much of the 1990s--during 
which time we increased hydrogen funding by a factor of ten with the 
support of the Committee--I believe that continued research into 
hydrogen remains important because of its potential to provide a 
pollution-free substitute for oil in the second half of this century. 
But if we fail to limit greenhouse gas emissions over the next decade--
and especially if we fail to do so because we have bought into the hype 
about hydrogen's near-term prospects--we will be making an unforgivable 
national blunder that may lock in global warming for the U.S. of one 
degree Fahrenheit per decade by mid-century.

HYDROGEN AND FUEL CELLS

    Hydrogen is not a readily accessible energy source like coal or 
wind. It is bound up tightly in molecules like water and natural gas, 
so it is expensive and energy-intensive to extract and purify. A 
hydrogen economy--which describes a time when the economy's primary 
energy carrier is hydrogen made from sources of energy that have no net 
emissions of greenhouse gases--rests on two pillars: a pollution-free 
source for the hydrogen itself and a fuel cell for efficiently 
converting it into useful energy without generating pollution.
    Fuel cells are small, modular, electrochemical devices, similar to 
batteries, but which can be continuously fueled. For most purposes, you 
can think of a fuel cell as a ``black box'' that takes in hydrogen and 
oxygen and puts out only water plus electricity and heat.
    The most promising fuel cell for transportation is the Proton 
Exchange Membrane (PEM) fuel cell, first developed in the early 1960s 
by General Electric for the Gemini space program. The price goal for 
transportation fuel cells is to come close to that of an internal 
combustion engine, roughly $30 per kilowatt. Current PEM costs are 
about 100 times greater. It has taken wind power and solar power each 
about twenty years to see a tenfold decline in prices, after major 
government and private-sector investments in R&D, and they still each 
comprise well under one percent of U.S. electricity generation. A major 
technology breakthrough is needed in transportation fuel cells before 
they will be practical.

THE STORAGE SHOW-STOPPER?

    Running a fuel cell car on pure hydrogen, the option now being 
pursued most automakers and fuel cell companies, means the car must be 
able to safely, compactly, and cost-effectively store hydrogen onboard. 
This is a major technical challenge. At room temperature and pressure, 
hydrogen takes up some 3,000 times more space than gasoline containing 
an equivalent amount of energy. The Department of Energy's 2003 Fuel 
Cell Report to Congress notes:

         Hydrogen storage systems need to enable a vehicle to travel 
        300 to 400 miles and fit in an envelope that does not 
        compromise either passenger space or storage space. Current 
        energy storage technologies are insufficient to gain market 
        acceptance because they do not meet these criteria.

    The most mature storage options are liquefied hydrogen and 
compressed hydrogen gas.

Liquid hydrogen is widely used today for storing and transporting 
hydrogen. Liquids enjoy considerable advantages over gases from a 
storage and fueling perspective: They have high energy density, are 
easier to transport, and are typically easier to handle. Hydrogen, 
however, is not typical. It becomes a liquid only at ^423+F, 
just a few degrees above absolute zero. It can be stored only in a 
super-insulated cryogenic tank.
    Liquid hydrogen is exceedingly unlikely to be a major part of a 
hydrogen economy because of the cost and logistical problems in 
handling liquid hydrogen and because liquefaction is so energy 
intensive. Some 40 percent of the energy of the hydrogen is required to 
liquefy it for storage. Liquefying one kg of hydrogen using electricity 
from the U.S. grid would by itself release some 18 to 21 pounds of 
carbon dioxide into the atmosphere, roughly equal to the carbon dioxide 
emitted by burning one gallon of gasoline.

Compressed hydrogen storage is used by nearly all prototype hydrogen 
vehicles today. Hydrogen is compressed up to pressures of 5,000 pounds 
per square inch (psi) or even 10,000 psi in a multistage process that 
requires energy input equal to 10 percent to 15 percent of the 
hydrogen's usable energy content. For comparison, atmospheric pressure 
is about 15 psi.
    Working at such high pressures creates overall system complexity 
and requires materials and components that are sophisticated and 
costly. And even a 10,000-psi tank would take up seven to eight times 
the volume of an equivalent-energy gasoline tank or perhaps four times 
the volume for a comparable range (since the fuel cell vehicle will be 
more fuel efficient than current cars).
    The National Academy study concluded that both liquid and 
compressed storage have ``little promise of long-term practicality for 
light-duty vehicles'' and recommended that DOE halt research in both 
areas. Practical hydrogen storage requires a major technology 
breakthrough, most likely in solid-state hydrogen storage.

AN UNUSUALLY DANGEROUS FUEL

    Hydrogen has some safety advantages over liquid fuels like 
gasoline. When a gasoline tank leaks or bursts, the gasoline can pool, 
creating a risk that any spark would start a fire, or it can splatter, 
posing a great risk of spreading an existing fire. Hydrogen, however, 
will escape quickly into the atmosphere as a very diffuse gas. Also, 
hydrogen gas is non-toxic.
    Yet, hydrogen has its own major safety issues. It is highly 
flammable with an ignition energy 20 times smaller than that of natural 
gas or gasoline. It can be ignited by cell phones and electrical storms 
located miles away. Hence, leaks pose a significant fire hazard. At the 
same time, it is one of the most leak-prone of gases. Odorants like 
sulfur are impractical, in part because they poison fuel cells. 
Hydrogen burns nearly invisibly, and people have unwittingly stepped 
into hydrogen flames. Hydrogen can cause many metals, including the 
carbon steel widely used in gas pipelines, to become brittle. In 
addition, any high-pressure storage tank presents a risk of rupture. 
For these reasons, hydrogen is subject to strict and cumbersome codes 
and standards, especially when used in an enclosed space where a leak 
might create a growing gas bubble.
    Some 22 percent or more of hydrogen accidents are caused by 
undetected hydrogen leaks. This ``despite the special training, 
standard operating procedures, protective clothing, electronic flame 
gas detectors provided to the limited number of hydrogen workers,'' as 
Russell Moy, former group leader for energy storage programs at Ford 
Motors has wrote in the November 2003 Energy Law Journal. Moy concludes 
``with this track record, it is difficult to imagine how hydrogen risks 
can be managed acceptably by the general public when wide-scale 
deployment of the safety precautions would be costly and public 
compliance impossible to ensure.'' Thus, major innovations in safety 
will be required before a hydrogen economy is practical.

AN EXPENSIVE FUEL

    A key problem with the hydrogen economy is that pollution-free 
sources of hydrogen are unlikely to be practical and affordable for 
decades. Indeed, even the pollution-generating means of making hydrogen 
are currently too expensive and too inefficient to substitute for oil.

Natural gas (methane or CH4) is the source of 95 percent of 
U.S. hydrogen. The overall energy efficiency of the steam methane 
reforming process (the ratio of the energy in the hydrogen output to 
the energy in the natural gas fuel input) is about 70 percent.
    According to a comprehensive 2002 analysis for the National 
Renewable Energy Laboratory by Dale Simbeck and Elaine Chang, the cost 
of producing and delivering hydrogen from natural gas, or producing 
hydrogen on-site at a local filling station, is $4 to $5 per kilogram 
(without adding in any fuel taxes), comparable to a price of gasoline 
of $4-$5 a gallon (since a kilogram of hydrogen contains about the same 
usable energy as a gallon of gasoline). This is over three times the 
current untaxed price of gasoline. Considerable R&D is being focused on 
efforts to reduce the cost of producing hydrogen from natural gas, but 
fueling a significant fraction of U.S. cars with hydrogen made from 
natural gas makes little sense, either economically or environmentally, 
as discussed below.

Water can be electrolyzed into hydrogen and oxygen. This process is 
extremely energy-intensive. Typical commercial electrolysis units 
require about 50 kiloWatt-hours (kWh) per kilogram, an energy 
efficiency of 70 percent. The cost today of producing and delivering 
hydrogen from a central electrolysis plant is estimated at $7 to $9 per 
kilogram. The cost of on-site production at a local filling station is 
estimated at $12 per kg. Replacing one half of U.S. ground 
transportation fuels in 2025 (mostly gasoline) with hydrogen from 
electrolysis would require about as much electricity as is sold in the 
U.S. today.
    From the perspective of global warming, electrolysis makes little 
sense for the foreseeable future. Burning a gallon of gasoline releases 
about 20 pounds of carbon dioxide. Producing one kg of hydrogen by 
electrolysis would generate, on average, 70 pounds of carbon dioxide. 
Hydrogen could be generated from renewable electricity, but that would 
be even more expensive and, as we will see, renewable electricity has 
better uses for the next few decades.

Other greenhouse-gas-free means of producing hydrogen are being 
pursued. The Department of Energy's FutureGen project is aimed at 
designing, building, and constructing a 270-megawatt prototype coal 
plant that would co-generate electricity and hydrogen while removing 90 
percent of the carbon dioxide. The goal is to validate the viability of 
the system by 2020. If a permanent storage location can be found for 
the carbon dioxide, such as an underground reservoir, this would mean 
that coal could be a virtually carbon-free source of hydrogen. The 
Department is also pursuing thermochemical hydrogen production systems 
using nuclear power with the goal of demonstrating commercial scale 
production by 2015. Biomass (plant matter) can be gasified and 
converted into hydrogen in a process similar to coal gasification. The 
cost of delivered hydrogen from gasification of biomass has been 
estimated at $5 to $6.30 per kg. It is unlikely that any of these 
approaches could provide large-scale sources of hydrogen at competitive 
prices until after 2030.
    Stranded investment is one of the greatest risks faced by near-term 
hydrogen production technologies. For instance, if over the next two 
decades we built a hydrogen infrastructure around small methane 
reformers in local fueling stations, and then decided that U.S. 
greenhouse gas emissions must be dramatically reduced, we would have to 
replace that infrastructure almost entirely. John Heywood, director of 
the Sloan Automotive Lab at the Massachusetts Institute of Technology, 
argues, ``If the hydrogen does not come from renewable sources, then it 
is simply not worth doing, environmentally or economically.'' A major 
technology breakthrough will be needed to deliver low-cost, zero-carbon 
hydrogen.

THE CHICKEN-AND-EGG PROBLEM

    Bernard Bulkin, Chief Scientist for British Petroleum, discussed 
BP's experience with its customers at the National Hydrogen Association 
annual conference in March 2003. He said, ``if hydrogen is going to 
make it in the mass market as a transport fuel, it has to be available 
in 30 to 50 percent of the retail network from the day the first mass 
manufactured cars hit the showrooms.'' Yet, a 2002 analysis by Argonne 
National Laboratory found that even with improved technology, ``the 
hydrogen delivery infrastructure to serve 40 percent of the light duty 
fleet is likely to cost over $500 billion.'' Major breakthroughs in 
both hydrogen production and delivery will be required to reduce that 
figure significantly.
    Another key issue is the chicken-and-egg problem: Who will spend 
the hundreds of billions of dollars on a wholly new nationwide 
infrastructure to provide ready access to hydrogen for consumers with 
fuel-cell vehicles until millions of hydrogen vehicles are on the road? 
Yet who will manufacture and market such vehicles until the 
infrastructure is in place to fuel those vehicles? And will car 
companies and fuel providers be willing to take this chance before 
knowing whether the public will embrace these cars? I fervently hope to 
see an economically, environmentally, and politically plausible 
scenario for how this classic Catch-22 chasm can be bridged; it does 
not yet exist.

Centralized production of hydrogen is the ultimate goal. A pure 
hydrogen economy requires that hydrogen be generated from carbon-
dioxide-free sources, which would almost certainly require centralized 
hydrogen production closer to giant wind-farms or at coal/biomass 
gasification power plants where carbon dioxide is extracted for 
permanent underground storage. That will require some way of delivering 
massive quantities of hydrogen to tens of thousands of local fueling 
stations.
    Tanker trucks carrying liquefied hydrogen are commonly used to 
deliver hydrogen today, but make little sense in a hydrogen economy 
because of liquefaction's high energy cost. Also, few automakers are 
pursuing onboard storage with liquid hydrogen. So after delivery, the 
fueling station would still have to use an energy-intensive 
pressurization system. This might mean that storage and transport alone 
would require some 50 percent of the energy in the hydrogen delivered, 
negating any potential energy and environmental benefits from hydrogen.
    Pipelines are also used for delivering hydrogen today. Interstate 
pipelines are estimated to cost $1 million per mile or more. Yet, we 
have very little idea today what hydrogen-generation processes will win 
in the marketplace over the next few decades--or whether hydrogen will 
be able to successfully compete with future high-efficiency vehicles, 
perhaps running on other pollution-free fuels. This uncertainty makes 
it unlikely anyone would commit to spending tens of billions of dollars 
on hydrogen pipelines before there are very high hydrogen flow rates 
transported by other means, and before the winners and losers in both 
the production end and the vehicle end of the marketplace have been 
determined. In short, pipelines are unlikely to be the main hydrogen 
transport means until the post-2030 period.
    Trailers carrying compressed hydrogen canisters are a flexible 
means of delivery, but are relatively expensive because hydrogen has 
such a low energy density. Even with technology advances, a 40-metric-
ton truck might deliver only about 400 kg of hydrogen into onsite high-
pressure storage. A 2003 study by ABB researchers found that for a 
delivery distance of 300 miles, the delivery energy approaches 40 
percent of the usable energy in the hydrogen delivered. Without 
dramatic improvement in high-pressure storage systems, this approach 
seems impractical for large-scale hydrogen delivery.

Producing hydrogen on-site at local fueling stations is the strategy 
advocated by those who want to deploy hydrogen vehicles in the next two 
decades. On-site electrolysis is impractical for large-scale use 
because it would be highly expensive and inefficient, while generating 
large amounts of greenhouse gases and other pollutants. The hydrogen 
would need to be generated from small methane reformers. Although 
onsite methane reforming seems viable for limited demonstrations and 
pilots, it is also both impractical and unwise for large-scale 
application, for a number of reasons.
    First, the upfront cost is very high--more than $600 billion just 
to provide hydrogen fuel for 40 percent of the cars on the road, 
according to Argonne. A reasonable cost estimate for the initial 
hydrogen infrastructure, derived from Royal Dutch/Shell figures, is 
$5000 per car.
    Second, the cost of the delivered hydrogen itself in this option is 
also higher than for centralized production. Not only are the small 
reformers and compressors typically more expensive and less efficient 
than larger units, but they will likely pay a much higher price for the 
electricity and gas to run them. A 2002 analysis put the cost at $4.40 
per kg (that is, equal to $4.40 per gallon of gasoline).
    Third, ``the risk of stranded investment is significant, since much 
of an initial compressed hydrogen station infrastructure could not be 
converted later if either a non-compression hydrogen storage method or 
liquid fuels such as a gasoline-ethanol combination proved superior'' 
for fuel-cell vehicles.'' This was the conclusion of a major 2001 study 
for the California Fuel-Cell Partnership, a Sacramento-based public-
private partnership to help commercialize fuel cells. Most of a 
methane-based investment would also likely be stranded once the 
ultimate transition to a pure hydrogen economy was made, since that 
would almost certainly rely on centralized production and not make use 
of small methane reformers. Moreover, it's possible the entire 
investment would be stranded in the scenario where hydrogen cars simply 
never achieve the combination of popularity, cost, and performance to 
triumph in the marketplace.
    In the California analysis, it takes 10 years for investment in 
infrastructure to achieve a positive cash flow, and to achieve this 
result requires a variety of technology advances in both components and 
manufacturing. Also, even a small tax on hydrogen (to make up the 
revenue lost from gasoline taxes) appears to delay positive cash flow 
indefinitely. The high-risk and long-payback nature of this investment 
would seem far too great for the vast majority of investors, especially 
given alternative fuel vehicles history.
    The U.S. has a great deal of relevant experience in the area of 
alternative fuel vehicles that is often ignored in discussions about 
hydrogen. The 1992 Energy Policy Act established the goal of having 
alternative fuels replace at least 10 percent of petroleum fuels in 
2000, and at least 30 percent in 2010. By 1999, some one million 
alternative fuel vehicles were on the road, only about 0.4 percent of 
all vehicles. A 2000 General Accounting Office report explained the 
reasons for the lack of success:

         Fundamental economic impediments--such as the relatively low 
        price of gasoline, the lack of refueling stations for 
        alternative fuels, and the additional cost to purchase these 
        vehicles--explain much of why both mandated fleets and the 
        general public are disinclined to acquire alternative fuel 
        vehicles and use alternative fuels.

    It seems likely that all three of these problems will hinder 
hydrogen cars. Compared to other alternative fuels (such as ethanol and 
natural gas), the best analysis today suggests hydrogen will have a 
much higher price for the fuel, the fueling stations, and the vehicles.
    The fourth reason that producing hydrogen on-site from natural gas 
at local fueling stations is impractical is that natural gas is simply 
the wrong fuel on which to build a hydrogen-based transportation 
system:

          The U.S. consumes nearly 23 trillion cubic feet (tcf) 
        of natural gas today and is projected to consume more than 30 
        tcf in 2025. Replacing 40 percent of ground transportation 
        fuels with hydrogen in 2025 would probably require an 
        additional 10 tcf of gas (plus 300 billion kwh of electricity--
        10 percent of current power usage). Politically, given the 
        firestorm over recent natural gas supply constraints and price 
        spikes, it seems very unlikely the U.S. government and industry 
        would commit to natural gas as a substitute for even a modest 
        fraction of U.S. transportation energy.

          Much if not most incremental U.S. natural gas 
        consumption for transportation would likely come from imported 
        liquefied natural gas (LNG). LNG is dangerous to handle and LNG 
        infrastructure is widely viewed as a likely terrorist target. 
        Yet one of the major arguments in favor of alternative fuels 
        has been their ability to address concerns over security and 
        import dependence.

          Finally, natural gas has too much economic and 
        environmental value to the electric utility, industrial, and 
        buildings sectors to justify diverting significant quantities 
        to the transportation sector, thereby increasing the price for 
        all users. In fact, using natural gas to generate significant 
        quantities of hydrogen for transportation would, for the 
        foreseeable future, undermine efforts to combat global warming 
        (as discussed below).

    Thus, beyond limited pilot stations, it would be unwise to build 
thousands of local refueling stations based on steam methane reforming 
(or, for that matter, based on any technology not easily adaptable to 
delivery of greenhouse-gas-free hydrogen).

THE GLOBAL WARMING CENTURY

    Perhaps the ultimate reason hydrogen cars are a post-2030 
technology is the growing threat of global warming. Our energy choices 
are now inextricably tied to the fate of our global climate. The 
burning of fossil fuels--oil, gas and coal--emits carbon dioxide 
(CO2) into the atmosphere where it builds up, blankets the 
earth and traps heat, accelerating global warming. We now have greater 
concentrations of CO2 in the atmosphere than at any time in 
the past 420,000 years, and probably anytime in the past three million 
years--leading to rising global temperatures, more extreme weather 
events (including floods and droughts), sea level rise, the spread of 
tropical diseases, and the destruction of crucial habitats, such as 
coral reefs.
    Carbon-emitting products and facilities have a very long lifetime: 
Cars last 13 to 15 years or more, coal plants can last 50 years. Also, 
carbon dioxide lingers in the atmosphere trapping heat for more than a 
century. These two facts together create an urgency to avoid 
constructing another massive and long-lived generation of energy 
infrastructure that will cause us to miss the window of opportunity for 
carbon-free energy until the next century.
    Between 2000 and 2030, the International Energy Agency (IEA) 
projects that coal generation will double. The projected new plants 
would commit the planet to total carbon dioxide emissions of some 500 
billion metric tons over their lifetime, which is roughly half the 
total emissions from all fossil fuel consumed worldwide during the past 
250 years.



    Building these coal plants would dramatically increase the chances 
of catastrophic climate change. What we need to build is carbon-free 
power. A March 2003 analysis in Science magazine by Ken Caldeira et al. 
concluded that if our climate's sensitivity to greenhouse gas emissions 
is in the mid-range of current estimates, ``stabilization at 
4+C warming would require installation of 410 megawatts of 
carbon emissions-free energy capacity each day'' for 50 years. Yet 
current projections for the next 30 years are that we will build just 
80 megawatts per day.
    Since planetary warming accelerates over time, and since 
temperatures over the continental U.S. land mass are projected to rise 
faster than the average temperature of the planet, a warming of 
4+C (over 7+F) means that by mid-century, the 
U.S. temperature could well be rising as much per decade as it rose all 
last century: one degree Fahrenheit. This scenario, which I am labeling 
``The Global Warming Century,'' would be a climate catastrophe--one 
that the American public is wholly unprepared for.
    In February 2003, British Prime Minister endorsed the conclusion of 
Britain's Royal Commission on Environmental Pollution: ``to stop 
further damage to the climate. . .a 60 percent reduction [in global 
emissions] by 2050 was essential.''
    Unfortunately, the path set by the current energy policy of the 
U.S. and developing world will dramatically increase emissions over the 
next few decades, which will force sharper and more painful reductions 
in the future when we finally do act. Global CO2 emissions 
are projected to rise more than 50 percent by 2030. From 2001 to 2025, 
the U.S. Energy Information Administration (EIA) projects a 40 percent 
increase in U.S. coal consumption for electricity generation. And the 
U.S. transportation sector is projected to generate nearly half of the 
40 percent rise in U.S. CO2 emissions forecast for 2025, 
which again is long before hydrogen-powered cars could have a positive 
impact on greenhouse gas emissions.
    Two points are clear. First, we cannot wait for hydrogen cars to 
address global warming. Second, we should not pursue a strategy to 
reduce greenhouse gas emissions in the transportation sector that would 
undermine efforts to reduce greenhouse gas emissions in the electric 
generation sector. Yet that is precisely what a hydrogen-car strategy 
would do for the next few decades.

HYDROGEN CARS AND GLOBAL WARMING

    For near-term deployment, hydrogen would almost certainly be 
produced from fossil fuels. Yet running a fuel-cell car on such 
hydrogen in 2020 would offer no significant life-cycle greenhouse gas 
advantage over the 2004 Prius running on gasoline.
    Further, fuel cell vehicles are likely to be much more expensive 
than other vehicles, and their fuel is likely to be more expensive (and 
the infrastructure will probably cost hundreds of billions of dollars). 
While hybrids and clean diesels may cost more than current vehicles, at 
least when first introduced, their greater efficiency means that, 
unlike fuel cell vehicles, they will pay for most if not all of that 
extra upfront cost over the lifetime of the vehicle. A June 2003 
analysis in Science magazine by David Keith and Alex Farrell put the 
cost of CO2 avoided by fuel cells running on zero-carbon 
hydrogen at more than $250 per ton even with a very optimistic fuel 
cell cost. An advanced internal combustion engine could reduce CO2 
for far less and possibly for a net savings because of the reduced fuel 
bill.
    Probably the biggest analytical mistake made in most hydrogen 
studies-including the recent National Academy report--is failing to 
consider whether the fuels that might be used to make hydrogen (such as 
natural gas or renewables) could be better used simply to make 
electricity. For example, the life-cycle or ``well-to-wheels'' 
efficiency of a hydrogen car running on gas-derived hydrogen is likely 
to be under 30 percent for the next two decades. The efficiency of gas-
fired power plants is already 55 percent (and likely to be 60 percent 
or higher in 2020). Co-generation of electricity and heat using natural 
gas is over 80 percent efficient. And by displacing coal, the natural 
gas would be displacing a fuel that has much higher carbon emissions 
per unit energy than gasoline. For these reasons, natural gas is far 
more cost-effectively used to reduce CO2 emissions in 
electric generation than it is in transportation.
    The same is true for renewable energy. A megawatt-hour of 
electricity from renewables like wind power, if used to manufacture 
hydrogen for use in a future fuel-cell vehicle, would save slightly 
under 500 pounds of carbon dioxide compared to the best current 
hybrids. That is less than the savings from using the same amount of 
renewable electricity to displace a future natural gas plant (800 
pounds), and far less than the savings from displacing coal power (2200 
pounds).
    As the June 2003 Science analysis concluded: ``Until CO2 
emissions from electricity generation are virtually eliminated, it will 
be far more cost-effective to use new CO2-neutral 
electricity (such as wind) to reduce emissions by substituting for 
fossil-electric generation than to use the new electricity to make 
hydrogen.'' Barring a drastic change in U.S. energy policy, our 
electric grid will not be close to CO2-free until well past 
2030.
    A 2004 analysis by Jae Edmonds et al. of Pacific Northwest National 
Laboratory concluded in that even ``in the advanced technology case 
with a carbon constraint. . .hydrogen doesn't penetrate the 
transportation sector in a major way until after 2035.''

CONCLUSION

    Hydrogen and fuel-cell vehicles should be viewed as post-2030 
technologies. In September 2003, a DOE panel on Basic Research Needs 
for the Hydrogen Economy concluded the gaps between current hydrogen 
technologies and what is required by the marketplace ``cannot be 
bridged by incremental advances of the present state of the art,'' but 
instead require ``revolutionary conceptual breakthroughs.'' In sum, 
``the only hope of narrowing the gap significantly is a comprehensive, 
long-range program of innovative, high risk/high payoff basic 
research.'' The National Academy came to a similar conclusion.
    The DOE should focus its hydrogen R&D budget on exploratory, 
breakthrough research. Given that there are few potential zero-carbon 
replacements for oil, the DOE is not spending too much on hydrogen R&D. 
But given our urgent need for reducing greenhouse gas emissions with 
clean energy, DOE is spending far too little on energy efficiency and 
renewable energy. If DOE's overall clean energy budget is not 
increased, however, then it would be bad policy to continue shifting 
money away from efficiency and renewables toward hydrogen. Any 
incremental money given to DOE should probably be focused on deploying 
the cost-effective technologies we have today, to buy us more time for 
some of the breakthrough research to succeed.
    The National Academy panel wrote that ``it seems likely that, in 
the next 10 to 30 years, hydrogen produced in distributed rather than 
centralized facilities will dominate,'' and so they recommended 
increased funding for improving small-scale natural gas reformers and 
water electrolysis systems. Yet any significant shift toward cars 
running on distributed hydrogen from natural gas or grid electrolysis 
would undermine efforts to fight global warming. DOE should not devote 
any R&D to these technologies. In hydrogen production, DOE should be 
focused solely on finding a low-cost, zero-carbon source, which will 
almost certainly be centralized. That probably means we won't begin the 
hydrogen transition until after 2030 because of the logistical and cost 
problems associated with a massive hydrogen delivery infrastructure.
    But we shouldn't be rushing to deploy hydrogen cars in the next two 
decades anyway, since not only are several R&D breakthroughs required, 
we also need a revolution in clean energy that dramatically accelerates 
the penetration rates of new CO2-neutral electricity. 
Hydrogen cars might find limited value replacing diesel engines (for 
example in buses) in very polluted cities before 2030, but they are 
unlikely to achieve mass-market commercialization by then. That is why 
I conclude neither government policy nor business investment should be 
based on the belief that hydrogen cars will have meaningful commercial 
success in the near- or medium-term.
    The longer we wait to deploy existing clean energy technologies, 
and the more inefficient, carbon-emitting infrastructure that we lock 
into place, the more expensive and the more onerous will be the burden 
on all segments of society when we finally do act. If we fail to act 
now to reduce greenhouse gas emissions--especially if fail to act 
because we have bought into the hype about hydrogen's near-term 
prospects--future generations will condemn us because we did not act 
when we had the facts to guide us, and they will most likely be living 
in a world with a much hotter and harsher climate than ours, one that 
has undergone an irreversible change for the worse.