[Senate Hearing 109-179]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-179
 
                    HYDROGEN AND FUEL CELL RESEARCH

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY ON RECENT PROGRESS IN HYDROGEN AND FUEL CELL RESEARCH 
     SPONSORED BY THE DEPARTMENT OF ENERGY AND BY PRIVATE INDUSTRY

                               __________

                             JULY 27, 2005


                       Printed for the use of the
               Committee on Energy and Natural Resources

                               _____


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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               JON S. CORZINE, New Jersey
GORDON SMITH, Oregon                 KEN SALAZAR, Colorado
JIM BUNNING, Kentucky

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                                 ------                                

                         Subcommittee on Energy

                  LAMAR ALEXANDER, Tennessee, Chairman
             RICHARD M. BURR, North Carolina, Vice Chairman

MEL MARTINEZ, Florida                BYRON L. DORGAN, North Dakota
JAMES M. TALENT, Missouri            DANIEL K. AKAKA, Hawaii
GEORGE ALLEN, Virginia               TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky                MARY L. LANDRIEU, Louisiana
LISA MURKOWSKI, Alaska               DIANNE FEINSTEIN, California
LARRY E. CRAIG, Idaho                MARIA CANTWELL, Washington
CRAIG THOMAS, Wyoming                JON S. CORZINE, New Jersey
CONRAD BURNS, Montana                KEN SALAZAR, Colorado

   Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the 
                              Subcommittee

                Kathryn Clay, Professional Staff Member
                  Jonathan Epstein, Legislative Fellow





















                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Alexander, Hon. Lamar, U.S. Senator from Tennessee...............     1
Bentham, Jeremy, Vice President, Royal Dutch Shell and Chief 
  Executive Officer, Shell Hydrogen B.V..........................    11
Burns, Dr. Lawrence D., Ph.D., Vice President, Research & 
  Development and Strategic Planning, General Motors Corporation.    18
Campbell, Dennis, President and CEO, Ballard Power Systems.......    23
Dorgan, Hon. Byron L., U.S. Senator from North Dakota............     3
Faulkner, Douglas L., Acting Assistant Secretary for Energy 
  Efficiency and Renewable Energy, Department of Energy..........     4

                                APPENDIX

Responses to additional questions................................    41




















                    HYDROGEN AND FUEL CELL RESEARCH

                              ----------                              


                        WEDNESDAY, JULY 27, 2005

                               U.S. Senate,
                            Subcommittee on Energy,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 3 p.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Lamar Alexander 
presiding.

          OPENING STATEMENT OF HON. LAMAR ALEXANDER, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Alexander. Good afternoon, the Subcommittee on 
Energy will come to order. The purpose of this hearing today is 
to receive testimony on the progress that has been made 
recently in hydrogen and fuel cell research sponsored by the 
Department of Energy and by private industry.
    We have four excellent witnesses. This is a subject that 
Senator Byron Dorgan has championed for a number of years in 
the U.S. Senate, and which I and many other Senators, are 
greatly interested.
    I think what we'll do is I'll introduce our witnesses, and 
then we'll ask Mr. Faulkner to go first. And then Senator 
Dorgan and I will ask questions. Mr. Faulkner, will you be able 
to stay for a few minutes?
    Mr. Faulkner. Sure, whatever you want.
    Senator Alexander. Well, then, I think we may invite the 
other three, if they're here, to come up. Are the other three 
witnesses here? I believe they are. Then we'll ask questions of 
the four of you all at once. That might be a better use of our, 
of everyone's, time.
    The genesis for this hearing came out of a conversation 
Senator Dorgan and I had a few weeks ago when we were talking 
about the energy bill. Let me put it this way, we stayed up 
late this week, the Senators on the Energy Committee, 
completing legislation that we hope the full Congress will 
enact this week, that sets an energy policy for the United 
States for the next several years. Congress has worked on that 
for 5 or 6 years. There are many different opinions on it, it 
wasn't easy to do, but it's fundamentally important to our 
country's future.
    The way I look at the energy bill, there are really two 
main directions that it seems to go. One is to transform the 
way we produce electricity. We do that by largely shifting our 
emphasis over the long term toward low carbon and no carbon 
electricity, conservation and efficiency, through support for 
advanced nuclear technology, through coal gasification and 
carbon sequestration, new supplies of natural gas and other new 
technologies. And we hope that that will, among other things, 
help stabilize the high price of natural gas in the United 
States, and eventually bring it down, which is very important 
for homeowners, and blue-collar workers and farmers in our 
country.
    The second thing that we seek to do is transform our 
dependence on oil, especially overseas oil. And we make a few 
short-term steps in the legislation that we're able to agree 
on--support for alternative fuels helps to do that. The Senate 
passed a provision requiring reduction of a million barrels of 
oil a day, but the House didn't agree to that, so that's not in 
there.
    We also have support for hybrid and advanced diesel 
vehicles, which are at least an interim step, and we'll see how 
promising they may be in helping us conserve oil. There is a 
significant provision for a long-term fix for the oil 
addiction--to borrow some of Senator Dorgan's words--and that 
is hydrogen fuel cells. There's support for about a $3.7 
billion program over 5 years for research and development and 
for demonstration.
    I was in Yokohama, Japan about a year ago, and I visited a 
hydrogen fuel cell vehicle filling station. I saw seven SUVs 
parked there. There was a Nissan, a Toyota, a General Motors, a 
Chrysler--all the major car manufacturers had their hydrogen 
fuel cell vehicles at this hydrogen filling station in 
Yokohama. And I filled one up, and in my conversation with the 
chief executive of Nissan, he said they're spending $700 
million a year of their own money on hydrogen fuel cells. The 
chief executive of Toyota indicated that they're investing a 
lot of money in hydrogen fuel cells. The president of General 
Motors just last week made it clear to me that General Motors 
considers it to be the transforming technology for vehicles, 
hydrogen fuel cells. So, we know very well that U.S. Senators 
and other politicians, and even bureaucrats in the Government 
can't create the technology to solve the myriad of issues that 
have to do with hydrogen fuel cell vehicles that emits only 
water vapor, instead of the various pollutants that gasoline 
does. But we do know that the Government can help to create an 
environment in which the private sector can succeed.
    So, our purpose today is to get an update both from the 
Government, itself--and the programs we have in the Federal 
Government--and from industry and outsiders on how we are doing 
in helping to create an environment in which we are likely to 
succeed in the United States in terms of production of hydrogen 
fuel cell vehicles.
    Our witnesses today are Mr. Doug Faulkner, who's the acting 
Assistant Secretary of the Office of Energy Efficiency and 
Renewable Energy in the Department of Energy--and we'll hear 
from Mr. Faulkner in just a moment--and then we have three 
other witnesses: Mr. Jeremy Bentham, the chief executive 
officer of Shell Hydrogen B.V., Dr. Larry Burns, the vice 
president of General Motors, and Mr. Dennis Campbell, president 
and chief executive officer of Ballard Power Systems. I'm going 
to ask each of the witnesses to summarize their testimony, in 
about 5 minutes. That would give Senator Dorgan and me--and any 
of the other Senators who came--more time to ask questions. Mr. 
Faulkner, if you need to take a little bit longer than that to 
give us your update, you're welcome to do that.
    So now I'll call on Senator Dorgan for whatever comments 
he'd like to make, then we'll go to Mr. Faulkner for his 
testimony. Thank you.

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

    Senator Dorgan. Thank you very much, Senator. I appreciate 
the work that we've done together, and the work of the entire 
Energy Committee on an energy bill. I share with you my hope 
that by the end of this week, we will have passed a Conference 
Committee Report through the House and the Senate, and that 
it's on the President's desk for signature.
    One of my former colleagues said, ``The future will be 
better tomorrow.'' I won't identify the colleague, but you 
know, the reaction to that is, ``One would hope so.'' But, with 
respect to energy, it's not all that certain, unless we start 
making some good decisions. And my colleagues have heard me say 
that we are hopelessly addicted to foreign oil to run this 
American economy. With 60 percent of our oil coming from off 
our shores, it means that our economy is held hostage to the 
ability to find that oil, and import that oil into our country.
    Now, with respect to energy policy, I think there are two 
approaches that we use. The first, every 25 years when we 
debate energy policy, that approach is staring at your shoes. 
You still stand erect, but you're not doing much more than 
staring at your shoes. And the other approach is looking ahead, 
to look ahead and search for new alternatives and new 
opportunities. I'm really pleased to say that in this energy 
bill--as my colleague, Senator Alexander, just described--we 
have $3.73 billion in both the hydrogen title and the vehicle 
title, that attempts to move us in a different direction, move 
us ahead. We've been putting gasoline through carburetors, and 
now fuel injectors, for 100 years, in our vehicles. And unless 
we decide we want to change that, we will continue to do that 
for the next 100 years. It makes a lot of sense to me because 
the line on increased usage of energy goes up like this on 
transportation.
    It makes sense to me that we would look for alternatives, 
look for sources of energy that are ubiquitous, that are 
everywhere, that we can develop and use, and so I have been 
pushing hard in recent years, working on this issue of hydrogen 
in fuel cells. It's not just in our country, the Europeans and 
others are moving in the same direction, in an attempt to pole 
vault to the future. It's my fervent hope that my grandchildren 
and their grandchildren will be driving vehicles that aren't 
dependent on someone digging oil out of the sand halfway around 
the world. We can do that, but you've got to decide where 
you're going. If you're going to get someplace, you've got to 
figure out what your destination is, and what the route is to 
get there, and that's the purpose of what we have done in this 
energy bill.
    There's plenty to criticize in this energy bill, and 
there's plenty that's good. But the one really bright spot, the 
spot that glows in this energy bill, in my judgment, is the 
hydrogen title. And I say that not just because I had a 
significant part of the work with my colleagues to help write 
that title, but because we also did a lot of work, as my 
colleague knows, with the U.S. Fuel Cell Council, the National 
Hydrogen Association, and a lot of interests involved in 
looking ahead, looking to the future, to new technologies, and 
how we might produce, store and transport hydrogen. And I'm 
really excited about all that.
    The other night I said, ``There's an old saying, if you 
don't care where you're going, you're never ever going to be 
lost.'' Well, that's true. If you just meander around, you'll 
always be where you intend to go, if you don't care. But if we 
can set benchmarks, and waypoints, and decide, ``Here's where 
we want to be as a country,'' down the road with new technology 
by the year 2010 and 2020, then we can make things happen. John 
F. Kennedy said, ``We're going to go to the moon in a decade,'' 
and we did. And that's exactly what we ought to do to try to 
escape this addiction we have, for our economy to be held 
hostage to foreign oil. We can do this, we will do this, as a 
country.
    This hearing, Mr. Chairman, is a refreshing opportunity to 
review with Mr. Faulkner, with the Department of Energy and 
three very well-respected folks from the industry who are 
working on these new technologies--I really appreciate this 
hearing and think it will, once again, advance the ball--but 
also augment and supplement that which we did late the other 
night, or early in the morning I should say, in this energy 
bill. We have a lot to celebrate today, those of us who think 
about hydrogen and fuel cells as part of the constructive 
future of this country's energy supply. So, Mr. Chairman, thank 
you. I look forward to hearing the witnesses.
    Senator Alexander. Thank you, Senator Dorgan.
    Mr. Faulkner, why don't you begin? And then we'll invite 
the other witnesses to come to the table.

 STATEMENT OF DOUGLAS L. FAULKNER, ACTING ASSISTANT SECRETARY 
              FOR ENERGY EFFICIENCY AND RENEWABLE 
                  ENERGY, DEPARTMENT OF ENERGY

    Mr. Faulkner. Yes, sir. Thank you. I thank you for your 
offer of more time for my remarks, but I believe that they'll 
come in 5 minutes or less.
    Mr. Chairman, and Senator Dorgan, I appreciate the 
opportunity to testify on the Department of Energy's hydrogen 
program. Since President Bush launched the Hydrogen Fuel 
Initiative over 2 years ago, we've made tremendous progress. We 
implemented valuable feedback from the National Academy of 
Sciences, and we're already seeing results. In fact, the 
Academy is currently completing its biannual review of the 
Program, and I think we'll see the results of that next week.
    The Academy called for us to improve integration and 
balance of activities within the relevant offices of the 
Department of Energy, establishing milestones and go/no-go 
decisions. We have done this. The DOE Hydrogen Posture Plan 
identifies strategies and milestones to enable a 2015 industry 
commercialization decision, and each office at DOE has 
developed a detailed research plan.
    We are now implementing those research plans, and making 
tangible progress. The Department competitively awarded over 
$510 million in Federal funding, subject to appropriations, for 
projects to address critical challenges. The DOE Office of 
Science announced 70 new projects addressing basic science 
issues in hydrogen. We've created a national hydrogen storage 
project, including three Centers of Excellence, with 
universities, industries, and Federal laboratories focusing on 
hydrogen storage materials, a critical technology for the 
hydrogen economy.
    These activities address the Academy's recommendation to 
shift toward more exploratory work. We have identified 
materials with higher hydrogen storage capacities; however, we 
still need both fundamental understanding and engineering 
solutions to address issues like charging and discharging 
hydrogen and the practical temperatures and pressures. We 
initiated 65 projects on hydrogen production and delivery, and 
the results are already promising.
    We believe we can meet our goal of $2 to $3 a gallon of 
gasoline equivalent. Our ultimate goal is carbon-neutral 
hydrogen production that emphasizes resource diversity. To 
address fuel cell costs and durability, we will have a new $75 
million solicitation, complementing existing materials research 
efforts, and results are already being achieved here, too.
    As highlighted by Secretary Bodman in earlier testimony, 
the high-volume cost of automotive fuel cells was reduced from 
$275 to $200 per kilowatt. Through new materials and 
fabrication technologies to further reduce fuel cell costs and 
improve durability, we believe we can meet our targets.
    We must keep sight of the ultimate goal, the transfer of 
research to the real world, and we've complemented our research 
with what we call a ``learning demonstration.'' This 50/50 
cost-shared activity, bringing auto and energy companies 
together to validate infrastructure technologies, will enable 
us to test laboratory concepts, major systems-level progress, 
collect data and provide valuable feedback for our research. In 
May, President Bush participated in the refueling of a GM 
hydrogen fuel cell vehicle at DC's Benning Road station; that's 
a part of our learning demonstration effort.
    We also conduct research on safety codes and standards, 
working with the Department of Transportation, and globally, 
through the International Partnership for the Hydrogen Economy. 
And we're working with the Department of Commerce and other 
Federal agencies to create a roadmap for research and 
development for manufacturing technologies, to bridge that 
continuum from basic research to commercialization. This effort 
will help to track new business investment, create new high-
technology jobs, and build a competitive U.S. supply base.
    The Department is working with partners on all fronts to 
address the challenges to a hydrogen economy. Under the 
FreedomCAR and Fuel Partnership, DOE is collaborating with the 
U.S. Council for Automotive Research (DaimlerChrysler, Ford and 
GM) and five major energy companies (BP, Chevron, 
ConocoPhillips, ExxonMobil and Shell). The program's technical 
targets--created using input from teams of DOE, automotive and 
energy company experts--represent customer requirements and the 
business case necessary for widespread commercial success.
    Ultimately, it is industry that will build the automotive 
and energy infrastructure for the country. However, developing 
hydrogen technologies that are economically competitive with 
marketplace alternatives entails significant risk. Therefore, 
Federal investment and high-risk R&D is necessary to overcome 
technology barriers and to reduce this risk.
    Mr. Chairman, Senator Dorgan, the DOE Hydrogen Program is 
committed to a balanced portfolio which integrates basic and 
applied research, engineering development and learning 
demonstrations. This committee has provided valuable guidance.
    This completes my prepared statement, I'll be happy to 
answer any questions.
    [The statement of Mr. Faulkner follows:]
 Prepared Statement of Douglas L. Faulkner, Acting Assistant Secretary 
               for Energy Efficiency and Renewable Energy
    Mr. Chairman and Members of the Subcommittee, I appreciate the 
opportunity to testify on the Department of Energy's (DOE or 
Department) Hydrogen Program. Today, I will provide an overview of the 
program, summarize progress in implementing the recommendations of the 
National Academies' hydrogen report, discuss support for state 
initiatives and demonstration projects, as well as provide a status of 
the Hydrogen Program's accomplishments and plans.
    Over two years ago, in his 2003 State of the Union address, 
President Bush announced the Hydrogen Fuel Initiative to reverse 
America's growing dependence on foreign oil by developing the hydrogen 
technologies needed for commercially-viable fuel cells--a way to power 
cars, trucks, homes, and businesses that could also significantly 
reduce criteria pollutants and greenhouse gas emissions. Since the 
launch of the five-year, $1.2-billion research initiative, we have had 
many accomplishments on the path to taking hydrogen and fuel cell 
technologies from the laboratory to the showroom in 2020, following an 
industry commercialization decision in 2015.
    Our Hydrogen Program emphasizes the research and development (R&D) 
activities necessary to achieve the President's vision of a hydrogen 
economy and to address foreign oil dependence and greenhouse gas 
emissions. Our R&D efforts address the critical path barriers to the 
hydrogen economy. As an extension of these research activities, we have 
also established a 50-50 cost-shared partnership with industry to 
create a ``learning'' demonstration. These demonstration projects 
ensure that the automotive and energy industries will work together to 
integrate vehicle and infrastructure technologies prior to market 
introduction.
         drivers for hydrogen research: energy and environment
    As a Nation, we must work to ensure that we have access to energy 
that does not require us to compromise our economic security or our 
environment. Hydrogen offers the opportunity to end petroleum 
dependence and virtually eliminate transportation-related criteria and 
greenhouse gas emissions by addressing the root causes of these issues. 
Imported petroleum already supplies more than 55 percent of U.S. 
domestic needs and those imports are projected to increase to more than 
68 percent by 2025 with business-as-usual. Transportation accounts for 
two-thirds of the oil use in the United States and vehicles contribute 
to the Nation's air quality problems and greenhouse gas emissions 
because they release criteria pollutants and carbon dioxide.
    At the G8 Summit earlier this month, President Bush reiterated his 
policy of promoting technological innovation, like the development of 
hydrogen and fuel cell technologies, to address climate change, reduce 
air pollution and improve energy security in the United States and 
throughout the world. The Department's R&D in high-efficiency vehicle 
technologies, such as gasoline hybrid-electric vehicles, will help 
improve energy efficiency and reduce the growth of petroleum 
consumption in the nearer term. Under DOE's FreedomCAR Program, the 
President's FY 2006 budget request is $100.4 million. This funding will 
make hybrid-vehicle components, like batteries, power electronics, 
electric motors and advanced materials, more affordable. But, in the 
longer term, higher efficiency alone will not reduce our petroleum 
consumption; we ultimately need a substitute to replace petroleum. 
Hydrogen and fuel cells, when combined, have the potential to provide 
domestically-based, virtually carbon-and pollution-free power for 
transportation.
    Hydrogen can be produced from diverse domestic energy resources, 
which include fossil fuels, nuclear energy, biomass, solar, wind and 
other renewables. We have planned and are executing a balanced research 
portfolio for developing hydrogen production and delivery technologies. 
Hydrogen from coal will be produced directly by gasification--not coal-
based electricity. For hydrogen from coal to be viable, research in 
carbon capture and sequestration technologies must also be successful. 
The ultimate outcome we are seeking is hydrogen from carbon-neutral 
fossil, nuclear and renewable energy resources.
    In the transition to the hydrogen economy, the Department 
recognizes that hydrogen will be produced by technologies that do not 
require a large, up-front investment in hydrogen delivery 
infrastructure. Instead, hydrogen can be produced at the refueling 
station by reforming natural gas and renewable fuels like ethanol 
utilizing existing delivery infrastructure. A fuel cell vehicle running 
on hydrogen produced from natural gas would produce 25 percent less net 
carbon emissions than a gasoline hybrid electric vehicle and 50 percent 
less than conventional internal combustion engine vehicles on a well-
to-wheels basis. However, natural gas is not a long-term strategy 
because of concerns of limited supply and the demands of other sectors. 
As vehicle market penetration increases and research targets for the 
diverse hydrogen production and delivery technologies are met, these 
will help establish the business case for industry investment in large-
scale hydrogen production and delivery infrastructure.
                major challenges to the hydrogen economy
    The President's FY 2006 request to Congress for the Hydrogen Fuel 
Initiative is $259.5 million. This funding is necessary to conduct the 
research to overcome the barriers to the hydrogen economy:

   The technology must be developed to store enough hydrogen 
        on-board a vehicle to enable greater than 300-mile driving 
        range without reducing cargo or passenger space.
   The high-volume cost of the fuel cell system must be reduced 
        by a factor of seven in order to be competitive with today's 
        internal combustion engines, and durability needs to be 
        improved by a factor of five.
   The cost of producing hydrogen must be reduced to be 
        competitive with the cost of gasoline. Hydrogen from natural 
        gas reforming is currently about two times as costly as 
        gasoline (untaxed) and hydrogen from other sources (renewables, 
        nuclear energy and coal combined with sequestration) is even 
        more costly.
   Improved materials and system designs must be developed to 
        ensure the safe use of hydrogen. Codes and standards need to be 
        developed to enable implementation of hydrogen technologies, 
        and international standards are needed to eliminate trade 
        barriers.
   Educational materials must be developed and available for 
        key target audiences (e.g. first responders, etc.) to 
        understand hydrogen and fuel cell technologies and their uses.
                      progress and accomplishments
    Mr. Chairman, the Department has made significant progress in 
planning and setting the stage to achieve the research breakthroughs 
necessary for a future hydrogen economy. The Department has 
competitively selected over $510 million in projects to address 
critical challenges such as hydrogen storage, fuel cell cost and 
durability, and hydrogen production and delivery cost. In addition, we 
have established a national ``learning'' demonstration and new projects 
in safety, codes and standards, and education. All of the multi-year 
projects discussed below were competitively selected and are subject to 
congressional appropriations. The continuum of research, from basic 
science to technology demonstration, will be closely coordinated.

   In May 2005, 70 new projects were selected at $64 million 
        over three years to focus on fundamental science and to enable 
        revolutionary breakthroughs in hydrogen production, storage and 
        fuel cells. Topics of this basic research include novel 
        materials for hydrogen storage, membranes for hydrogen 
        separation and purification, designs of catalysts at the 
        nanoscale, solar hydrogen production, and bio-inspired 
        materials and processes.
   Three Centers of Excellence and 15 independent projects were 
        initiated in Hydrogen Storage at $150 million over five years 
        to develop the most promising low-pressure storage approaches. 
        The Centers include 20 universities, 9 federal laboratories and 
        eight industry partners, representing a concerted, multi-
        disciplinary effort to address on-board vehicular hydrogen 
        storage.
   To address fuel cell cost and durability, five new projects 
        were initiated at $13 million over three years. A $17.5 million 
        solicitation is currently open to research new membrane 
        materials in fuel cells. And, a new $75 million solicitation 
        will be released this fall to address cost and durability of 
        fuel cell systems.
   A total of 65 projects were awarded for applied research in 
        hydrogen production and delivery, funded at $107 million over 
        four years. These include hydrogen production from renewables, 
        distributed natural gas, coal and nuclear energy.
   A national vehicle and infrastructure ``learning 
        demonstration'' project, a six-year effort with $170 million in 
        DOE funding, was launched to take research from the laboratory 
        to the real world, critically measuring progress and providing 
        feedback to our R&D efforts.
   Approximately $7 million over four years for hydrogen 
        education development was awarded to serve the needs of 
        multiple target audiences, including state and local government 
        officials, safety and code officials and local communities 
        where hydrogen demonstrations are located.

    With these new competitively selected awards, the best scientists 
and engineers from around the Nation are actively engaged. The stage is 
now set for results.
    Our ongoing research has already led to important technical 
progress.

   As highlighted by Secretary Bodman in earlier Congressional 
        testimony, the high-volume cost of automotive fuel cells was 
        reduced from $275 per kilowatt to $200 per kilowatt in two 
        years. This cost reduction was the result of increased power 
        density; advancements in membrane materials; reductions in both 
        membrane material cost as well as amount of membrane material 
        required in the fuel cell; enhancement of specific activity of 
        platinum catalysts; and innovative processes for depositing 
        platinum and reducing the overall amount of catalysts.
   In hydrogen production, we have demonstrated our ability to 
        produce hydrogen at a cost of $3.60 per gallon of gasoline 
        equivalent at an integrated fueling station that generates both 
        electricity and hydrogen. This is down from about $5.00 per 
        gallon of gasoline equivalent prior to the Initiative.
         implementation of national academies' recommendations
    We have implemented the valuable feedback from the National Academy 
of Sciences (NAS) review in March 2004 and are already seeing results. 
The NAS called for us ``to improve integration and balance of 
activities'' within the relevant DOE Offices (which include Energy 
Efficiency and Renewable Energy; Fossil Energy; Nuclear Energy, Science 
and Technology; and Science). We have done this by developing and 
publishing an integrated research, development and demonstration plan, 
called the ``Hydrogen Posture Plan,'' which covers all Department 
hydrogen activities. The Plan identifies the major milestones which 
need to be achieved to enable industry to make a 2015 commercialization 
decision. Each of the four offices has, in turn developed a detailed 
research plan which outlines how the high-level milestones will be 
supported. Lower-level, time-phased, performance-based milestones form 
the basis for measuring research progress.
    In response to another National Academies' recommendation, we 
established a systems analysis activity to examine the impact of 
different components or subsystems of hydrogen technology on the 
complete system, as well as establish the time frames needed for 
transition to a hydrogen economy. ``Well-to-wheels'' analyses assessing 
the energy, economic and environmental impacts of various hydrogen 
production and delivery pathways, as well as other systems analysis 
activities, will be valuable in technology decision-making and planning 
for a transition to the hydrogen economy.
    The Hydrogen Program has increased emphasis on exploratory research 
in response to the NAS recommendation that ``there should be a shift . 
. . away from some development areas towards exploratory work'' and 
that ``the probability of success [will be] greatly increased by 
partnering with a broader range of academic and industrial 
organizations.'' In accordance with this recommendation, we have moved 
away from subsystem hardware development, such as fuel cell stack 
systems and conventional high-pressure storage tanks, to put greater 
emphasis on materials research.
    Starting in FY 2005, DOE's Office of Science has been included in 
the Hydrogen Fuel Initiative in order to focus basic research on 
overcoming key technology hurdles in hydrogen production, storage and 
conversion. The Office of Science-funded research seeks fundamental 
understanding in areas such as novel materials for hydrogen storage 
with an emphasis on nanoscale structures and new storage concepts, non-
precious-metal catalysts, membranes for fuel cells and hydrogen 
separation, multifunctional nanoscale structures, photocatalytic 
(including biological and bio-inspired approaches) and 
photoelectrochemical hydrogen production, and modeling and analytical 
tools. The three Centers of Excellence established through the 
Department's ``Grand Challenge'' solicitation are utilizing recent 
progress in materials discovery and technology which allows hydrogen to 
be stored at low pressures and modest temperatures. Rather than ``stand 
alone'' test tube research, we have an integrated effort to address 
basic, applied, and engineering sciences to develop materials and 
systems for storing hydrogen.
    Through the hydrogen production solicitations, we have increased 
emphasis on long-term research. Last October, DOE announced industry 
and university grants of $25 million over three years, contingent upon 
appropriations, for solar-driven photoelectrochemical, thermochemical 
and photobiological technology. The NAS also recommended changes in 
other hydrogen production technology areas and advised DOE to 
``increase development of breakthrough approaches for small-scale 
reformers[,] . . . research novel renewable liquid distributed 
reforming [and] . . . emphasize electrolyzer development.'' Our 
transition strategy emphasizes small-scale reformers and electrolyzers 
for refueling stations and distributed electricity generation sites. 
Through our solicitation, we have added new projects totaling $30 
million over 3 years, contingent upon appropriations, in these areas. 
We have worked with our energy industry partners to develop technology 
roadmaps that emphasize distributed technologies.
                   collaboration through partnerships
    We are working with partners on all fronts to address the 
challenges to a hydrogen economy. Under the FreedomCAR and Fuel 
Partnership, DOE is collaborating with the U.S. Council for Automotive 
Research (DaimlerChrysler, Ford and General Motors) and five major 
energy companies (BP, Chevron, ConocoPhillips, ExxonMobil and Shell) to 
help identify and evaluate technologies that will meet customer 
requirements and establish the business case. Technical teams of 
research managers from the automotive and energy industries and DOE are 
meeting regularly to establish and update technology roadmaps in each 
technology area.
    An Interagency Hydrogen R&D Task Force has been established by the 
White House Office of Science and Technology Policy (OSTP) to leverage 
resources and coordinate interrelated and complementary research across 
the entire Federal Government. This year, the Task Force initiated a 
plan to coordinate a number of key research activities among the eight 
major agencies that fund hydrogen and fuel cell research. Coordination 
topics include novel materials for fuel cells and hydrogen storage, 
inexpensive and durable catalysts, hydrogen production from alternative 
sources, stationary fuel cells, and fuel-cell vehicle demonstrations. 
The Task Force has launched a website, Hydrogen.gov, and in the coming 
year plans to sponsor an expert panel on contributions that nanoscale 
research can make to realizing a hydrogen economy.
    Last year, we announced the establishment of the International 
Partnership for the Hydrogen Economy (IPHE). The IPHE, which now 
includes 16 nations and the European Commission, establishes world-wide 
collaboration on hydrogen technology. The members have agreed to work 
cooperatively toward a unifying goal: practical, affordable, 
competitively-priced hydrogen vehicles and refueling by 2020. Projects 
involving collaboration between different countries are being proposed 
and reviewed for selection.
              state initiatives and demonstration projects
    The Department supports the growing number of state hydrogen 
initiatives by providing accurate and objective information about 
hydrogen and fuel cell technologies. Hydrogen initiatives exist in more 
than ten states, including California. The Department is a member of 
the California Fuel Cell Partnership and has participated on planning 
committees for the California Hydrogen Highway Network. Today, 21 full 
members and ten associate members representing eight automakers, four 
fuel providers, the supplier industry, as well as state and Federal 
Government agencies (including DOE, DOT, and EPA), are working together 
through the Partnership to share their experiences operating first-of-
their-kind research vehicles throughout California. The objective of 
the new Hydrogen Highway Network initiative, championed by Governor 
Schwarzenegger, is to ensure that hydrogen fuel availability will match 
fuel cell vehicle demand.
    As mentioned earlier, the Department's partnership with the 
automotive and energy industries to conduct a national ``learning'' 
demonstration project will expand the Program's research while 
leveraging industry investments in hydrogen and fuel cell technologies; 
subject to appropriations, the first phase of the project will total 
over $350 million, with more than 50 percent coming from industry. The 
project includes four automotive and energy teams made up of General 
Motors and Shell; Ford and BP; DaimlerChrysler and BP; and Chevron and 
Hyundai-Kia.
    The goals of the project are:

   to obtain detailed component and performance data to guide 
        the Department's hydrogen and fuel cell research, and
   to validate industry's progress toward meeting the 
        milestones leading up to the 2015 commercialization decision.

    Three major milestones for 2009, when phase one ends, are: 2,000-
hours fuel cell durability; 250-mile vehicle range; and $3.00 per 
gallon gasoline equivalent hydrogen fuel.
    While hydrogen fuel infrastructure and fuel cell vehicle 
technologies are not ready for widespread deployment or 
commercialization, DOE believes there is tremendous benefit in energy 
and auto companies working together before the market introduction 
phase to ensure that there is seamless integration. Transitioning to a 
hydrogen-based infrastructure from today's petroleum infrastructure 
will require coordination between stakeholders. For example, standards 
for hydrogen purity must be addressed before commercialization can 
happen. Fuel cell manufacturers would like the purest hydrogen 
available to ensure the best performance and longest durability; 
however, it will not be cost-effective for energy suppliers to produce 
and deliver perfectly pure, laboratory-grade hydrogen. Therefore, some 
compromise must occur and the demonstration program will provide the 
data necessary to facilitate development of hydrogen fuel quality 
standards prior to commercialization and infrastructure investment.
                       toward the hydrogen future
    DOE is looking to the future as well. Just as we have already made 
progress, we plan to have significant progress next year. The progress 
will be tracked using performance-based technical and cost milestones 
that provide clear and quantifiable measures. We will report this 
progress annually to Congress and to the Office of Management and 
Budget.
    For our critical targets, it is important that we verify our 
progress in a way that is independent and transparent. In Fiscal Year 
2006, three major technical milestones will be assessed using 
independent review:

   In hydrogen storage, we will determine the potential of 
        cryogenic-compressed hydrogen tanks to meet DOE's 2010 targets.
   In fuel cells, we will evaluate high-volume fuel cell cost 
        per kilowatt against our 2006 target of $110 per kilowatt and 
        towards meeting the 2010 target of $45 per kilowatt.
   In hydrogen production, we will determine if the laboratory 
        research is complete for $3.00 per gallon gasoline equivalent 
        with distributed natural gas reforming technology. This 
        technology will need to be validated later at full-scale.

    In addition, high-volume manufacturing processes must be developed 
to lower the costs of hydrogen and fuel cells. Manufacturing R&D 
challenges for a hydrogen economy include developing innovative, low-
cost fabrication processes for new materials and applications as well 
as adapting laboratory fabrication techniques to enable high-volume 
manufacturing. The Hydrogen Program is working with the Department of 
Commerce and other Federal agencies to create a roadmap for developing 
manufacturing technologies for hydrogen and fuel cell systems as part 
of the President's Manufacturing Initiative. The roadmap will help to 
guide budget requests in Fiscal Year 2007 and beyond. This work is part 
of the Interagency Working Group on Manufacturing R&D, which is chaired 
by the Department of Commerce and includes 14 Federal agencies. The 
Working Group has identified three focus areas for the future: nano-
manufacturing, manufacturing R&D for the hydrogen economy, and 
intelligent and integrated manufacturing systems. Manufacturing R&D for 
the hydrogen economy will be critical in formulating a strategy to 
transfer technology successes in the laboratory to new jobs, new 
investments and a competitive U.S. supplier base in a global economy.
    Successful commercialization of hydrogen technologies requires a 
comprehensive database on component reliability and safety, published 
performance-based domestic standards, and international standards or 
regulations that will allow the technologies to compete in a global 
market. Initial codes and standards for the commercial use of hydrogen 
are only now starting to be published. Research will be conducted in 
Fiscal Year 2006 to determine flammability limits under real-world 
conditions and the dispersion properties of hydrogen under various 
conditions and also to quantify risk. Through such efforts, critical 
data will be generated to help write and adopt standards and to develop 
improved safety systems and criteria. DOE is also working closely with 
the Department of Transportation in hydrogen codes and standards.
                               conclusion
    Mr. Chairman, the Department of Energy welcomes the challenge and 
opportunity to play a vital role in this Nation's energy future and to 
help address our energy security challenges in such a fundamental way. 
This completes my prepared statement. I would be happy to answer any 
questions you may have.

    Senator Alexander. Thanks, Mr. Faulkner. How long does your 
schedule permits you to stay?
    Mr. Faulkner. As long as you want.
    Senator Alexander. That's terrific. Well, why don't I 
invite the other three witnesses to come forward, and we'll ask 
them to present their testimony. Mr. Bentham, why don't you go 
first, and then Dr. Burns, and then Mr. Campbell. Thank you 
very much for being here today.

STATEMENT OF JEREMY BENTHAM, VICE PRESIDENT, ROYAL DUTCH SHELL, 
              AND CHIEF EXECUTIVE, SHELL HYDROGEN

    Mr. Bentham. Thank you very much, indeed, Mr. Chairman and 
Senator Dorgan. I really appreciate the invitation to testify 
before this committee.
    My name is Jeremy Bentham. I'm the vice president of Royal 
Dutch Shell responsible for the hydrogen business and the chief 
executive of Shell Hydrogen. I'll provide the oral summation 
here, and ask that my written testimony be submitted for the 
record.
    Senator Alexander. It will be.
    Mr. Bentham. I thoroughly agree with you that what we're 
discussing here is a real opportunity to take action today that 
will have a significant impact on building the kind of future 
that we want for our children, for our grandchildren. Clearly, 
we mustn't underestimate the scale or the durability or the 
seriousness of the commitment that's required to face 
challenges that are related across the fields of energy, 
security, environment, and the economy. However, alongside the 
efficient use of ever-cleaner and advanced familiar fuels, we 
are convinced that a national portfolio that includes a 
significant use of hydrogen-powered fuel cell applications will 
make an important contribution to addressing the fundamental 
issues we collectively face. Hence, we do believe that the U.S. 
Senate is showing responsible leadership in helping to develop 
the hydrogen as a transportation fuel, as we've seen in the 
Senate's version of the energy bill.
    We must recognize that the goal of introducing hydrogen on 
a significant scale requires an unprecedented joint undertaking 
by government, by the automotive industry, and by energy 
companies. My remarks will cover three areas: First, the 
technical and operational challenges that we face; second, the 
importance of public/private partnership; and third, what I 
believe it will take to accelerate the commercialization of 
hydrogen-powered fuel cell technology.
    First of all, the technical and the operational challenges. 
The real key to this undertaking is the promise of attractive, 
affordable and commercially successful fuel cell vehicles. 
While there are other areas of interest, such as station re-
power, we believe that the transport market must be the primary 
focus of attention. It's the vehicles themselves that are 
currently the furthest away from commercial readiness. So 
substantial R&D attention must be directed to inexpensive, on-
board hydrogen storage solutions, to the fuel cell power plant 
itself, and to low-cost manufacturing systems. However, while 
we know that technological challenges remain in all these 
areas, we believe there is increasing confidence that vehicles 
with the necessary operational performance will be introduced 
within the next few years.
    The core challenge to making these affordable will be 
achieving sufficient levels of mass production to drive down 
the costs. That will require a period of market-based 
government incentives to build up vehicle demand and supply, to 
build up the necessary component-supply businesses, and we need 
to start building these supply chains and the frameworks for 
these incentives right now.
    Moving to a fuel supply perspective, it shouldn't be 
forgotten that there already is, and has been, a hydrogen 
economy and hydrogen infrastructure in place for decades. 
Currently, 50 million tons of hydrogen are produced and 
consumed globally every year, mainly in industrial settings, 
such as in our own refineries, for producing clean traditional 
fuels.
    Now, just to put that number in perspective, that amount of 
hydrogen could power all of the family cars in the United 
States, if they were fuel cell vehicles. Also, most areas of 
significant population are close to significant hydrogen 
production. I hope you can see back here a beautiful satellite 
photograph of the United States, showing the areas of 
population as the light areas, and it's overlaid with the areas 
within 60 miles of current production sites. Most areas of high 
population are already close to hydrogen production, so really, 
the only new factor is to bring hydrogen out of its industrial 
setting and into the everyday life of customers, in convenient 
locations.
    This can be done in an attractive way, as has already been 
demonstrated, for example, with a combined hydrogen and 
gasoline station at Benning Road, here in Washington, DC. As 
you may know, and has been mentioned, President Bush and a 
number of people from congressional and regulatory staffs have 
visited Benning Road, and we are pleased to host any and all of 
you, if you would like to visit that as well.
    We're also confident that we already understand how to 
supply hydrogen fuel at an attractive price, in a commercially 
sustainable way, into a reasonably established market. That's 
an important statement to make. The main challenge to fuel 
suppliers will come during the earliest phases of market 
growth, when the utilization rate of individual facilities will 
be low. To get the ball rolling will take both ingenuity from 
companies like my own, and some time-limited, market-based 
incentives from governments.
    Looking to the public policy standpoint, one of the 
attractions of hydrogen fuel is that it can be produced from a 
wide range of primary energy sources, whether that's natural 
gas, coal, or renewable sources such as wind and solar energy.
    We anticipate that the bulk of hydrogen will initially be 
produced, as it is now, from natural gas, with increasing use 
of coal over the course of time, and eventually renewable 
resources as they become abundant in themselves. We also 
believe that there must be a goal over the longer term of not 
adding to the carbon-loading of the atmosphere as we produce 
hydrogen. Whether that will be through carbon dioxide 
geological sequestration, and in the longer term, through the 
use of the renewable energies, we believe that none of these 
challenges are unsolvable.
    Second, if I can move to some comments on public/private 
partnership and Federal Government programs. Strong government 
support and structures are required to shape what I would call 
a coordinated and geographically-concentrated introduction of 
vehicles and infrastructure. Government action can be very 
helpful in orchestrating the dance that needs to take place 
among the different partners. Government action is also 
critical in addressing potential roadblocks on the way, such as 
consistent codes and standards, insurance and liability, and 
intellectual property rights.
    Now, there's clearly a definite need, as you are doing, to 
continue to promote public awareness and understanding. That's 
an educational effort that can be effectively fostered by 
government. As you've recognized, it's also critical that we 
begin to establish the framework of economic incentives that 
will give all parties the confidence to invest in the new 
technologies, establish the supply chains whilst those 
economies of scale, large-scale production, and reasonable 
facility utilization are building up.
    The current Department of Energy Vehicle and Fuel 
Validation program, and the other Department of Energy 
programs, are a useful platform for the future. We support them 
as far as they go. However, we do believe that to take the next 
steps in moving from research to reality requires further 
attention to the bridge that needs to be built over the next 10 
years from small-scale demonstration units toward 
commercialization and commercial operation.
    Finally, a few views on what it will take to accelerate 
commercialization.
    Senator Alexander. Mr. Bentham, what we were trying to do 
is keep each of the testimonies to about 5 minutes so we could 
have more back and forth. So if you could go ahead and 
summarize your remaining remarks, we'll come back.
    Mr. Bentham. I'll summarize in 1 minute, if I may. Less 
than a minute.
    We believe that the establishment of some large-scale, 
integrated projects that we call ``Lighthouse Projects'', 
because they light the way to the future, will be critical. And 
we believe that these will require the use of many vehicles so 
that we get operational validation not only of the vehicles, 
but also a mini-network that shows supply and refueling 
operations in considerable loading.
    So, for us, the next question is which public authorities 
and which governments will provide the environment to enable 
these to take place? We think that where there are these 
conditions and where these Lighthouse Projects are first 
established will determine whether North America, Europe or 
Asia will take the lead in building these industries, and 
through that lead, generate the greatest benefits to the 
economies and the environments.
    In summary, therefore, I think the final, the primary 
challenges we face in the area are the vehicle technology and 
mass production, with the effective utilization of facilities 
being an important secondary consideration, and that the 
public/private lighthouse projects will be an important bridge 
toward commercialization.
    I'll conclude with my comments there and, of course, will 
respond to any questions that you have.
    [The statement of Mr. Bentham follows:]
   Prepared Statement of Jeremy Bentham, Vice President, Royal Dutch 
               Shell, and Chief Executive, Shell Hydrogen
    Good afternoon, Senators. My name is Jeremy Bentham. I am the Vice 
President of Royal Dutch Shell responsible for the hydrogen business 
and the chief executive of Shell Hydrogen. Thank you for the invitation 
to testify before this committee and share my views on how the hydrogen 
& fuel cell industry could--and should--develop over the coming years.
    Clearly, we must not underestimate the scale, durability and 
seriousness of commitment required to grasp the related energy, 
security, environmental, and economic challenges we collectively face. 
Alongside the efficient use of ever-cleaner and more advanced familiar 
fuels, we are convinced that a national energy portfolio that includes 
significant use of hydrogen fuel and fuel-cell applications will make 
important contributions to addressing these fundamental issues. The 
U.S. Senate has shown leadership in helping develop hydrogen as a 
transportation fuel as we've seen in the Senate's version of the energy 
bill, but we should not underestimate the scale of developments 
required.
    First of all, I think we should all acknowledge that the goal' of 
moving to hydrogen is an unprecedented undertaking by government, auto 
industry, and energy companies and just importantly, such an effort is 
needed to address the long term energy needs of the U.S. and the world.
    Even a brief look at a simplified overview of the current energy 
picture of the United States highlights key features such as the almost 
complete dependence of transport on a single, primary, imported energy 
source--oil, and also the high amount of energy which goes to waste 
rather than useful service, which is an environmental as well as an 
economic burden.
    Hydrogen fuel and fuel-cell applications can make important 
contributions to addressing these fundamental issues, such as providing 
a transport fuel that can be derived from a wide range of present and 
future primary energy sources, to be used in vehicles with high 
efficiency, low emissions, and high customer attractiveness. Also, this 
technology enables electricity generation in widely distributed 
locations where much of the currently wasted heat generation can be 
usefully applied. Such a portfolio can provide much-needed options for 
national policy-makers, and attractive choices for customers.
    That's a positive outlook. But we have to be realistic. It comes at 
a cost. It requires long-term investment, and it requires long-term 
commitment from both industry and government. Everyday incremental 
developments and ongoing market influences will bring everyday 
incremental changes, but I think most people are looking for more than 
this. Governments want those bigger challenges to be met as quickly as 
possible.
    As businessmen and industrialists we need to get down to the 
practicalities of how to invest private and public resources wisely to 
making this happen. And to begin with, that means looking at what we've 
achieved so far; what we've learnt from it; and what we need to do next 
to make that positive outlook a reality.
               shell: a wealth of experience in hydrogen
    For an energy company like Shell, dealing with hydrogen is, of 
course, nothing new. We have many decades of experience using hydrogen 
in our refineries, where we handle over 7,000 tons a day as part of the 
production of ever-cleaner and better traditional fuels.
    From a fuel supply perspective, it should not be forgotten that 
there is already a hydrogen economy and hydrogen infrastructure. 
Globally, 50 million tonnes are produced and consumed every year. Just 
to put this number into perspective, this amount of hydrogen could 
power all the family cars in the U.S.A. if they were fuel cell 
vehicles. Also, most areas of significant population are already close 
to significant hydrogen production (as shown in this satellite 
photograph of the U.S.A. at night overlaid with the areas within 100km 
of current production sites). Industrial hydrogen production is already 
widespread and close to those who would want to use it. We only have to 
compare the locations of major cities with those of facilities where 
hydrogen is produced to see how significant these nodes are. Indeed, in 
the U.S., and throughout the industrialized world, few people are more 
than 60 miles away from major hydrogen production site. This deserves 
exclamation points because I'm sure many us had not come to realize 
this until recently.
    So we already have an initial hydrogen platform. The challenge now 
is to bring it out of its industrial setting and into convenient, 
consumer-friendly locations. That this can be done in an attractive way 
has already been demonstrated, for example, with our Benning Road 
station here in Washington DC.
    We are also confident that we already understand how to supply 
hydrogen fuel at an attractive price in a commercially sustainable way 
into a reasonably established market. The main challenge to fuel 
suppliers will come during the earliest phases of demand growth when 
the utilisation rate of individual facilities will be low. To get the 
ball rolling will take both ingenuity from companies such as my own and 
some limited market-based incentives from governments.
    From a public policy standpoint, one of the attractions of hydrogen 
fuel is that it can be produced from a wide range of primary energy 
sources, including natural gas, coal and renewable sources such as 
solar and wind energy. We anticipate that the bulk of hydrogen will 
initially be produced, as now, from natural gas, with increasing use of 
coal over the course of time. We also believe that there must be a goal 
over the longer term of not adding to the carbon loading of the 
atmosphere; whether through CO2 geological sequestration or 
through the use of renewable energies such as wind and solar--but we 
believe that none of these are challenges are unsolvable.
    Shell Hydrogen was established six years ago to bring a focus on 
hydrogen as an ordinary fuel in itself, in transport and distributed 
power applications. And from what we have learned since, we believe 
that it can indeed become an important element in the future energy 
mix, along with the cleaner, traditional fuels, and important advances 
such as modern bio-fuels and gas-to-liquids components.
    To get there, however, a number of factors need to be in place, 
such as inexpensive and compact hydrogen storage and purification, and 
cheap large-scale production. Hence our active role in a range of 
technology ventures in these areas. For example, Shell is proactively 
involved in unconventional solutions to the storage issues. If more 
familiar methods--such as ultra high pressure storage--remain too 
expensive, then we already have an advanced role in seeking 
alternatives.
    We've also established Venture Capital enterprises and partnerships 
within and across industries; and worked with government organizations 
at local, regional and national levels worldwide. And finally--and most 
conspicuously--we've been involved in demonstration projects that span 
Europe, North America and Asia.
    My main message for today is that we now need to move beyond the 
small isolated demonstration projects we've seen so far, but before 
addressing this central topic let's remind ourselves how far we have 
come with the demonstrations.to date.
            demonstrating in all the major hydrogen markets
    An important step for us, of course, was opening the very first 
publicly accessible Shell-branded hydrogen refuelling station in the 
world in Reykjavik, just 2 years ago. In Europe, since then, we've 
helped set up hydrogen stations for fuel cell buses in Amsterdam and 
Luxembourg, as part of the Clean Urban Transport for Europe initiative
    On another continent, the Japan Hydrogen and Fuel Cell 
Demonstration Project--or JHFC--is progressing well, with 10 refuelling 
stations around the Tokyo metropolitan area serving more than 50 FCVs. 
The Ariake station that Shell operates is the most highly used of these 
stations, which means it's probably the most utilised hydrogen station 
in the world. Indeed, when I last visited Japan, I actually saw a queue 
of FCVs waiting to be refuelled! And these from as many as eight 
different auto manufacturers.
    In North America, we are active in California and we have launched 
our plans to build an `East Coast Corridor'--starting with our station 
on Benning Road here in Washington DC, to be extended with a station in 
New York and a station connecting these important cities in 2006. These 
form part of our infrastructure validation project with our partners 
General Motors and the Department of Energy. I would like to emphasise 
the importance of our station here in Washington. This station 
showcases the first hydrogen dispenser fully integrated at a regular 
retail gasoline station in the United States, servicing a fleet of six 
FCVs from General Motors. It's well worth a visit to sample the 
customer experience of the future.
       making the most of lessons learnt and technical challenges
    So . . . we've been very busy and we've learnt a great deal; and, 
I'm pleased to say, the results continue to be positive. True, we see 
the technological hurdles still to be overcome--in particular, the 
development of inexpensive, on-board hydrogen storage systems; and 
affordable, mass-produced fuel cell systems. But we believe that none 
of these are unsolvable.
    The real key to this undertaking is the promise of attractive, 
affordable, and commercially successful hydrogen-powered fuel cell 
vehicles. This must be the primary focus of attention, and it is the 
vehicles themselves that are the farthest from commercial readiness. 
R&D attention should be directed to inexpensive on-board hydrogen 
storage solutions, to the fuel cell powerplant itself, and to low-cost 
manufacturing systems. While technological challenges remain in these 
areas, however, there is increasing confidence that vehicles with the 
necessary performance will be introduced in the next few years. The 
core challenge to making these affordable will be achieving sufficient 
levels of mass production to drive down costs. This will require a 
period of market-based government incentives to build up vehicle demand 
and supply and the necessary component supply businesses, in a rapid 
and timely fashion. We need to start building these supply chains and 
designing these incentives now.
    Our experience indicates that there is every likelihood that our 
industries will be able to bring hydrogen-powered FCVs to the point 
where both vehicle and fuel are attractive and affordable. The trick 
will be achieving mass production to drive down costs, as indicated in 
this estimate of the impact of production volume on drive-train 
affordability. We also believe that the public benefits resulting from 
this justify the considerable government interest and investment 
required to reach this point.
    And, of course, we see that public response to the introduction of 
hydrogen-powered technology developments still varies enormously--from 
enthusiastic to fearful, depending on how effectively public engagement 
has been conducted locally, or how politicised the subject has become. 
We've certainly noticed a difference between working in communities 
like Iceland--where support and desire have really been built up over 
several years--and here in Washington DC, where our project was 
initially greeted with both community and regulatory suspicion.
    Building public confidence as early as possible is important, so 
that we have the fertile ground of public support and regulatory 
experience when take-off does, eventually, becomes possible. Otherwise, 
progress will suffer long and unnecessary delays. There is a most 
definite need to promote public awareness and understanding--an 
educational effort that can be effectively fostered by government.
    So where do we go from here? Let me return to the central theme I 
mentioned earlier. While we have made tremendous progress, it's clear 
we can't rest on our laurels. And instructive though our demonstration 
projects have been, continuing to serve a handful of vehicles from 
single sites doesn't move us forwards.
    So our thoughts on the next move are very clear--we need to 
replicate more realistic scenarios. Hence Shell's proposal last year 
for the establishment of a small number of large-scale, integrated 
demonstration activities, which we call Lighthouse Projects.
                   lighthouse projects bridge the gap
    Strong government support and structures are required to shape a 
coordinated and geographically concentrated introduction of vehicles 
and deployment of fueling infrastructure.
    Government action is also critical in addressing potential early 
roadblocks such as codes and standards, insurance and liability, and 
intellectual property rights.
    It is also critical that we begin to establish a framework of 
economic incentives that will give all parties the confidence to invest 
in these new technologies, and establish supply chains, while the 
economies of large-scale production and reasonable facility utilisation 
build up
    The current Department of Energy vehicle and fuel validation 
programme, and other DOE programmes, are a useful platform for the 
future, as far as they go. However, to move from Research to Reality, 
now requires further attention to the bridge that needs to be built in 
the next ten years from small-scale demonstrations towards commercial 
operation.
    As mini-networks of consumer-friendly retail sites, we believe that 
Lighthouse Projects will play a crucial role in bridging the gap 
between the current demonstration projects and commercialisation. In 
our view, they will act as the stepping stone to a commercial 
infrastructure roll-out.
    We recommend focusing on a limited number of large-scale projects, 
mainly focused on transport applications involving hundreds of vehicles 
and several combined hydrogen and gasoline refuelling stations 
operating on a semi-commercial basis. Other relevant applications may 
also be included to maximise synergy.
    Involving several different companies--in partnership with 
government authorities--Lighthouse Projects will not only significantly 
increase coverage and mobility, they will provide us with the real-
world operational and economic data we desperately need. As such, they 
will enable us to address the biggest barriers that face the 
development of this industry.
    Why so many vehicles? Well one reason is that an effective 
component supply chain is going to be essential for vehicles and other 
applications to move down the cost curve towards mass production. And 
this means giving component suppliers a realistic outlook on activity 
and investment levels over the next few years, while applications 
achieve the necessary performance and attractiveness criteria.
    And from a fuel provider's position, we need to build experience in 
conditions where facilities are utilised at levels much closer to 
future realities. And last, but certainly not least, we need to 
demonstrate these facilities on a scale that will really inform and 
interest the public--our future customers.
    In short, we believe that if we don't take the step to full 
Lighthouse Projects, we cannot build and test the strategies, 
disciplines and incentive mechanisms we need to coordinate our 
activities for the next phase of development and allow the industry to 
grow.
    While the current United States Department of Energy infrastructure 
validation projects and other U.S. initiatives are very positive and 
valuable developments, the JHFC project in Japan is probably the 
closest current example to our proposal, and we're watching it closely 
to see how it develops; and particularly the growth in the number of 
vehicles involved.
    We believe that failure to take the next step to full Lighthouse 
Projects could have serious consequences.
                           keeping the focus
    First, there is a real danger that we don't focus our efforts, 
government funding and industry attention will become hopelessly 
fragmented; with valuable time being lost through duplication and re-
inventing the wheel.
    This is entirely possible--we've already experienced the issue of 
infrastructure ``earmarks'' in the U.S.; and in Europe, there will be a 
strong push from all 25 individual member states to site activities in 
their own country. But if our next move sees five or six vehicles 
scattered in each of 100 places throughout the world, we'll end up 
going nowhere fast.
                          utilisation hurdles
    The second danger is that even if we get over the technology and 
mass production hurdles for fuel cell vehicles, we will run into a huge 
infrastructure `utilisation hurdle' that significantly increases 
hydrogen supply costs.
    For example, we have results from a series of scenarios from a 
study of the roll-out of vehicles and fuel infrastructure in a major 
metropolitan area. In one set of scenarios retail stations are located 
in areas and sites where they do not stimulate good additional demand 
for fuel cell vehicles, and experience low facility utilisation. In 
other scenarios, however, there is closer coordination with vehicle 
manufacturers on their anticipated customer needs, and with local 
authorities on effective site development, and this is built on better 
experience with effective utilisation of facilities through realistic 
Lighthouse Projects. This leads to much better alignment of capacity 
with anticipated demand, and more cost-effective matching of customer 
interests.
    From our analysis of these scenarios, it is clear that a 
coordinated infrastructure roll-out, making good use of existing 
manufacturing and retail assets, realises much lower full supply 
costs--up to a factor of two lower! The alternative is higher hydrogen 
fuel prices, but that will simply discourage vehicle purchase.
    Looking forwards, therefore, there is a great need for mechanisms 
like larger scale Lighthouse Projects that encourage coordination 
between vehicle and fuel suppliers--with suitable investment 
incentives--to enable the industry to grow from its pre-commercial 
beginnings, to the next phase of early commercial development.
    This means having fiscal and other economic incentives that give 
manufacturers, infrastructure providers and users the confidence to 
invest in these new technologies and establish supply chains while the 
economies of large-scale production build up. It also means having more 
flexible, dynamic financial instruments aimed at fostering industry 
growth.
    It means establishing regulations, codes and standards, and 
intellectual property rights, to encourage new technology and protect 
investment in R&D. It also means building up human capital--trained 
scientists and engineers. And it most definitely means promoting public 
awareness and education.
    And to achieve all of this requires very substantial public-private 
partnerships.
                               conclusion
    Lighthouse Projects as we have defined them are the catalyst to 
fulfilling all these conditions, for overcoming fragmentation, and for 
realising the next step towards commercialisation of the industry.
    Building on our experience and valuable lessons so far, the next 
question is simply which governments and public authorities will 
provide the environment for this step, and which businesses will 
respond. Where these lighthouse projects are established will determine 
whether North America, Europe or Asia will build a lead in these 
industries and, through that lead, secure the greatest benefits to 
their economies and environments. I look to our current industry and 
government partners, and other serious parties, to join with us in 
developing innovative partnerships to realise these lighthouse 
projects.
    In summary, therefore, I believe the primary challenges to 
developing the hydrogen opportunity are fuel cell vehicle technology 
and mass production, with the effective utilisation of refuelling 
facilities being an important secondary consideration, and that public-
private Lighthouse Projects will be an important bridge towards 
commercialisation.
    Thank you.

    Senator Alexander. Thank you very much.
    Dr. Burns.

STATEMENT OF LAWRENCE D. BURNS, PH.D., VICE PRESIDENT, RESEARCH 
     & DEVELOPMENT AND STRATEGIC PLANNING, GENERAL MOTORS 
                          CORPORATION

    Dr. Burns. Mr. Chairman and Senator Dorgan, I'm responsible 
for leading General Motors' fuel cell program. We place very 
high priority on fuel cells and hydrogen as the long-term power 
and energy carrier for automobiles. We see this combination as 
the best way to ensure energy independence, remove the 
automobile from the environmental debate, to grow our economy, 
to grow jobs, and very importantly, the best way to allow 
automakers to create better vehicles for our customers and the 
kinds of vehicles that they really want to buy in high volume. 
Now, high volume is absolutely critical. It's the only way we 
could meet the growing global demand for automobiles while at 
the same time realize the energy and environmental benefits 
that we're all seeking.
    Our fuel cell program is focused in three areas. First, 
we're developing a fuel cell propulsion system that can compete 
head-to-head with an internal combustion engine system. Second, 
we're demonstrating our progress publicly to let key 
stakeholders know the potential of this technology. And 
finally, we're collaborating with energy companies and with 
governments to ensure the safe, convenient and affordable 
availability of hydrogen in a way that can lead to rapid 
transformation of the industry.
    We're targeting to design and validate a fuel cell 
propulsion system by 2010 that has the cost, durability and 
performance of an internal combustion engine system. Now that's 
at an assumed volume on the cost side, consistent with the 
scale of our industry. This is an aggressive timetable, and 
it's clear that it's being industry-led. It's also clear that 
we believe these technologies have matured to the point where 
such a timetable is possible. We've made significant progress 
on the technology--in the last 6 years, we've improved fuel 
cell power density by a factor of seven. This helps us enhance 
the efficiency and reduce the size of the components for the 
car. We significantly increased the durability, reliability and 
cold start performance of our fuel cells. We are developing 
safe hydrogen storage systems that are beginning to approach 
the capability to deliver the range that our customers will 
expect between fill-ups. And we've made significant progress on 
cost reduction through technology improvements and systems 
simplification.
    Our progress has convinced us that fuel cell vehicles have 
the potential to be fundamentally better automobiles on nearly 
all attributes that are important to our customers. This is a 
key to enabling high-volume sales. And with just one-tenth as 
many moving parts as internal combustion engine systems, we're 
confident that our vision to make this technology cost-
competitive and durability-competitive is indeed possible.
    We've made excellent progress with respect to 
demonstrations. We have a fleet of six hydrogen vehicles here 
in Washington, DC. It's now in its third year. We've had nearly 
3,000 people take a ride or drive our hydrogen fuel cell 
vehicle. The FC vehicle fleet is actually fueled at the fuel 
station that Jeremy mentioned earlier, on Benning Road. This is 
a very important, albeit small, step toward demonstrating the 
infrastructure. We've collaborated with the U.S. Army in 
building the first fuel cell-powered military truck, and it's 
being evaluated now at Fort Belvoir. We also will field 40 fuel 
cell vehicles as part of the Department of Energy program, and 
these vehicles will span two generations of technology. And 
finally, we've made visible the vision for a totally re-
invented automobile around fuel cells and advanced electronics, 
they go by the names of AUTOnomy, Hy-wire, and most recently, 
Sequel. Sequel was revealed at this year's North American 
International Auto Show in Detroit, and it will have a 
capability of a range of 300 miles between fill-ups. It's a 
sport utility vehicle aimed right at the sweet spot of our 
market, with acceleration from zero to 60 miles per hour in 
less than 10 seconds. And by the way, it was designed to meet 
Federal Motor Vehicle Safety Standards.
    Now, with respect to collaboration, we're working closely 
with Shell, with Sandia, with Dow, with Hydrogenics, with 
QUANTUM, with the Department of Energy, and then part of the 
FreedomCAR fuel cell partnership with other auto companies and 
energy companies. We see the biggest challenge to vast industry 
transformation to hydrogen and fuel cells as being the fueling 
infrastructure. A major advantage of hydrogen is that it can be 
obtained from numerous pathways, including renewable sources. 
We think it's the key to relieving our 98 percent dependence on 
petroleum as energy for our cars and trucks.
    Building a new infrastructure is a formidable task, but as 
Jeremy mentioned, 50 million tons per year of hydrogen are 
already being used globally, and that equates to 200 million 
vehicles worth of hydrogen, if it was used for those purposes. 
I think the important point here is that the world has a lot of 
experience producing hydrogen in large volumes, doing it 
safely, and doing it at commercially competitive costs for 
those applications. We also do not have to build the 
infrastructure overnight. The entire U.S. fleet would turn over 
in about 20 years, and as such, we would be able to pace the 
infrastructure with the growth of that fleet.
    Now, we applaud the Department of Energy and Federal 
Government initiatives on hydrogen infrastructure; however we 
believe more needs to be done if we're going to be ready for 
large-scale demonstrations, and ultimately mark our growth in 
the next decade. We'd like to see the Federal Government 
articulate a clear and broadly sanctioned vision that requires 
more than just the Department of Energy and Department of 
Transportation to make hydrogen and fuel cell technology 
development and application a high priority. Clear, consistent 
communication to the American people of this vision and the 
underlying rationale for hydrogen and fuel cells are also 
vitally important to building public acceptance of fuel cell 
vehicles.
    The energy bill is directionally quite good, in our 
judgment, but if we are really serious about transforming to a 
hydrogen economy, we're going to have to do more in the coming 
years. The auto industry alone is spending about a billion 
dollars a year to develop this technology, so if the Government 
sees a need to accelerate progress, we believe that government 
funding at greater levels is warranted.
    We welcome, in particular, the energy bill's increased R&D 
funding. Now, as I mentioned, we're targeting a first-
generation system by 2010 that can compete with the internal 
combustion engine system, but the real volume--and the real 
benefits--will come from second-generation technology and 
beyond. So, continued R&D on advanced materials for fuel cell 
components and for hydrogen storage is very much welcome. 
Market demand for fuel cell vehicles must also be encouraged. 
The price of hydrogen will be a critical factor in doing that, 
so one consideration would be, perhaps, to not tax hydrogen 
with fuel taxes, maybe, perhaps until we have up to 5 million 
vehicles on the road. And since availability will also be an 
issue, a generous tax credit would ensure the investments 
necessary for developing hydrogen filling stations and 
mitigating the risks of these investments.
    Looking past 2010, we must start thinking about moving 
beyond today's small scale demonstrations. We welcome the 
Federal fleet purchase program of the energy bill, and believe 
Congress should consider doing more in this area. This would be 
an important bridge to commercially competitive vehicles and 
high-volume production.
    To summarize, General Motors sees hydrogen as the long-term 
automotive fuel and the fuel cell as the long-term power 
source. Our fuel cell program seeks to create clean, 
affordable, full-performance fuel cell vehicles that really 
excite and delight our customers, and that's really the key to 
getting to high-volume sales in these vehicles. We believe 
customers will really want to buy these vehicles in large 
numbers, and that society will reap the economic energy and 
environmental benefits. Thank you.
    [The statement of Dr. Burns follows:]
    Prepared Statement of Lawrence D. Burns, Ph.D., Vice President, 
     Research & Development and Strategic Planning, General Motors 
                              Corporation
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to testify today on behalf of General Motors. I am Larry 
Bums, GM's Vice President of Research & Development and Strategic 
Planning, and I am leading GM's effort to develop hydrogen-powered fuel 
cell vehicles.
    GM has placed very high priority on fuel cells and hydrogen as the 
long-term power source and energy carrier for automobiles. We see this 
combination as the best way to simultaneously increase energy 
independence, remove the automobile from the environmental debate, 
stimulate economic and jobs growth, and allow automakers to create 
better vehicles that customers will want to buy in high volumes.
    High volume is critical. It is the only way to meet the growing 
global demand for automobiles while realizing the large-scale energy 
and environmental benefits we are seeking.
    GM's R&D program is focused on three areas:

   Developing a fuel cell propulsion system that can compete 
        head-to-head with internal combustion engine systems.
   Demonstrating our progress publicly to let key stakeholders 
        experience firsthand the promise of this technology.
   Collaborating with energy companies and governments to 
        ensure that safe, convenient, and affordable hydrogen is 
        available to our customers, enabling rapid industry 
        transformation to fuel cell vehicles.

    We are targeting to design and validate an automotive-competitive 
fuel cell propulsion system by 2010. By automotive competitive, we mean 
a system that has the performance, durability, and cost (at scale 
volumes) of today's internal combustion engine systems.
    This aggressive timetable is a clear indication that fuel cell 
technology for automotive applications is industry driven (rather than 
government driven) and that this technology has matured to a point 
where such timing is indeed possible.
    We have made significant progress on the technology:

   In the last six years, we have improved fuel cell power 
        density by a factor of seven, while enhancing the efficiency 
        and reducing the size of our fuel cell stack.
   We have significantly increased fuel cell durability, 
        reliability, and cold start capability.
   We have developed safe hydrogen storage systems that 
        approach the range of today's vehicles, and we have begun to 
        explore very promising concepts for a new generation of storage 
        technology.
   We have made significant progress on cost reduction through 
        technology improvements and system simplification.

    Our progress has convinced us that fuel cell vehicles have the 
potential to be fundamentally better automobiles on nearly all 
attributes important to our customers, a key to enabling high-volume 
sales. And with just 1/10th as many moving propulsion parts as 
conventional systems, our vision design has the potential to meet our 
cost and durability targets.
    We have also made excellent progress with respect to vehicle 
demonstrations:

   Our six-vehicle fleet demonstration here in Washington, D.C. 
        is now in its third year, with almost 3,000 people 
        participating in a ride or drive. We also have other 
        demonstration programs in California, Japan, Germany, and soon 
        in China.
   The D.C. fleet is fueled at a Shell station equipped with a 
        hydrogen pump. This is the first retail outlet dispensing 
        hydrogen fuel in the U.S. and a significant, albeit small, step 
        toward a hydrogen infrastructure.
   We collaborated with the U.S. Army on the development of the 
        world's first fuel cell-powered military truck; it is currently 
        being evaluated and maintained by military personnel at Fort 
        Belvoir.
   We also will field 40 fuel cell vehicles, spanning two 
        technology generations, as part of the Department of Energy's 
        Controlled Hydrogen Fleet and Infrastructure Demonstration and 
        Validation Project. We are pleased to see that the Energy Bill 
        affirms this demonstration. This is the right size program at 
        the right time. It is large enough to generate real learnings 
        about operating fuel cell vehicles, without being so large that 
        it diverts the resources of automakers from our central focus 
        on automotive-competitive technology.
   GM has also created the AUTOnomy, Hy-wire, and Sequel 
        concepts, which demonstrate how new automotive DNA can 
        transform our vehicles. Sequel, a five-passenger crossover SUV, 
        is the first fuel cell vehicle capable of driving 300 miles 
        between fill ups.

    With respect to collaboration, we are working with key partners on 
virtually every aspect of fuel cell and infrastructure technology. 
Among our partners are Shell Hydrogen, Sandia National Lab, Dow 
Chemical, Hydrogenics, and QUANTUM Technologies as well as the 
Department of Energy, which includes the FreedomCar and Fuel 
Partnership involving Ford, Chrysler, and five energy companies.
    The biggest challenge to a fast industry transformation to hydrogen 
and fuel cells is the fueling infrastructure. A major advantage of 
hydrogen is that it can be obtained from numerous diverse pathways, 
including renewable sources. As such, it promises to relieve our 98-
percent dependence on petroleum as an energy source for cars and 
trucks.
    Building a new fueling infrastructure is a formidable task. 
Fortunately, we are not starting from scratch. A global hydrogen 
infrastructure already exists today that produces 50 million tons of 
hydrogen per year--which equals the amount of hydrogen needed to fuel 
200 million fuel cell vehicles! While this hydrogen is currently 
allocated to industrial uses, it shows that hydrogen can be produced 
and used economically and safely on a huge scale in commerce.
    We also do not have to build the infrastructure overnight. It takes 
about 20 years to turn over the entire vehicle fleet, so it is possible 
to evolve infrastructure development in line with vehicle production.
    GM has calculated that an infrastructure for the first million fuel 
cell vehicles could be created in the United States at a cost of $10-15 
billion--about half the cost of the Alaskan oil pipeline (when its $8 
billion price tag is converted into today's dollars). This 
infrastructure would make hydrogen available within two miles for 70 
percent of the U.S. population and connect the 100 largest U.S. cities 
with a fueling station every 25 miles.
    While this is a somewhat oversimplified calculation, it 
demonstrates that an initial hydrogen infrastructure would not be cost 
prohibitive. In fact, the cost is only a small fraction of the capital 
the oil industry says it will need to keep up with increasing demand 
for petroleum.
    GM applauds the Department of Energy and the federal government for 
its hydrogen infrastructure initiatives. However, in our view, much 
more needs to be done if we are to be ready for the large-scale fuel 
cell demonstration programs and market growth that we envision for the 
next decade.
    We would like to see the federal government articulate a clear, 
concise, broadly sanctioned vision that requires agencies beyond DOE 
and DOD to make hydrogen and fuel cell technology development and 
application priority areas of engagement.
    Clear, consistent, ongoing communication to the American people of 
this vision and the underlying rationale for hydrogen and fuels cells 
is also vitally important to building public acceptance of fuel cell 
vehicles.
    The Energy Bill now under consideration by Congress is 
directionally quite good, but if we are really serious about 
transforming to a hydrogen economy, there will be more to do in the 
coming years. The automotive industry alone is probably spending close 
to $1 billion per year on fuel cell technology. If government wants to 
accelerate progress, a greater investment is warranted.
    We welcome in particular the Energy Bill's increased funding for 
R&D. Fuel cells energized by hydrogen fundamentally change the DNA of 
the automobile. While we have made dramatic progress toward a first-
generation automotive-competitive system, like with any new technology, 
the real volume and benefits will be realized in second-generation 
designs and beyond. As such, we would like to see a significantly 
expanded national R&D initiative on breakthrough fuel cell materials, 
hydrogen storage, and hydrogen generation--leveraging the creative 
capabilities of our government labs, universities, and industrial 
research facilities--to help us move quickly to later-generation 
designs.
    Market demand for hydrogen fuel cell vehicles must also be 
encouraged. The price of hydrogen will be a critical factor and 
Congress should act now to exempt hydrogen from fuel taxes until, 
perhaps, at least five million fuel cell vehicles are on the road. 
Since availability will also be an issue, a generous tax credit would 
ensure the investments necessary for development of hydrogen filling 
stations by mitigating the risks of these investments.
    Looking past 2010, we must start thinking about moving beyond 
today's small-scale demonstrations. We welcome the federal fleet 
purchase program in the Energy Bill and believe Congress should 
consider doing more in this area. This would be an important bridge to 
commercially competitive vehicles and high-volume production.
    To summarize, General Motors sees hydrogen as the long-term 
automotive fuel and the fuel cell as the long-term power source. Our 
fuel cell program seeks to create clean, affordable, full-performance 
fuel cell vehicles that will excite and delight our customers. We 
believe customers will buy these vehicles in large numbers and that 
society will reap the economic, energy, and environmental benefits.
    I want to emphasize, however, that this is not just about car 
companies wanting to sell vehicles. In a very real sense, this is about 
nation building:
    In the 19th century, the construction of the transcontinental 
railway gave rise to new industries and changed our country's economic 
destiny. In the 20th century, the development of the interstate highway 
system achieved similar dramatic results. The creation of a hydrogen-
based economy is the 21st century's exercise in nation building. 
Leadership in hydrogen and fuel cell technology will underscore our 
pre-eminence in innovation and is absolutely vital to our future. It 
will ensure our ability to compete on a global basis, enable 
sustainable economic growth, and spur the creation of exciting new job 
opportunities for future generations of Americans.
    GM is ready and eager to work collaboratively with government, 
energy companies, and suppliers to drive the hydrogen economy to 
reality.
    Thank you.

    Senator Alexander. Thank you very much, Dr. Burns.
    Mr. Campbell.

STATEMENT OF DENNIS CAMPBELL, PRESIDENT AND CEO, BALLARD POWER 
                            SYSTEMS

    Mr. Campbell. Senator Dorgan, and Senator Salazar.
    Senator Alexander. I should welcome Senator Salazar from 
Colorado, who has joined us. Thank you very much for being 
here. We're going to--we're finishing the testimony of each of 
the four witnesses and then we'll turn to questions, if that's 
all right.
    Mr. Campbell. My name is Dennis Campbell, and I'm the 
president and CEO of Ballard Power Systems. We are the 
exclusive fuel cell supplier to Ford Motor Company and to 
DaimlerChrysler, and we also have supplied product to eight of 
the top ten automotive manufacturers.
    Fuel cells offer a game-changing technology that can help 
us overcome some of the most pressing problems of our time: 
energy security, global climate change, urban air quality and 
long-term energy supply. In addition to the obvious benefits, a 
fuel cell-powered car is also simpler to build, inherently more 
reliable, with fewer moving parts, and can be more versatile, 
feature-rich, and more fun to drive.
    As with any disruptive technology, though, there are 
critics, those who prefer the status quo, those for whom the 
glass is always half empty. Well, today I'd like to respond to 
the skeptics and the naysayers with a factual update that 
suggests the hydrogen economy is closer than many people think. 
I'll discuss three of the major challenges that must be 
overcome--reducing the cost, increasing the durability and 
ensuring reliable start-up in freezing temperatures.
    Earlier this year, Ballard released a technology road map, 
as part of our plan to demonstrate commercially viable 
automotive fuel cells by 2010. Our road map is fully aligned 
with the Department of Energy's 2010 automotive fuel cell 
goals.
    From 1999 to 2003, we reduced the cost of our fuel cells by 
80 percent, while achieving a ten-fold increase in durability. 
By 2004, we reduced our costs, adjusted for high-volume 
production, to $103 per kilowatt. Our goal this year is to get 
that down to $85, and we're confident that by 2010, we can 
achieve the DOE's target of $30 per kilowatt.
    The DOE has also set a commercial durability target of 
5,000 hours--roughly the expected life of today's piston 
engines, or 150,000 miles. We are on track to meet that goal. 
Last year, we demonstrated automotive technology with a 
lifetime of 2,200 hours. Our Ballard Power fuel cell buses in 
Europe have surpassed more than 2,500 hours of operation, and 
our stationary co-generation fuel cell system for Japan has 
achieved more than 25,000 hours of lifetime.
    A third technical challenge is to improve the ability of 
our fuel cells to start in freezing temperatures. Last year, we 
demonstrated an ability to start at minus 20 degrees Celsius, 
reaching 50 percent of the rated power within 100 seconds. Our 
goal for 2010 is to demonstrate start-up from minus 30 degrees 
Celsius in 30 seconds.
    Now, the technical challenges that we face are significant, 
but our confidence in meeting them is bolstered each day by the 
tremendous progress that we're making--progress in fundamental 
understanding, in the development of advanced design tools, 
simulation models and accelerated test methods, and in our 
manufacturing process capabilities. A key enabler of this 
progress is the demonstration of fuel cell vehicles in the 
hands of everyday customers. Since 2003, Ballard fuel cells 
have been powering 30 Mercedes-Benz transit buses in daily 
revenue service in 10 cities throughout Europe. More than 3.5 
million passengers have already experienced the advantages of 
clean, quiet fuel cell transportation.
    The Department of Energy's Fleet Validation Program takes 
our field experience to the next level. Ballard, through its 
automotive partners--Ford and DaimlerChrysler--as part of the 
DOE initiative, will be powering approximately 60 vehicles in 
various locations throughout the United States. Right now, 
Ballard fuel cells are powering more than 130 vehicles on four 
different continents.
    Now, effective demonstrations are critical, but the single 
most important determinant of when fuel cells can be introduced 
to the mass market is the will and commitment of government. 
There's no better investment for government to make in the 
health and welfare of its people than an all-out Apollo-like 
commitment to hydrogen and fuel cells.
    The President's hydrogen initiative has galvanized the 
industry and government in support of the hydrogen economy, and 
continues to facilitate public/private collaboration. The 
pending energy bills, R&D and demonstration programs, if fully 
funded, will strengthen the President's initiative and provide 
a vital boost to fuel cell commercialization.
    It's a great start, and I congratulate the committee for 
their outstanding leadership in getting the energy bill to this 
point. But considering the stakes, I urge Congress to do more. 
An effective national strategy to accelerate the hydrogen 
economy must also include a transition to market plan. Only 
government can overcome the classic ``chicken and egg'' problem 
and kickstart the transition to fuel cell power. We applaud the 
proposed $1,000 per kilowatt tax credit for stationary fuel 
cells. For automotive fuel cells, the framework of an effective 
transition to market program is present in legislation 
sponsored earlier this year by Senators Dorgan and Graham, and 
is also captured in the energy bill's vehicles and fuels 
provision.
    In closing, I strongly recommend that Congress 
significantly increase funding for this fuel cell vehicle 
procurement program. A vigorous procurement program targeting 
fuel cell vehicles for Federal and State fleets must be in 
place alongside R&D and demonstrations as a third component of 
a national strategy to accelerate the hydrogen economy. A clear 
commitment by Congress to make a specific and sizable annual 
outlay in fiscal years 2010 to 2015 on State and Federal fuel 
cell fleets would support the volume production necessary to 
drive costs down, to stimulate the build-out of a hydrogen 
infrastructure, draw additional private capital into the 
sector, and provide the American public with a large-scale 
introduction to the hydrogen economy. There's no doubt the 
challenges are real, but they can and will be met.
    Thank you for the opportunity to appear before you today, 
and I look forward to answering any questions you may have.
    [The statement of Mr. Campbell follows:]
       Prepared Statement of Dennis Campbell, President and CEO, 
                         Ballard Power Systems
    Mr. Chairman, Members of the Committee, my name is Dennis Campbell 
and I am the President and CEO of Ballard Power Systems. Thank you for 
the opportunity to speak with you today on a subject of central 
importance to today's pressing energy, economic, and environmental 
challenges.
    Ballard is recognized as the world leader in developing and 
manufacturing proton exchange membrane or PEM fuel cells. We've been 
developing PEM fuel cells since 1983 and hold nearly 1,000 patents, 
granted and pending, on some of the most fundamental fuel cell 
technologies.
    We are the exclusive fuel cell supplier to Ford Motor Company and 
DaimlerChrysler and to date have supplied eight of the top 10 
automotive manufacturers. Today, Ballard fuel cells power more customer 
demonstration vehicles than all other fuel cell developers combined.
    Based on our more than 20 years of research, development and 
extensive over-the-road experience, we've concluded--and I believe each 
of the major automotive manufacturers would agree--that hydrogen fuel 
cells will be the automotive powertrain of the 21st century.
    Fuel cells have the power to transform our world because they offer 
a comprehensive solution to the most pressing problems of our time: 
energy security, global climate change, urban air quality, and long-
term energy supply.
    In addition to these obvious benefits, a fuel cell powered 
automobile is also simpler to build, inherently more reliable with 
fewer moving parts, and has the potential to be feature rich, more 
versatile and more fun to drive.
    At Ballard our corporate vision statement is ``Power to change the 
world''. While that may sound like a lofty statement, there are those 
who would take it a step further and state that fuel cells in fact, 
have the power to save the world.
    The fact is, the hydrogen economy is not just some Utopian dream, 
it is an opportunity that is within our reach. The building blocks are 
here today, and we have clear line of sight to solutions that will meet 
the remaining technical challenges.
    As with any disruptive technology, there are legions of critics, 
those who prefer the status quo, those for whom the glass is always 
half empty.
    When I was a student at the University of Oklahoma in 1967, the 
Senator from New York came to our campus for a talk. That night, Bobby 
Kennedy said something that has stayed with me all these years and 
continues to inspire me today. He said:
    ``Some men see things as they are and ask `Why?' I dream things 
that never were and ask, `Why not?' ''
    At Ballard we are focused on ``why not.'' We're focused on solving 
problems, on advancing the technology, on meeting the challenges.
    We are responding to those who claim that fuel cell technology is, 
and will remain, prohibitively expensive; that onboard fuel storage is 
too difficult; that a hydrogen refueling infrastructure is too much 
trouble; or that it takes too much energy to produce hydrogen.
    We're focused on providing evidence, not opinion. Let me offer some 
data to set the record straight.
    Last year, before the House Science Committee, Dr. Joseph Romm, a 
leading critic of fuel cell technology, claimed that PEM fuel cell 
costs were about 100 times greater than the cost of a comparable 
internal combustion engine and that a major technology breakthrough 
would be needed in transportation fuel cells before they would be 
practical.\1\
---------------------------------------------------------------------------
    \1\ Dr. Joseph Romm before the House Science Committee, March 3, 
2004.
---------------------------------------------------------------------------
    The truth is that from 1999 to 2003, at Ballard we reduced the cost 
of our fuel cell by 80% while achieving a ten-fold increase in 
lifetime. By 2004, we reduced the cost of our fuel cell, adjusted for 
high volume production, to $103 dollars per kilowatt--that's only a bit 
more than three times higher than the commercial target the Department 
of Energy has set for 2010. Our goal this year is to get down to $85, 
and we're confident that by 2010 we can achieve DOE's target of $30 per 
kilowatt.
    This is not unlike developments in the computer industry. In 1956, 
a gigabyte of memory cost $10 million. By 1980, the cost had been 
reduced to $193,000 per gigabyte. Today, the cost is about $1.15.
    The hydrogen delivery infrastructure, cited by many critics as an 
insurmountable obstacle, is merely an engineering problem. There are 
already more than 100 fueling stations in place around the world. The 
estimated cost for broad deployment of a hydrogen fueling 
infrastructure in the U.S. is variously estimated at between $10 and 
$20 billion--not much more than the $11 billion that the industry 
reportedly spends each year to simply maintain its present gasoline 
delivery system.
    With respect to on-board storage of hydrogen, progress is being 
made with higher pressure tanks, purpose built vehicles, and the 
investigation of solid storage media.
    Governments are assembling the building blocks of the hydrogen 
economy in fuel cell vehicle demonstrations throughout the world. 
Through these demonstrations, citizens are gaining exposure to hydrogen 
and fuel cell vehicles and the promise of clean, energy independent 
transportation.
    One such demonstration is the Department of Energy's Fleet 
Validation program. Ballard, through its automotive partners Ford and 
DaimlerChrysler, will be powering approximately 60 vehicles in this 
initiative in various locations throughout the U.S., generating 
important data and experience that will directly advance the 
technology.
    Another highly successful demonstration program is the European 
Fuel Cell Bus Project. Since 2003, Ballard fuel cells have been 
powering 30 Mercedes-Benz Citaro buses in daily revenue service in 10 
different cities. This program is co-financed by the European Union.
    To date, more than 3.5 million passengers have ridden these Ballard 
powered buses, putting them in direct contact, today, with clean, quiet 
and efficient hydrogen-fueled transportation. In London, Mayor Ken 
Livingstone embraces these fuel cell buses as part of his initiative to 
reduce ambient noise levels in the city.
    In addition to the European program, six other Ballard powered 
transit buses are operating in Perth, Australia and Santa Clara, 
California with three more scheduled for Beijing later this year.
    Through these and other demonstrations, Ballard fuel cells are 
powering more than 130 vehicles on four different continents, 
approximately three quarters of all publicly demonstrated fuel cell 
vehicles on road today.
    As we move from demonstrations to a commercially viable fuel cell 
product for the automotive sector, there are four key technical 
challenges to be overcome: reducing the cost, increasing the 
durability, ensuring reliable startup in freezing temperatures, and 
doing so within the available package space.
    Ballard has a plan to overcome each of these challenges . . . what 
we call our technology ``road map'', our public commitment to 
demonstrate commercially-viable automotive fuel cell stack technology 
by 2010. This ``road map'' is fully aligned with the DOE's published 
commercial targets for this technology.
    Let me first address fuel cell cost. Meeting DOE's 2010 cost target 
of $30 per kW will ensure that a fuel cell engine is cost competitive 
with today's internal combustion engines. There are a number of factors 
that affect fuel cell cost. Two of the most challenging are the amount 
of platinum used in the catalyst, and the type of membrane used in the 
fuel cell construction. Ballard has done significant research and 
development to reduce the amount of platinum we use. In 2004 we 
demonstrated a 30% reduction without compromise to performance, 
efficiency or durability. We are also looking at a number of membrane 
chemistries and constructions to significantly reduce the cost of this 
critical component. We believe we are on track to achieve the DOE 
target of $30 per kilowatt by 2010.
    Durability is the second key technical challenge we face. The DOE 
has set a 2010 commercial target of 5,000 hours--about 150,000 miles 
which is roughly equivalent to the lifetime of today's internal 
combustion engines. As with the cost challenge, membrane design and 
material is a key factor in fuel cell lifetime. Last year, we 
demonstrated automotive fuel cell technology with a lifetime of 2,200 
hours. Many of the Ballard-powered fuel cell buses operating as part of 
the European Fuel Cell Bus Project have achieved more than 2,500 hours 
of operation. We have a stationary fuel cell--our cogeneration system 
for residential usage in Japan--that has achieved more than 25,000 
hours of lifetime. We are confident that we can deliver the DOE target 
of 5,000 hours by 2010.
    The third technical challenge is to improve the ability of our fuel 
cells to start in freezing temperatures. The electrochemical reaction 
within a fuel cell produces water and heat. Managing that water in sub-
freezing temperatures is essential to a successful start-up. Our 
advanced simulation tools and testing methods have provided us with 
insight and a fundamental understanding of how water behaves through 
the various cycles of fuel cell operation. Last year, we demonstrated 
technology that was able to start at -20 Celsius, reaching 50% of the 
rated power within 100 seconds. Our goal for 2010 is to demonstrate 
start-up from -30 Celsius, reaching 50% of the rated power in 30 
seconds. The DOE target for 2010 is -20 Celsius, reaching 50% of the 
rated power in 30 seconds.
    Power density, is an important boundary condition that constrains 
the previous three goals to ensure that the solutions can be packaged 
within the limited vehicle space available. Last year, we demonstrated 
fuel cell technology at 1,200 watts per liter net. The DOE's 2010 
commercial target is 2,000 watts per liter net. As in the case of 
freeze start, we've actually set a more stringent target for ourselves, 
at 2,200 watts per liter net, based on our customers' requirements, and 
we're confident that we can achieve that.
    To summarize: we know what the technical challenges are, we have 
multiple technology paths that we are pursuing, and we are confident 
that we will demonstrate commercially-viable automotive fuel cell stack 
technology by 2010.
    The single most important determinant of when fuel cells will be 
commercially available for automotive application is the will and 
commitment of government. If the role of government is to protect and 
serve its people, there is no better investment for government to make 
than an all-out, Apollo-like commitment to hydrogen and fuel cells.
    The President's Hydrogen Initiative has galvanized industry and 
government in support of the hydrogen economy, and continues to 
facilitate public-private sector collaboration.
    Though I believe a higher overall funding commitment is 
appropriate, the pending energy bill's important R&D and Demonstration 
programs will strengthen the President's initiative and, if fully 
appropriated, provide a push at a crucial stretch along the 
commercialization timeline.
    Yet I urge Congress to take a further step. A national strategy to 
accelerate the hydrogen economy must not only have strong R&D and 
Demonstration programs but also a robust transition to market plan that 
provides a bridge to commercialization. Only government intervention 
can overcome the classic chicken and egg problem and kick-start the 
transition to a hydrogen economy. The proposed $1,000 per kilowatt tax 
credit for stationary fuel cells is a good beginning--but more must be 
done to support vehicular fuel cell introduction.
    The framework of an effective transition to market program for fuel 
cell vehicles is present in legislation sponsored earlier this year by 
Senators Dorgan and Graham, and is also captured in the energy bill's 
Vehicles and Fuels provision. I strongly recommend that Congress 
elevate, expand, and significantly increase funding for this 
procurement program for fuel cell vehicles. A strong procurement 
program aimed at fuel cell vehicles for federal and state fleets must 
be in place, along side R&D and Demonstrations, as a third component of 
the national strategy to accelerate the hydrogen economy.
    Broadcast early enough and with sufficiently clear guidelines, a 
clear commitment by the Congress to make a specific and sizable annual 
outlay for the fiscal years 2010 to 2015 on federal and state fleet 
procurement of fuel cell vehicles would: (a) support early volume 
production by automotive OEMs and suppliers that is necessary to drive 
cost down; (b) support the build out of hydrogen infrastructure; (c) 
draw additional private capital into the sector, and (d) provide the 
American public with a large scale introduction to the hydrogen 
economy.
    In closing, let me say that the challenges are real--but they can 
and will be met.
    I would like to commend the committee on its outstanding leadership 
with respect to this year's energy bill, and for the forward-thinking 
hydrogen and fuel cell provisions therein.
    Thank you for the opportunity to appear before you today. I look 
forward to any questions you may have.

    Senator Alexander. Thank you, Mr. Campbell, and thanks to 
each of you for your testimony. Why don't we each take about 5 
minute turns, and we'll just keep going for awhile.
    Mr. Bentham, you talked about production of hydrogen; most 
of it's from natural gas today, I believe, and I had two 
questions related to that. One is, if in the United States we 
produce hydrogen from natural gas, won't we just be increasing 
our reliance on overseas natural gas, which is where we're 
going to have to get a lot of our gas over the next few years, 
and won't we create the same problem with natural gas that we 
have now with overseas dependence on oil? And second, I don't 
believe you mentioned nuclear power as you listed the variety 
of ways that we might produce hydrogen; would that not be an 
obvious way for the United States to produce hydrogen?
    Mr. Bentham. Thank you for the question.
    As you mentioned, indeed, most of the world's hydrogen 
production currently is culled from natural gas, and I'd like 
to say that the most efficient ways of producing hydrogen are 
from chemical conversion. That chemical conversion can be 
applied to natural gas, or any hydrocarbon that can be 
gasified. And so, coal gasification is a good route to 
hydrogen, and we see that to be an increasing possibility going 
forward. And it really, then, becomes a question of the 
different policy requirements and the various incentives toward 
shaping the way forward. It may be, from a system point of 
view, at any particular time, better to increase the amount of 
indigenous use of coal to create coal gasification and to use 
that as electricity into the grid, to back out natural gas and 
to use natural gas, or a fraction of that natural gas, to 
produce hydrogen. So, you have to think of it in a systems way, 
which way is the best way to go forward. And different 
circumstances will determine which way forward is the most 
appropriate, but indeed, both of those routes would effectively 
get efficient production of hydrogen, and can effectively 
reduce natural gas usage by increasing the use of indigenous 
coal, for example.
    You mentioned nuclear, and there are two routes to using 
nuclear to produce hydrogen. One of them is using the heat from 
nuclear--thermochemistry. That is really rather still a 
fundamental development process, and is many years from 
practical application. The other one is through electrolysis--
effectively, again, using electricity to produce hydrogen, just 
as you might, with a renewable source, use electricity to 
produce hydrogen. Overall, it may be more efficient, from an 
energy systems point of view, from a national point of view, to 
put that electricity directly into the grid to back out the use 
of hydrocarbons, to use to produce the hydrogen. So it's really 
a systems issue. Each of those routes you can use directly to 
produce the hydrogen, but it may be more efficient to use, 
indirectly, the hydrocarbon, and to back out the overall use.
    Senator Alexander. Thank you very much. Mr. Faulkner, in 
the 1990's, the Department of Energy sponsored the partnership 
for the next generation vehicles with the idea, I think, of 
trying to accelerate the use of the hybrid technologies, and 
now we are--we have a FreedomCAR initiative to encourage the 
fuel cell vehicle. A National Research Council Report on the 
hybrid program in the 1990's was critical, because it was 
limited to just three manufacturers of cars, headquartered in 
Detroit, only two of which are headquartered in Detroit today.
    I wonder if you have given consideration, in the Department 
of Energy, to involving all of the companies in the world that 
are working with fuel cell technology, including especially 
those who do domestic manufacturing? When I visited the 
hydrogen fuel cell filling station in Yokohama, there were at 
least seven--maybe there were nine--SUVs there from 
manufacturers all over the world. And if we want to make 
progress in this country on cleaner air, global warming, energy 
independence, then we have to think about all of the cars that 
are produced in the United States and sold in the United States 
and not just by the two companies that are still headquartered 
in Detroit.
    So, what are your plans for including all automobile 
companies, at least those that are engaged in domestic 
manufacturing in the United States, in the hydrogen fuel cell 
initiative?
    Mr. Faulkner. Senator, could I make a comment, before I get 
started on that, on the natural gas question that you asked Mr. 
Bentham at the table?
    Senator Alexander. Sure.
    Mr. Faulkner. Natural gas is seen as a transition to other 
sources of hydrogen production. We would eventually like to get 
to renewable sources of hydrogen, renewable sources for 
hydrogen production, and I think the Energy Information 
Administration has projected that that transition would only 
increase natural gas demand by less than 3 percent by 2025.
    In response to your question about foreign auto makers, 
we're not averse to working with, to building R&D partnerships 
with foreign auto makers, those in Asia. I think we're looking 
to develop relationships with all auto makers, if we can share 
fully and actively in research and development. We're keeping 
an open mind on that. Our currently relationship is with the 
USCAR, that's the Big Three in Detroit now--DaimlerChrysler, GM 
and Ford.
    Senator Alexander. Excuse me, Mr. Faulkner, where is 
DaimlerChrysler headquartered?
    Mr. Faulkner. It's in Europe, sir. That relationship with 
USCAR, that entity requires as a condition of its membership 
that a foreign auto maker do major power train research and 
development here in the United States, and DaimlerChrysler is 
foreign, and it does do that.
    Meanwhile, foreign auto makers can still participate in the 
whole range of meetings, helping to develop documents, 
participate in solicitations, subject to U.S. laws and 
regulations. Hyundai is in our learning demonstration program, 
Toyota is doing ``work for others''--a technology transfer tool 
with Savannah River Lab in hydrogen storage. So I think the 
bottom line is, we're open to that, but we do have this formal 
relationship with USCAR, sir.
    Senator Alexander. Well, thank you, Mr. Faulkner, maybe 
we'll come back to that. I mean, we're very proud of General 
Motors, for example, which is why they're here today, and they 
make cars in Tennessee. We're very proud, also, that Nissan 
makes cars in Tennessee as well. In the energy bill, we 
considered this question twice, and decided to support domestic 
manufacturing, which meant all cars and vehicles that are 
produced in the United States by members, so I hope you'll 
consider that.
    Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much. Mr. 
Faulkner, some while ago, I guess 3 or 4 years ago, when the 
Department of Energy representatives were in front of the 
committee, I asked them if they were doing some work to look 
forward 50 years, for example, to evaluate in 50 years what we 
aspired to have happen with respect to the supply and the type 
of energy we used. The reason I asked that is that we talk 
about Social Security 50 years, and 75 years and 100 years, and 
I was just curious, what is our strategy, and what is our 
aspiration with respect to the kind of energy in our energy 
future that leads back to 50 years. The answer, at that point, 
from the Department of Energy was, ``No, we really--we don't 
have a road map for 50 years from today.'' So that's what got 
me kind of interested in the notion of trying to figure out how 
we move toward alternatives. Because I think, ultimately, 
retaining this addiction to foreign oil is unhealthy for our 
country.
    Your testimony was well-done and it suggests that the 
Department now feels like it's committed and really has a 
significant interest in hydrogen and fuel cell technology--is 
that a good way to describe where the Department is?
    Mr. Faulkner. Well, sir, the President deserves a lot of 
credit for his visionary stance in promoting hydrogen fuel 
cells. Yes, the Department is committed to that, to his vision, 
and I think we're well on the way to success there.
    Senator Dorgan. You're absolutely correct, the President 
does deserve credit. I did say his initial suggestion was a 
little more timid than I would be, because about half of it was 
taken from other funding, and it was about $1.2 billion or so; 
but nonetheless, it is true that President Bush provided the 
leadership to say, ``Let's step in this direction,'' and he 
deserves substantial credit for that, and I think the Congress, 
and particularly in this conference committee that has now come 
up with a $3.73 billion authorization, also recognizes that we 
need to move in this new direction.
    Let me ask, Mr. Campbell, Dr. Burns or Mr. Bentham--tell me 
what you see of the plans in other areas of the world, such as 
Europe? I've read a lot about what Europe is doing with respect 
to hydrogen fuel cells, and their aspirations for an energy 
future; can you contribute some knowledge in that area?
    Mr. Campbell. Well, I can give you some information on what 
we see in Japan. Prime Minister Koizumi has been very 
aggressive in support of the transition to hydrogen and fuel 
cells in that country. I'm proud to say that the Prime Minister 
has a Ballard fuel cell in his official residence, providing 
hot water and electricity for his home. But he's been very 
supportive for hydrogen fuel cells for automobiles, and has set 
a target in Japan to have 50,000 fuel cell vehicles on the road 
by 2010, and to have 5 million on the road by 2020. Now that's 
a very aggressive target, far more aggressive than the numbers 
that we're looking at in this country--and whether or not it's 
feasible is a different question--but at least they have set 
out an ambitious agenda for transition to hydrogen fuel cells 
in Japan.
    Senator Dorgan. Mr. Bentham.
    Mr. Bentham. Yes, I'll add a little bit on what's happening 
within Europe. A lot of the activity within Europe has so far 
been driven at both the level of the member states themselves, 
but also the European Commission, and there is a European 
Hydrogen and Fuel Cell Technology Platform, which I have the 
pleasure of chairing, which is bringing together the various 
stakeholders around Europe to provide strategic overview. I 
would say that they are still in the process of catching up in 
terms of the level of development of activity compared to Japan 
and the United States, but they have an awful lot of good 
science, good engineering there. They also have the kinds of 
fiscal flexibility in terms of the cost of the taxation on 
vehicles, and the cost of the taxation on fuel to give 
flexibility to help encourage the path going forward, and they 
have a projection or a plan, an aspiration to see approximately 
2 million vehicles on the roads in Europe by 2020.
    Senator Dorgan. Can I go back to you, Mr. Campbell? Tell me 
again the targets and timetables in Japan.
    Mr. Campbell. The targets that have been articulated by the 
Prime Minister are to have 50,000 fuel cell vehicles by 2010, 
and 5 million by 2020.
    Senator Dorgan. I would just say, in the energy conference 
report we just passed, I pushed like the dickens to get targets 
and timetables. They're a little bit squishy, I must admit, but 
I tried to get them in, in any event. We do have section 811, 
100,000 hydrogen fuel cell vehicles in the United States by 
2010, and 2.5 million by the year 2020. So I really feel that 
if you're going to move in a direction, you need to set some 
waypoints, or some targets and timetables, and that's the 
reason I kept pushing for that. And, again, they're not--these 
are not any mandates, but nonetheless, they give us a roadmap 
of what we're going to do.
    Just one additional question. China has about 20 million 
automobiles at the moment. They've got 1.3 billion people, I 
believe, and 20 million automobiles. It's estimated they will 
have 120 million automobiles by the year 2020, so they'll go 
from 20 million to 120 million in the next 15 years. They're 
going to want to fuel those vehicles, so just figure what the 
demand side does on oil, to run gasoline through the fuel 
injectors or the carburetors. And that's one of the reasons I 
feel so strongly about what's going to happen to the price of 
oil with the limited supply and only so much oil under the sand 
in such a small part of the world. We need to look at all these 
alternatives. Do you have any notion of what the Chinese are 
thinking about--we know a little bit because of their CNOOC's 
approach to buying Unocal, but what else are they thinking 
about with respect to an auto industry and how they would power 
that industry? Do any of you know the answer to that?
    Mr. Campbell. Senator, I could offer some insight. We have 
been meeting for some time with the various technical 
institutes and the Ministry of Science and Technology in China. 
They have a very aggressive technology development effort on 
the way in China. There is no place on earth that has a more 
compelling case for fuel cell technology than China. There's 
every reason to believe that China will do what they have done 
with wireless telephone and skip the wire line; they could 
easily skip the petrol infrastructure and go right to a 
hydrogen infrastructure. It makes tremendous good sense for 
China to do that.
    Senator Dorgan. I had not thought about that point, but 
it's a fascinating point, because they're at such an embryonic 
stage here that they could just create their own infrastructure 
that is very different for a new type of energy.
    Mr. Campbell. That's absolutely right, and frankly, that's 
what they're thinking.
    Senator Dorgan. Just one aside. You also know that one of 
our U.S. domestic auto manufacturers is suing the Chinese for--
they alleged--lifting the entire production design for a little 
car that the Chinese are now producing called the QQ, produced 
by the Cherry Company. One of our companies says that it's 
simply from a stolen set of designs for a U.S. vehicle. And the 
Chinese are also launching and ramping up an auto industry for 
export, aggressive export at the same time, which is just an 
aside on this entire Chinese issue.
    Mr. Campbell. Well, Senator, if I could add, the issue of 
intellectual property rights in China is a very important one, 
and a cautionary tale as we begin to engage with the Chinese on 
an advanced technology like fuel cells.
    Senator Dorgan. It's a big issue. And let me just say that 
testimony of all four of you today has just been excellent, I 
think it really adds substantially to our knowledge and to the 
interest in this hydrogen fuel cell economy. Thank you very 
much.
    Senator Alexander. Thank you, Senator Dorgan.
    We welcome Senator George Allen. I will call on him in just 
a minute.
    On your point, Mr. Campbell, and yours, Senator Dorgan, 
about China skipping a generation, and skipping over a 
distribution system, in effect, Japan did that with steel after 
World War II. All of their steel mills were destroyed, so they 
built a whole new generation of steel mills, creating a lot of 
problems for us here in the United States because we had old 
steel mills.
    Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Alexander 
and Ranking Member Dorgan, for holding this important question.
    My question I think refers to you, Mr. Faulkner. We spent a 
lot of time here over the last 6 months working on this energy 
bill, and I think it's a good step in the right direction. 
Perhaps not the perfect bill that any one of us would have 
wanted, but that's the nature of compromising. But I'm hopeful 
that we will have a bill that the President will sign here 
soon.
    There's a lot of investment in here with respect to 
hydrogen, billions of dollars in terms of the fiscal impact 
coming out of this energy bill. One of my scientist friends 
wrote me this note with respect to the hydrogen. He says, ``I 
don't like the bill where it speaks specifically with respect 
to hydrogen. The hydrogen economy is still mostly a theory. 
There are many technical hurdles to overcome if hydrogen 
transportation and production is to be used on a large-scale 
basis. The demonstration of hydrogen-powered vehicles generates 
press, but the cost of these vehicles is near $1 million, so 
it's almost hypocritical to say that we're going to get there 
with regard to the goals that have been articulated by the 
Department of Energy and by the President.'' So my friend might 
go as far here as to tell me that that's what I ought to do is 
feed opposition to the conference committee report, which I 
will not do. But will you respond to that? Because I think that 
with a lot of members of the public, you start talking about 
the technology of hydrogen fuel cells, and that's sort of their 
response. It's sort of pie in the sky, when we're talking about 
the kinds of timelines that DOE has articulated, and Mr. 
Campbell, the goals that you said you thought were reasonable. 
How do we go about explaining to the public that this is, in 
fact, something doable?
    Mr. Campbell. That's a good question, sir. Well, first of 
all, I don't think that anyone--at least I wouldn't sit here 
and say I'm 100 percent certain we're going to reach all of the 
targets we've laid out, that's not the nature of research, but 
we feel confident that we've laid out with our partners a good 
research plan. The President laid out a 5-year program, and 
we're already starting to talk internally about going beyond 
that.
    I understand the sentiment. A couple of the sentiments 
embedded in what you've said, one of them is, ``This is so 
important, the percentage of imported oil that we use is going 
up, so why can't we go faster?''. Well, I think the nature of 
research is, sir, that unfortunately it may be unpopular to 
say, but sometimes you can only go so fast. You can't--you 
know, fundamental research doesn't occur overnight, and 
breakthroughs are impossible to predict ahead of time. But I 
think we do have technical hurdles in here, and I think that 
we're on a good pathway now. This program is, from a government 
standpoint, one of our--it's reviewed and dissected and 
overseen by a lot of different people, it's got a good 
partnership program, and I think the other thing I would 
probably say is, if you have to get started today to reach 
long-term goals, what if we had started this 5 or 10 years ago, 
how much further along would we be? So we have to start 
sometime, and we are making progress, as I laid out in my 
testimony. I won't go through any of that right now, but I 
think we have a good target, we have a good plan and we have a 
good partnership.
    Dr. Burns. Senator, if appropriate, I'd like to make a 
comment on that from General Motors' perspective. We've 
publicly stated that we are designing and validating a fuel 
cell propulsion system by 2010 that can go head-to-head with 
the internal combustion engine. I think it's one of these 
phenomenon--an ``if we build it, they will come'' kind of a 
mindset, like a Field of Dreams, in a sense.
    I have the honor of leading a team of researchers and 
scientists in our laboratories working on this technology 
daily. They're creating the state-of-the-art. I'd be more than 
happy to invite your friend to our laboratory to show him at 
least what I can show him without violating our own 
confidentiality, we're so confident that these targets can be 
met. Certainly if your friend is spending time in state-of-the-
art fuel cells facilities, that's great. He certainly may have 
reached different conclusions from the science than we're 
reaching. We don't see anything right now that says it can't be 
done.
    And so we just need to keep moving aggressively toward the 
goals we've set for ourselves to get this propulsion system 
validated, show the world that it is, indeed, possible to have 
a propulsion source that has one-tenth as many moving parts as 
an internal combustion engine. Keep in mind that an internal 
combustion engine is a pretty complicated mechanical device. It 
marries up with a transmission and a mechanical drive train and 
a fuel system, and controls an emissions system, exhaust 
systems and all of that. We're talking about, conceptually, a 
much simpler pile of parts to make the vehicle move, and all we 
have to do is put one fuel on it--hydrogen. And it's immensely 
scalable from small applications to large applications.
    We're doing this for business reasons, and if we can see 
that possibility, our competitors can see that possibility. 
Certainly, we believe we need to do unto ourselves before 
others do unto us. So I think it's possible, I'd be happy to 
share some insights with your friend if he or she is interested 
in doing that.
    Senator Salazar. Let me just say this comment to both Dr. 
Burns and Mr. Faulkner: I've appreciated your testimony here, 
and I think it's compelling that you can make the statement, as 
you just did, Dr. Burns, that in 5 years from now we're going 
to be in the position where you, from a General Motors 
perspective, can say that we can, in fact, replace the internal 
combustion engine. That's an incredible statement to make, 
because we're not talking about 50 years out, we're not talking 
about 25 years out, we're talking about 5 years out.
    A question for you, Mr. Faulkner: for someone like me, 
learning about the hydrogen fuel economy, where is it within 
the DOE complex that someone like me or my fellow Senators or 
others might be able to get a good on-the-ground briefing with 
respect to what you're doing with respect to the R&D and 
milestones? It probably would not be at the National Fuel and 
Energy Lab in Golden; or would it be?
    Mr. Faulkner. Well, NREL plays a key role in this issue, 
sir. You could also probably find quite a bit on the website 
and we'd be willing to come up and talk to you personally. We 
have a hydrogen posture plan, we have a hydrogen vision and 
roadmap. These are developed not just by government, but in a 
partnership with technical targets, timelines----
    [The following was received for the record:]

    The following organizations may be visited to provide Senator 
Salazar with ``a good on the ground briefing'' of hydrogen and fuel 
cell technologies related to the Department of Energy's (DOE) Hydrogen 
Program.
     national renewable energy laboratory (nrel), golden, colorado
    A tour can be arranged to provide an overview of key research 
activities and milestones related to hydrogen production, storage, fuel 
cells, and technology validation as well as cross-cutting areas of 
systems analysis and safety, codes, and standards. NREL is the lead 
laboratory in the Center of Excellence in carbon-based materials for 
hydrogen storage. The tour will include laboratory facilities as well 
as wind turbines, solar photovoltaics, and electrolyzers to produce 
hydrogen.
    Contact: George M. Sverdrup, Ph.D. Technology Manager, Hydrogen, 
Fuel Cells and Infrastructure Technologies, National Renewable Energy 
Laboratory, 1617 Cole Boulevard, Golden, CO 80401-3393; Tel--(303) 275-
4433; Mobile--(303) 919-8762; [email protected].
                    general motors corporation (gm)
    Tours may be arranged at GM's facilities in Warren, Michigan, and/
or in Honeoye Falls, New York. The Honeoye Falls site is preferred 
because that is the location where most of the GM fuel cell research 
takes place. Laboratory facilities related to hydrogen and fuel cell 
technology development as well as prototype hydrogen fuel cell vehicles 
may be seen. GM is a partner in DOE's ``learning demonstration'' effort 
to develop and demonstrate hydrogen fuel cell vehicles in real world 
operating conditions and has several fuel cell vehicles in the DC area.
    Contact: Keith Cole, Director, Legislative and Regulatory Affairs, 
General Motors, Suite 401, 1660 L Street, NW, Washington, DC 20036; 
Tel--(202) 775-5040; [email protected].
                             shell hydrogen
    Shell Hydrogen, set up in 1999 to develop business opportunities in 
hydrogen and fuel cells technologies, is a global business of The Shell 
Group with headquarters in Amsterdam, the Netherlands, and regional 
bases in Houston and Tokyo. A tour may be arranged to visit the first 
hydrogen fueling station in Washington, DC, on Benning Road.
    Shell is partnering with GM in DOE's ``learning demonstration'' 
activities to develop and demonstrate hydrogen infrastructure 
technologies for fuel cell vehicles.
    Contact: Sara B. Glenn, Washington Counsel, Shell Oil Company, 
Government Affairs, 1401 Eye St., NW, Suite 1030, Washington DC 20005; 
Tel--(202) 466-1400; [email protected].
                               utc power
    A tour may be arranged at UTC Power in South Windsor, Connecticut, 
to view laboratory facilities as well as stationary fuel cell power 
plants and prototype fuel cell vehicles. Technology development 
facilities and test stations may be seen for a range of fuel cell 
applications, including fuel cells developed for NASA's space program 
(Apollo, space shuttle, etc.). UTC is a leader in fuel cell technology, 
with more than 40 years of experience, and provides on-site power 
systems for commercial and industrial markets, with fuel cell power 
plants in 19 countries.
    Contact: Judith Bayer, Director, Government Business Development, 
UTC Power, 1401 Eye Street, NW, #600, Washington, DC 20005; Tel--(202) 
336-7436; [email protected].
    In addition, the DOE Hydrogen Program Manager is willing to visit 
Senator Salazar's office anytime to provide an overview and details of 
the DOE hydrogen program. An appointment may be coordinated through:
    Jennifer A. Sollars, Advisor, Legislative Affairs, Office of Energy 
Efficiency and Renewable Energy, U.S. Department of Energy, 1000 
Independence Avenue, SW, Washington, DC 20585; Tel--(202) 586-0440; 
[email protected].

    Senator Salazar. Let me ask you--this is a personal 
question with me. I visited NREL for about 3 hours. And I know 
that Senator Dorgan and others have been leading the charge 
with respect to ethanol, and I'm very proud of the fact that 
I'm one of the partners trying to push us in that direction. I 
was very impressed with what was happening with cellulostic 
ethanol research and some of the other activities going on 
there at NREL. It makes a big difference when you actually see 
these things on the ground and in the laboratory. So my simple 
question to you is, where can I get a similar kind of review? 
Do I have to go to GM? Would you be able to do something for me 
if I come out and visit your plant?
    Dr. Burns. Could you just repeat the very last part of your 
comment? I'm sorry.
    Senator Salazar. I'd like to have the same kind of tour 
that I essentially had at NREL at someplace, either the DOE or 
maybe with some of the private sector partners, just to get a 
good sense of what you're talking about. Because what you're 
talking about, again, is revolutionary, if you are talking 
about replacing the internal combustion engine within a 5-year 
timeframe. That is just an incredible statement to make, and I 
want to get some kind of raw information on that.
    Thank you very much for your testimony.
    Senator Alexander. Senator Allen.
    Senator Allen. Thank you, Mr. Chairman. Thank you and 
Senator Dorgan for holding this hearing. Hopefully by the end 
of this week we will have passed an energy policy for this 
country that's gone through a lot of stalling, a lot of 
stalled-out vehicles on getting that thing done, but we're 
finally, I think, going to get it done.
    And I'm one who feels that this is a very important measure 
for our country for a variety of reasons. One is our national 
security, since we're far too reliant on foreign sources of 
energy. Second, it will be important for jobs. Whether there 
are jobs here presently, or jobs in the future, some will be in 
this new area of technology. And third, it's support for our 
competitiveness. We all need affordable, clean--if we can make 
it as clean as possible--energy, whether it's for 
transportation, for electricity, a variety of other functions. 
I'm one who's always embraced advances in technology and the 
hydrogen aspect of this measure, the incentives for it, as well 
as the research and development. I think is very important. And 
rather than being on a petroleum-based economy, or the internal 
combustion engines, to the extent that these new technologies 
can give us an affordable, reliable energy, that's important 
for our competitiveness. And I do believe that our energy bill 
does move the United States closer to this goal, and 
particularly the hydrogen fuel initiative, which brings in 
Federal agencies, universities, the private industry and others 
all working together. And I think the Generation IV nuclear 
reactors producing hydrogen fuel that these vehicles of the 
future will need is a good idea as well.
    Now, let me ask you all some questions. I'm sorry I was 
late, I had to be on a conference call on some other matter. 
This speaks to Mr. Burns and Mr. Campbell. One of the aspects 
of this whole energy bill is that we need more production of 
natural gas here in this country, which is important not just 
for our own fertilizer, chemicals, plastics, wood forestry 
products, tires and all sorts of manufacturing. I think one of 
you said something to the extent that we're going to have 
hydrogen fuel cells made, ultimately, derived from natural gas. 
Did one of you say that this would only affect 3 percent of the 
natural gas demands of this country? Because we have such great 
demands, and skyrocketing prices.
    Mr. Faulkner. I said that, sir.
    Senator Allen. Okay.
    Mr. Faulkner. I was quoting from the Energy Information 
Administration, an independent arm of the Department of Energy, 
that in that transition, we're looking now at natural gas as 
the first step in the transition to hydrogen production from a 
number of sources, hopefully renewable in the end.
    Senator Allen. All right, so it's 3 percent. Now, let me 
ask you this, you mentioned----
    Senator Dorgan. He was saying they wouldn't ultimately use 
natural gas, but they would use natural gas in the interim as a 
step to other fuel stops. I think that's what he was saying 
there.
    Senator Allen. All right. But with our high demand for 
natural gas and our limited supplies, you're saying that this 
would take up 3 percent of the present natural gas supply, or 
this is what you were quoting from, Mr. Faulkner?
    Mr. Faulkner. I believe what EIA said was, it would only 
increase natural gas demand by 2025 by less than 3 percent.
    Dr. Burns. I may be able to help with that a bit. We've 
done an analysis that if you were going to put 10 million fuel 
cell vehicles on the road in the United States, recognizing 
there's over 200 million vehicles in the United States today, 
but to get this started, when you are thinking about the first 
10 million, that that would increase the demand for natural gas 
by 2 percent, so that's a calculation that we've done.
    Our view is that hydrogen can come from so many different 
sources. That's what we like. So we don't think in terms of 
relieving 98 percent dependence on petroleum and shift that all 
the way over to 98 percent dependence on some other energy 
pathway. In fact, what we'd like is to get a little bit from a 
whole bunch of sources.
    Senator Allen. All right. Mr. Faulkner mentioned something 
about renewable hydrogen; is that what you're talking about, or 
are you talking about hydrogen from some other sources, from 
gasoline, from what other sources?
    Dr. Burns. We would certainly like to see it come from 
coal. It can come from nuclear in the form of electricity, 
electrolyzing water, hopefully down the road, nuclear in terms 
of direct hydrogen creation, renewable--wind, geothermal, 
solar, biological sources--whatever the local economy sees as 
their strength, as the most cost-effective way to create the 
hydrogen in an environmentally friendly way is the one that 
should win out in the marketplace, and we'd like to see all 
these pathways competing on a daily basis for our customers' 
energy dollar.
    Senator Allen. All right. Now it comes down to cost, Mr. 
Campbell. I was reading your testimony where you actually have 
hydrogen fuel cell vehicles, mostly buses, in different places 
around the world. Mr. Burns, you have Senator Salazar all fired 
up and he's probably thinking, ``Hey, we're going to have fuel 
cells in 5 years in our vehicles,'' but regardless, what is the 
operating cost difference right now, because affordability does 
matter? What is the operating cost difference from having the 
propulsion from fuel cells versus conventionally powered? And I 
realize there can be a cost difference, I'm just talking about 
absolute dollars or yen out of the pockets, and then you can 
say, well it costs a little bit more, but look, we don't have 
any of the emissions, the by-product is water. But if you could 
share that with us. If you've said it already, I'm sorry, but 
I'd just like to know what that is.
    Mr. Campbell. Well, thank you, I'll try to answer your 
question, Senator. A couple of ways to look at it--if you look 
at the energy cost, various studies have reported--and Mr. 
Faulkner has better data on this than I do, probably--that the 
energy cost per mile driven for hydrogen used in a fuel cell is 
actually lower than the energy cost per mile driven in a piston 
engine car. So the cost of operation, in other words, fuel 
costs, as one component of the operating costs should actually 
be less for a fuel cell vehicle.
    Senator Allen. Is it less in these situations, these 
programs you're involved in?
    Mr. Campbell. Yes, if you can buy the hydrogen at $2 to $3 
a kilogram, yes.
    Senator Allen. Well, can you?
    Mr. Campbell. I think the station that was recently opened 
in Washington, where the President was pumping gas, was $4.50?
    Mr. Bentham. That's about right. A lot of the cost, 
ultimately, in hydrogen is not the fuel itself, but it's the 
cost of distributing the fuel and having the facilities to 
bring that forward. Clearly, as you go into an established 
market, those costs come down--you don't have to distribute as 
far, you don't have to have the same kind of network 
optimization issues that you would have when you're only doing 
a demonstration. So we have a line of sight that brings us to 
that point, that in a fully developed market, the supply of 
hydrogen, the price of hydrogen per mile traveled would be of 
the same order as it currently is with gasoline. Clearly there 
are a number of steps toward that point, but in a fully 
established market that is the goal, and we have a line of 
sight on that.
    Senator Allen. Well, that's very encouraging, because some 
of the concerns we've had--I'm very much in favor of this 
hydrogen economy, so to speak. The concern is you use so much 
energy just to create the hydrogen that it increases the cost 
of hydrogen. And while there's the environmental benefits from 
it, you may not have all of the environmental benefits, unless 
the way that you're actually going through the entire process 
is also a clean process. And then, ultimately, you get the 
final price. To the extent it ends up being a distribution 
issue, that's something that does have to be solved, but that 
could be more easily solved for fleets, as Mr. Campbell's 
company is doing, where you know the defined number of miles 
that they'll be driving and coming back to that distribution 
center. Ultimately, that's some of the problem that we've found 
over the years in, say, natural gas-powered vehicles, they 
simply don't have Shell gas stations or Wawa's or Flying J's or 
whatever one has all over. So that's very, very encouraging 
that you actually believe that the actual cost of the fuel, 
notwithstanding the distribution system, is the same.
    Let me ask this final question, Mr. Faulkner. Mr. Chairman, 
if I may. I'm aware that this is another alternative, and I'd 
like to get your view of this, and this is the Solid State 
Energy Conversion Alliance within the Department of Energy 
that's leading efforts to commercialize what is called low cost 
solid oxide fuel cells for application in industrial uses, 
households and military applications. Is there any effort to 
utilize this solid oxide fuel cell technology in the 
transportation sector? If you're aware.
    Mr. Faulkner. If I could, if you'll let me, I'd like to 
make one point on the conversation you just had about natural 
gas.
    Senator Allen. Yes.
    Mr. Faulkner. One reason we won't use as much natural gas 
as you may think is that all the different pathways for 
producing hydrogen for fuel cell vehicles would use less 
energy, total energy than the gasoline internal combustion 
engine. As you noted, I think we would use more energy, maybe, 
up front, producing the hydrogen, but you gain a lot more on 
the back end because the fuel cell vehicles are more efficient 
than internal combustion engines. The SECA, the acronym for 
that, I'll have to get you something on the record, sir, I'm 
not as familiar with that as I probably should be.
    [The following was received for the record:]

    Solid oxide fuel cells (SOFCs) operate at high temperatures (650-
1000C) therefore they take a long time to start up. They are much less 
suited for passenger vehicle applications than direct-hydrogen polymer 
electrolyte membrane fuel cells (PEMFCs). PEMFCs operate at lower 
temperatures (80C), can start up quickly, and are very good at load-
following.
    SOFCs are proposed for stationary applications where steady-state 
performance and a long start up time are acceptable and where the high 
quality heat can be used for cogeneration applications. To accelerate 
development of SOFC technology, the DOE Office of Fossil Energy's Solid 
State Energy Conversion Alliance (SECA) focuses on SOFC research and 
development (R&D) for stationary applications such as centralized power 
plants and distributed generation applications (e.g., 10-100 kW). FY 
2005 funding for the SECA program was $54.2M.
    SOFCs have some limited transportation applications such as 
auxiliary power units in heavy-duty trucks to minimize diesel engine 
idling, thus saving oil and providing environmental benefits. DOE's 
Office of Energy Efficiency and Renewable Energy has a very small R&D 
effort ($750K in FY 2005) on solid oxide fuel cells for transportation 
applications. This effort includes projects to design, develop, and 
perform in-vehicle demonstration of diesel-fueled SOFC auxiliary power 
unit systems configured to provide electrical power for the sleeper 
cabs in heavy-duty trucks.

    Senator Allen. Are any of you aware of this concept of the 
solid oxide fuel cells?
    Dr. Burns. Yes, we are.
    Senator Allen. Could you comment on that and any of their 
applications to transportation?
    Dr. Burns. There are a couple of different classes of fuel 
cell technology. We use what's called a PEM fuel cell, a proton 
exchange membrane. You mentioned the solid oxide. The latter is 
really more conducive for auxiliary power. So let's say you 
have a large truck that you're using for transportation of 
freight, and it pulls into a rest stop and it wants to generate 
power for the vehicle to run its accessories. We think that's a 
nice application for this solid oxide, but the industry pretty 
much started down, I guess it was about a decade ago, when we 
were looking at challenges like power density, and the extreme 
range in which you have to operate automobiles. We concluded 
that the PEM technology had the most promise for transportation 
applications, certainly for accessories and other things, for 
military uses. We think the latter technology has promise.
    Mr. Campbell. If I could add to that, just to explain the 
difference between a solid oxide and a PEM fuel cell. A PEM 
fuel cell operates at low temperatures--85 degrees Celsius--so 
it starts up very quickly and it has great load-following 
capability. So it's really good for an automobile with lots of 
transient behaviors. A solid oxide fuel is a very high 
temperature device--800, 900 degrees Celsius. So it takes a 
long time to warm up, and you want to run it for a steady state 
over long periods of time. So it's great for distributed 
generation, it's not very good for standby or backup power, 
it's not very good for automotive. So it may be good for a 
locomotive-type application, for a rail application, but not 
for a car or a truck.
    Senator Allen. Mr. Bentham, you seem to know what all this 
is, too. Do you have any comment on the solid oxide?
    Mr. Bentham. Just to re-emphasize the point that Mr. 
Campbell was stating, that we've seen the solid oxide fuel cell 
as being very good technology for those stationary power 
applications, where you want something that will run for 50,000 
hours, nonstop, but you don't want to be starting it up and 
shutting it down every few minutes.
    Senator Allen. Thank you, all four of you gentlemen, and 
thank you, Senator Dorgan, also and our chairman. Thank you for 
your answers and insight. I'm very much looking forward to 
working with you all and we can all use your insight and 
knowledge. And I think that people ought to be encouraged about 
the future. I think we'll work on a bipartisan basis with the 
incentives to make sure that this research and development goes 
forward with the proper incentives also for the private sector, 
the marketplace. I think it makes great sense. I'm not one who 
likes dictates or mandates, I like carrots rather than sticks, 
and you've given me some good evidence here to continue with 
that advocacy. Thank you all.
    Senator Dorgan [presiding]. Senator Allen, thank you very 
much. The Chairman had to leave, and asked me to adjourn the 
hearing as the ranking member. Let me just make an observation. 
The reason that I asked you to yield for a moment is I think 
that natural gas will certainly be used as a source of 
hydrogen, but I think it's also the intention of virtually 
everyone to find sources of hydrogen from many other areas. But 
initially, I think, as a start-up, you rely more heavily on 
natural gas, and the question you asked on that is a perfectly 
important question.
    I also think that in every area of this type there are the 
skeptics, that is, people who believe that this science doesn't 
exist, or will never exist. And then there are the incumbents, 
in whose interest it is never to change what is. So I 
understand that. I happen to be a big fan of ethanol, I like 
growing energy in our fields, and pulling up to a service 
station and saying, ``Fill it up with corn.'' I kind of like 
that approach. But I also know that the incumbent providers of 
our fuel have done all sorts of studies saying that it takes 
more energy to produce ethanol than you get from ethanol, which 
is patently nonsense. The studies are just fatally flawed. But 
nonetheless, it ricochets around the Internet, and the same 
will happen with respect to hydrogen. We will have people 
continue to say, ``This can't work, it won't work, it doesn't 
add up,'' and I understand that. I know my colleague from 
Virginia understands that.
    I am encouraged by your comments as well, because I think 
there's a sizable group of us here in Congress who are 
determined to try to chart a different course so that we have 
greater capability to control our own destiny, rather than have 
the destiny of our country and its economy controlled by 
someone else, somewhere else. I just think this is a very 
important issue, and I think your contribution to that body of 
knowledge today is very important.
    I'm pleased to work with the U.S. Fuel Cell Council and the 
Natural Hydrogen Association and many others who are engaged in 
this work. There are a lot of interests engaged in this, as 
well as the Department of Energy, and having the benefit of all 
of their combined knowledge is very, very important, as we 
proceed to make what we hope is good policy. And I do think if, 
at the end of this week, the President signs this conference 
report on energy, if he does that, the hydrogen title, dealing 
with hydrogen fuel cells both in that title and also in the 
vehicle title, authorizes about $3.73 billion. It's a huge step 
forward in an exciting new direction, and that will be good 
news for our country. With that, we thank you all, and we 
adjourn the hearing.
    [Whereupon, at 4:22 p.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

     Responses of Jeremy Bentham to Questions From Senator Domenici
    Question 1. Other nations also support programs in hydrogen and 
fuel cell development. Is the United States government coordinating 
effectively with other governments in developing codes and standards 
for hydrogen and fuel cell vehicles? Please explain.
    Answer. The U.S., through efforts led by DOE and NREL have 
effectively shaped the hydrogen codes and standards process in the U.S. 
and helped in the organization of global efforts through the 
International Partnership for the Hydrogen Economy (IPHE) as well as 
other existing channels such as U.S. TAG in the ISO arena. The impact 
of these efforts have helped identify areas needing research and data 
generation and have allowed multiple stakeholders and organizations to 
efficiently communicate and share information.
    Question 2. Your testimony addressed the importance of public 
awareness and understanding and the need for government actions to 
foster such understanding. Are there other nations who have model 
efforts in this regard? What can the United States learn from public 
education in other countries?
    Answer. One major point should be made at the outset: No other 
country has the scope or the market to serve as a template for a 
program on the scale of U.S. needs.
    That being said, Iceland, a country about the size of Kentucky, 
with a population of nearly 300,000, is highly dependent on imported 
sources of energy. As such, the government of Iceland has taken the 
step of establishing a multi-stakeholder (industry, government, NGO, 
etc.) initiative group to develop hydrogen strategies for enhancing 
public awareness in Europe as part of the European Hydrogen and Fuel 
Cell Technology Platform (HFP).
     Responses of Jeremy Bentham to Questions From Senator Bunning
    Question 1. The biggest hurdle to full implementation of fuel cell 
vehicles has often been cited as the creation of the refueling 
infrastructure. Estimates peg the cost of such infrastructure at $10 to 
$15 billion. Where do you envision the funding coming from? What do you 
think should be the role of the federal government?
    Answer. As noted in the testimony, we don't believe the 
infrastructure is the biggest hurdle. We believe that hurdle will be 
the widespread availability of mass-produced, customer-pleasing 
hydrogen vehicles. Focusing on the isolated question of fuel supply 
infrastructure, however, we believe that fuel supply can be achieved on 
a fully commercial basis once there is sufficient demand to ensure that 
facilities are reasonably utilized.
    For a limited period, therefore, some publicly funded, market-based 
initiatives will be necessary to support first-phase investment from 
industry. Federal and state policies will need to recognize this. 
Overall, and in the long term, the bulk of the investment will come 
from business.
    Question 2. What specific programs and agencies, other than the 
Department of Energy and the Department of Defense would you like to 
see included in developing the federal government's hydrogen policies?
    Answer. The Department of Agriculture could be a leader in 
sponsoring programs exploring the adaptation of fuel cell and hydrogen 
technology by Agribusiness. The government also sets standards for 
storage and transportation and the relevant departments should be 
involved in maximizing public safety. Agencies such as NASA have a 
great deal of hydrogen experience. All of these have practical and 
regulatory experience with hydrogen questions. All that will be 
involved eventually should be involved now.
    Question 3. The price of hydrogen is also a potential hurdle to 
widespread implementation. Given the efficiency advantage, what price 
range do you believe hydrogen needs to reach to be competitive? What 
policies would you recommend to reach that goal?
    Answer. Customers will make decisions on vehicles taking into 
account many factors including vehicle prices, fuel prices, and safety, 
among others. We believe the development of the FC vehicle industry 
will be best stimulated by having the fuel price per mile-driven, 
comparable to that the familiar gasoline fuel.
    Where there are many complex questions of technology and motorist 
acceptance to be answered, it is our aim--and expectation--to be able 
to develop a cost position comparable to gasoline. Fuel taxation policy 
both for hydrogen and traditional fuels will play a role in shaping the 
price range that customers will accept.
    When the discussion widens beyond customer acceptance, there are 
some facts to consider. While 50 million tons of hydrogen are produced 
around the world each year, for industrial use, hydrogen is not yet a 
commodity in the sense natural gas or coal is. Its production and use 
are restricted to isolated regional industrial complexes with minimal 
national or international trade.
    Apart from limited demonstration fleets, it is not yet used as a 
fuel for vehicles, so no retail ``market price'' for hydrogen fuel 
exists. Once hydrogen becomes a large-scale commodity, that will 
change. We expect it will then move to direct comparability with 
gasoline. As such, it would be economically competitive.
    The chief variable, apart from taxes, would be the manufacturing 
source. If hydrogen largely comes from conventional, low-cost, natural 
gas reforming, costs may remain fairly stable. We believe, with the 
gradual introduction of renewable/sustainable hydrogen increasingly 
added to the mix of sources, costs could still be relatively stable 
thanks to R&D, growing economies of scale, and expanding commercial 
application.
    Question 4. How do you see hydrogen technology affecting job 
growth? What are your projected estimates for job growth related to 
transitioning to this energy source?
    Answer. The degree of job creation will be largely a factor of 
which country develops the definitive technological next-step first. 
Shell has a high degree of confidence that hydrogen and fuel cell 
technology could come in any of a number of forms and will come in at 
least one. The main question of both job-and wealth-contribution is 
whether the fuel cells and FCVs come from the U.S. or to the U.S.
    If the advances come from the U.S., hydrogen and fuel cells will 
represent major technological opportunities leading to the creation of 
significant new jobs in many companies in many industries.
    Particularly significant job growth may occur as revolutionary fuel 
cell engines and electric drive systems replace steel engines, 
transmissions and mechanical drive components.
    A hydrogen economy will not happen overnight. It will be phased in 
as other systems phase out. Both the phase-in and the phase-out will be 
providing some level of new jobs. For example, new vehicle fuels will 
require new stations and means of transmission of bulk quantities of 
fuel for storage and resale. Naturally, new R&D will be required to 
support jobs and maximize the opportunities presented by the new energy 
source.
    These and other possibilities can develop in the U.S. if the right 
environment is fostered. But it should be noted that the U.S. is no 
longer the only country with an R&D infrastructure able to develop the 
next generation of products, or a manufacturing system able to support 
this scope of change, or a steady mass demand for the new products that 
will be created. In today's global market, other countries that unite 
cheap labor, multiple gas and coal hydrogen sources, and aggressive 
technical development pose a threat to our economic leadership that 
really didn't exist in recent decades.
    Question 5. Do you envision a hydrogen-refueling infrastructure 
based on hydrogen pipelines or based on on-site hydrogen production?
    Answer. We believe the appropriate refueling infrastructure will be 
driven the local market circumstances such as the density of local 
demand, the degree of urbanization, the availability of land, etc. It 
will also be influenced by the most economical locally available 
primary source of hydrogen manufacture, (e.g., coal, natural gas, 
etc.), and the degree to which CO2 needs to be captured and 
sequestered.
    Finally, it will be influenced by the need to support the 
development of a hydrogen pipeline transportation and storage network 
if that is competitive with local availability of hydrogen fuels from 
local sources.
    The optimal infrastructure will be a mix of different approaches 
driven by these various local market conditions.
    Question 6. Do you see hydrogen technology taking off in certain 
geographic areas of the country at a faster rate? How do we ensure that 
fuel cell technologies penetrate rural areas of the country?
    Answer. We anticipate that the earliest markets for fuel cell 
vehicles and hydrogen will be California and the Northeast U.S. due to 
the high population and vehicle density, high concentration of early 
adopters, and receptive state governments. Shell Hydrogen demonstration 
projects--already underway--and our planned Lighthouse Projects are 
focused on these two early markets.
    Given the need of vehicle providers to build up a service network, 
and given the economic importance of facility utilization to fuel 
providers, it is important to encourage concentrated activity in major 
urban centers during the first phase of the industry development.
    Rural customers, may well, however, choose fuel cell technology for 
distributed electricity generation from a very early point.
    With respect to the hydrogen fuel penetration of rural areas, it is 
worth noting that 100 years ago, the auto fuel industry was starting 
from an effective baseline of zero. Yet within 20 years, there was 
scarcely a small town in rural America without the 
representation of at least two to four brands of gasoline. It seems 
safe to say, the penetration of new fuels today will proceed at least 
as fast as the penetration of gasoline did in the conditions of the 
early 1900s.
                                 ______
                                 
                      Responses of Dennis Campbell
    Question 1. In the FreedomCAR partnership, clearly both fuel cell 
manufacturers and automobile manufacturers must work closely together. 
Is that partnership structured in a way that representatives of both of 
these industries can be at the table together, and collaborate 
effectively? What are the strengths and weaknesses of the current 
partnership structure?
    Answer. The FreedomCAR partnership continues to play a central role 
in the commercialization of fuel cell and hydrogen technology for the 
transportation sector. The partnership's effectiveness resides in its 
model of public-private collaboration, which enables members of 
industry, DOE, and the national labs to work together toward the shared 
vision of the hydrogen economy.
    The membership of the partnership--Ford, DaimlerChrysler, GM 
Corporation, BP America, ChevronTexaco Corporation, ConocoPhillips, 
ExxonMobil Corporation, and Shell Hydrogen--effectively captures the 
major automotive and energy supply companies involved in the transition 
to the hydrogen economy in the United States. It does not, however, 
provide for representation for automotive fuel cell manufacturers.
    Reflecting the highly interdependent relationship between the fuel 
cell, the corresponding system that enables it to power a vehicle, and 
the vehicle design itself, the FreedomCAR partnership could be 
strengthened by including relevant automotive fuel cell manufacturers 
in a formal advisory role capacity. This addition will allow DOE to 
more accurately identify, enable, and monitor progress toward key 
technical targets for the automotive fuel cell.
    Question 2. In the last six years, fuel cell power has increased by 
a factor of seven. Do you believe we can continue to make such rapid 
strides in size and efficiency, or are there limiting physical or 
technological parameters on the horizon?
    Answer. Earlier this year, Ballard released a roadmap that provides 
milestones by which we will measure progress toward the goal of 
developing commercially viable fuel cell technology by 2010. Power 
density is one of the four areas of measurement, and we are on track to 
meet our target for 2010 of 2500 watts/liter for the fuel cell stack.
    As our roadmap indicates, we do not expect power density for the 
automotive fuel cell stack to increase at a rate equal to that 
previously achieved. Importantly, however, similar gains in power 
density are not required to support the development of a commercially 
viable automotive fuel cell stack.
    Lastly, the efficiency ratio of the fuel cell to internal 
combustion engine is approximately 2.4 and is not expected to increase 
dramatically.
    Question 3. What specific programs and agencies, other than the 
Department of Energy and Department of Defense, would you like to see 
included in developing the government's hydrogen policies?
    Answer. The fuel cell provisions in Title XII (Vehicles and Fuels) 
and Title XIII (Hydrogen) of the National Energy Policy Act of 2005 can 
make an important contribution to the current public-private sector 
effort to accelerate the hydrogen economy. These programs should be 
fully funded and implemented.
    Federal and State Procurement of Fuel Cell Vehicles and Hydrogen 
Energy Systems (Title XII, Sec. 782) should be elevated, and its 
funding levels significantly increased, so that it represents the third 
major component (following R&D and Demonstrations) of the national 
strategy for the hydrogen economy.
    Broadcast early enough and with sufficiently clear guidelines, a 
clear commitment by the Congress to make a specific and sizable annual 
outlay for the fiscal years 2010 to 2015 on federal and state agency 
procurement of fuel cell vehicles and supporting hydrogen 
infrastructure would: (a) support early volume production by automotive 
OEMs and suppliers that is necessary to drive cost down; (b) support 
the build out of hydrogen fueling stations; (c) draw additional private 
capital into the sector, and (d) provide the American public with a 
large scale introduction to the hydrogen economy.
    Question 4. The price of hydrogen is a potential hurdle to 
widespread implementation. Given the efficiency advantage, what price 
range do you believe hydrogen needs to reach to be competitive? What 
policies would you propose to reach that goal?
    Answer. A recent Stanford University study, the results of which 
were published in the June 24, 2005 Science journal, is instructive in 
this area. Reflecting the health and climate benefits of hydrogen 
generated from wind, the study focused on this renewable energy 
feedstock. It estimated that the unsubsidized near-term mean cost (<10 
years) of supplying wind-generated hydrogen to the end-user is $3 to 
$7.4 per kg or $1.12 to $3.20 per gasoline gallon equivalent. This 
places the mean cost of wind-generated hydrogen at a competitive $2.16 
per gasoline gallon equivalent.
    The study found that this already competitive position improves 
when the societal costs of gasoline--including reduced health, lost 
productivity, hospitalization, death, and the remediation of polluted 
sites--are considered. These externalities add $0.29 to $1.80 to the 
cost of a gallon of gasoline.
    The government role in facilitating the supply of cost-competitive 
hydrogen fuel includes a robust national procurement program (as 
outlined above) that will serve to kick-start the build out of fueling 
infrastructure; continued support for R&D programs that increase 
efficiencies in hydrogen production and delivery; and meaningful tax 
policies that encourage private sector investment in hydrogen 
production, distribution, and delivery infrastructure.
    Question 5. How do you see hydrogen technology affecting job 
growth? What are your projected estimates for job growth related to 
transitioning to this energy source?
    A mature hydrogen economy will have profound economic growth 
implications for the United States. This job growth will occur as 
wealth that is now transferred overseas for foreign oil is instead 
invested domestically in a diverse set of energy feedstocks (including 
clean coal, nuclear, and renewables) that produce hydrogen to fuel our 
transportation sector.
    To date, there has not been a comprehensive analysis of the 
economic benefits of a hydrogen economy. As such, reliable job growth 
figures are not yet available.
    Question 6a. Do you see hydrogen technology taking off in certain 
geographic areas of the country at a faster rate?
    Factors such as an early commitment to a hydrogen infrastructure 
and state regulatory policies are likely to determine which areas of 
the country lead the transition to the hydrogen economy. California, 
with its hydrogen highway plan and ``Zero Emission Vehicles'' (ZEV) 
policies, is an example of one state that is helping to pioneer the 
commercialization of hydrogen and fuel cell technology. Massachusetts, 
Rhode Island, Maine, Vermont, Connecticut, New York, and New Jersey 
have also adopted ZEV regulations while Oregon, Washington, North 
Carolina, and Maryland are at various stages of opting into a ZEV 
regulatory regime.
    Question 6b. How do you ensure that fuel cell technologies 
penetrate rural areas of the country?
    The level of hydrogen fueling infrastructure will be an important 
determining factor in the rate of penetration for fuel cell vehicles in 
a given community. Accordingly, rural communities should actively 
support and use federal and state programs that promote the development 
of hydrogen fueling infrastructure, including demonstration and 
procurement initiatives and tax policies.

                                    

      
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