Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 03:00 PM

Mr. Douglas Faulkner

Acting Assistant Secretary , Department of Energy

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Statement of Douglas L. Faulkner

Acting Assistant Secretary for Energy Efficiency and Renewable Energy

Before the

Subcommittee on Energy

Committee on Energy and Natural Resources

United States Senate

July 27, 2005

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

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those imports are projected to increase to more than 68 percent by 2025 with business-asusual.

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- towheels

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:

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· 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 revo lutionary 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 inc lude 20 universities, 9 federal

laboratories and eight industry partners, representing a concerted, multidisciplinary

effort to address on-board vehicular hydrogen storage.

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· 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 highvolume

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

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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. Lowerlevel,

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

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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

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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 performancebased

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:

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- 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.

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