February 19, 2003
Prepared by the Institute for the Analysis of Global Security
Auto Companies and Fuel Cells:
Fuel Cell Developers mentioned in this brief:
The week's news highlighted the risk of relying on hostile and/or unstable regimes for our energy :
Iraq Will Set Oilfields Ablaze If Attacked - Iraq is reinforcing defenses around its northern oilfields and troops have been ordered to set the wells ablaze if there is an invasion, according to tanker drivers just back from the region. The British SAS has been given the task of preventing the sabotage of the wells if war starts. Retreating Iraqi troops torched 600 Kuwaiti oil wells during the last Gulf War, setting fires that burned for 10 months and destroyed six million barrels of oil a day.
While some optimists may imagine a postwar Iraq would render OPEC irrelevant and slash oil prices radically, Max Boot of the Council of Foreign Relations notes: "This seems unlikely, if the experience of Kuwait is anything to go by. While oil prices spiked before the Persian Gulf war and plummeted afterward, the long-term impact has been close to nil. Kuwait hasn't exactly been offering to fill up American sport utility vehicles free out of gratitude for being liberated. It hasn't even carried out its pledge to allow direct foreign investment in state-owned oil fields." Beyond that, the Iraqi oil industry is in bad repair. A study by the Council on Foreign Relations and the James A. Baker III Institute at Rice University estimated that just to restore Iraqi production to its pre-1990 level of 3.5 million barrels a day would require three years and $5 billion, in addition to an estimated $3 billion in annual operating expenses. That would increase total world production by only 1.3 percent, and might not reduce prices at all if other countries cut output or banded together to keep prices stable. Increasing Iraq's production further, while geologically possible, would require more time and tens of billions of dollars in investment.
Nigerian Oil Workers' Strike Could Halt Exports - Nigerian oil workers announced on Saturday that they would carry out an indefinite strike that could shut down crude exports from the country. The strike comes as the threat of war in Iraq and a prolonged strike in Venezuela have pushed oil prices to two-year highs. Nigeria is the fifth largest supplier of oil to the United States. Half of Nigerian exports go to the U.S.
The State of the Union address put energy security squarely on the national agenda:
President Bush asked Congress to allocate $1.2 billion "so that America can lead the world in developing clean, hydrogen-powered automobiles [.. and become] much less dependent on foreign sources of energy." The president returned to the subject again on Feb. 6 when he detailed his plan for a program that would create an infrastructure for hydrogen-based fuels. Bush called on lawmakers to support an initiative that would help fund innovation of fuel cell technology and ultimately "reduce our demand for oil by over 11 million barrels per day by the year 2040." In a speech at the National Building Museum the President said "We import over half of our crude oil stocks from abroad. And sometimes we import that oil from countries that don't particularly like us.. It jeopardizes our national security to be dependent on sources of energy from countries that don't care for America, what we stand for, what we love."
Senator Byron Dorgan (D- N.D.) proposed $6.5 billion of funding for next-generation energy, and called for "an Apollo-like plan that sets ambitious goals and timetables, and puts real resources behind the drive to make a real change in the energy economy. We need a plan that will achieve real results.”
BusinessWeek estimates that, at a cost of $120 billion to $200 billion over 10 years--less than the cost to the economy of a major prolonged oil price rise--it should be possible to raise energy efficiency in the economy by up to 50% and reduce U.S. oil consumption by more than 3 million bbl. a day.
Fuel cells run on hydrogen. One of the major concerns with shifting to hydrogen powered fuel cell vehicles is the cost of replacing the existing fuel transport and distribution infrastructure. Packaging hydrogen as methanol addresses this issue, as methanol is a liquid with physical characteristics similar to gasoline and enables use of existing infrastructure - retrofitting a fuel station to supply hydrogen packaged as methanol runs about $65k, significantly more economical than the $1.5 million pricetag for a fueling station that supplies hydrogen in its pure form. Using methanol as a hydrogen carrier fuel means the time to market for mass produced fuel cell vehicles can be numbered in years instead of decades. On February 6, President Bush got to experience using methanol as a hydrogen carrier, placing a call back to the White House using a phone powered by MTI MicroFuel Cells latest direct methanol fuel cell system prototype. The President viewed demonstrations by several fuel cell companies. IdaTech of Bend, Oregon demonstrated a portable, 1.2-kilowatt fuel cell system featuring a fuel processor that produces high-purity hydrogen from a mixture of methanol and water. IdaTech is already taking orders for its fuel processor, and for field trials of its fuel cell system, and MTI MicroFuel Cells plans to commercialize its direct methanol micro-fuel cells systems starting in 2004.To implement the President's vision the fuel cell industry is working hard to reduce costs. The primary driver of fuel cell cost is the cost of materials, specifically, the required amount of precious metals such as platinum. As a recent RAND study notes: “the projections that fuel-cell system costs can fall to $35 to $60 per kilowatt in volume production are well grounded. Costs might be even lower if the very low platinum designs currently being investigated pan out. However, it is too early to tell if this will be the case.” Assuming a mid-range price of $50/kw, a 50kw automotive power system would cost $2,500, comparable to the cost of an internal combustion engine.
In one recent development effort, scientists from Lawrence Berkeley National Laboratory replaced a fuel cell's usual ceramic electrodes with a sandwich of metal and ceramic. The alloy is stronger than ceramic and can be welded, and the cost of the raw materials is considerably lower. Previous work opened the door for the alloy by decreasing the fuel-cell reaction temperature from 1,000 to 800 degrees Celsius.
Since fuel-cell vehicles are powered by electric motors, rather than internal combustion engines, they open up a world of possibilities for vehicle body design. GM's Hy-Wire Fuel Cell Vehicle Revolutionizes Car Design. “The most dramatic view of this car may be from the driver’s seat,” says Ed Welburn, executive director of GM Design for Body-on-Frame Architectures. “Imagine having no engine, instrument panel or foot pedals in front of you – an open, yet secure cockpit with a floor to ceiling view. It’s like being in my living room looking out my picture window.” GM Hy-Wire's propulsion and control systems are contained within an 11-inch-thick skateboard-like chassis, maximizing the interior space for five occupants and their cargo. “The absence of a conventional engine means you don’t need a grille up front. So the question became what to do with the open front face where you’d typically put a grille,” said Alan Nicol, exterior designer for Hy-wire. “We decided to enclose it with glass, allowing the driver to have a view of the road ahead that was never possible before. You can see immediately that there is no engine at the front, the pedals and instrument panel are superfluous and the floor is flat from front to back.” GM engineers envision a future where customers could own one "skateboard" that would serve as the platform for a variety of vehicle bodies.Making fuel cell vehicles available at a mass scale requires an economically viable, safe, and plentiful supply of hydrogen containing fuel. The U.S. holds 25% of the world's coal supply (compared to barely 3% of the world's oil reserves,) and clean coal technologies enable coal to be converted into the hydrogen carrier fuel methanol at a cost of about 40 cents a gallon. The gasification process converts carbonaceous materials (such as coal) to syn-gas, which can be used to generate fuels, chemicals, and electricity. Syn-gas is converted into methanol by a simple chemical reaction, as has been done at a commercial scale since 1997 at Eastman Chemical Co.'s Integrated Coal Gasification Facility in Kingsport, TN. Eastman just signed an agreement with Texaco Development Corp., a wholly owned subsidiary of ChevronTexaco Corp., to provide operation, maintenance, management and technical services, as well as parts fabrication and sales for gasification plants of Texaco Development licensees.
Elsewhere on the energy frontier:
Nissan Motor Company and UTC Fuel Cells (UTCFC) signed an agreement to jointly develop proton exchange membrane (PEM) fuel cell technology. Nissan will obtain rights to UTCFC's technology, and the two companies will continue to jointly develop this technology for automotive applications. UTCFC will continue its separate development efforts with other auto companies. 'Our efforts with Nissan over the past two years have proven extremely successful,' said Jan van Dokkum, president of UTC Power, noting the December unveiling of Nissan's X-TRAIL fuel cell vehicle powered by a UTCFC fuel cell power plant. 'This agreement builds upon our prior efforts and continues our work in advancing this game-changing technology.'
Neah Power Systems Inc. unveils methanol fuel cell with porous silicon electrodes. A three-year old start-up, Neah claims its porous-silicon based methanol fuel cell can deliver higher energy density than conventional carbon-electrode methanol fuel cells, and two to three-times the energy density of a lithium ion battery. The company also announced it received backing from Intel Capital as part of initial fund-raising round of $7.5 million.
The California Fuel Cell Partnership (CaFCP) is seeking public or private-sector vehicle fleets interested in helping test and operate fuel cell electric vehicles and related infrastructure in real-world conditions. In addition to auto manufacturers, and fuel cell companies, the CaFCP includes energy providers (BP, ExxonMobil, Shell Hydrogen, and ChevronTexaco) and government agencies (California Air Resources Board, California Energy Commission, South Coast AQMD, US Department of Energy, US Department of Transportation and US EPA).
The Connecticut Clean Energy Fund (CCEF) received 60 proposals in response to its 2002 Fuel Cell Request for Proposal. A total of 41 companies and 13 fuel cell manufacturers are represented within the prospective proposals.
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