Public policy concepts and applications

Public Policy

The Bush administration believes that hydrogen cars hold to key to reducing pollution, decreasing dependence of foreign oil, making energy more affordable and overcoming resource shortages (Onion, 2004). In Bush's 2003 State of the Union address, he revealed his goal of having significant numbers of hydrogen cars on the road by 2020, pledging $1.2 billion in federal funding to achieve his objective. In 2004, the energy department included $318 million for fuel cells and hydrogen production in its 2005 budget. However, abundant evidence suggests that hybrids, not fuel cells should be the focus of public policy for the immediate future. This research discusses why public policy needs to embrace a short-term strategy involving hybrids and hydrogen research and development with a longer-term focus on selecting proven technologies.

The illusory lure of hydrogen cars is the fact that they will eliminate carbon dioxide (CO2) emissions from cars when driven. Unlike gasoline-driven combustion engines, the hydrogen fuel cell generates power not by burning, but through a chemical reaction in which hydrogen and oxygen are converted into energy with water as the only by product (Onion, 2004). But, these gains in pollution elimination tell only part of the overall picture. This is because hydrogen manufacture and distribution creates CO2, introducing potential for pollution problems greater than those posed by current gasoline-driven cars (Korchinski, 2004). According to Korchinski, the largest emissions source is in the hydrogen generation plant -- via the furnace stack and the CO2 vent. The next largest contributor results from the natural-gas-fired power generation required for electricity, much of which is used to compress the hydrogen for transportation. With these factors in mind, simulations ran by Korchinski reveal that the effect of converting vehicles to run on hydrogen would be marginal. In fact, Korchinski shows that if hydrogen cars are made to have the same performance characteristics as gasoline-powered ones, the use of hydrogen may actually increase atmospheric emissions of CO2.

Alex Farrell, assistant professor of energy and resources at UC Berkeley, and David Keith, associate professor of engineering and public policy at Carnegie Mellon University question whether hydrogen cars are economically feasible (Keith and Farrell, 2003). They point out that:

the refueling infrastructure would cost approximately $5,000 per vehicle hydrogen cars will be more expensive than current cars hydrogen is very expensive to transport, store and deliver.

There are currently only about sixty hydrogen refueling station demonstrations worldwide for experimental vehicles (Ogden, 2004), illustrating the enormous infrastructure task at hand. Provided that mass production of a hundred thousand vehicles becomes achievable, hydrogen technology would still add thousands of dollars to the base price of a car (Llanos, 2004). For hydrogen vehicles to compete in automotive markets they will have to offer the customer comparable or better performance at a similar cost to competing vehicles (Ogden, 2004). Incentives would be needed to make up differences in costs, until mass production brought hydrogen vehicles to a competitive level.

Presently, transcontinental hydrogen pipelines are too expensive to be a realistic transportation option (Ogden, 2004). Instead, hydrogen plants will need to be located near a city. The cost of building local distribution pipelines through an urban area will cost about $1 million/mile. Therefore, a large and geographically dense demand, ten to twenty-five percent of the cars in a large urban areas using hydrogen, would be required for cost-effective local hydrogen pipelines. Further, Hydrogen onboard storage systems now under development for vehicles are bulkier, heavier and costlier than those for liquid fuels such as gasoline. Today, none of the hydrogen storage options simultaneously satisfy the manufacturers' goals for compactness, weight, cost, vehicle range and ease of refueling.

Finally, even if the most optimistic outcomes for hydrogen car and hydrogen infrastructure development come true, hydrogen cars won't make a major difference in environmental and supply challenges for some time to come. "Given the time needed to bring hydrogen technologies to commercialization and the long time constants inherent in changing the energy system, most analysts do not see a major role for hydrogen in reducing emissions or oil use on a global scale for several decades." (Ogden, 2004). In the interim, the United States is left with no effective public policy response to the problems presented by our present gasoline-driven automobiles, given its de-emphasis on current options such as hybrid cars.

A hybrid car is a cross between a gasoline-powered car and an electric car. According to Joseph Romm, chief official for alternative fuels for the Department of Energy under President Clinton, hybrid cars can reduce emissions by thirty to fifty percent (Onion, 2004). And, the technology is viable today. Already, approximately 47,500 hybrid vehicles were sold in the United States at a price of only a few thousand dollars more than gasoline-powered cars. Certainly, with mass production the prices of hybrid cars could be even lower. Even with aggressive efforts, a MIT study concludes, the hydrogen vehicle will not surpass the hybrid in terms of total energy use and greenhouse gas emissions by 2020 (Driving it home: Hybrid cars overtake fuel cells in short-term comparison, 2003).

Despite the immediate availability and benefits of hybrid technology, the United States government is reducing tax breaks for their purchase (Block, 2004). A buyer of a hybrid car received a $2,000 deduction in 2003 and $1,500 in 2004. In 2004, the deduction will drop to $1,000 and then to $500 in 2006. After 2006, the tax break is slated to disappear all together unless new legislation is introduced.