[Senate Hearing 108-817]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-817

                    FUTURE OF THE HYDROGEN FUEL CELL

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

                                HEARING

                               before the

             SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND SPACE

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 7, 2003

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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       8SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois        RON WYDEN, Oregon
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
                                     FRANK LAUTENBERG, New Jersey
      Jeanne Bumpus, Republican Staff Director and General Counsel
             Robert W. Chamberlin, Republican Chief Counsel
      Kevin D. Kayes, Democratic Staff Director and Chief Counsel
                Gregg Elias, Democratic General Counsel
                                 ------                                

             Subcommittee on Science, Technology, and Space

                    SAM BROWNBACK, Kansas, Chairman
TED STEVENS, Alaska                  JOHN B. BREAUX, Louisiana
CONRAD BURNS, Montana                JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
JOHN ENSIGN, Nevada                  BYRON L. DORGAN, North Dakota
GEORGE ALLEN, Virginia               RON WYDEN, Oregon
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
                                     FRANK LAUTENBERG, New Jersey


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 7, 2003......................................     1
Statement of Senator Brownback...................................     1
Statement of Senator Dorgan......................................     3
Statement of Senator Lautenberg..................................     4

                               Witnesses

Friedman, David J., Senior Engineer, Clean Vehicles Program, 
  Union of Concerned Scientists..................................    25
    Prepared statement...........................................    27
Garman, Hon. David K., Assistant Secretary, Energy Efficiency and 
  Renewable Energy, Department of Energy.........................    10
    Prepared statement...........................................    12
Marburger III, Hon. John H., Director, Office of Science and 
  Technology Policy..............................................     6
    Prepared statement...........................................     8
McCormick, J. Byron, Executive Director, Fuel Cell Activities, 
  General Motors Corporation.....................................    36
    Prepared statement...........................................    41
Preli, Jr., Francis R., Vice President-Engineering, United 
  Technologies Corporation Fuel Cells............................    44
    Prepared statement...........................................    46

                                Appendix

Response to written questions submitted by Hon. Bill Nelson to 
  Francis R. Preli, Jr...........................................    57

 
                    FUTURE OF THE HYDROGEN FUEL CELL

                              ----------                              


                         WEDNESDAY, MAY 7, 2003

                               U.S. Senate,
    Subcommittee on Science, Technology, and Space,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:36 p.m. in room 
SR-253, Russell Senate Office Building, Hon. Sam Brownback, 
Chairman of the Subcommittee, presiding.

           OPENING STATEMENT OF HON. SAM BROWNBACK, 
                    U.S. SENATOR FROM KANSAS

    Senator Brownback. The hearing will come to order. We're 
going to have a fun hearing today on a great topic, hydrogen-
fueled automobiles and other uses of hydrogen fuel.
    I'd like to begin the hearing of the Science, Technology, 
and Space Subcommittee by thanking each of our witnesses. I 
appreciate you coming today. I want to thank you on behalf of 
the Committee for joining us here today and sharing your 
testimony. Secondly, I want to thank you on behalf of my kids 
for your leadership in advancing the practical applications of 
hydrogen fuel cell research. This is an incredibly important 
issue for the future, and it certainly has a lot of excitement 
and interest for now and for the next generation.
    Perhaps a critical duty for any leader, whether you're a 
CEO, Secretary of State, a principal of a high school, is to 
advance a vision of what we want our country and the world to 
look like. As did countless generations before we were born, we 
are charged to leave our children's life better than that which 
we inherited. I'd also argue that this notion of the world we 
would like to leave our children is a vision that unites us. 
While we often disagree about how to get there, we just as 
often agree about where we would like to be heading.
    It is almost universally held we would like to be energy 
independent. This country is best when it is a forceful 
advocate for democracy and freedom. Unfortunately, far too 
often, our Nation's interests in advancing these principles 
stumble over our interest in affordable and reliable sources of 
energy. It is a generally held belief that the more affordable 
and reliable energy sources we can develop at home, the more 
freely we will be able to advance American ideals abroad.
    Generally, I think we can all agree that we would like to 
leave our children a cleaner, better environment. My dad is a 
farmer in Parker, Kansas, and he farms the land that his dad 
farmed. My brother farms the same land. Growing up on a farm, 
you can't help but learn the values of good stewardship. I have 
no doubt that Dad is going to leave to my brother, Jim, the 
land better than he found it.
    I've been very blessed to see a great deal of this country, 
and I have a great faith that we are living on a gift from God. 
As stewards of this country, such is our responsibility to pass 
on the gift to the next generation in better condition than it 
was received.
    But we can't ignore that we are also stewards of the 
economy. If we listen to the debate around here, it's very 
clear that we agree that a robust economy makes this country 
strong. Again, we don't all agree on how to get there, but I 
suspect that that's a whole different hearing. We have a 
tremendous burden to keep the economy growing and to continue 
creating new jobs.
    If the duty of a leader is to advance a vision of the 
future, perhaps the greatest trick of leadership is not having 
to sacrifice one goal for the sake of another. And therein lies 
the importance of the hydrogen fuel cell.
    Hydrogen is the most plentiful element on the planet. Two-
thirds of the planet is water. Two-thirds of water is hydrogen. 
Now, I'm trained neither as a scientist, nor an engineer, but 
as near as I can figure, we have all the hydrogen that we need 
right here within our borders.
    As for the environment, at worst the emissions of a 
hydrogen fuel cell is minimal, and the efficiency of fuel cells 
is unmatched by conventional technologies. Likely, the initial 
generations of fuel cells will rely on some form of 
petrochemicals, most likely natural gas, to produce the 
hydrogen. However, the modest amounts of CO2 emitted from these 
power sources are dwarfed by the emissions of today's cleanest 
internal combustion engines.
    In addition, today's internal combustion engine captures 
only 15 to 20 percent of the energy in gasoline. Fuel cells, on 
the other hand, convert 40 to 65 percent of hydrogen energy 
into electricity. The potential of this 160-year-old technology 
to help us achieve cleaner air by the time my kids are driving 
their kids to school is staggering.
    Not only can our economy be sustained in a transition to a 
greater reliance on hydrogen, but our economy can grow as we 
move toward hydrogen. As we have seen in the past several 
years, our economy is extremely sensitive to fluctuations in 
energy cost. Moving away from the more limited and unstable 
commodities of fossil fuels towards the more abundant hydrogen 
has a tremendous potential to insulate the economy from 
fluctuations in energy prices.
    In addition, where there is innovation, there is growth. As 
American companies, like those represented here today, develop 
the innovative technologies that carry us into hydrogen-based 
transportation and possibly a hydrogen-based economy, our 
country will see growth follow.
    However, for all the potential of hydrogen fuel cells, to 
paraphrase Robert Frost, there are many miles before we sleep. 
The time frame we've laid out for the transition to hydrogen-
based transportation is almost unmatched in human history. To 
meet the time frame, our commitment must be unwavering.
    We thank those of you who are here to testify today, in 
advance, for all the hard work and the dedication and the 
leadership you will invest and have already invested in this 
mission. And that's why we look forward to your testimony and 
presentation and answering questions today.
    We've been joined by another advocate of hydrogen 
technology that's approached me and talked with me on the floor 
about this issue and has aggressively supported it, Senator 
Dorgan, from North Dakota.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Senator Brownback, thank you very much.
    Let me just make a couple of comments before we begin the 
hearing. I will not be able to stay for the entire hearing, but 
I'm especially pleased that you're holding it, because I think 
this is the issue. We have the energy bill on the floor. It 
includes an initiative dealing with hydrogen and fuel cells. 
The President has indicated his interest and his 
administration's support for this. I have indicated previously 
that it is enormously welcome, because putting the 
administration's support behind this direction is not only a 
breath of fresh air, but is an enormous source of strength to 
move something like this through the Congress.
    I've indicated also, without meaning to be highly critical, 
that the President's specific proposal was more timid than I 
would like. I had offered legislation here in the Congress 
prior to the President making his proposal, a more robust 
proposal that I think we ought to embrace. It is a $6.5 billion 
proposal over 10 years that sets targets and timetables of 
having 100,000 fuel cell vehicles on the road by 2010 and 2.5 
million vehicles on the road by 2020.
    This is not a project that will be achieved just because we 
wish it to be so. The issue of finding a new supply of energy, 
particularly hydrogen, means that we have issues dealing with 
the production, the transportation, the storage of hydrogen, 
and the continued development of increasingly sophisticated 
fuel cells.
    But, as you indicated, Mr. Chairman, running gasoline 
through the carburetors of our vehicle fleet forever makes no 
sense to me. Fuel cells are twice as efficient as running 
gasoline through carburetors, in terms of putting power to the 
wheel, and it just makes sense to me, especially given what 
we've seen in Iraq and the Middle East recently, that our 
economy should not be so overly dependent on foreign sources of 
energy. The fastest growing part of our energy usage is in 
transportation, by far. We import 55 percent of our oil. Which 
is expected to increase to 68 percent by the year 2020. That's 
an unsustainable path, and it's a path that jeopardizes this 
country's economy. It holds our country hostage to conditions 
that we do not, cannot, and will not control.
    We will continue to dig and drill, and we will continue to 
increase production of oil, coal, and natural gas. I support 
all that. But if digging and drilling is our only energy 
strategy, then we are confined to a ``yesterday-forever'' 
strategy.
    Mr. Chairman, my first car was a 1924 Model-T Ford. I 
restored it as a young teenager. I put gasoline in the 1924 
Ford the same way you put gasoline in a 2003 Ford. Not a thing 
has changed in a century. The new dream and vision of a 
hydrogen economy with fuel cells, particularly for our 
transportation fleet, but also stationary fuel cells, is 
something that can cause fundamental change in this country 
that is positive--positive for our economy, and positive to 
help us become less dependent on things that we can't control. 
I just think that this requires a robust, aggressive push from 
all of us in public policy.
    I'm really pleased with the people you have testifying. 
I've worked with many of them. Mr. Garman has been to North 
Dakota. We've talked about other energy, wind energy. But Mr. 
Garman, I know that you are representing the administration's 
view of how much we can do, and you and I have a slight 
disagreement about how aggressive we can or should move. But we 
have no disagreement on the direction, and that is refreshing 
to me. This administration has put itself in the position of 
saying, ``Let's move in this direction.'' I say, ``You bet. 
Let's do it, and let's be very bold about it as we do it.''
    My hope, Mr. Chairman, is that when the energy bill leaves 
the Senate, even though we nearly tripled the amount of effort 
in the Energy Committee on the hydrogen piece--we're up to a 
little over $3 billion at this point--my hope is that we can 
increase it even more so that my grandchildren and your 
grandchildren, when they turn the key in their vehicle, will be 
turning their key in a fuel cell vehicle that uses hydrogen.
    And if I can make one final point. Secretary Garman came to 
North Dakota to talk about wind energy. There is a wind energy 
component in this, as well, because wind blows intermittently. 
But you put up the new efficient wind turbines to produce 
electricity and use electricity through the process of 
electrolysis to separate hydrogen and oxygen for water, store 
the hydrogen, and use it for our vehicle fleet. It all fits 
together in a wonderful, wonderful way, and because of that, I 
sleep better. It was therapeutic to say all of this.
    [Laughter.]
    Senator Dorgan. Thank you.
    Senator Brownback. Thank you very much, Senator Dorgan, 
whose passionate support of hydrogen is obvious.
    Senator Lautenberg, do you have an opening statement?

              STATEMENT OF HON. FRANK LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks, Mr. Chairman. I listened with 
interest to Senator Dorgan's statement, and he talked about 
fixing up his 1924 vehicle. I had a energy-less vehicle in 
1924. It was my mother pushing me in a baby carriage, and----
    [Laughter.]
    Senator Lautenberg.--you can't find that kind of energy 
around anymore, but I didn't realize that you were old enough 
to understand that. I'm pleased to be here, also, to join in 
this discussion, this review of where we go beside fossil fuels 
and how we get where we want to go. And I'm not talking about 
the mileage alone. The alternatives have to be found to the way 
we do business today.
    It's so rare that we hear things like ``conserve'' or 
``sacrifice'' or things of that nature, and I think the best 
way to get where we'd like to be is to really devote our energy 
and our resource to this opportunity with the hydrogen fuel 
cells. And I just passed a car that's parked outside downstairs 
that General Motors is showing, a hydrogen fuel cell car. But 
it's still prototype. It's not ready at all for production. But 
they are going into hybrid production, I was told, next year. 
And that will add something like a 10 percent efficiency 
factor. If that translates immediately to the use of oil, to 
the importation of oil--I mean, the numbers are staggering.
    Well, in the State of the Union Address, President Bush 
announced a new $1.2 billion dollar research and development 
initiative for hydrogen-fueled vehicles. Now, as those in this 
room know now, the hydrogen fuel cells hold enormous promise as 
an efficient low-emission source of power. And theoretically, 
it's possible to create a hydrogen fuel cell that only emits 
water, and the water can be used again as a source for more 
hydrogen.
    The President's initiative is meant to complement the 
Department of Energy's Freedom CAR Program, a 2-year-old 
cooperative research program between the Federal Government and 
universities and private industry. But as important as hydrogen 
will be down the road, I can't help but think that the 
initiative merely scratches the surface. It's designed to, I 
think, hide the relatively poor record that we've had with 
regard to cutting auto emissions and our dependence on OPEC oil 
now at a time when we know how precarious that supply is and 
the availability.
    The fastest, cheapest way to cut our dependence on foreign 
oil now is to make our cars and trucks go further on each 
gallon of gas that they burn. And the fact is, the automakers 
are keenly aware of hydrogen promises and are investing $2- to 
$3 billion of their own money each year to develop the 
technology. And the Federal Government's money, $1.2 billion, 
would be better spent promoting near-term fuel economy 
improvements in our cars and trucks. And this near-term 
component is what's missing from the President's approach.
    According to the National Academy of Sciences, existing 
technologies could be used to raise fuel efficiency to 40 miles 
per gallon without compromising safety. The NRDC estimates that 
we could cut the amount of oil our cars and trucks use by a 
half by the year 2020, and by three-quarters over the next 
three decades, compared with business-as-usual projections. And 
total consumer savings from these improvements would equal 
nearly $13 billion per year in 2012, and almost $30 billion by 
2020.
    By lifting the fuel economy standards for the national 
fleet to 40 miles per gallon by 2012 and 55 miles per gallon in 
2020, we'd save nearly 4 billion barrels of oil over the next 
dozen years. And by the year 2012, we could save nearly, it's 
believed with credibility, 2 million barrels each day. That's 
more oil than we imported from Saudi Arabia last year, and 
three times our imports from Iraq. By 2020, savings would grow 
to nearly 5 million barrels a day, which is almost twice the 
amount that we currently import from the Persian Gulf.
    When it comes to hydrogen, I'm anxious to learn more from 
the witnesses today about this exciting technology, how long 
it'll take before hydrogen-fueled cars and trucks are 
commercially feasible. But I would suggest that we should also 
hold a hearing, Mr. Chairman, on why President Bush hasn't 
announced any initiatives to cut auto emissions and our 
dependence on OPEC oil now.
    And I look forward to hearing from our witnesses, and I 
thank you, Mr. Chairman, for holding this meeting.
    Senator Brownback. Yes, thank you, Senator Lautenberg.
    We have two panels today. Our first panel is the Honorable 
John Marburger III. He's director of Office of Science and 
Technology Policy. And the Honorable David Garman, Assistant 
Secretary for Energy Efficiency and Renewable Energy of the 
U.S. Department of Energy.
    Gentlemen, we're delighted to have you here today, 
delighted to hear your testimony, and look forward to that and 
answering questions.
    And, Mr. Marburger, if you'd be willing to go first, if 
that would be all right. We will put your full statement into 
the record as if presented, so you're free to summarize if 
you'd like.

 STATEMENT OF HON. JOHN H. MARBURGER III, DIRECTOR, OFFICE OF 
                 SCIENCE AND TECHNOLOGY POLICY

    Mr. Marburger. Thank you Mr. Chairman, Senator Dorgan, and 
Senator Lautenberg. It's a pleasure to be here. I appreciate 
the opportunity to appear before you today to discuss the 
President's hydrogen fuel initiative. I will keep my oral 
presentation short so there's time for questions, and I 
appreciate that my written testimony will be included in the 
record.
    The President's National Energy Policy Report that was 
released 2 years ago this month set forth a vision for a clean, 
secure, and affordable energy future. That vision includes a 
key role for hydrogen as an energy medium across the entire 
spectrum of energy applications.
    President Bush, as you noted, emphasized in his State of 
the Union Address this year that one of his chief domestic 
goals is to promote energy independence for our country while 
dramatically improving the environment.
    Senator Brownback. Mr. Marburger, could you pull that 
microphone closer to you? I don't know if it's picking up very 
well.
    Mr. Marburger. Okay.
    Senator Brownback. There you go.
    Mr. Marburger. The President subsequently announced the 
Hydrogen Fuel Initiative to develop the technology to enable 
mass production of clean hydrogen-powered automobiles and the 
infrastructure to support them by 2020. The Hydrogen Fuel 
Initiative complements the previously announced Freedom CAR 
Partnership, which includes fuel cell, hybrid electric, and 
other advanced automotive technology research.
    Other new initiatives have followed, including the Carbon 
Sequestration International Leadership Forum, the FutureGEN 
Zero Emission Coal-Fired Electricity and Hydrogen Power Plant 
Initiative, and an international partnership for the hydrogen 
economy. In a related but much longer-term initiative, the 
President announced U.S. participation in the international 
collaboration on fusion energy research.
    Hydrogen is important, because it can serve as a primary 
energy carrier. Like electricity, it can be produced from many 
different domestically available energy sources using 
technologies that do not emit pollutants or carbon dioxide. 
Furthermore, hydrogen-based transportation, power, and heating 
systems promise dramatic efficiency gains with greatly reduced 
noxious air pollutants and greenhouse gas emissions. These 
technologies, together with the other elements of the 
President's energy plan, have the long-term potential to 
substantially reduce or eliminate our Nation's dependence on 
foreign oil while improving the environment.
    Our transportation sector, for example, runs almost 
exclusively on oil and we are importing more than half of our 
oil needs every day. Hydrogen can be produced from diverse 
domestic energy sources, including natural gas, coal, or 
nuclear energy, or biomass, wind, and solar power, anything 
that produces electricity. Although we will continue to strive 
for efficiency improvements in conventional vehicles, hydrogen-
fueled vehicles can potentially remove petroleum from the 
equation altogether.
    Hydrogen fuel cell vehicles are potentially more than twice 
as efficient as conventional cars and trucks. And if you 
consider the entire well-to-wheel energy cycle, including the 
efficiency of hydrogen production from natural gas, fuel cells 
still are more efficient and produce significantly less CO2 
than conventional, diesel, or hybrid electric vehicles. 
Widespread use of fuel-cell-powered cars and trucks would also 
yield significant air quality improvements, particularly in 
urban areas.
    As hydrogen production shifts toward newer energy source 
technologies, such as coal power with carbon sequestration or 
nuclear power, our transportation sector could reduce emissions 
of air pollutants and greenhouse gases to near zero.
    So what do we have to do to achieve this hydrogen vision? 
There are significant technical challenges. First, we need a 
hydrogen infrastructure for convenient and affordable refueling 
of the vehicles and devices. The private sector builds 
infrastructure only when the business case is attractive. And 
considering that our current infrastructure delivers gasoline 
for less than the price of bottled water, this is a significant 
challenge.
    When produced from natural gas, hydrogen is currently four 
times more expensive than gasoline. The President's Hydrogen 
Fuel Initiative proposes a large increase in R&D funding for 
technologies that will drive down the cost of production, 
storage, distribution, and delivery of hydrogen.
    As the infrastructure develops, hydrogen will likely come 
from a number of different energy sources and production 
methods, as determined by the marketplace. The mix will depend 
on regional factors like the cost and availability of feed 
stocks or environmental constraints or state regulations. The 
hydrogen distribution and delivery systems will involve a 
combination of centralized production facilities, pipelines, 
local production of neighborhood fueling stations, and truck 
delivery to rural areas.
    After the infrastructure challenge is the need for the fuel 
cell vehicles themselves to be cost competitive with the 
conventional vehicles that they will replace. Even in mass 
production, fuel cells today would be 10 times more expensive 
than comparable gasoline engines. Currently available high-
performance fuel cells require relatively large amounts of 
precious metals, such as platinum, and highly engineered 
materials. Agency R&D efforts focus on reducing these costs and 
very promising new technologies are emerging.
    A third challenge is the need for hydrogen storage systems 
with sufficient energy density to provide a 300-mile vehicle 
driving range without excessive size, weight, or cost. The 
President's initiative proposes funding increases for each of 
these vital research areas, along with the development of codes 
and standards that will foster safe handling and operation of 
hydrogen-fueled systems.
    The hydrogen fission includes many other applications 
besides fuel cell vehicles. Stationary fuel cells can provide 
heating and power for buildings and reliable distributed power 
generation. As a hydrogen infrastructure is developed, local 
hydrogen production will support distributed power generation, 
and pipeline networks could serve residential applications.
    This future-oriented initiative does not obviate the need 
for interim strategies to address our Nation's energy 
environmental challenges. The administration proposes to 
continue R&D in non-hydrogen transportation technologies--
hybrid electric systems, for example--energy storage, and 
materials.
    Our ultimate goal is a petroleum-free, emission-free energy 
future. The President's Hydrogen Fuel Initiative led by the 
Department of Energy proposes $1.2 billion for research over 5 
years to overcome the key technology hurdles to enable a 
hydrogen-based economy. There are many other agencies involved 
in this initiative, including the Departments of 
Transportation, Defense, Commerce, Agriculture, NSF, NASA, and 
EPA, and my office will continue to work with all agencies, as 
usual, to assist coordination. The agencies, by the way, are 
working well together and have already begun to establish 
collaborative activities.
    So I thank you very much for allowing me to present the 
President's initiative here today, and I'll be glad to answer 
questions.
    [The prepared statement of Mr. Marburger follows:]

 Prepared Statement of Hon. John H. Marburger III, Director, Office of 
                     Science and Technology Policy

    Mr. Chairman, Mr. Breaux, and Members of the Subcommittee, I 
appreciate the opportunity to appear before you today to discuss the 
President's Hydrogen Fuel Initiative.
    America's energy challenges must be met with revolutionary new 
technologies and dedicated leadership to improve the production, 
distribution, and use of energy. The President's National Energy Policy 
Report, released in May 2001, establishes a clear path for our Nation 
to achieve a clean, secure, and affordable energy future. That vision 
includes hydrogen as an energy carrier in our automobiles, trucks, 
homes, and businesses.
    In the State of the Union address in January 2003, President Bush 
stated that one of his key domestic goals is ``to promote energy 
independence for our country, while dramatically improving the 
environment.'' The President then announced the Hydrogen Fuel 
Initiative to develop the technology to enable mass production of 
clean, hydrogen-powered automobiles, and the infrastructure to support 
them, by 2020. The Hydrogen Fuel Initiative complements the FreedomCAR 
partnership, which includes fuel-cell, hybrid-electric, and other 
advanced automotive technology research. Other new initiatives have 
followed from the President's leadership. In February, the Secretary of 
Energy announced the Carbon Sequestration International Leadership 
Forum, along with the ``FutureGEN'' initiative to build a zero-
emission, coal-fired electricity and hydrogen power plant. 
Additionally, on February 3 the President announced that the U.S. will 
join Canada, the European Union, Japan, Russia, and the United Kingdom 
in the creation of an international collaboration on fusion energy 
research. Most recently, the Administration announced that it will lead 
an International Partnership for the Hydrogen Economy.
    Through these initiatives, we will lead the effort, in concert with 
the private sector and other nations, to develop clean and secure 
energy supplies and energy systems. We envision a future in which 
hydrogen serves, along with electricity, as a primary energy carrier 
for the U.S. economy. Like electricity, hydrogen can be produced from a 
diversity of domestically available energy sources using technologies 
that do not emit pollutants or carbon dioxide. Furthermore, hydrogen-
based transportation, power, and heating systems offer the promise of 
dramatic efficiency gains with greatly reduced noxious air pollutants 
and greenhouse gas emissions. These technologies, together with the 
other elements of the President's energy plan, have the long-term 
potential to substantially reduce or eliminate our Nation's dependence 
on foreign oil while improving the environment.
    While we have made significant progress in reducing pollutant 
emissions from our cars, trucks, and power plants, and we will continue 
to make progress in the near term through ongoing regulatory actions, 
our objective is to move beyond the command-and-control mechanisms of 
environmental policy. We can do this by developing and deploying 
transportation systems and power systems that are emission-free by 
design.
    For example, a hydrogen-based transportation sector would 
dramatically improve our Nation's energy security. Our transportation 
sector runs almost exclusively on oil, and we are importing more than 
half of our oil needs every day. Although we will continue to strive 
for efficiency improvements in conventional vehicles, hydrogen-fueled 
vehicles can potentially remove petroleum from the equation altogether. 
Hydrogen can be produced from diverse domestic energy sources, 
including natural gas, coal, nuclear energy, biomass, wind, and solar 
power. Upon successful market penetration, hydrogen fuel cell vehicles 
would dramatically reduce our dependence on imported oil, with ultra-
clean hydrogen internal combustion engines as a possible interim step.
    Hydrogen fuel cell vehicles offer the potential to achieve more 
than twice the efficiency of conventional cars and trucks. When 
considering the full energy cycle, including the efficiency of hydrogen 
production from natural gas, fuel cells are still more efficient--and 
produce less carbon dioxide--than conventional, diesel-powered, or 
hybrid-electric vehicles. Hydrogen fuel cell vehicles produce no 
emissions other than water. Widespread use of fuel-cell powered cars 
and trucks would thus yield significant air quality improvements, 
particularly in urban areas. As hydrogen production shifts more to 
renewable sources, nuclear power, and coal power with carbon 
sequestration, our transportation sector could reduce emissions of air 
pollutants and greenhouse gases to near zero.
    In the State of the Union address, the President said:

        ``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.''

    In order to achieve this hydrogen vision, we must overcome some 
significant technical challenges.
    First, a hydrogen infrastructure must be built that will enable 
convenient and affordable refueling. The private sector will build the 
infrastructure only when the business case is attractive. Considering 
that our current gasoline infrastructure can deliver refined petroleum 
products to local stations for less than the price of bottled water, 
this represents a significant challenge. When produced from natural 
gas, hydrogen is currently four times as expensive to produce as 
gasoline. The President's Hydrogen Fuel Initiative, therefore, proposes 
a large increase in the research and development funding for 
technologies that will enable cost-competitive production, storage, 
distribution, and delivery of hydrogen. This includes funding for 
renewable- and nuclear-based hydrogen production.
    As the infrastructure develops, hydrogen will likely be produced 
from a portfolio of energy sources and production methods, as 
determined by the marketplace. The optimal combination of energy 
sources will likely depend on regional factors such as the cost and 
availability of the feedstocks, environmental constraints, and state 
regulations. Similarly, hydrogen distribution and delivery systems will 
most likely involve a combination of centralized production facilities 
with pipelines, local production at neighborhood fueling stations, and 
truck delivery to rural areas.
    Second, fuel cell vehicles must be safe, reliable, and cost-
competitive with the conventional vehicles that they replace. Even in 
mass production, fuel cells today would be ten times more expensive 
than comparable gasoline engines. High-performance fuel cells require 
relatively large amounts of precious metals (platinum) and highly 
engineered materials. Agency research and development efforts are 
focused on reducing these costs.
    Third, we must develop hydrogen storage systems with sufficient 
energy density to provide a 300-mile vehicle driving range without 
excessive size, weight, or cost.
    The President's Initiative proposes funding increases for each of 
these vital research areas, along with the development of codes and 
standards that will help ensure the safe handling and operation of 
hydrogen-fueled systems.
    The hydrogen vision includes many other applications besides fuel 
cell vehicles. Stationary fuel cells can provide heating and power for 
buildings and reliable, distributed power generation. Portable power 
units, laptops, and cell phones can also be powered by hydrogen. Some 
of these applications could achieve commercial viability before fuel 
cell vehicles do. As the hydrogen infrastructure is developed, local 
hydrogen production will support distributed power generation, and 
pipeline networks could serve residential applications.
    In addition, as we work to achieve the hydrogen vision, we need 
interim strategies to address our Nation's energy and environmental 
challenges. Therefore, the Administration has proposed a continuing 
research and development effort in non-hydrogen transportation 
technologies such as hybrid-electric systems, energy storage, and 
materials. These technologies are expected to provide fuel savings both 
in the near term, by application to conventional gasoline-fueled 
vehicles, and in the long term by enabling commercially viable fuel-
cell vehicles, which will need lightweight materials, high-density 
power electronics, and cost-effective energy storage devices.
    Our ultimate goal is a petroleum-free, emission-free energy future. 
The President's Hydrogen Fuel Initiative, led by the Department of 
Energy (DOE), proposes $1.2 billion for research over five years 
(including $181.7 million in the FY2004 budget request) to overcome the 
key technology hurdles to enable a hydrogen-based economy.
    Other agencies besides DOE, including the Department of 
Transportation (DOT), Environmental Protection Agency, Department of 
Defense, Department of Commerce, National Science Foundation, 
Department of Agriculture, National Aeronautics and Space 
Administration, and others, also conduct or plan to conduct significant 
research related to hydrogen and fuel cell technologies. For example, 
DOT will develop many of the codes and standards related to hydrogen 
technologies. In order to foster coordination across the federal 
government, and to improve the effectiveness of hydrogen research and 
development, my office is leading an interagency hydrogen R&D task 
force. The agencies have strongly supported this effort and have begun 
to establish collaborative activities. The task force will also provide 
an opportunity to reach out to the private sector and to expand 
coordination of research, where appropriate, to other nations through 
the International Partnership for the Hydrogen Economy.
    The hydrogen vision is ambitious, but through the President's 
Hydrogen Fuel Initiative, together with related activities across the 
federal government, we can make substantial progress towards the vital, 
national goals of energy security and environmental stewardship.
    I would be happy to answer any questions you may have.

    Senator Brownback. Thank you, Mr. Marburger, for the 
presentation, and I look forward to the questions back and 
forth.
    Mr. Garman, welcome to the Committee, and I look forward to 
your presentation.

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

    Mr. Garman. Thank you, Mr. Chairman. I, too, will summarize 
my testimony.
    As the chart behind me shows, there is an imbalance between 
domestic oil production and transportation's demand for 
petroleum. This imbalance, which is now around 11 million 
barrels a day, is projected to keep growing. And we're not 
going to close this imbalance with regulation, with new 
domestic production, or even both. Although promoting 
efficiency in the use of oil and finding new domestic sources 
of oil are important short-term undertakings, over the long-
term, a petroleum-free option is eventually required. We 
ultimately want a transportation system that is free of 
dependence on foreign energy supplies and free of all harmful 
emissions.
    We also want to preserve the freedom of consumers to 
purchase the kind of vehicles they want to drive, and that's 
the concept behind the Freedom CAR Partnership and the 
President's Hydrogen Fuel Initiative, which are designed to 
help develop the technologies necessary for hydrogen fuel cell 
vehicles and the infrastructure to support them.
    A transportation system based on hydrogen provides several 
advantages. Hydrogen can be produced from diverse domestic 
sources, freeing us from a reliance on foreign imports. And 
when hydrogen is used to power a fuel cell, the combination 
results in more than twice the efficiency of today's gasoline 
engines and none of the harmful air emissions. In fact, the 
only byproducts of fuel cell operation are pure water and waste 
heat.
    But to bring about the mass market penetration of hydrogen 
vehicles, government needs to partner with the private sector 
to conduct the research and development needed to advance 
investment in a hydrogen fuel infrastructure that performs as 
well as the petroleum-based infrastructure we already have, and 
that's going to be difficult.
    Our gasoline infrastructure that we currently enjoy has 
been forged over the last century in a competitive market. It's 
remarkably efficient. It can deliver refined petroleum products 
that began as crude oil a half a world away to your 
neighborhood for less than the cost of milk, drinking water, or 
many other liquid products you can buy in the supermarket. 
We're currently bound to that petroleum infrastructure. And 
before drivers will purchase a fuel cell vehicle, they have to 
have confidence in a new hydrogen infrastructure. And that's 
why the President, in his State of the Union Address, made a 
new national commitment backed over the next 5 years by $1.2 
billion for the Hydrogen Fuel Initiative, in addition to 
another $1/2 billion for associated vehicle technologies.
    And government's not going to build this hydrogen 
infrastructure. The private sector will do that as the business 
case becomes clearer. But as we develop the technologies needed 
by the vehicles, we'll also develop the technologies required 
by the infrastructure. Some of the technology challenges are 
daunting. For example, we have to lower, by a factor of four, 
the cost of producing and delivering hydrogen. We have to 
develop more compact, lightweight, lower-cost hydrogen storage 
systems. We have to lower by a factor of at least 10 the cost 
of materials for fuel cells.
    And, fortunately, we're not starting from scratch. 
Beginning back in November 2001, the Department of Energy began 
working with industry, academia, and other stakeholders on a 
comprehensive technology roadmap. We've achieved a remarkable 
level of consensus on what needs to be done.
    And as important as hydrogen is for the long term, we've 
maintained a robust research and development program in non-
hydrogen transportation technologies. Under the Freedom CAR 
Partnership, we've proposed a funding increase in fiscal year 
2004 for our hybrid technology, as well as increases in 
materials technology. Many of these technologies will deliver 
fuel savings both prior to and after the introduction of fuel 
cell vehicles, since lightweight materials and hybrid 
technologies will most likely be incorporated into the fuel 
cell vehicle designs as well as the conventional and hybrid 
models that precede them.
    Automakers are introducing technologies that have resulted 
in part from DOE's work in this area. At the recent Detroit 
auto show, the major U.S. automakers announced that they'll 
have a variety of new hybrid electric models entering the 
market in the 2004-2008 time frame. Of course, hybrid vehicles 
are more expensive compared to conventional vehicles, which is 
why the President proposed a tax credit for hybrid vehicles in 
his national energy plan and in subsequent budget submissions. 
And we urge Congress adopt these important incentives for more 
efficient vehicles.
    So, with that, Mr. Chairman, I'd be pleased to answer any 
questions the Committee has, either now or in the future.
    Thank you.
    [The prepared statement of Mr. Garman follows:]

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

    Mr. Chairman and Members of the Subcommittee, I appreciate this 
opportunity to testify today.
    The President's National Energy Plan, entitled ``Reliable, 
Affordable and Environmentally Sound Energy for America's Future,'' is 
the blueprint for the energy future we seek, and it makes several 
recommendations with regard to hydrogen.
    Specifically, it directs the Secretary to develop next generation 
energy technology, including hydrogen; it recommends that our research 
and development (R&D) programs related to hydrogen and fuel cells be 
integrated; and it recommends that legislation reauthorizing the 
Hydrogen Energy Act enjoy the support of the Administration.
    Since the release of the President's energy plan in May 2001, the 
President and Secretary Abraham have unveiled several exciting new 
initiatives related to hydrogen. Most notable are the FreedomCAR 
partnership announced in January 2002; the President's Hydrogen Fuel 
Initiative announced during the State of the Union address in January 
2003; and the ``FutureGEN'' zero-emission coal-fired electricity and 
hydrogen power plant initiative announced in February. Each of these 
initiatives plays a particularly important role in a hydrogen energy 
future. Each will help make possible a future in which the principal 
``energy carriers'' are hydrogen and electricity, eventually generated 
using technologies that do not emit any pollutants or carbon dioxide.
    Today, we are highly dependent on coal, natural gas and nuclear 
energy for the majority of our electricity. We depend on oil, a growing 
percentage of which is imported, to power our transportation needs. In 
my testimony today I will focus on transportation, and the role that 
FreedomCAR could have in eventually building a light duty 
transportation system that requires no petroleum, and is comprised of 
vehicles that emit nothing other than water vapor. As illustrated in my 
first chart (Figure One) the ``gap'' between domestic production and 
transportation demand is growing--and is projected to keep growing. The 
current gap between total U.S. consumption and net production of oil is 
roughly 11 million barrels per day. Promoting efficiency in the use of 
oil, and finding new domestic sources of oil, are both important short-
term undertakings. But over the long-term, a petroleum-free option is 
eventually required.
    Our energy challenge is further complicated by another important 
factor--the pollutants and carbon dioxide emissions resulting from our 
use of energy. We have made tremendous progress in reducing pollutant 
emissions from our cars and trucks as well as our stationary power 
sources, and we will continue to make incremental gains through 
regulatory approaches such as the Tier II standards. But for true 
efficiency gains, we must reach to develop a wholly new approach to 
energy.
    In his recent State of the Union address, President Bush announced 
a groundbreaking plan to transform our Nation's energy future from one 
dependent on foreign petroleum, to one that utilizes the most abundant 
element in the universe--hydrogen.
    Hydrogen can be produced from diverse domestic sources, freeing us 
from a reliance on foreign imports for the energy we use at home. 
Hydrogen can fuel ultra-clean internal combustion engines, which would 
reduce auto emissions by more than 99 percent. And when hydrogen is 
used to power fuel cell vehicles, it will do so with more than twice 
the efficiency of today's gasoline engines--and with none of the 
harmful air emissions. In fact, fuel cells' only byproducts are pure 
water and some waste heat.
    But ultimate success in the mass-market penetration of hydrogen 
fuel cell vehicles requires a hydrogen-based infrastructure that 
performs as well as the petroleum-based infrastructure we now have.
    Our current gasoline/hydrocarbon infrastructure has been forged in 
a competitive market. It is ubiquitous and remarkably efficient. It can 
deliver refined petroleum products that began as crude oil half a world 
away to your neighborhood for less than the cost of milk, drinking 
water, or many other liquid products you can buy at the supermarket. We 
are currently bound to that infrastructure. We have no alternative. 
Eventually replacing it with something different will be extremely 
difficult. But that is what we must do if we expect to achieve success 
with the FreedomCAR partnership. Drivers must be able to go anywhere in 
America and to refuel their hydrogen-powered vehicle before they will 
be comfortable purchasing one.
    That is why the President, in his State of the Union address, 
proposed that we in the federal government significantly increase our 
spending on hydrogen infrastructure R&D, including hydrogen production, 
storage, and delivery technologies, as well as fuel cells. Over the 
next five years, we plan to spend an estimated $1.7 billion on the 
FreedomCAR partnership and Hydrogen Fuel Initiative, $1.2 billion of 
which is for the Hydrogen Fuel Initiative, which includes resources for 
work on hydrogen and fuel cells. Of the $1.2 billion figure, $720 
million is ``new money.''
    We will not build the infrastructure. The private sector will do 
that as the business case becomes clear. But as we develop the 
technologies needed by the vehicles, we will also develop the 
technologies required by the infrastructure. In cooperation with DOT, 
we will convene the parties needed for technology partnerships, we will 
collaborate on the needed codes and standards, and we will promote 
international cooperation in this effort. Just last week, during a 
presentation to the International Energy Agency, Secretary Abraham 
called for an ``International Partnership for the Hydrogen Economy'' to 
collaborate on research and deployment of hydrogen technologies.
    I will now elaborate further on some of these technology challenges 
we face and the timing of the transition toward a hydrogen economy.
Technology Challenges
    Achieving our vision will require a combination of technological 
breakthroughs, market acceptance, and large investments in a national 
hydrogen energy infrastructure. Success will not happen overnight, or 
even over years, but rather over decades; it will require an 
evolutionary process that phases hydrogen in as the technologies and 
their markets are ready. Success will also require that the 
technologies to utilize hydrogen fuel and the availability of hydrogen 
occur simultaneously.
    Some of the significant hurdles to be cleared include:

   Lower by a factor of four the cost of producing and 
        delivering hydrogen;

   Develop more compact, light weight, lower cost, safe, and 
        efficient hydrogen storage systems that will enable a greater 
        than 300 mile vehicle range;

   Lower by a factor of ten the cost of materials for advanced 
        conversion technologies, especially fuel cells;

   More effective and lower cost (by a factor of at least ten) 
        carbon-capture and sequestration processes (a separate program 
        critical to fossil-based production of hydrogen);

   Designs and materials that maximize the safety of hydrogen 
        use; and,

   Finally, we must solve the overarching infrastructure 
        challenges to develop a hydrogen-based delivery and refueling 
        infrastructure comparable to the petroleum-based one we have 
        today. The development of needed codes and standards as well as 
        the education of consumers relative to the use of hydrogen can 
        help safely establish this hydrogen infrastructure.

    The Department has drafted a work breakdown structure associated 
with each of the critical areas (production, delivery, storage, 
conversion, and end-use) identified in the National Hydrogen Energy 
Roadmap unveiled by the Secretary last November. We have developed 
critical milestones and decision points that will help us gauge 
technology progress. Examples of key program milestones that support 
FreedomCAR and achievement of a hydrogen economy include the following:

   On-board hydrogen storage systems with a six percent 
        capacity by weight by 2010; more aggressive goals are being 
        established for 2015;

   Hydrogen production at an untaxed price equivalent to $1.50 
        per gallon of gasoline at the pump by 2010;

   Polymer electrolyte-membrane automotive fuel cells that cost 
        $45 per kilowatt by 2010 and $30 per kilowatt by 2015 and meet 
        100,000 miles of service life; and,

   Zero emission coal plants that produce hydrogen and power, 
        with carbon capture and sequestration, at $0.79 per kilogram at 
        the plant gate.

    In the near future, we plan on partnering with energy companies to 
establish more specific goals related to technology and components 
needed to produce and distribute hydrogen using various fossil, nuclear 
and renewable pathways. In this exercise, we will be looking at the 
full range of hydrogen technology areas covered in the Roadmap.
    Advances in other technologies will also be necessary for the 
ability of a hydrogen-fueled vehicle to realize its full potential. 
These include:

   Improved energy storage, (e.g., batteries that are more 
        durable, cheaper, and better performing);

   More efficient and cost effective electric motors;

   Inexpensive and more effective power electronics; and,

   Better materials for lighter, but strong, structural 
        members.

    These technologies will enable hydrogen-fueled vehicles to be more 
efficient, and to help lower the vehicle cost to the consumer.
    In the near- to mid-term, most hydrogen will likely be produced by 
technologies that do not require a complete hydrogen distribution 
infrastructure (i.e., using existing distributed natural gas 
infrastructure). As RD&D progresses along renewable, nuclear, and clean 
coal and natural gas production pathways (including techniques for 
carbon sequestration) a suite of technologies will become available in 
the mid- and long-term to produce hydrogen from a diverse array of 
domestic resources. The economic viability of these different 
production pathways will be strongly affected by regional factors, such 
as feedstock availability and cost, delivery approaches, and regulatory 
environment.
    Detailed analysis of life-cycle costs and benefits for alternative 
hydrogen production pathways, carbon sequestration, and other elements 
will continue. ``Well-to-Wheels'' analyses conclude that the energy and 
environmental benefits depend greatly on how hydrogen is manufactured, 
delivered and stored, and on the economic feasibility of sequestration 
for fossil feed stocks. The results of these studies will help in 
making down-select decisions and to ensure that the relative merits of 
specific hydrogen pathways are evaluated properly and in comparison 
with other energy alternatives. In fact, we are now following up on a 
National Academy of Sciences recommendation to establish a more robust 
systems analyses effort so that we can optimally prioritize areas for 
R&D, as well as understand the ramifications of future R&D successes 
and disappointments. Out-year planning will identify needs for RD&D on 
production and storage technologies, delivery infrastructure, and 
education and safety/codes and standards. Public education of consumers 
and local code officials must also be pursued concurrently with the 
RD&D.
    Finally, industry must develop and construct the infrastructure to 
deliver hydrogen where it is needed. We will work with the DOT to help 
industry develop a safe, efficient, nation-wide hydrogen 
infrastructure. The hydrogen distribution infrastructure can evolve 
along with the conversion and production technologies, since much of 
the infrastructure that is developed for fossil-based hydrogen will 
also be applicable to renewable- and nuclear-based hydrogen. We will 
partner with industry to develop infrastructure in pilot projects, and 
industry will expand locally, regionally, and ultimately nationally.

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

   We are working to develop technologies for heavy vehicles by 
        2006 that will enable reduction of parasitic energy losses, 
        including losses from aerodynamic drag, from 39 percent of 
        total engine output in 1998 to 24 percent;

   The 2006 goal for Transportation Materials Technologies R&D 
        activities is to reduce the production cost of carbon fiber 
        from $12 per pound in 1998, to $3 per pound; and,

   The 2010 goal for Hybrid and Electric Propulsion R&D 
        activities is to reduce the production cost of a high power 
        25kW battery for use in light vehicles from $3,000 in 1998 to 
        $500, with an intermediate goal of $750 in 2006, enabling more 
        cost competitive market penetration of hybrid vehicles.

    Automakers are introducing technologies that have resulted in part 
from DOE's work in this area. At the recent North American 
International Auto Show in Detroit, the major U.S. automakers announced 
that they will have a variety of new hybrid gasoline-electric models 
entering the market in the 2004-2008 timeframe.
    Of course, hybrid vehicles are more expensive compared to 
conventional vehicles, which is why the President proposed a tax credit 
for hybrid vehicles in his National Energy Plan, and subsequent to that 
in his 2004 budget submission. We urge that Congress adopt this 
important incentive for more efficient vehicles.
    And we will continue support for our Clean Cities program, a 
unique, voluntary approach supporting more than eighty local coalitions 
that deploy alternative fuel vehicles (AFVs) and promote supporting 
infrastructure.
    The Administration strongly supports a renewable fuels standard 
(RFS) that will increase the use of clean, domestically produced 
renewable fuels, especially ethanol, which will improve the Nation's 
energy security, farm economy, and environment.
    As important as the RFS and the Clean Cities program are, their 
goals illustrate the daunting challenges we face. Taken together, the 
RFS and Clean Cities are expected to offset about four billion gallons 
of petroleum use per year by 2010. That sounds impressive until it is 
compared to the demand for petroleum for transportation uses. In the 
year 2000, we used approximately 130 billion gallons of gasoline and 
over 33 billion gallons of diesel (highway use only). With that 
realization, the critical importance of the FreedomCAR partnership and 
Hydrogen Fuel Initiative as a long-term strategy becomes clear.
    And, if we are to achieve real progress in the near term and our 
ultimate vision in the long term, we must continue to nurture 
productive partnerships with the private sector. It is the private 
sector that will make the major investments necessary for the 
transition to a radically different transportation future. Those 
investments will not be made in the absence of a clear-cut business 
case.

Transition to a Hydrogen Economy
    We consider the transition to the hydrogen economy as occurring in 
four phases, each of which requires and builds on the success of its 
predecessor, as depicted in Chart 2. The transition to a hydrogen-based 
energy system is expected to take several decades, and to require 
strong public and private partnership. In Phase 1, government and 
private organizations will research, develop, and demonstrate 
``critical path'' technologies and safety assurance prior to investing 
heavily in infrastructure. This Phase is now underway and will enable 
industry to make a decision on commercialization in 2015.
    The FY04 Budget currently before Congress is consistent with 
completion of the technology RD&D phase by 2015.
    Phase II, Transition to the Marketplace, could begin as early as 
2010 for applications such as portable power and some stationary 
applications, and as hydrogen-related technologies meet or exceed 
customer requirements. If an industry decision to commercialize 
hydrogen fuel cell vehicles is made in 2015, mass-market penetration 
can begin to occur around 2020. Consumers need compelling reasons to 
purchase new products; public benefits such as high fuel use efficiency 
and low emissions are not enough to overcome the market advantages of 
the incumbent technology and infrastructure. The all-electronic car 
powered by hydrogen fuel cells is one example of an approach to greater 
value delivery; it could offer the consumer greater amenities, improved 
performance through elimination of mechanical parts and greater design 
flexibility.
    As these markets become established, government can foster their 
further growth by playing the role of ``early adopter,'' and by 
creating policies that stimulate the market. As markets are established 
this leads to Phase III, Expansion of Markets and Infrastructure. The 
start of Phase III is consistent with a positive commercial decision 
for vehicles in 2015. A positive decision will attract investment in 
infrastructure for fuel cell manufacturing, and for hydrogen production 
and delivery. Government policies still may be required to nurture this 
infrastructure expansion phase.
    Phase IV, which should begin about 2025, is Realization of the 
Hydrogen Vision, when consumer requirements will be met or exceeded; 
national benefits in terms of energy security and improved 
environmental quality are being achieved; and industry can receive 
adequate return on investment and compete globally. Phase IV provides 
the transition to a full hydrogen economy by 2040.

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




    Senator Brownback. Thank you very much, Mr. Garman.
    There's a number of questions that I have. And let's run 
the clock here about 7 minutes, if we could, for questions back 
and forth. Both of you put forward the promise of this for the 
future, and we can see the beauty of that. Both of you put 
forward a series of technical and cost hurdles to overcome in 
both the fuel and in the vehicle. Is this doable, to be able to 
meet these costs and technical hurdles? And in what time frame 
are we talking about being able to do that, if it is 
achievable?
    Mr. Marburger. Dave, you're closer to the technical 
details. I'll do the high-level content-free questions, and you 
can do the technical questions.
    Mr. Garman. The President's words in the State of the Union 
were really chosen very carefully when he said a child born 
today should be able to purchase a hydrogen fuel cell vehicle 
when he's ready to drive. We think that the components can be 
in place for commercialization on the merits of the business 
case for the automakers to make a decision to proceed with 
mass-market introduction of the vehicles. That decision can 
happen around 2015, with real mass-market introduction by 2020. 
Some of the automakers are saying perhaps that can come sooner 
if the refueling infrastructure is in place.
    Our general findings with respect to alternative fuel 
infrastructure is that fueling stations, about 20 percent in 
urban markets and 50 percent in rural markets need to have the 
alternative fuel available or customers won't have confidence 
in purchasing the vehicles. So we have to attack this chicken-
and-the-egg problem, not only the vehicles, but also the 
infrastructure, and that is going to take some time. So I think 
2015/2020 is the correct time frame.
    Mr. Marburger. Let me add to that by pointing out that 
there are current applications of stationary fuel cells for 
backup power, and they are developing a market. They're 
developing the industry and, together with that, the 
infrastructure that will be necessary as the applications move 
on into the transportation sector.
    Senator Brownback. Mr. Garman, what do you base that 
projection of 2015--you're 12 years out from that--that you 
could get to a commercialization phase, and you're talking 
about a factor of 4 on the price of the fuel, a factor of 10 on 
the actual fuel cell vehicle itself--where do you see those 
great advances coming in such, really, a pretty short period of 
time?
    Mr. Garman. We're heartened, in part, by some great 
advances that have happened in the recent past. For example, 
the cost of fuel cells themselves have been brought down by an 
order of magnitude in the last 5 or 6 years as a consequence of 
some of the work done at the national labs and in the private 
sector on reducing the amount of platinum and other precious 
metals needed for the fuel cell membrane. We have, through this 
road-mapping process that I referred to and bringing all of the 
parties together to understand what the technology hurdles 
were, have really developed a pretty tight set of R&D goals, 
beginning in the 2010 time frame.
    If we are successful in meeting all of our 2010 goals--and 
I'll provide them for the Committee; it's sort of engineering-
type-based goals--but if we're successful, we believe we'll 
have the basic technology components necessary for the vehicle 
in place--the technology, the capability, at least--somewhere 
after the 2010 time frame. So we've given a great deal of 
thought to these possibilities.
    You know, the price of, for instance, hydrogen from natural 
gas, yes, today it is four times higher than it needs to be, 
but we are already opening some demonstration stations, 
hydrogen refueling stations, and learning a great deal about 
how to improve the efficiency of the hydrogen production, how 
to optimize compression, storage, and some of the other 
elements that need to be in place to make sure we can meet our 
cost targets.
    And the reason we are doing these cost targets kind of 
consistent with the President's management agenda and linking 
the budget that we're asking Congress for with the achievement 
of performance goals that we've articulated, we hope to be 
transparent to the Congress so that you will know and we will 
know how we're progressing against those goals going ahead.
    Senator Brownback. Mr. Garman or Mr. Marburger, either one 
of you. Senator Dorgan and I have one similar feature that we 
have between our States--there are a number of them, but we do 
have plenty of wind energy. And we've had windmills and wind 
electricity generation be recently constructed. Of course, it's 
been a power source since people have been farming in it, but 
the big problem is the sporadic nature of wind energy and then 
being able to put that into the grid in a timely or usable 
fashion. But if you did convert that wind energy into hydrogen 
and store and receive it, it does seem to answer significant 
questions for wind energy and possibly for hydrogen. Is that 
correct, or is that too simplistic of a view of putting 
together these resources?
    Mr. Garman. No, that's absolutely correct. We have to--
because we're using electrolysis as the mode of hydrogen 
production there, which is the conversion of one energy carrier 
to another. And there's a certain loss of efficiency whenever 
you do that. We want to make sure that the underlying wind 
technology, we continue to bring down the cost of generating 
electricity from wind. That's very important.
    And also, we're going to have to do a little bit of work on 
how we get the hydrogen from its point of production, at the 
wind turbine or close to it, to where it needs to go. We do 
have, today, hydrogen pipelines, about 700 miles worth in this 
country. We operate them at pretty low pressures. If we were to 
want to operate large hydrogen pipelines at much higher 
pressures, we're going to have some materials issues and some 
other things that we have to confront. We think we can do this. 
We don't see any showstoppers. The issue is, as always, cost--
competing with that tremendously low cost that energy companies 
are able to deliver gasoline to your neighborhood for. That's 
what we have to compete with, and that's a tough competitor.
    Senator Brownback. Mr. Marburger?
    Mr. Marburger. Yes, I'd like to add to that, in that 
hydrogen is not only a great way to store energy, it's a great 
way to deliver it. Because unlike electricity, which has to be 
brought from the production source to the user by a wire which 
loses a lot on the way, hydrogen doesn't lose any of its 
electricity en route. So if you can have pipeline distribution, 
it could be much more efficient than electrical energy 
distribution over wires. And this is potentially another 
attractive feature.
    Senator Brownback. As you mention, though, Mr. Garman, that 
we've got to get more efficient production of electricity, then 
in the present scenario are we likely to produce hydrogen via 
coal because of the expense, and are we having another set of 
environmental issues, then, that are forward with producing 
hydrogen via coal?
    Mr. Garman. We wouldn't want to do that unless we were 
successful at sequestration technology. And, of course, there 
are--you know, if I wanted to produce hydrogen from coal, what 
I would do is gasify the coal, split off the hydrogen from that 
gas created, and then take the carbon dioxide, the sulfur, and 
the other elements in that gas and sequester that in, say, deep 
unminable coal seams or saline aquifers so that that's not 
released to the environment. That is a way, theoretically, that 
we could cleanly use coal.
    In the near term, we believe that most of the hydrogen will 
be produced from natural gas, the way hydrogen is produced 
today. We produce some 9 million metric tons of hydrogen each 
and every year using natural gas. We would need 40 million 
metric tons to drive a fleet of 100 million vehicles. So we're 
really not that far apart, in terms of what we produce today 
and what we would need to drive a fleet of vehicles.
    So in the near term, we think natural gas would probably be 
the feed stock. But, again, the great thing about hydrogen is 
that we can, on the farm, gasify agricultural residues that are 
currently left in the field. That can be turned into hydrogen. 
There's just a variety of methods and processes that we can 
use. One day we hope to be able to use microbes, bacteria, 
algae, some other things that, even through genetic 
modification or other means, we can use to actually create 
hydrogen, or to synthesize hydrogen, if you will. So this gives 
us lots of options as a nation.
    Senator Brownback. Senator Lautenberg?
    Senator Lautenberg. Yes, thank you, Mr. Chairman.
    Mr. Garman, accompanying your statement is a graph that 
says the oil used in transportation plotted against domestic 
production. And that's a grim prospect, obviously. When we got 
to the 2000 line, the difference between available oil from 
domestic sources and that which is presently used began to 
widen substantially. And so here we are with an expectation 
that we're going to have to use far more than twice that which 
we are able to produce domestically, and we're looking at a 
program that has a lot of potential, but also a lot of 
practical problems associated with it. Namely, cost, as I 
looked at Mr. Marburger's statement.
    So if those are the projections, why wouldn't we be wise to 
step up the funding that is offered from the Government, 
considering that the automobile manufacturers are spending 
between $2- and $3 billion each year on hydrogen fuel vehicle 
research, and we're proposing $1.2 billion. We're going to be 
throwing away a lot of money long-term in this process, and 
wouldn't you think that the situation is more emergent than 
$1.2 billion and that we ought to try to see what we can do 
about expanding that, match the private sector, and really show 
that the commitment's a serious one?
    Because I think that if people look at a $1.2 billion spent 
here, that energy is probably the second or third highest 
priority, in terms of our need as a society. I mean, we're 
drowning in pollution, and the dependency on others for our 
product, our needs, and I think that we have to declare an 
emergency alarm and get on with the investment.
    I take it, from each of you, that the practicality is 
there. But the question of how you get this into production is 
a fairly good-sized task. But money can cure a large part of 
that. We're going to be spending the money. It's a question of 
where we spend it and when we spend it.
    Mr. Garman. I would respond and agree that there's both a 
short-term challenge and a long-term challenge and would argue 
that the most appropriate use of Federal R&D dollars is in 
long-term technology.
    Automakers have technology to produce high-mileage cars 
today. You can buy high-mileage cars today. I drive a car that 
gets over 50 miles per gallon. It's available. The problem is 
the consumers, for one reason or another, are not choosing to 
purchase high-mileage cars, because it doesn't give them the 
features that they want in a vehicle.
    And what's, sort of, different and remarkable about fuel 
cell vehicles is that a fuel cell vehicle, like the one you 
saw, the General Motors car, outside today and others being 
planned by the other automakers, actually provide advantages 
that consumers will want to buy. It actually gives them 
advantages, it does things that their vehicles today can't do. 
And it also confers certain public benefits, like reducing our 
dependence on foreign oil and making our air cleaner to 
breathe.
    So I think that our approach is a good one to make the 
investments in the long term R&D. We have other tools at our 
disposal, and, in fact, the administration used corporate 
average fuel economy standards. When you look at that graph, 
you see that the largest increase in petroleum use is in the 
light truck category. And just a couple of weeks ago, the 
administration increased CAFE standards on light trucks for the 
first time since the 1996 model year, and it was the largest 
increase in standards in 20 years, I believe. So there are 
various mechanisms that are available to us.
    I think the right role for R&D is to solve these truly 
difficult technical challenges that we have to this alternative 
that will make these debates about corporate average fuel 
economy standards absolutely moot, totally remove the 
automobile from the environmental equation, and totally remove 
the geopolitics of oil from our transportation problems.
    Senator Lautenberg. Well, do you think, therefore, then, 
the pace is an acceptable one at this juncture? Can we 
accelerate the pace of development by spending more money, or 
are the automobile companies being foolish in the amount that 
they're investing?
    Mr. Garman. We're guided, in part, by the roadmap work that 
we developed in partnership with private sector, 
nongovernmental organizations, and others. The truth is, yes, 
more money can accelerate some things, but you also need time. 
You need learning cycles where you actually put the technology 
on the road, discover where the improvements need to be made, 
redirect your R&D to solve the problems, and then, again, go 
through another learning cycle to put the next-generation 
technology on the road.
    So, yes, money is useful, and we're glad the President has 
entrusted us with these resources, but we also need some time.
    Senator Lautenberg. I think we also need some 
encouragement, when you say that the consumers haven't turned 
to these things with a rush certainly. But I've never heard a 
word--and, by the way, it's not unique to this administration, 
but over the last years--I haven't heard the word ``conserve,'' 
``sacrifice,'' ``do your part,'' ``help us reduce our 
dependence,'' and ``if you need a second vehicle, look at the 
gasoline, the mileage consumption there per gallon''--and 
encourage the industry rather than I think what we're doing. 
There is a delicate balance between jobs and investment and--
but the industry, generally, has been permitted to set its own 
timetable. There were several times in my previous term here 
when we tried to raise the CAFE standard, and it just couldn't 
go anywhere.
    I think in view of what is an emergency character to where 
we're going, I would think that a more aggressive campaign 
coming out of the administration talking about, you know, ``You 
want to do your part. If you need another something, then look 
at the mileage standards and see what that looks like.'' And, 
really, because we know that the vehicles--there are vehicles 
available that get more mileage. I looked at that car, and I'm 
trying to figure out what it is that you saw in that car that 
you can't get in other cars. But perhaps we can talk about that 
privately.
    I thank you, Mr. Chairman.
    Senator Brownback. Thank you very much.
    If I could ask one follow-up of Secretary Garman. Based on 
your experience and your knowledge, what are the greatest 
challenges--and I'd like for you to put these in priority 
order--to the deployment of hydrogen fuel cell cars? What are 
the specific set of questions that we have to answer in list of 
importance as you look at this issue?
    Mr. Garman. Number one, I would say, is storage. Storage of 
hydrogen onboard the vehicle. Consumers are only going to buy a 
vehicle that gives them a range of 300 or 350 miles between 
refuelings. And the nature, the physical nature, of hydrogen is 
such that it's difficult to store in a manner that--without 
using a lot of weight and bulk. And weight and bulk is, in 
essence, the enemy of an automaker trying to design a car that 
consumers will want to buy.
    So, you know, the method of storing hydrogen today is by 
compressing it in a 5,000- or 10,000-pounds-per-square-inch 
vessel, pressure vessel. We're looking at a variety of 
technologies, like chemical hydrides, metal hydrides, carbon 
nanotubes, other types of materials that can store hydrogen at 
close to ambient temperatures and pressures. That, I would say, 
is number one.
    Number two, I would say, is probably the cost of the 
hydrogen itself. It needs to be competitive with the cost of 
gasoline if we're going to get in the ballpark. Maybe down the 
road, Congress can deal with some policy incentives, in terms 
of how hydrogen is taxed or other things, but we've got to make 
sure that we can produce hydrogen close to the cost of its 
competitor before consumers will feel comfortable purchasing 
the car.
    And, third, you might think about making hydrogen out of 
ethanol. Biomass is a tremendous opportunity for hydrogen.
    Senator Brownback. Good.
    Mr. Garman. Absolutely.
    Senator Brownback. Nice statement.
    [Laughter.]
    Mr. Garman. And, third, the cost and durability of the fuel 
call itself. They're about an order of magnitude too high 
today. And also the durability of the fuel cell of--you know, 
when you buy a car, you want to make sure it's going to go 
120,000 or 150,000 miles, and that's going to require about a 
5,000-hour life on the fuel cell. Today, the fuel cells are 
lasting, you know, 1,000 hours or 2,000 hours. We need to 
improve the durability and lower the cost of the fuel cell.
    Those items, I would think, are the big three.
    Senator Brownback. And you don't see any of them as 
insurmountable within this 12-year time frame that you're 
talking about?
    Mr. Garman. I probably worry a little bit more about 
storage than the others. And, we've pulled together Nobel 
Laureates and other prize-winning scientists to help us tackle 
this problem.
    Senator Brownback. And they feel it is accomplishable?
    Mr. Garman. Yes. I mean, we're going to need a technology 
breakthrough on that one. All the others, I think we can do 
without a major technology breakthrough, but on the storage, I 
think we're going to need a technology breakthrough.
    Senator Brownback. Like what? What sort of technology 
breakthrough are you----
    Mr. Garman. A composition of a metal hydride, for instance, 
we've got metal hydrides that come close, just not quite there 
yet--that can actually hold the hydrogen molecules in its 
matrix without having to use high pressure for storage. And 
this is kind of a materials challenge, and this is--I yield to 
the expert, who's an actual scientist. He doesn't just play one 
on TV.
    Mr. Marburger. Let me just comment on the relevance of 
other national priorities for basic research to this problem. 
These new materials are designed and improved through the 
processes of nanotechnology. The National Nanotechnology 
Initiative is likely to produce new materials and new materials 
preparation processes that will be very relevant, both to the 
storage and to the fuel cell membranes and electrodes, 
themselves, and that the figures of merit on these materials 
have been improving gradually.
    But I agree with Dave, a technology breakthrough will be 
necessary. But in view of the many opportunities that exist--
for example, Dave mentioned carbon nanotubes; if we can find a 
way to manufacture carbon nanotubes in much larger quantities--
--
    Senator Brownback. Slow me up here a little bit. Carbon 
nanotubes. I realize I chair this Subcommittee, but I don't--
what are you talking about?
    [Laughter.]
    Mr. Marburger. These are nanoscale structures made out of 
carbon atoms that have unusual geometrical properties, and they 
have strength properties and electrical-conductivity 
properties, but they also have properties that may make them 
suitable for storing hydrogen. And the problem with them now is 
that they're difficult to manufacture in the quantities and 
specifications that you need.
    So lots of people are working on this, because there are 
other applications of carbon nanotubes, as well. And we hope 
for a crossover kind of result that can stimulate developments 
in the fuel cell business, the hydrogen business.
    Senator Brownback. You know, we've doubled funding at NIH 
over a 5-year time period, widely supported amongst the 
Congress, a strong feeling that we were just very close to some 
major breakthroughs in health research and medical information 
technology, drugs, treatment. Would we have the same sort of 
promises if we did something similar with NSF, National Science 
Foundation, as some people have kicked that idea around? Are we 
on some of the breakthroughs that we need in this and a number 
of other areas if we significantly increase that investment?
    Mr. Marburger. NSF is currently the largest shareholder in 
the National Nanotechnology Initiative, and there are certainly 
very, very important benefits to come from funding those 
initiatives, that initiative in the Department of Energy and 
other big physical science agencies, as well. Our preference is 
to focus on the priorities and on the areas of science that are 
likely to create breakthroughs like this. The physical sciences 
have been identified as an area that's in need of additional 
support. And in the President's fiscal year 2004 budget 
request, a number of physical sciences programs and projects 
are singled out for increased funding, including five new 
nanotechnology materials centers in Department of Energy 
laboratories, all of which, I can assure you, will be recruited 
for basic research on a hydrogen economy.
    Senator Brownback. Sounds like a topic we'll need to cover 
at a future hearing.
    Gentlemen, thank you very much. I would like the one 
document you talked about, Mr. Garman, to be submitted into the 
record, that would be appreciated. *
---------------------------------------------------------------------------
    * The document is included in Mr. Garman's prepared statement.
---------------------------------------------------------------------------
    Senator Brownback. Very good testimony.
    Call for the second panel. The second panel is Dr. David 
Friedman. He's the senior engineer of Clean Vehicles Program 
for the Union of Concerned Scientists. Mr. Byron McCormick, the 
Executive Director of fuel cell activities for General Motors 
Corporation. And Mr. Francis Preli, Jr., vice president of 
engineering, United Technologies Corporate Fuel Cells.
    Gentlemen, we're delighted to have you here this afternoon. 
Your written statements will be put into the record as 
presented, so you're free to summarize if you would choose to 
do so.
    Dr. Friedman, we will start with you. And the microphones, 
pull them up close, if you will. They're not the best 
technology.

STATEMENT OF DAVID J. FRIEDMAN, SENIOR ENGINEER, CLEAN VEHICLES 
                  PROGRAM, UNION OF CONCERNED 
                           SCIENTISTS

    Dr. Friedman. Thank you, Mr. Chairman, and thank you for 
the opportunity to testify before you today.
    My name is David Friedman, and I'm a senior engineer with 
the Union of Concerned Scientists. UCS is a nonprofit 
organization of more than 60,000 scientists and citizens 
working for practical environmental solutions.
    Now, as I start, I just want to note that in the 5 minutes 
it will take me to speak today, we will spend over $1 million 
overseas to buy oil. That is $200,000 that leaves the U.S. 
economy every minute. This economic burden will continue to 
grow as long as the U.S. is tied to oil. We will be susceptible 
to OPEC's market power and Persian Gulf instability. We will 
also be contributing to many significant environment problems 
that impact our health and our economy.
    While there is no single silver bullet to address this 
problem, there is a set of technologies that offer short-, 
medium-, and long-term solutions to our transportation oil 
problem. Given the size of this problem, we must put each of 
these tools to work. Today I would like to talk about these 
technologies and where hydrogen fuel cells fit in.
    If you would turn your attention to this chart, the top 
edge, very similar to the chart that Secretary Garman showed, 
shows the projected oil use for U.S. cars and trucks only, 
today starting at about 8 million barrels per day and reaching 
over 14 million barrels per day by 2020. In the short term, as 
seen in the blue-shaded area, cost-effective conventional 
technologies are available and can be put on the road to 
quickly and dramatically slow the growth of oil use from cars 
and trucks while also saving consumers money. These 
technologies include efficient gasoline engines, like General 
Motors' displacement-on-demand technology. They also include 
more efficient transmissions, improved aerodynamics, high-
strength steel, and lower rolling-resistance tires. Diesel is 
another conventional technology option, but it will not be as 
cost effective as other existing technologies, and it will make 
it harder to address air quality concerns.
    Because these conventional technologies exist and are cost 
effective, we do not need a major research program to get them 
on the road. Instead, we need automakers to put them in the 
showrooms, providing consumers with choices they currently do 
not have, things like a 35-mile-per-gallon Ford Explorer or a 
33-mile-per-gallon Chevy Silverado pickup.
    The administration recently set an extremely modest 4-year 
goal for increasing light truck fuel economy standards by 1.5 
miles per gallon. This will have a negligible impact on our oil 
use, barely affecting the top line. It will save less than one 
day's worth of oil each year between 2005 and 2008. 
Significantly more can be done with the use of conventional 
technologies, as the blue-shaded area in this chart shows.
    In the medium term, as shown in the red-shaded area, hybrid 
technology can stabilize our passenger-vehicle oil use through 
2020 building on the gains made by near-term conventional 
technology. Our analysis indicates that hybrid technology can 
lead to a fleet of 55- to 65-mile-per-gallon cars and 40- to 
50-mile-per-gallon trucks in the 2015 to 2020 time frame.
    Dedicated alternative fuel vehicles also offer near- and 
medium-term air quality and oil savings benefits. And fuels 
such as natural gas and possibly methanol will provide a major 
source of hydrogen in the transition to renewable hydrogen feed 
stocks.
    These technologies also do not require major public funding 
for research, but they will be more expensive than other 
options, especially in the near-term. For this reason, 
temporary performance-based market incentives will be important 
to get a sufficient number of vehicles and fuel on the road to 
bring down their costs.
    Finally, hydrogen fuel cell vehicles, as shown in the 
green-shaded area, build on gains from conventional and hybrid 
technology, and together they can dramatically reduce projected 
oil use. By 2030 and beyond, hydrogen fuel cell vehicles can 
put us on a path to effectively eliminate our passenger vehicle 
oil use. But, again, that's 20 to 30 years away, and there are 
many technologies that can do a lot in the interim.
    There is a need for government-funded research and 
demonstration on fuel cells and fuel cell vehicles to ensure 
that clean hydrogen fuel and vehicles can be made available. 
Temporary performance-based market incentives for fuel cell 
vehicles, hydrogen, and, importantly, renewable energy 
resources will also be important to bring down costs.
    These research programs and incentives must also recognize 
that hydrogen is not inherently clean. Instead, it is an energy 
carrier that is only as clean as the source. Accelerating the 
movement to a clean hydrogen future will not be a small or 
inexpensive task, but the benefits far outweigh the costs. To 
be successful, such a program will need a clear timetable, 
along with concrete vehicle production and supply goals, and 
that's something that is missing from the administration's 
current plans.
    In closing, I just want to say that as an engineer, I see 
this broad array of technology that is available as an 
opportunity. It's an opportunity to roll up our sleeves and get 
to work making vehicles that are safer, cleaner, and less 
dependent on oil.
    Because the available conventional and advanced 
technologies complement each other, this is not an either/or 
proposition. We don't have to choose between conventional 
improvements, hybrids, and fuel cell vehicles. We can do them 
all and dramatically reduce our oil dependence. We must 
continue to focus on policies that will put conventional 
technology to work while we also invest in these longer-term 
options.
    Thank you for the opportunity to testify today.
    [The prepared statement of Dr. Friedman follows:]

    Prepared Statement of David J. Friedman, Senior Engineer, Clean 
            Vehicles Program, Union of Concerned Scientists

    Thank you Mr. Chairman and Members of the Committee for the 
opportunity to testify before you today. My name is David Friedman and 
I am a Senior Engineer in the Clean Vehicles Program at the Union of 
Concerned Scientists (UCS). UCS is a nonprofit organization of more 
than 60,000 scientists and citizens working for practical environmental 
solutions.
    Today, I would like to begin by briefly describing the numerous 
challenges--ranging from growing dependence on foreign oil to public 
health concerns--posed by our transportation sector. I will then focus 
on both the technologies available today as well as the technologies of 
the future that will help us meet these challenges. UCS firmly believes 
that technology is available today that can increase our efficiency, 
help protect public health and provide consumers with safe 
transportation. There is no single silver bullet, but there is a set of 
technology that offer short, medium and long-term solutions to our 
transportation oil problem. Given the size of this problem, we must put 
each of these tools to work. We must continue to focus on policies that 
will put that technology to work for us now even while we invest in the 
technologies of the future.

Energy, Oil, and the Transportation Sector
    The United States currently uses about 20 million barrels of oil 
each day. Two thirds of that oil is used in the transportation sector. 
So, the economic, political, environmental and health risks associated 
with our oil dependence are inherently linked to the amount of fuel our 
transportation system requires every day.

Oil Markets
    As the world's largest oil consumer, the United States is 
particularly exposed to the risks posed by an oil market beyond our 
control. Reliance on the economically powerful OPEC cartel \1\ and the 
politically unstable Persian Gulf nations will only grow over time as 
oil supplies dwindle. OPEC owns four-fifths of the world's remaining 
proven oil reserves and nations in the Persian Gulf own two-thirds 
(Figure 1). Only a small proportion--about 2 percent--of the proven 
reserves lies within the United States.
---------------------------------------------------------------------------
    \1\ OPEC, the Organization of Petroleum Exporting Countries, 
consists of Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, 
Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.



Economic Impacts
    Importing large amounts of oil carries significant economic costs: 
we send more than $200,000 overseas each minute to buy foreign oil. \2\ 
But even if we imported no oil at all, the U.S. economy would still be 
vulnerable. The world oil market determines the price we pay for oil, 
so global price hikes affect the cost of U.S. oil because all oil 
retailers (domestic and foreign) charge more. As long as the U.S. 
economy is tied to oil--and oil is traded globally--we will be 
susceptible to OPEC's market power and Persian Gulf instability. To 
date, the economic costs of oil dependence have been tremendous, 
totaling $7 trillion over the past 30 years by one estimate (Greene 
&Tishchishyna, 2000).
---------------------------------------------------------------------------
    \2\ UCS estimate based on the Energy Information Administration `s 
import cost figure of $119 billion in 2000 (EIA, 2001c).
---------------------------------------------------------------------------
    The political instability of the Persian Gulf has caused three 
major price shocks over the past 30 years. The Iraqi invasion of Kuwait 
in 1990 took an estimated 4.6 million barrels per day out of the global 
oil supply for three months. The Iranian revolution reduced global oil 
supplies by 3.5 million barrels per day for six months in 1979, and the 
Arab oil embargo eliminated 2.6 million barrels per day for six months 
in 1973 (EIA, 2001b). In each of these cases, the world oil supply 
dropped only about 5 percent (Davis, 2001), but world oil prices 
doubled or tripled (Greene et al., 1998). In the wake of these oil 
price hikes, U.S. inflation increased markedly, accompanied by 
downturns in our gross domestic product (BLS, 2001;BEA, 2001;EIA, 
2001a). In each case, recession followed.
    Petroleum imports also exact a toll on our international balance of 
trade: The $119 billion we spent on foreign oil in 2000 accounted for a 
fourth of that year's U.S. trade deficit (EIA, 2001c). The situation is 
likely to worsen as imports increase. Today, the United States imports 
over half the petroleum products we use; this portion can only rise as 
our oil appetite grows (Figure 2).



    Finally, consumers themselves feel a significant bite from our oil 
dependence. Forty percent of our daily oil consumption in 2000 (about 8 
million barrels per day) went to fuel our cars and trucks, at a cost to 
consumers of $186 billion. By 2020, oil consumption is expected to grow 
by nearly 40 percent and consumers will be spending around $260 billion 
dollars per year to fuel up their cars and trucks.

Environmental Impacts
    The cars and trucks we drive every day were responsible for over 20 
percent of the global warming emissions produced by the United States 
during 2000: 1.5 billion tons (358 million metric tons, carbon 
equivalent) of the heat-trapping gases linked to global warming. \3\ 
Most of these gases will stay in the atmosphere for more than 100 
years, contributing to an increase in the earth's average surface 
temperature. This is projected to rise 2.5 to 10.4 +F (1.4 to 5.8 +C) 
between 1990 and 2100, if no major efforts are undertaken to reduce 
emissions of global warming gases. As the earth continues to warm, we 
face a great risk that the climate will change in ways that threaten 
our health, our economy, our farms and forests, beaches and wetlands, 
and other natural habitats.
---------------------------------------------------------------------------
    \3\ This UCS estimate is based on EIA 2000a. Each gallon of 
gasoline burned emits nearly 19 pounds of carbon dioxide, the primary 
pollutant responsible for global warming. The production and delivery 
of gasoline are responsible for another 5 pounds per gallon of global 
warming pollutants (Wang 1999).
---------------------------------------------------------------------------
    Cars and trucks are also major contributors to air pollution. 
Regulations have helped clean up passenger vehicles over the past three 
decades. However, rising demand for travel and increased vehicle 
ownership will outpace even the standards on the books through this 
decade. Cars and trucks will need to clean up their act even more if we 
are to eliminate the threat air pollution poses to public health--
especially to our children and the elderly.
    Finally, producing and distributing the gasoline that went to fuel 
our cars and trucks in the year 2000 resulted in the emission of 
848,000 tons of smog-forming pollutants and 392,000 tons of benzene-
equivalent toxic chemicals, in addition to the pollutants emitted from 
the tailpipes of vehicles. \4\ Altogether, cars and trucks are the 
largest single source of air pollution in most urban areas. As with 
U.S. oil use and global warming emissions, upstream air pollution is 
expected to continue to rise significantly over the next two decades, 
posing the greatest health threat to children, the elderly, and other 
vulnerable members of our population. Gasoline and oil distribution 
also leads to water and ground pollution and catastrophic oil spills 
such as the Exxon Valdez that harm the entire ecosystem.
---------------------------------------------------------------------------
    \4\ The production, refining, and delivery of each gallon of 
gasoline in the United States emit an estimated 6.4 grams (0.014 
pounds) of smog-forming pollutants (Wang 1999). Upstream activities 
also release harmful toxic pollution into the air. This poses a major 
health hazard near refineries, along distribution routes, and at 
gasoline stations. For every gallon of gasoline delivered, 2.9 grams 
(0.0065 pounds) of benzene-equivalent toxic emissions are produced 
(Winebrake et al. 2000; Wang 1999).
---------------------------------------------------------------------------
A Comprehensive, Technology Based, Plan to Kick our Oil Habit
    While the problems of our oil dependence loom large, there is a 
suite of technology options that can be used to turn things around. We 
can take advantage of the technical and engineering prowess of U.S. 
industries to put these technologies to work in a comprehensive 
approach that can ultimately move the transportation sector away from 
oil. No single silver bullet can solve the problems posed by our use of 
cars and trucks--but if we, as a society, choose now to invest in a 
variety of solutions, ranging from near to long term, together they can 
effectively eliminate the use of oil for transportation and at the same 
time address many of the other problems associated with our 
transportation system.
    Because it will likely take most of the first half of this century 
to finally move ourselves off oil in the transportation sector, we must 
take advantage of every option that is afforded to us in that time. 
Conventional technologies can be put on the road over the next 10 years 
to dramatically reduce oil use from cars and trucks. Hybrid technology 
can then begin to actually stabilize that amount of oil below today's 
levels. Together, as shown in Figure 3, conventional and hybrid 
technology can fill the gap while the long-term hope offered by 
hydrogen fuel cells and alternative fuels begins to materialize.



    At the same time these technologies are being put into play to 
address oil dependence and energy security, they offer the opportunity 
to address the air quality and safety problems associated with cars and 
trucks. The aggressive use of conventional and advanced technology can 
mark a return to ``the age of the engineer,'' \5\ as Ford's then Vice 
President of Car Product Development, Robert B. Alexander characterized 
the period in the late 1970's when automakers were challenged to 
provide consumers with more socially responsible vehicles by 
simultaneously improving safety, fuel economy, and emissions. The 
current and future levels of technology available in automobile 
development provide the exact same opportunity to both transform the 
internal combustion engine vehicles we have been driving for the past 
100 years and to work on new technologies such as fuel cells and 
alternative fuels that offer the promise of addressing transportation 
problems in the longer run.
---------------------------------------------------------------------------
    \5\ Robert B. Alexander, speech before the Management Briefing 
Seminars sponsored by the Michigan Chamber of Commerce and the 
University of Michigan (Traverse City, MI) August 4, 1977.
---------------------------------------------------------------------------
    The technologies available today and those being developed for the 
future provide the opportunity to integrate air quality, safety, and 
reduced oil dependence into the regular redesign process that takes 
place for each car and truck model every 3-5 years. These three goals 
then become a complementary part of a refocused redesign process that 
can diminish and then ultimately kick our oil habit while also 
protecting public health through improved air quality, and making our 
highways safer. These technologies and this shift in focus are well 
within the abilities of our automobile and fuels industries, but will 
require a change in their priorities--a change that will need to be 
driven by clear signals from the government.
    Like other investments in technology, using automotive technology 
to build a fleet of cleaner, safer, cars and trucks while reducing our 
oil dependence will be an engine for economic and job growth. For 
example, our analysis indicates that a reaching a fleet average of 40 
mpg over the next ten years will provide consumers a net savings of 
more than $29 billion per year by 2015 because savings at the pump far 
outweigh the added vehicle costs. The money saved would be spent 
throughout the economy, yielding a net increase of 182,700 new jobs in 
areas such as the service industry, agriculture, construction, 
manufacturing and even 41,100 additional jobs for the U.S. auto 
industry and their suppliers.
    The federal government can play a key role in addressing oil 
dependence while simultaneously helping to make our highways safer and 
improving air quality. Providing a clear vision that guides technology 
development to meet these goals can fulfill part of this role. This 
vision must capture the urgency of the problems while providing 
realistic goals, timelines, and performance metrics. Finally, the 
vision needs to include rolling up our sleeves and getting this 
technology on the road and be backed up by the necessary policies and 
resources to truly address the problems that exist today.

Conventional Technology
    The most effective near term approach to addressing the many 
problems associated with our cars and trucks is to put existing and 
emerging convention technology to work. These technologies can reverse 
the 15 year trend of declining fuel economy and dramatically improve 
fuel economy over the next ten years--filling a stop-gap role by 
keeping keep passenger vehicle oil use near today's 8 million barrels 
per day, rather than letting it continue to grow at unprecedented 
rates.
    Many of the technologies that could have been used improve fuel 
economy while making safer and cleaner vehicles have been left on the 
automakers' shelves. These technologies include efficient engines that 
incorporate lower friction components, variable valve technology, 
displacement on demand, gasoline direct injection, and turbo or super-
charging. Improved transmission technologies have also been developed: 
e.g. 6-speed automatic transmissions with aggressive lock-up control, 
continuously variable transmissions, and efficient ``manual'' 
transmissions that are shifted by a computer instead of by the driver. 
Integrated starter/generator technology that can turn off the engine 
instead of letting it idle have seen use in Japan and Europe and are 
available to U.S. automakers. More mundane technologies can also be put 
to work: e.g. improved aerodynamics, lower rolling resistance tires, 
and electronic power steering.
    Putting these technologies to work--according to our analysis and 
that of the National Academy of Sciences, researchers at MIT, and 
others--means that it is possible to make SUVs like the Ford Explorer 
that reach 34-35 miles to the gallon, family cars like the Ford Taurus 
that get up to 41-45 mpg, and full-size pickups like the Dodge Ram that 
can reach 30-33 mpg--all of which will have the same size, comfort, 
performance as consumers expect today along with the same or even 
improved safety (DeCicco 2001, Friedman 2001, NRC 2002, Weiss 2000). 
The added technologies will increase vehicle cost, but will more than 
pay for themselves in gasoline savings.
    Another conventional engine technology that could be used to 
address oil dependence is diesel technology, sometimes referred to as 
``advanced lean burn'' technology. Diesel engines offer improved 
efficiency and, like gasoline vehicles, rely on fuel derived from oil. 
In many ways, diesel is no different from the other conventional 
technologies that can be used to improve fuel economy and should be 
treated within the policy arena in the same way as the other 
conventional technologies listed above.
    Several cautions are in order, however, on diesel:

        1.  Diesel technology is expensive and will not be as cost 
        effective as other conventional technologies. The added costs 
        needed to reduce the production of harmful emissions will 
        further reduce the cost effectiveness of diesel technology.

        2.  Unlike the conventional technologies above, diesel makes it 
        harder to address public health concerns regarding air quality. 
        Current diesel technology in Europe is cleaner than past 
        vehicles, but still produces toxic emissions and smog forming 
        emissions that several times dirtier than the average gasoline 
        cars and trucks under Federal Tier 2 emission requirements.

        3.  With added emission controls being developed by the auto 
        industry, we expect that diesel vehicles will fall within the 
        allowance of future U.S. emission standards, but are unlikely 
        to catch up with the cleanest gasoline cars. Conventional 
        gasoline vehicles can already meet standards well below those 
        required by current law, while diesel vehicles are expected to 
        qualify within the dirtier emission categories under Tier 2, 
        making it harder to address air quality concerns.

        4.  Questions remain about whether future standards on the 
        books are sufficient to protect public health, but even with a 
        clean bill of health, diesel may not be as cost effective a 
        fuel economy strategy as employing existing and emerging 
        conventional gasoline technology.

    With those cautions noted, and as long as diesel is held to the 
same standards as gasoline vehicles and provided with the same 
incentives as other conventional technology, it can still be part of 
the mix of conventional technologies being considered.
    The main historical approach to getting conventional technologies 
on the road has been through fuel economy standards; which have proven 
quite effective--saving 43 billion gallons of gasoline in the year 
2000, or a reduction of over 25 percent, according to recent work by 
the National Academy of Sciences (NRC 2002). The current effort on fuel 
economy is a proposal by the National Highway Traffic Safety Authority 
(NHTSA) to increase the fuel economy standard for light trucks by 1.5 
mpg as of model year 2007, raising it from 20.7 mpg to 22.2 mpg.
    While NHTSA's proposed rule would be the first increase in fuel 
economy standards in a decade, it is an extremely modest goal given the 
suite of technologies available in that timeframe and will not pose a 
challenge to automakers. It will also have a negligible impact on our 
oil use, saving less than one day's worth of oil each year between 2005 
and 2008. Over that timeframe our cumulative oil use will be more than 
30 billion barrels of oil compared to cumulative savings from the NHTSA 
proposal that amount to 0.02 to 0.06 billion barrels of oil from 2005 
to 2008. Significantly more can be done with the use of conventional 
technology and we hope that NHTSA will take greater advantage of this 
in their final rule. We also hope that NHTSA or Congress will address 
many of the regulatory loopholes within existing fuel economy 
regulations that are adding to our increased oil dependence.
    Additional approaches can be taken by the government to support of 
near term technology. Although choice is severely limited in today's 
car and truck market, the government can commit to purchasing the 
highest fuel economy car or truck that meets their needs and increasing 
the overall fuel economy of federal fleets. In this way the government 
can both provide the auto industry with a guaranteed market for 
vehicles that use conventional technology to improve fuel economy while 
also providing leadership by example. Government can also provide 
incentives for the purchase of cars and trucks with above average fuel 
economy.

Advanced Technology
    More recent developments have led to a new suite of technologies 
that can follow on the heels of the conventional technology 
improvements discussed above. These include the development of hybrid 
electric vehicles, hydrogen fuel cell vehicles, and dedicated 
alternative fuel vehicles.
    Hybrid Electric Vehicle Technology provides fuel economy 
improvements primarily during city driving, with the ability to more 
than double city fuel economy while providing incremental benefits on 
the highway. Creating a hybrid entails the use of an electric motor and 
battery along with a conventional internal combustion engine. The 
electric motor provides regenerative braking that recovers energy in 
stop and go traffic, idle off capability that turns the engine off when 
you would otherwise be wasting fuel at a stop light, and electric motor 
assist that provides the necessary boost for driving around town and 
accelerating onto the highway. Analysis in our recent report on hybrids 
indicates that a fleet of hybrid cars and trucks could reach 50 to 60 
miles per gallon (Friedman, 2003). Hybrids will also provide added 
features that will appeal to consumers: such as improved low-end 
torque, smoother acceleration when using the electric motor, reduced 
engine and brake maintenance and added electrical capacity.
    Honda and Toyota have both offered first-generation hybrid cars in 
the marketplace for the past few years and Toyota recently announced 
its second generation Prius that achieves better fuel economy while 
also providing more space and better acceleration. Ford and GM are 
planning to join the hybrid market with SUVs in 2004 and 2005, while 
Toyota is expected to offer a luxury hybrid SUV that will outperform 
the conventional model. Fully developed gasoline hybrid electric 
technology, technology that builds on the benefits of improved 
conventional vehicles, offers the potential to begin reducing passenger 
vehicle oil use below today's 8 million barrel per day level during the 
next decade while meeting the strictest existing Federal tailpipe 
emission levels, Bin 2.
    Hybrids will cost more than conventional vehicles, especially in 
the early years when production volumes are low and automakers are 
unable to take advantage of economies of scale. Once sufficient 
production volumes are reached, automakers will be able to sell hybrids 
for a profit while consumers save more on gasoline than they spent for 
the added technology--a win/win situation. The challenge with hybrids 
is how to reach those economies of scale as soon as possible. Hybrids 
can benefit from tax credits and other financial incentives to 
encourage consumers to purchase the early hybrid offerings. These tax 
credits must incorporate emissions and fuel economy performance metrics 
to ensure that taxpayer dollars are spent on the most promising 
technology--hybrids that can provide consumers with the greatest 
gasoline savings and cleanest air. Without the assurance that hybrid 
tax credits are going to vehicles that perform better than the average 
vehicle on the road, such a program would run the risk of following in 
the footsteps of the Arizona budget crisis that was created by offering 
tax breaks to alternative fuel vehicles without requiring environmental 
performance metrics.
    The goal of hybrid tax credits would be to get the technology on 
the road and help familiarize consumers with a new vehicle option. 
Getting hybrids on the road in significant numbers also has the benefit 
of supporting fuel cell vehicles as they both share many of the same 
electric technologies. Hybrid tax credits will not guarantee oil 
savings or improvements in energy security, but they will help to pave 
the road for those benefits to be realized in the future.
    As with some of the conventional technology mentioned, a note of 
caution is also required regarding some vehicles that may end up being 
labeled by some as hybrids:

        1.  Of specific concern are vehicles that use the 42 volt 
        integrated starter/generator, or idle-off, technology mentioned 
        in the conventional technology section. This is a wonderful 
        conventional technology that can provide fuel economy 
        improvements of more than 10 percent, but as noted above, 
        hybrids provide more than just idle-off capability and the two 
        technologies should not be confused when establishing policies 
        and providing incentives for hybrid technology. If treated like 
        hybrids instead of conventional technology, these idle-off 
        systems have the potential to repeat the problems of the 
        Arizona budget crisis on a national scale.

        2.  Of additional concern are vehicles that use hybrid 
        technology to increase the weight and power of a vehicle 
        without providing fuel economy benefits. These ``muscle 
        hybrids'' represent a squandering of hybrid technology and are 
        reminiscent of past technology trends where conventional fuel 
        ``efficiency'' technology was used to make vehicles heavier 
        instead of helping them to get better fuel economy. Policies 
        must also recognize that the label ``hybrid'' does not 
        inherently imply improved fuel economy performance.

    Hydrogen Fuel Cell Vehicle Technology offers the ultimate potential 
of complete energy independence, dramatic reductions in greenhouse gas 
emissions and zero tailpipe emissions. Fuel cells combine hydrogen with 
oxygen in the air to produce electricity, water, and some heat. If the 
hydrogen is stored on-board the vehicle, no smog forming emissions, 
carbon dioxide or toxic pollutions are emitted from the tailpipe. 
Hydrogen fuel cell vehicles can also provide a smooth, quite and 
comfortable ride possible with electric drive technology. Fuel cells 
can also be used for many other things, from powering laptop computers 
to providing the electricity for a hospital, home or office building.
    To be successful, fuel cell vehicles will rely on many of the 
conventional and hybrid technologies reaching the consumer market 
before fuel cells--therefore efforts made by automakers on conventional 
and hybrid vehicles will also pay off in the scope of their longer term 
fuel cell vehicle development. Many of the same conventional 
technologies that would help today's cars and trucks reach 40 miles per 
gallon, e.g. improve aerodynamics and reduce rolling resistance, along 
with the high strength materials that can make vehicles both lighter 
and safer, will help to fuel cell vehicles efficient and cost 
effective. The technology for the electric motors, batteries and 
electric auxiliary systems in hybrid vehicles will be used in the same 
roles to make fuel cell vehicles work.
    Fuel cell vehicles, however, will not be ready in the same 
timeframe as existing conventional technologies or even hybrid 
vehicles. Without sufficient government support, it will probably take 
more than 20 years for millions of fuel cell vehicles and the necessary 
hydrogen fuel to be offered to consumers. It will take even longer, 
with business as usual, for the majority of the hydrogen to be supplied 
by renewable energy sources. If hydrogen fuel cell vehicles are going 
to be widely available in the marketplace within the next 10 to 15 
years, a government program on the scale of the Apollo project will be 
necessary. And even with such an aggressive program, fuel cells must 
still be considered a long-term investment, needing to be supported by 
the shorter-term investments of getting conventional, hybrid and 
alternative fuel technology on the road.
    As with the Apollo project, a similar program to support hydrogen 
fuel cell vehicles must have a clear development target. The engineers 
knew what they were shooting for: putting a man on the moon and getting 
them back safely by the end of the decade. That meant they needed to 
develop the technology to build a rocket that could put a human on the 
moon and then make it happen within a certain amount of time. For 
today's automotive engineers to know what is being asked of them on 
hydrogen fuel cell vehicles the parallel set of goals would be as 
follows: develop the technology to build a fleet of a safe, clean, 
efficient and cost effective hydrogen fuel cell vehicles; develop the 
technology to provide a clean, cost effective source of hydrogen; and 
then make it happen within the next 15 years. Developing the technology 
is not enough; a fuel cell vehicle ``Apollo-like'' project must also 
include clear vehicle production and fuel supply goals, performance 
targets and timelines along with the resources to make the program 
successful. \6\
---------------------------------------------------------------------------
    \6\ For reference, President Kennedy asked for $531 million in 
fiscal year 1962 alone to support the Apollo program, today that would 
be equivalent to more than 3 billion dollars in the FY 2004 budget.
---------------------------------------------------------------------------
    A final note of caution regarding fuel cell and hydrogen 
technology: just because a fuel cell vehicle runs on hydrogen, it 
should not be assumed that it is clean. Hydrogen can be made from many 
feedstocks and is actually considered an energy carrier and not an 
energy source, or fuel, in and of itself. In that way, it is much like 
electricity; its overall energy and environmental benefits are linked 
to the fuel or energy source used to make the hydrogen in the first 
place. For that reason it is important that funding for hydrogen and 
funding for renewable energy go hand in hand. Renewable resources such 
as wind, solar and biomass energy will be vital in making the clean 
hydrogen future a reality. Cuts in renewable funding jeopardize 
investments in hydrogen and fuel cells.
    Alternative Fuels offer the promise of 100 percent oil 
displacement, often along with significant air quality benefits. In the 
long term, alternative fuels based on renewable, home grown 
agricultural waste and dedicated crops can be one of the backbones of 
clean, domestic energy production--even supplying some of the hydrogen 
that can be used in fuel cell vehicles. In the nearer term, alternative 
fuels such as natural gas can serve both as an alternative to diesel in 
heavy duty vehicles and as a bridge to hydrogen fuel cells (both by 
helping to develop technology to support the use of gaseous fuels and 
by providing a key early feedstock for hydrogen). Alternative fuel 
support can also help domestic industries that provide fuel options 
that can move us off of oil.
    Much like hybrids, one of the hurdles alternative fuels face is 
their high cost in low volume production along with the initial costs 
of building the necessary infrastructure. And again, much like hybrids, 
tax credits for alternative fuel vehicles, fuel, and infrastructure can 
help to build the necessary economies of scale. Many other incentive 
programs are also possible, though clear enforcement mechanisms are 
vital to their success.
    It is important, also, to recognize some of the technical 
limitations associated with some alternative fuel approaches. Vehicles 
that could run on an alternative fuel are not providing energy security 
or environmental benefits if they are actually being run on gasoline or 
diesel, both of which are clearly derived from oil and are not 
alternative fuels. Thus targeting any incentives to directly encourage 
and reward alternative fuel use can both help to ensure growing markets 
for the alternative fuels and provide the associated benefits.

Conclusion
    The United States has a history putting technology to work in 
solving many of the problems around us. We developed mass-production, 
computers, the Internet, and we put several people on the moon. We now 
have the technology to put people into cars and trucks that don't 
guzzle so much gas and can further develop the technology to put them 
in cars and trucks that don't use gasoline at all.
    As an engineer, I see the broad array of available technology as an 
opportunity to roll up our sleeves and get to work making vehicles 
safer, cleaner and less dependent on oil while saving consumers money 
and creating new jobs. We can rely on existing conventional technology 
over the next ten years to take advantage of this opportunity. At the 
same time, we can make investments in hybrid vehicles, alternative 
fuels, and hydrogen fuel and fuel cell vehicles to take advantage of 
the longer-term opportunities. Because these conventional and advanced 
technologies compliment each other, it is not an either/or proposition. 
And because our need for safe vehicles, clean air and increased energy 
security is so important and immediate we cannot afford to these 
technologies and the opportunities they represent slip through our 
fingers. The Federal Government has a key role to play in developing 
sound policies to ensure that we take advantage of these opportunities.
    Thank you for the opportunity to testify before the Committee 
today. I would be happy to answer any questions you may have.
References
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Davis, S. 2001. Transportation Energy Data Book: Edition 21. Oak Ridge, 
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DeCicco, J., F. An, M. Ross. 2001. Technical Options for Improving the 
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Energy Information Administration (EIA). 2000. Annual Energy Outlook 
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Friedman, D., et al. 2001. Drilling in Detroit. Cambridge, Mass.: Union 
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Greene, D.L., and N.I. Tishchishyna. 2000. Costs of Oil Dependence: A 
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Wang, M. Q. 1999. GREET 1.5-Transportation Fuel-Cycle Model, Volume 1: 
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        National Laboratory. ANL/ESD-39. [GREET 1.5a on the Argonne 
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Weiss, M. A., J. B. Heywood, E. M. Drake, A. Schafer, and F.F. AuYeung. 
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        October.
Winebrake, J., D. He, M. Wang. 2000. Fuel-Cycle Emissions for 
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        Air Toxics. Argonne, Ill.: Argonne National Laboratory. ANL/
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    Senator Brownback. Thank you, Dr. Friedman.
    Mr. McCormick, thank you for joining us.

          STATEMENT OF J. BYRON McCORMICK, EXECUTIVE 
        DIRECTOR, FUEL CELL ACTIVITIES, GENERAL MOTORS 
                          CORPORATION

    Mr. McCormick. Thank you, Senator. I appreciate the 
opportunity to be here today to testify on behalf of General 
Motors.
    As you noted, I'm Byron McCormick, the Executive Director 
of General Motors' Global Fuel Cell Activities, and I head the 
team that is developing hydrogen fuel cell vehicles that people 
want to drive and, most importantly, want to buy.
    Senator Brownback. Mr. McCormick, pull that microphone a 
little----
    Mr. McCormick. Oh, I'm sorry.
    Senator Brownback. --closer to you, if you would.
    Mr. McCormick. Before I go into my prepared text, I'd like 
to make a couple of additions.
    First of all, you may have noticed today that we made an 
announcement, a business announcement, with Dow Chemical. We 
think it's a milestone in moving towards the hydrogen economy, 
and it's somewhat different than many of the things that people 
talk about.
    Dow and General Motors today entered into an agreement with 
a plan to use byproduct hydrogen generated in their chemical 
production facilities in Texas and other places in the world 
with General Motors using its automotive fuel cells to create 
electricity from that byproduct hydrogen to, in fact, then help 
power the facilities themselves. It's a pure business 
proposition and one that we think makes a great deal of sense 
but, for us, allows us to move the technology out of the 
laboratory into low-volume production where we'd begin to 
develop our supply base, et cetera.
    The second thing I'd like to mention before I go into my 
larger discussion is that we'd like to invite the members and 
their staff this afternoon. We have, at the exit of the 
building, hybrid and fuel cell vehicles which will be available 
for ride and drive. And over the next 2 years, we will have 
hydrogen fuel cell vehicles here in Washington, DC, available 
for you to drive and your staffs to drive, and you can contact 
our Washington office so you can get some hands-on experience 
with the technology.
    Now, as I comment, this is a really exciting time for the 
automotive industry and for General Motors, in particular. 
Technology is changing the way we live our lives for the 
better, and there's much more to come. This year we announced a 
three-phased advanced technology plan focused on reducing 
consumption in vehicle emissions. This plan includes internal 
combustion engine initiatives such as displacement on demand, 
cylinder deactivation, and many other activities, as well as a 
suite of high-volume hybrid offerings for the mid-term. And 
these hybrids are really designed to match the driving patterns 
of U.S. consumers and, in fact, are on most of our best-selling 
vehicles, and then, early next decade, to be ready to introduce 
hydrogen fuel cell vehicles.
    The subject today is hydrogen in fuel cells. And these 
technologies, when they're fully developed and deployed will 
not only deliver revolutionary vehicles, like the Hy-Wire 
vehicle, which we will be showing at RFK Stadium, if you have a 
chance to see it this week, but also will change the way we 
think about the automobile and our environment.
    We are on the threshold of a historic opportunity. Instead 
of the historical evolution of automotive technology by 
incremental improvements, we now see our way to bold technology 
advances that will fundamentally change personal transportation 
in this century. These advances have the potential to lead to 
the creation of commercially viable, zero-emission, fuel cell 
vehicles with the functionality that Americans expect. This 
vision is based on hydrogen as fuel, which can be made from 
many nonpetroleum sources.
    Not only will fuel cells essentially remove the auto from 
the environmental debate by reducing tail pipe emissions to 
only water vapor and potentially shifting vehicles to renewable 
fuels, they will also offer the performance for every type of 
vehicle--heavy-duty commercial, sport utilities, truck, mass 
transit, or cars.
    Fuel cells running on hydrogen fuel are the ultimate 
environmentally friendly vehicles, because their emission is 
only water. The fuel cell supplies the electricity to electric 
motors, which power the wheels. The fuel cell produces 
electricity by stripping electrons from the hydrogen that 
travels through a membrane and combines with oxygen to form 
water. Fuel cell vehicles are substantially more efficient than 
internal combustion engine vehicles, have no pollution, and are 
quiet.
    Beyond the advantages for the vehicles, fuel cells promise 
two additional benefits. First, once integrated into our daily 
lives, fuel cell vehicles will be supported by broadly 
available cost-effective hydrogen refueling infrastructure. And 
I'm sure we'll want to talk more about that as we go forward. 
Such an infrastructure, by its very nature, would provide an 
evolutionary shift of personal transportation from petroleum 
to, very importantly, a mix of sources, including renewables.
    Secondly, the development of this technology will create 
new, more environmentally compatible distributed electric power 
generation capabilities, like the type we announced with Dow 
this morning. The automobile will have the potential to provide 
electric power for homes and work sites, as well.
    The power on today's electrical grid could be supplemented 
by generating capacities of cars in every driveway. For 
example, if only one out of 25 cars in California today was a 
fuel cell vehicle, their generating capacity would exceed the 
entire utility grid. A typical mid-sized fuel cell vehicle 
produces 50 to 100 kilowatts, and typical household power is on 
the 7 to 10 kilowatts load. So you can see that one vehicle can 
really power a neighborhood.
    Like any advancement that has promise to completely change 
the dominant technology, fuel cell development is a major 
costly technical endeavor which, if aggressively undertaken and 
sustained, should allow significant implementation in the 10- 
to 20-year time frame. Our rate of progress today is rapid. 
With an uninterrupted focus, our technology momentum should 
make this vision possible.
    It is clear that we are in intense global competition for 
leadership in this race to establishing commercialized fuel 
cell technologies. In Japan, the kyogikai, which are companies 
operating under government auspices, are developing a program 
for the implementation of fuel cell technology. Now is the time 
for U.S. Government and U.S. industry to create a partnership 
that can lead to the changed world that we see in this vision.
    Recognizing this potential, approximately 6 years ago 
General Motors consolidated and accelerated its fuel cell 
program. We were given one mandate by our management: Take the 
automobile out of the environmental debate regardless of 
whether the environmental debate is focused on air quality, 
climate, or overall sustainability. GM leadership recognizes 
that the global conditions inspire bold and thoughtful action.
    Number one, there are over 6 billion people in the world, 
with 10 billion expected later this century. Most of these 
people are young, globally aware, Web-connected, and, most 
importantly, residing in emerging economies with escalating 
demands for personal transportation. Only 12 percent of the 
world's population have automobiles today. That's a staggering 
number, 88 percent nonpenetration of automobiles in the world 
today. Therefore, a breakthrough in energy efficiency and 
emissions will absolutely be required to meet the demands of a 
future sustainable high-quality environment.
    Our vision is as follows. We see fuel cells as the long-
term power source. The GM Global Fuel Cell Program seeks to 
create affordable, full-performance fuel cell vehicles that 
meet customer preferences and demands and emit only water from 
their tailpipes. We see hydrogen as the long-term fuel. And the 
creation of a robust, readily available, hydrogen refueling 
network for those vehicles must be accessible through refueling 
stations as gasoline is dispensed today.
    The hydrogen in the infrastructure could be certainly 
derived from a mix of hydrocarbons and any source of 
electricity. In the first case, hydrogen is extracted from 
petroleum, natural gas, a renewable hydrocarbon, such as 
ethanol, via reformers or fuel processors, which catalytically 
decompose the hydrocarbons into hydrogen carbon dioxide. 
Hydrogen can also be extracted from water using electrolysis, 
which uses electricity to dissociate water. Electricity could 
come from conventional power plants, renewable power such as 
hydro, solar, wind, or geothermal sources. And in this way, the 
hydrogen economy allows a graceful transition for 
transportation from a reliance on petroleum to a robust 
diversity of energy sources, including renewable.
    The blending of these energy sources is seamless to the 
driver of the vehicle. The driver of the vehicle really only 
sees the hydrogen in fuel and not whether it came from 
petroleum, natural gas, nuclear, or renewable. And we should 
point out that hydrogen can be created directly from nuclear 
energy, as well.
    There are major challenges we need to overcome to make this 
hydrogen economy a reality. First, we need continued 
development of onboard hydrogen storage. Using hydrogen in a 
vehicle requires a completely new type of tank. The challenge 
is to find a lightweight, compact tank that stores enough 
hydrogen at modest pressures for a lengthy drive.
    Liquid hydrogen stored cryogenically or compressed hydrogen 
stored at high pressures will suffice for early market 
introductions. But, over the long term, we should seek solid, 
in quotes, storage techniques such as chemical hydrides, which 
will more efficiently and cost-effectively store significant 
amounts of hydrogen onboard the vehicle.
    We need the Government to partner with us on fundamental 
long-term research and development of hydrogen storage, as well 
as a full portfolio of technologies.
    And that includes our second major challenge to a hydrogen 
economy, developing and commercializing clean and efficient 
methods of producing hydrogen. Eventually, we want to use 
methods that are renewable and have no adverse environmental 
impact.
    We're working closely with energy suppliers to investigate 
the best solutions. A few weeks ago, we announced that we are 
partnering with Shell to demonstrate our fuel cell vehicles 
here in Washington, DC, and Shell will be putting a hydrogen 
fueling station in the District to be operational in the 
October time frame so that people can begin to experience 
hydrogen as a real fuel.
    The third challenge we have to overcome is developing 
business models for the deployment of the hydrogen 
infrastructure and piloting technologies to support it.
    As for the reality of the vision, we, at General Motors, 
have invested aggressively in what we call enabling 
technologies--fuel cells, reformers, electrolyzers, and 
automotive electric propulsion. Our commitment is clear in the 
significance of our investment--hundreds of millions of dollars 
annually for several years to date, and growing. The 
acceleration has spurred some very rapid technical progress.
    To give you an idea of that rate of progress, in the last 4 
years the size and weight of our fuel cell stack for a given 
power has decreased by a factor of 10. And we have also 
achieved significant cost reduction with each new generation of 
stack technology. In fact, we generate new generations a couple 
to three times a year.
    Like today's gasoline cars, fuel cell vehicles must be able 
to handle a tremendous range of environmental conditions. We 
are now able to start fuel cells in freezing, down to minus 40, 
and do it in substantially less than a minute. Also, at the 
vehicle level, we have developed and demonstrated full-
performance vehicles, like our HydroGen3 vehicles that you will 
be able to drive later today.
    We have developed revolutionary auto designs such as our 
AUTOnomy concept, Hy-Wire concept, which combine fuel cells, 
and by-wire electronics, and other advanced technologies in new 
and unique ways. These designs could make fuel cell vehicles 
both more affordable and, most importantly, more compelling to 
our customers.
    Additionally, we have demonstrated numerous stationary, 
distributed electrical-generation systems based on our fuel 
cell technologies.
    These milestones represent remarkable progress, and our 
rate of progress encourages us. But no one should overlook that 
there remain major technical obstacles that must be conquered 
before vehicles can be brought to market and become 
commercially successful.
    Let me be clear about the progress represented by our 
demonstration vehicles. The progress is rapid and encouraging, 
but we are not there yet. Although we are well on our way to 
achieving automotive performance levels required for 
reliability, durability, and safety, and full capability in 
harsh weather extremes, including the ability to withstand 
environment and in-use abuse that trucks and automobiles are 
subject to worldwide every day. We must achieve these goals 
and, most importantly, do it in a way that is affordable to our 
customers.
    Achieving full automotive performance and affordability 
targets is the key to customer acceptance and enthusiasm. These 
targets require a huge investment and can only reasonably be 
made if we believe the infrastructure will be there to allow us 
to introduce fuel cell vehicles to the public.
    And I want to emphasize the next sentence. Consistent and 
sustained government policy today must drive the development of 
the hydrogen economy by accelerated R&D in hydrogen storage, 
pilot-scale distribution networks, fuel cell stations, and, 
most importantly, incentives for proliferation.
    Selective demonstration vehicles or captive fleets will not 
suffice to encourage major timely investment by energy 
producers or automotive companies, nor will potential creators 
of the hydrogen infrastructure invest until they see a rapid 
expansion in fuel cell hybrid vehicles. Even then, there is an 
economic burden of supporting the infrastructure during the 
long transition period from today's gasoline-powered fleet.
    Stewardship of this transition requires a careful and 
thoughtful, well-thought-out plan which allows automotive 
manufacturers, our materials and component suppliers, hydrogen 
fuel suppliers, and government regulatory bodies to progress 
hand in hand. This careful coordination must also take into 
account technical, financial, and environmental realities that 
a successful transition requires. This is the basis on which a 
government-industry partnership must be based.
    Within General Motors, the magnitude of our fuel cell 
investment creates an intensive business dilemma. The choice 
between using our resources to meet expanding funding needs to 
achieve the revolutionary vision at the expense of short-term 
initiatives, or to fund an aggressive pursuit of more 
incrementally based technologies. To a large degree, the 
outcome of that internal debate in General Motors will depend 
on the development of a long-term, stable set of governmental 
policies and initiatives upon which we can properly balance the 
investment of our finite financial and technical resources.
    As a closing thought, I believe that fuel cells and 
hydrogen-based transportation are absolutely the future. The 
pace of technical progress is accelerating. We cannot be left 
behind or sitting on the sidelines. Now is the time for the 
U.S. Government and U.S. industry to create a partnership that 
can lead to the world which we have envisioned.
    General Motors and our partners are driving to bring the 
first-generation fuel cell technology to market as rapidly as 
possible. To a large degree, this initiative was made possible 
by the pioneering research and development sponsored by NASA 
and later extended by the Department of Energy. We now look 
forward to not only realizing the full benefits of that 
pioneering work in automobiles, but additionally in working 
together with the Government to create new generations of 
breakthrough technologies in hydrogen storage and fuel cell 
materials.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. McCormick follows:]

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

    I appreciate the opportunity to be here today to testify on behalf 
of General Motors. I am Byron McCormick, Executive Director of GM's 
Global Fuel Cell Activities. I head the team that is developing 
hydrogen-powered fuel cell vehicles that people will want to drive and 
buy.
    This is an exciting time in the automotive industry and for General 
Motors. Technology is clearly changing the way we live our lives for 
the better, and there's more to come. This year, we announced a three-
phase advanced technology plan focused on reducing fuel consumption and 
vehicle emissions. This plan includes advanced internal combustion 
engine initiatives--such as Displacement on Demand cylinder 
deactivation--for the near term; a suite of high-volume hybrid 
offerings for the mid-term, and the introduction of hydrogen fuel cell 
vehicles early next decade.
    The subjects today are hydrogen fuel and fuel cells. These 
technologies, when fully developed and deployed, will not only deliver 
revolutionary vehicles, but will change the way we think about the 
automobile and our environment.
    We are on the threshold of an historic opportunity. Instead of the 
historical evolution of automotive technology by incremental 
improvements, we now see our way to bold technology advances that will 
fundamentally change personal transportation for the new century. These 
advances have the potential to lead to the creation of commercially 
viable zero-emission, fuel-efficient fuel cell vehicles with the 
functionality that Americans expect. This vision is based on hydrogen 
fuel, which can be made from many non-petroleum energy sources. Not 
only will fuel cells essentially remove the auto from the environmental 
equation by reducing tailpipe emissions to only water vapor and 
potentially shifting vehicles to renewable fuels--they will also offer 
the performance required for every type of vehicle: heavy duty 
commercial, sport utilities, trucks, mass transit or cars.
    Fuel cell vehicles running on hydrogen fuel are the ultimate 
environmentally friendly vehicles because the only emission is water. 
The fuel cell supplies electricity to an electric motor that powers the 
wheels. The fuel cell produces electricity by stripping electrons from 
hydrogen that travels through a membrane to combine with oxygen to form 
water. Fuel cell vehicles are more than twice as energy efficient as 
the internal combustion engine, have no pollutant emissions, and are 
quiet.
    Beyond the advantages for vehicles, fuel cells in vehicles promise 
two additional benefits. First, once fully integrated into our daily 
lives, fuel cell vehicles will be supported by a broadly available, 
cost-effective hydrogen-refueling infrastructure. Such an 
infrastructure by its very nature would provide an evolutionary shift 
of personal transportation from petroleum to a mix of energy sources 
including renewables.
    Secondly, the development of this technology will create new, more 
environmentally compatible distributed electric power generation 
possibilities. The automobile will have the potential to provide 
electrical power to homes and worksites. Power on today's electrical 
grid could be supplemented by the generating capacity of cars in every 
driveway. For example, if only one out of every 25 cars in California 
today was a fuel cell vehicle, their generating capacity would exceed 
that of the utility grid. A typical midsize fuel cell vehicle would 
produce 50 to 75 kilowatts of electrical power, where a typical 
household may use 7 to 10 kilowatts at peak load.
    Like any advancement that has the promise to completely change the 
dominant technology, fuel cell development is a major, costly, 
technical endeavor, which--if aggressively undertaken and sustained--
should allow significant implementation in the 10-20 year timeframe. 
Our rate of progress today is very rapid. With an uninterrupted focus, 
our technological momentum should make this fuel cell vision possible.
    It is clear that we are in an intense global competition for 
leadership in this race to establish and commercialize fuel cell 
technologies. Toyota, Honda, Daimler, Ford, Volkswagen, Nissan, PSA, 
Hyundai, GM and others all have large programs. In Japan, the kyogikai, 
which are companies operating under government auspices, are developing 
a program for the implementation of fuel cell technology. Now is the 
time for the U.S. government and U.S. industry to create a partnership 
that can lead the world in the charge to achieve this vision.
    Recognizing this potential, approximately six years ago at General 
Motors fuel cell activities were consolidated and accelerated. We were 
given one mandate by our management: Take the automobile out of the 
environmental debate. Regardless of whether the environmental debate is 
focused on air quality, climate, or overall sustainability, GM 
leadership recognizes that global conditions inspire bold, thoughtful 
action.

        1.  There are over 6 billion people in the world today with 
        over 10 billion expected later this century. Most of these 
        people are young, globally aware, web-connected, and residing 
        in emerging economies with escalating demand for personal 
        transportation.

        2.  Only 12 percent of the world's population have automobiles 
        today. Therefore, a breakthrough in energy efficiency and 
        emissions will be required to meet the demands of the future in 
        a sustainable high-quality environment.

    Our vision is as follows:

        1.  We see fuel cells as the long-term power source. The GM 
        global fuel cell program seeks to create affordable, full-
        performance, fuel cell-powered vehicles that meet customer 
        preferences and demands and emit only water vapor from their 
        tailpipes.

        2.  We see hydrogen as the long-term fuel. The creation of a 
        robust, readily available hydrogen-refueling network for those 
        vehicles will be accessible through refueling stations, as 
        gasoline is dispensed today. Hydrogen in the infrastructure 
        could be derived from a mix of sources including: 1) 
        hydrocarbons, and 2) from any source of electricity.

    In the first case, hydrogen is extracted from petroleum, natural 
gas and renewable hydrocarbons, such as ethanol, via ``reformers'' or 
fuel processors, which catalytically decompose the hydrocarbons into 
hydrogen and carbon dioxide.
    Hydrogen can also be extracted from water using electrolysis, which 
uses electricity to dissociate water. Electricity would come from 
conventional power plants or renewable power such as hydro, solar, 
wind, and geothermal sources. In this way, hydrogen fuel allows a 
transition of transportation from reliance on petroleum to a robust 
diversity of energy sources including renewable energy. The blending of 
these energy sources is seamless to the driver of a vehicle; he sees 
only hydrogen fuel, not whether it came from petroleum, natural gas, 
nuclear or renewable energy. Hydrogen created directly from nuclear 
energy is also a future option.
    There are three major challenges that we need to overcome to make 
this hydrogen economy a reality:
    First, we need continued development of on-board hydrogen storage. 
Using hydrogen in a vehicle requires a completely new type of fuel 
tank. The challenge is to find a lightweight, compact tank that stores 
enough hydrogen at modest pressure for a lengthy drive.
    Liquid hydrogen stored cryogenically or compressed hydrogen stored 
at high pressures will suffice for early market introduction, but, over 
the long term, we should seek ``solid'' storage techniques such as 
chemical hydrides, which will more efficiently and cost-effectively 
store significant amounts of hydrogen on board the vehicle.
    We need the government to partner with us on fundamental, long-term 
research and development on hydrogen storage as well as a full 
portfolio of technologies.
    And that includes our second major challenge to a hydrogen 
economy--developing and commercializing clean and efficient methods of 
producing hydrogen. Eventually, we want to use methods that are 
renewable and have no adverse environmental impact. We're working 
closely with energy suppliers to investigate the best solutions. A few 
weeks ago, we announced that we are partnering with Shell to 
demonstrate our fuel cell vehicles and an operational hydrogen fueling 
station here in Washington, DC. The demonstration vehicles went into 
service today and the fueling station will be operational in late fall.
    The third challenge we have to overcome is developing business 
models for the deployment of a hydrogen infrastructure and piloting 
technologies to support it.
    As for the reality of this vision, we at General Motors have 
invested aggressively in what are called ``enabling'' technologies: 
fuel cells, reformers, electrolyzers and automotive electric 
propulsion. Our commitment is clear in the significance of our 
investment--over $100 million annually for several years to date, and 
growing. The acceleration has been spurred on by rapid technical 
progress.
    To give you an idea of that rate of progress, in the last four 
years the size and weight of our fuel cell stack for a given power has 
decreased by a factor of 10. And we have also achieved a cost reduction 
with each new generation of stack technology.
    Like today's gasoline cars, fuel cell vehicles must be able to 
handle a tremendous range of environmental conditions. We are now able 
to start fuel cells from freezing--minus 40 +C--in substantially less 
than a minute. Also at the vehicle level, we have developed and 
demonstrated full-performance vehicles like our HydroGen3 demonstration 
vehicles that you will be able to drive here in Washington. And we have 
developed revolutionary designs, such as our AUTOnomy concept and Hy-
wire prototype vehicles, which combine a fuel cell, by-wire 
electronics, and other advanced technologies in new and unique ways. 
These designs could make fuel cell vehicles both more affordable and 
more compelling for our customers.
    Additionally, we have demonstrated numerous stationary, distributed 
electrical-generation systems based on our fuel cell technologies.
    These milestones represent remarkable progress. Our rate of 
progress encourages us, but it is crucial to recognize that the race 
for fuel cell development is a marathon, not a sprint. No one should 
overlook that there remain major technical obstacles that must be 
conquered before these vehicles can be brought to market and can become 
commercially successful.
    Let me be clear about the progress represented by our fuel cell 
demonstration vehicles. The progress is rapid and encouraging, but we 
are not there yet. Although we are well on the way to achieving 
automotive performance levels required for reliability, durability, 
safety and full capability in harsh weather extremes, including the 
ability to withstand all environment and in-use abuse that automobiles 
and trucks worldwide are subjected to every day. We must achieve these 
goals and, more importantly, affordability before this technology will 
be considered an option by our customers.
    Achieving full automotive performance and affordability targets is 
key to customer acceptance and enthusiasm. These targets require huge 
investments that can only be responsibly made if we believe the 
infrastructure will be there to allow us to introduce fuel cell 
vehicles to the public. Government policy today must drive the 
development of the hydrogen economy by accelerated R&D in hydrogen 
storage, pilot-scale distribution networks, and refueling stations and 
incentives for their proliferation.
    Selective demonstration vehicles or captive fleet tests will not 
suffice to encourage major timely investment by the energy producers 
and the full automotive supply base before a hydrogen infrastructure is 
seen to be evolving. Nor will potential creators of the hydrogen 
infrastructure invest until they see a rapid expansion of hydrogen fuel 
cell vehicles and even then, there is the economic burden of supporting 
that infrastructure during the long period of transition from today's 
gasoline-powered fleet.
    Stewardship of this transition requires a carefully thought out 
plan which allows the automotive manufacturers, their material and 
component suppliers, the hydrogen fuel providers and governmental 
regulatory bodies to progress hand-in-hand. This careful coordination 
must also take into account the technical, financial and environmental 
realities that a successful transition requires.
    This is the basis on which a government-industry partnership must 
be based.
    Within General Motors, the magnitude of our fuel cell investment 
creates an intense business dilemma-the choice between using our 
resources to meet the expanding funding needs to achieve a 
revolutionary vision at the expense of short-term focused initiatives, 
or to fund the aggressive pursuit of more incrementally focused 
initiatives.
    To a large degree, the outcome of that internal debate will depend 
on the development of a long-term, stable set of governmental policies 
and initiatives upon which we can properly balance the investment of 
our finite financial and technical resources.
    As a closing thought, I believe that fuel cells and hydrogen-based 
transportation are the future. The pace of technical progress is 
accelerating. We cannot be left behind or sitting on the sidelines. Now 
is the time for the U.S. government and U.S. industry to create a 
partnership that can lead the world in the charge to achieve this 
vision.
    General Motors and our partners are driving to bring first-
generation fuel cell technology to market as rapidly as possible. To a 
large degree, this initiative was made possible by pioneering R&D work 
sponsored by NASA and later extended by the Department of Energy. We 
now look forward to not only realizing the full benefits of that 
pioneering work in automobiles, but, additionally, working together 
with government to create new generations of breakthrough technologies 
in advanced hydrogen storage and fuel cell materials.
    Thank you.
    I look forward to responding to your questions.

    Senator Brownback. Thank you, Mr. McCormick. This is very 
encouraging testimony.
    Mr. Preli?
    Mr. Preli. Preli.
    Senator Brownback. Very good to have you here today.

      STATEMENT OF FRANCIS R. PRELI, JR., VICE PRESIDENT-
         ENGINEERING, UNITED TECHNOLOGIES CORPORATION 
                           FUEL CELLS

    Mr. Preli. Good afternoon Mr. Chairman, Senator.
    My name is Frank Preli. I'm vice president of engineering 
for UTC Fuel Cells, a business of UTC Power, which is a 
division of United Technologies Corporation. I appreciate the 
opportunity to participate in today's hearing.
    UTC Fuel Cells is one of the largest and most experienced 
fuel cell companies in the U.S. and the world. We're the only 
company addressing space, stationary, and transportation 
markets. We employ a total of 850 individuals, of which 350 are 
dedicated solely to fuel cell research and technology 
development. Over the years, our employees have amassed a 
patent portfolio of more than 550 U.S. patents.
    UTC Fuel Cells produced its first fuel cell in 1961 for the 
space application. And since then, we've supplied fuel cells 
for every U.S. manned space mission. UTC Fuel Cells has also 
led the way with terrestrial fuel cell applications. We've sold 
255 stationary 200-kilowatt units, known as the PC25, to 
customers in 25 states, 19 countries on five continents. Our 
installed base of PC25 has generated clean energy for over 6 
million hours.
    We're also a leader in the development of fuel cell systems 
for the transportation market. We count Nissan, Hyundai, and 
BMW among our transportation fuel cell partners. In addition, 
California's only hydrogen fuel cell transit bus in revenue 
service is operated by SunLine Transit and is powered by one of 
our fuel cell power plants.
    Great progress has been made in fuel cell technology. For 
example, in the past 5 years, the life of a fuel cell stack has 
been extended from hundreds of hours to a thousand hours and, 
in recent lab tests, close to 10,000 hours. Costs have also 
come down dramatically from $600,000 a kilowatt for the space 
application to $4,500 a kilowatt for our PC25 stationary power 
plant. Our next-generation stationary product is targeted at an 
initial cost of around $2,000. And, of course, for automotive 
transportation uses, that has to go much, much lower, probably 
down to $50 a kilowatt or below. We've also achieved 50 percent 
reductions in size since 1977. The weight has decreased 
approximately the same amount. But we still have a long way to 
go.
    The automotive application is the most challenging based on 
cost, durability, and performance requirements. The internal 
combustion engine has a 100-year head start and benefits also 
from huge volumes. Therefore, it will take longer for fuel 
cells to successfully compete in this market.
    But the auto market also offers the largest payoff in terms 
of environmental benefits and our ability to reduce the 
Nation's dependence on foreign oil. We believe fuel cells will 
be deployed first in stationary devices, in fleet vehicles, 
such as transit buses, and only later in the personal auto 
market.
    Transit buses are a strategic enabler on the path to autos 
powered by fuel cells. Hydrogen fueling stations can be made 
available, given the relatively small number of inner-city bus 
stations, and the power plant size and weight requirements are 
less demanding than those associated with automobiles.
    We need to walk before we run, and gain experience in real-
world operating conditions. Fleet vehicles represent a perfect 
candidate for this type of practical experience. As the 
industry gains experience in deploying fuel cells for 
stationary, inner-city buses, and fleet applications, these 
successes can pave the way for zero-emission fuel cell cars and 
serve as benchmarks to measure progress.
    A team effort that involves original equipment 
manufacturers, power plant, component, and raw-material 
suppliers, energy companies, and governments will be required, 
with substantial sustained global investment by both public and 
private sectors.
    Our recipe for successful fuel cell commercialization is 
included in my written statement. The top ingredients, however, 
are, one, development of a comprehensive, long-term national 
strategy with sustained national commitment and leadership; 
two, robust investment by the private and public sector focused 
on research, development, and demonstration programs for both 
fuel cells and hydrogen infrastructure, with an emphasis on 
renewable sources of hydrogen; three, financial incentives and 
government purchases; four, elimination of regulatory barriers; 
and, five, harmonized codes and standards that permit global 
involvement with open access to markets.
    We've covered a lot of distance in the past few years, but 
we are engaged in a marathon, not a 100-yard dash. If the 
technical challenges are met, the private and public sector 
make robust investments, suppliers perform as predicted, 
consumer acceptance is won, and the necessary infrastructure 
develops as required, we anticipate the early adopter vehicle 
fleets will result in at least 10,000 fuel cell cars, trucks, 
and buses on the road by 2010, and a substantial amount of 
stationary fuel cell-generation capacity deployed. Mass 
production of fuel cell vehicles could then begin, starting in 
the 2012/2015 time frame.
    UTC Fuel Cells believes that in order to meet the 
automotive challenge, a national strategy for fuel cell 
commercialization must focus on stationary and fleet vehicles 
to ensure our success in the automotive market and get us there 
sooner. At UTC Fuel Cells, we're proud of our past 
accomplishments, we're excited about meeting the challenges and 
opportunities that lie ahead so that the many benefits of fuel 
cells can be enjoyed not just by a lucky few, but on a global 
scale.
    We look forward to working with you, Mr. Chairman and other 
Members of Congress, to ensure the fuel cell agenda noted above 
becomes a reality, and the full promise of fuel cell technology 
is realized.
    Thank you, Mr. Chairman, for the opportunity to testify.
    [The prepared statement of Mr. Preli follows:]

      Prepared Statement of Francis R. Preli, Jr., Vice President-
        Engineering, United Technologies Corporation Fuel Cells

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

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

        2. Sustained national commitment and leadership;

        3. Robust investment by the private and public sector;

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

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

        6. Financial incentives and government purchases;

        7. Elimination of regulatory barriers;

        8. Harmonized codes and standards in the U.S. and globally;

        9. Global involvement with open access to markets; and

        10. Education and outreach to ensure consumer acceptance.

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

    Senator Brownback. Thank you, and that is very encouraging. 
Ten thousand vehicles on the road by 2010. These fleet 
vehicles, that's what you project now.
    Mr. Preli. Obviously, a projection of how much will happen 
in the future is wrought with uncertainty. But if you look at 
extrapolations based upon the number of vehicles today, the 
number that some auto companies are projecting for 2005/2007, 
if we can make inroads in infrastructure, and if the technology 
comes home and the cost comes down, we think that's a 
reasonable assumption.
    Senator Brownback. That's a pretty short time frame to get 
there, too. I mean, a 7-year time frame to be able to do that.
    Mr. Preli. Right. I think the opportunity is here now. If 
you look at fuel cell technology development--it was invented 
in 1830. Not an awful lot happened. In the 1960s we did some 
work in space; in the 1970s and 1980s, in commercial. But I 
would say over the last 10 years, the level of interest and 
investment in this PEM technology, which is the potential 
technology for automotive, has vastly increased the number of 
minds and the amount of money being brought forward. And, 
really, the achievements over the last 5 years, maybe 10 years, 
are really stunning in terms of the evolution of fuel cells, 
since the 1830s.
    Senator Brownback. Is it safe to say, and I don't care who 
would want to respond to this--that as the scientific and 
engineering community looks to the future and wants to take the 
automobile out of the environmental equation, that this is, by 
far, the most promising technology?
    Mr. McCormick. I'll take that on for General Motors. 
Unambiguously, we believe that. And it's because we think that, 
in a sense, moving from petroleum to hydrogen gives us an awful 
lot of very substantial societal benefits. But moving to the 
electric driving allows us to do things with the automobile 
that we haven't been able to do before, as evidenced by our Hy-
Wire concept, where we now can package cars and design them in 
ways that give better style and better utility than the 
conventional designs we have that have to design around the 
hard mechanical interfaces between the engine, transmission, 
and wheels. And so, in a sense, this idea of having customers 
that want to buy, what we sell is performance, transportation, 
for sure, utility, which has something to do with how the 
vehicle is designed. And most people buy vehicles, to a large 
degree, based on style and fun, as well. So you've got to put 
all that together. And these new concepts allow us to design 
vehicles that we think people absolutely want to buy. So, from 
our viewpoint, it's a win all the way around.
    Dr. Friedman. If I might add to that. I think this is one 
of the areas that's really encouraging, because the automotive 
industry and, generally, the environmental community and 
scientific communities agree that fuel cells hold amazing long-
term promise. I do have to underscore, though, that it is 
promise. Hydrogen is only as clean as how it is made. So if it 
is made from coal, if it is made from other dirty resources, we 
will definitely not be taking vehicles out of the equation. So 
it's very important that as we look forward to developing fuel 
cell vehicles, that development also happen for the energy 
resources to make sure that the hydrogen can be as clean as 
possible.
    It's also important that we develop a lot of other 
technologies. A lot of the conventional technologies and a lot 
of the hydro technologies will actually feed into fuel cell 
vehicles. For example, the electric motors in hybrid vehicles 
and the aerodynamic improvements or better rolling-resistance 
tires, in conventional vehicles all are very important to 
ensure that fuel cell vehicle costs can come down and that 
their efficiency can be maximized.
    So there's a real synergy between those technologies that's 
important to take advantage of.
    Senator Brownback. But, Dr. Friedman, I want to make sure I 
understand. You believe, as well, representing the Union of 
Concerned Scientists, that hydrogen technology represents the 
most promising aspect of taking the automobile out of the 
environmental impact equation?
    Dr. Friedman. As long as hydrogen technology is linked to 
renewable fuels, definitely.
    Senator Brownback. Mr. Preli, do you agree with that 
statement, too, that hydrogen is the key opportunity that we 
have here in taking the automobile out of the environmental 
equation?
    Mr. Preli. Yes, I think we agree with that, and I think our 
concern is really when--Sooner or later, fossil fuel reserves 
dwindle down, you have to make a switch. How quickly do you 
move toward that goal?
    Senator Brownback. Mr. Friedman, I want to go to a 
statement that you made that hydrogen is an energy carrier, not 
a ``energy fuel.'' And I see your difference, and I agree with 
that. What sources--and perhaps you can state even generally 
from the environmental community--should we be deriving 
hydrogen from?
    Dr. Friedman. Well, certainly that's a near-term and a 
long-term question. In the near-term, I think natural gas is 
likely the most promising source of hydrogen. If you look at 
this projection for basically getting 50 percent of the new 
vehicles as fuel cell vehicles by 2030, then kind of look back 
at 2020, where we're expecting maybe 10 percent of the new 
vehicles would be fuel cell vehicles, the hydrogen demand is on 
the order of one quad of energy. To make that from natural gas, 
that's about two quads of energy, which is less than 10 percent 
of the projected natural gas demand in that time frame. So as a 
transition fuel, natural gas makes a lot of sense, specifically 
because you can put a natural gas reformer at the fueling 
station. So instead of necessarily having to build up the 
infrastructure in the short term to pipe hydrogen to fueling 
stations, you have a reformer----
    Senator Brownback. You just pipe natural gas to the 
station.
    Dr. Friedman. Exactly, and then you crack the fuel there.
    Senator Brownback. Is it that cheap to be able to make that 
transfer technology where you crack it right at the station?
    Dr. Friedman. Well, in terms of technology, that technology 
is actually what UTC Fuel Cells is using for their stationary 
technology for the PC250s or PC25--sorry if I'm saying them 
wrong. Certainly, it's still more expensive than gasoline, and 
it will take time to get that down. It will also probably take 
tax credits, infrastructure tax credits and fuel tax credits 
such as are being looked at in the CLEAR Act in order to help, 
in the short term, bring down those costs.
    In the long term, because fuel cell vehicles can be on the 
order of two to three times more efficient than the cars we 
have today. The price for the fuel can be higher than gasoline, 
but because the vehicle is so much more efficient, the actual 
on-the-road price can be quite similar.
    Now, in the long term, though, we can't rely on natural 
gas. Obviously, there are still carbon emissions associated 
with natural gas, and there are some upstream emissions and air 
pollutants associated with producing natural gas. Ultimately, 
we do need to move to electrolysis-type technologies based off 
of wind and solar energy, as well as using biomass to gasify 
and produce hydrogen fuel.
    Senator Brownback. Gentlemen, do either of you have any 
comments to make about his analysis of the sourcing of the 
hydrogen?
    Mr. McCormick. Maybe we see it somewhat differently. And if 
you use the analogy of electricity, which, in the future, we 
envision, there are two energy carriers, one being electricity, 
one being hydrogen. The earlier we begin to get the 
infrastructure in, get the vehicles out there, and get the 
fueling infrastructure in, then we have the opportunity over 
time to balance environmental policies, economics, balance-of-
trade kind of issues and other real-world things that we have 
to balance in order to fundamentally come up with what's our 
national policy around these issues. And so a bit like 
electricity, once the grid's in, then you can decide 
incrementally how do I want to move my base production of 
electricity, how do I want to deal with the environmental 
issues. And so the quicker we begin to get the vehicles out 
there and get the infrastructure in, the better we are in terms 
of developing that path to renewables that we've just talked 
about.
    Senator Brownback. You know, it's exciting to hear it being 
talked about here, as it's frequently--as long as I've been 
around, there's been tension between the automobile community 
and the environmental community, and I don't sense that same 
level of tension here. There's a, it seems to me, a coming 
together of interests, which is a delight to see.
    Mr. McCormick, congratulations on the historic announcement 
this morning that GM did with Dow Chemical, provide fuel cells 
with, as I understand it, generating capacity of 35 megawatts 
at Dow's Freeport, Texas plant. Could you speak to some of the 
business advantages that both companies experienced? Because 
you noted this was a straight business-to-business arrangement 
that both saw advantages from.
    Mr. McCormick. Right. And, if I may, I'd like to generalize 
some business-to-business opportunities beyond this.
    First of all, it's in the nature of the chemical industry 
that quite often one of the things they produce is hydrogen. 
And they have----
    Senator Brownback. What do we do with that now?
    Mr. McCormick. Pardon?
    Senator Brownback. What's done with that now?
    Mr. McCormick. Well, what they do with it now is one of two 
or three things. They'll sell it into the merchant hydrogen 
business, they'll clean it and sell it. Second of all, they'll 
combust it to create some heat or to create--put it into a 
turbine or something and generate some additional power. Or, 
thirdly, in some cases it's vented. And, therefore, that 
hydrogen is there as an economic commodity. And if we then put 
it through a fuel cell and take advantage of the efficiency of 
the fuel cell, we allow Dow, then, onsite to generate 
electricity to help run their own facility. So what they're 
doing is they're taking the basically free hydrogen, running it 
through a fuel cell and playing that off against the need to 
buy electricity off of the grid. And in so doing, you notice 
that also now that they're going to have some real big 
environmental benefits, because they are not driving coal-fired 
power plants or other power plants to generate that electricity 
for their facility. So it has many, many wins, both societal 
and business-wise. But, fundamentally, that's the win for them.
    The win for us is that you don't go from the laboratory to 
generating 5- to 10 million vehicles a year all in one step. 
And so what we need to do is take that automotive technology 
and begin to build 1,000, then 10,000, then 100,000. Because 
not only is it important what we do in General Motors, but we 
have an entire supply base to transition. And our suppliers 
that make sensors or membranes or catalysts or gaskets or 
whatever have to go through that learning with us. And so it's 
very important that we bring this out of the laboratory and 
start getting real experience with it.
    So this was a pure business-to-business opportunity. At the 
cost of fuel cell as we have them, or will have them during the 
next couple of years, it turns out it's a profitable venture 
for both of us. Pure business.
    Now, I would comment that----
    Senator Brownback. Well, I hope when you open that up, 
you'll have a public announcement and reception for people so 
that they can look at that. That's an exciting development.
    Mr. McCormick. One of the other things that I think is 
implied in the discussion of what we call ``forecourt 
manufacturing'' of hydrogen in the filling station is that the 
technologies we're talking about, fuel cells, work well in 
small sizes and in large sizes. The fuel processors are nicely 
scalable. We built a car which had a small fuel processor on 
it. The people at UTC build small fuel processors, large fuel 
processors. Electrolyzers also work well when they're small or 
well when they're large.
    Consequently, the notion that you have to do everything 
centralized in some big massive capital-intensive way is not 
appropriate in this environment. So the idea that we can start 
to put in small fuel processors, small electrolyzers, as 
there's a few cars out there and the demand's not large, and 
later put in larger facilities as that demand grows, gives us 
an opportunity to, sort of, manage that transition. And that's 
a key difference, in terms of how this transition can happen.
    It also means that whenever there's an economic 
inefficiency, because we've got lots of sources of energy and 
lots of ways to convert it to hydrogen, if one of the economic 
factors is out of whack, somebody can arbitrage it. That is, 
somebody can make hydrogen from some other source, and so you 
start to get free-market competition here, which, at the end of 
the day, is going to stabilize markets and drive good 
competitiveness.
    So the key is for us to get the fuel cell vehicles out 
there and begin to get that infrastructure started.
    Senator Brownback. Now, you stated that a typical fuel cell 
vehicle produces 50 to 75 kilowatts of electrical power, and I 
think you also noted that not all of that's going to be needed 
in the vehicle and that in turn could be used to generate 
electricity?
    Mr. McCormick. Well----
    Senator Brownback. I mean, you're not going to plug your 
car into the house and start running the house, are you?
    Mr. McCormick. Well, in fact, look at that. We had--well, 
think about the tornados in your state and others recently 
where there's disruption of electric power. A couple of weeks 
ago in Detroit, we had an ice storm that caused 175,000 people 
to be without power. And so right off the bat, the notion of a, 
let me say, ``reconfigurable electric grid'' becomes very, very 
pragmatic. Now the electric cars can help power the grid and 
help deal with emergencies, homeland security, those kind of 
things.
    Finally, because of the way that--I've got to be very 
careful how I say this, because I'm not an expert on it--but, 
quite often, utility rates are set by the peak that you use 
over some period: a year, a month, or whatever. The ability to 
plug your car in and just occasionally peak-shave, particularly 
during the summers when your air conditioner is driving a lot 
of the power, could change the utility rates a lot. Remember 
that the brownouts in California and other places are not due 
to base-load generation; they're due to peak. And so what you'd 
like to be able to do, as a society, is take that peak offline 
so that you don't have to build all that base load. So the 
vehicles, again, could play a key role and be economically a 
very, very pragmatic solution to that.
    Senator Brownback. Mr. Preli, would you comment about that?
    Mr. Preli. Well, I think if you look at the automobiles, 
particularly in the United States, it's a largely underutilized 
capability. Automobiles are operated about 10 percent of the 
time, and the other 90 percent of the time they're sitting in a 
parking lot or a garage. So if you were able to tap that, then 
all of the effort that goes into building an automobile could 
be put to much better use, in that you could use it for 
generation of electricity at an industrial site, at a home, or 
anywhere else that you need electricity. Really, the home load 
would be an automobile more or less idling. Its idle capability 
is more than enough to power a home. And maybe you would even 
form micro-grids at an industrial site to tap that power if you 
had hydrogen available.
    Senator Brownback. So, you would see the possibility that 
people drive into work, when they get there, they would plug 
their car in to generate electricity at the work site?
    Mr. Preli. It's certainly possible, but we would have to 
change the design of the power plant for the automobile a 
little bit, because right now, let's say an automobile lasts 
for 10 years, which is 87,000 hours, of which maybe you'll use 
it for 8,700 hours, perhaps. If you're going to use it more, 
then the power plants would have to be designed to live more 
like a stationary power plant. For example, the PC25 power 
plant we currently market has a minimum life of 40,000 hours, 
and we have units that have run to 60,000 hours. So if you're 
going to use these as more of a stationary power-generation 
capability, you would have to improve upon the design life of 
the power plant. But that's certainly doable, both GM and 
ourselves are looking at the stationary market as an early 
market for these types of fuel cell power plants.
    Senator Brownback. What are the top two or three policy 
issues that we have to get right to press this technology 
forward?
    Dr. Friedman?
    Dr. Friedman. I think there is--the top policies in one 
is--sadly, we don't have a fuel supplier here today, but 
supplying the fuel and making sure the fuel gets out there is 
probably one of the most important hurdles; and that's much 
less of a technical hurdle, it's much less of an engineering 
hurdle, and it's more of a question of sustained commitment 
from the Government to provide certainty for fuel companies 
that they're going to have a market.
    The auto companies have been investing billions of dollars 
over the last several years to get fuel cell vehicles 
developed, and they've been really making a lot of progress.
    The fuel companies have not been really been making as 
large an investment, because they're waiting for a lot of the 
vehicles to be out there. But the vehicles aren't going to be 
out there unless the fuel is out there, and you get into this 
chicken-and-egg problem, which is where I think the Government 
can play a very significant role in helping to assure the fuel 
companies that there is going to be a market, to help mitigate 
their risk and their financial risk.
    Part of the way to do that is by providing tax credits for 
putting in infrastructure, tax credits for actually selling the 
fuel, especially in the early years so that you can bring down 
the initial costs of hydrogen.
    I think, second, it is very important to deal with the 
storage issue, as we heard earlier today, but I don't see that 
as as major of a stumbling block. We've seen studies by Ford 
Motor Company that show that, with really good packaging, they 
can get over a 300-mile range with 5,000 psi tanks. But storage 
is an important issue.
    And I think, also, education is important. It's very 
important that we train the next generation of engineers so 
that they are ready to deal with fuel cells and fuel cell 
technology. It requires a much more interdisciplinary engineer 
than your typical mechanical, electrical, or chemical engineer.
    Finally, I would say that one of the important things we 
need to do to make ourselves ready for fuel cell vehicles is to 
do something about oil consumption as soon as possible, 
investing in other conventional technologies so that the 
problem doesn't continue to grow and so that the urgency for 
fuel cell vehicles maybe isn't as large and we can wait and we 
can afford to wait until the technology is ready.
    Senator Brownback. Mr. McCormick?
    Mr. McCormick. Well, I have four. First of all, when people 
talk about the cost of hydrogen, a lot of that cost is in the 
capitalization of the hydrogen generation hardware; it's not 
necessarily in the hydrogen itself or the raw fuel that makes 
the hydrogen. So as we go forward, policies that enable people 
to put in the capitalization and get it amortized or get it 
written off quickly; or maybe, in the extreme cases, in the 
railroads when they were put in the United States west of the 
Mississippi, they were highly subsidized by the Government, 
because there wasn't enough population to support having 
profit-making railroads there. So there's a number of ways that 
the Government can think about dealing with what I'll call the 
``capital issue.'' I don't want people to be misled, to think 
that the cost of hydrogen is purely a technical issue. In fact, 
to a minor degree, it's a technical issue. It's primarily a 
financial issue.
    The second one is codes and standards, and it comes in two 
forms. Codes and standards as it relates to putting in the 
hydrogen fueling stations, in particular. When we did the 
electrical vehicles in California, we found that we had to go 
to every municipality, every--people that handle jaws of life, 
everybody that could license anything and try and convince them 
to put the electric chargers in. It means that nationally we 
have to really start harmonizing codes and standards work 
across the national Government.
    Number two, if we're going to have this--around codes and 
standards, if we're going to have this merging of hydrogen and 
electricity and the ability to switch back and forth between 
the two or use the vehicles to power the grid or have 
distributed generation, it means that we need codes and 
standards for connection onto the electrical grid. Right now, 
public utility commissions in each location have sway over how 
that happens, and so consequently it's a very difficult 
proposition to really move distributed electrical generation 
into the market, except in select places.
    Number three, this sounds strange, but I think this is a 
long-term proposition. We start, if we're going to make a 
change that happens in 30 years or even 50 years, the first 10 
years, this next 10 years, are absolutely pivotal to us, and so 
what we need are policies that don't change every year or two. 
They've got to be policies that envision continuity for periods 
of 20 and 25 years if you want this kind of a transition to 
happen.
    As we talk to fleet users, one of the problems with some of 
the earlier initiatives is that fleet users will begin to get 
ready to take advantage of the tax credits, only to find out 
the tax credits have gone away because they're 4 years out, and 
by the time people get the planning, get the capital, get ready 
to do it, all of a sudden the incentive to do it is gone. So I 
think we need to be looking at 20-year kinds of policies and 
make them consistent.
    And then, lastly, we're beginning on a journey. And, in a 
sense, as one college student told me recently, we're moving 
away from the theme of fire to the theme of electrochemistry. 
And when we look at that, the fuel cells that we're putting out 
in the next 10 years are going to be absolutely antiquated and 
obsolete by the technology that's possible. And so, 
consequently, I think that we need now to be energizing some of 
the best scientists in the country, places like National 
Science Foundation, NIST, many other of the research agencies 
and people who could take on very aggressive kinds of things.
    We're going to drive that cost curve, our technical 
suppliers and the supply community are going to do that, but I 
look to the day when we don't even think about using precious-
metal catalysts, maybe organometallic catalysts and things that 
are much more aggressive. And I think now is the time, as we 
get those first vehicles out there and we start moving, that 
there's a whole body of new technologies for us to implement in 
the 2010 to 2020 time frame.
    Again, I think we should be looking at the short term to 
implement, but I'd also like to see some really good research 
to get some of those Nobel Prize winners to look beyond what 
we're doing. And those would be the four things I would have in 
mind.
    Senator Brownback. Mr. Preli?
    Mr. Preli. Perhaps this is redundant. It may be surprising 
that we all agree. I'll run down my list, maybe for 
reinforcement.
    I think we need to lead in the development of technology, 
both short-term technologies, like improving durability and 
lowering cost, but, in particular, we need to lead in advanced 
concepts. We're at the Model-T stage in terms of fuel cell 
development, and there's many, many more advancements to come, 
and I think the U.S. needs to lead in that regard.
    I think we need to provide a forum for demonstrating these 
technologies, make things easier to demonstrate, in stationary, 
bus and fleets, and auto.
    I think we need to lead in the development of an 
infrastructure, because one fear I have is that the technology 
is moving very, very rapidly, maybe more rapidly than some of 
us originally anticipated, but the technology is not very 
useful without an infrastructure to fuel.
    And then, finally, to continue to spur the market through 
incentive programs.
    Senator Brownback. That's very good. Very good thoughts and 
comments.
    Gentlemen, I very much appreciate your testimony, your 
enthusiasm, your unity on an important, important topic for us. 
This was an exciting forward-looking hearing.
    I would like to join Mr. McCormick in inviting people here 
to go view--I hope to drive it. My license is good, I have 
insurance to be able to drive it. Where is the vehicle located, 
Mr. McCormick?
    Voice: Back by the Russell Building, out the back door, on 
the corner of C Street and First.
    Senator Brownback. Oh, very good.
    Mr. McCormick. If you follow that gentleman right there, 
he'll----
    Senator Brownback. So if we follow the gentleman over here, 
then people can look and see, possibly drive it.
    It's an exciting issue, and I hope you'll continue to work 
with us.
    Thank you all for coming. The hearing is adjourned.
    [Whereupon, at 4:24 p.m., the hearing was adjourned.]

                            A P P E N D I X

      Response to Written Questions Submitted by Hon. Bill Nelson 
                        to Francis R. Preli, Jr.

    Questions 1. What does one do with the water byproduct? Store it on 
board, release it to the atmosphere/street?
    Answer. Excess water is released to the atmosphere as water vapor 
and as liquid water. Internal combustion engines also release large 
amounts of water, but because they operate at higher temperatures than 
Proton Exchange Membrane fuel cells, the water is usually in the 
gaseous form. Sometimes, particularly when the engine is cold, you can 
see water dripping from the exhaust pipes. With fuel cells, on cold 
days, some heating of the water may be needed to make sure that a lot 
of liquid water does not drip out.

    Questions 1a. And do we have enough clean water to make this thing 
work, or do we need to be looking at large water purification plants to 
accompany hydrogen plants?
    Answer. Water is formed as a by-product of the hydrogen and oxygen 
reaction and so large amounts of pure water do not need to be supplied 
to the fuel cell engine. About 3-10 liters of water may be required at 
initial start-up, but the fuel cell uses its own water to make up any 
losses.

    Questions 2. Where does the oxygen come from? (A fuel cell combines 
oxygen and hydrogen to make water and heat/electricity. We're focusing 
on making hydrogen. Is the oxygen pulled out of the air, or is it 
stored onboard like the hydrogen?)
    Answer. The oxygen comes from the air. The fuel cell operates 
better on pure oxygen (as in our fuel cells for the space shuttle), but 
operates very well using oxygen from air. The improved performance from 
pure oxygen does not outweigh the cost, storage and safety issues 
encountered with pure oxygen.

    Questions 3. How quickly can you see hydrogen powered vehicles 
making a significant impact? (e.g., 20 percent of the market by 2020, 
2030 . . . ?)
    Answer. As indicated in our written testimony, the answer to this 
question depends on many variables. Assuming that the technical 
challenges are met, the private and public sector make robust 
investments, suppliers perform as predicted, consumer acceptance is won 
and the necessary infrastructure develops as required, we can see mass 
production of fuel cell vehicles starting in the 2012-2015 timeframe. 
This scenario also requires that we are successful in the deployment of 
stationary and fleet vehicles such as transit buses as important 
stepping-stones to the deployment of fuel cell automobiles.
    UTC Fuel Cells is working diligently with its auto and fleet 
customers to increase the durability and reduce the cost and size of 
fuel cell power plants so they can compete with the internal combustion 
engine. We estimate that size/power density is within 30 percent of the 
target required for wide spread auto usage of fuel cells and progress 
on durability is very encouraging. Cost, however, remains a significant 
challenge since the internal combustion engine enjoys a one hundred 
year head start and benefits from high volume production.
    The convergence of the required size and cost of a fuel cell system 
for the automotive market with all the performance criteria demanded by 
consumers is very dependent on continued R&D investment from the auto 
sector and fuel cell component and raw material suppliers. Presuming 
that investment continues to accelerate, we could foresee a truly 
competitive fuel cell system in the 2015 time frame. Of course there 
will be niche markets as much as five years earlier than that.
    The milestones to watch for are continued investment from the major 
automotive companies in fuel cell R&D, particularly when those 
investments are made in the absence of legislative initiatives. When 
that happens, it will be a signal that the automakers believe they will 
compete head-to-head within the next ten years on the efficacy of their 
respective fuel cell technologies. If those R&D investments decline 
when legislative initiatives lose momentum, it will be a signal that 
fuel cell market entry will be delayed. Additionally, if there are 
significant legislative initiatives or a major upward swing in the cost 
of petroleum products, the introduction of fuel cells to the auto 
market place could be accelerated by as much as three to five years.

    Questions 4. Will hydrogen be able to compete in the absence of 
policy measures (e.g., carbon credits), considering that it is more 
costly with the present carbon-based fuel prices?
    Answer. The conversion to hydrogen will be costly. The U.S. must 
use some form of incentives to stimulate the conversion process and 
must lead the development of infrastructure.

    Questions 5. Should the federal government be picking hydrogen and 
fuel cell vehicle technologies over other technologies, such as hybrid 
vehicles and lean burn engines?
    Answer. Hybrids are an important bridging technology for fuel cells 
because they will solve the electric drive issues and will help reduce 
the costs of such systems. High-volume manufacturing of hybrid vehicles 
will make the eventual conversion to hydrogen fuel cells easier.

    Questions 6. Would the designation of a target deadline for 
commercialization of fuel cell vehicles help focus the program and make 
better use of funding resources? Alternately, would such a deadline 
force manufacturers to abandon other promising technologies or create 
an unfair burden on the industry?
    Answer. A plan that includes aggressive milestones is appropriate. 
These milestones should include both technology and product goals so 
progress can be measured on an annual basis. We believe too much 
emphasis is being placed on 2015 commercialization goals without 
looking carefully at the intermediate steps.

    Questions 7. Should the government focus on long-term research or 
should it focus on technologies closer to commercialization, or both?
    Answer. The government should develop and implement both short and 
long term strategies. In the near term, the deployment of stationary 
fuel cells needs the support of the government through tax credits and 
as a purchaser of fuel cell products. In the mid term, fuel cell busses 
are the best way to begin deploying the technology for transportation 
because the technical requirements are not as demanding as for 
automobiles and hydrogen infrastructure can be developed. A near and 
long term R&D program is also needed to improve durability, operability 
and to lower the cost. But a single focus on long-term R&D will 
discourage near-term applications and reduce the ability to acquire 
design and usage feedback for today's state of the art technology.

                                  
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