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Prepared by the
Institute for the Analysis of Global Security

March 28, 2005
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Energy Security Current Issue

What the 9/11 Commission missed
One of the main conclusions of the 9/11 Commission is that in order for the U.S. to prevail in the war on terror it must develop a multidisciplinary, comprehensive, and balanced strategy, which integrates diplomacy, intelligence, covert action, law-enforcement, economic policy, foreign aid, homeland defense, and military strength. IAGS' Gal Luft argues that a key component is missing.

The Connection: Water and Energy Security
Allan Hoffman, former associate and acting deputy assistant secretary for Utility Technologies in the Office of Energy Efficiency and Renewable Energy of the DOE and IAGS Advisor, explains why water and energy security are inextricably linked.


Saudi Arabia in Crisis
IAGS' Anne Korin presented a strategy for reducing U.S. dependence on Saudi oil as part of a conference hosted by the Hudson Institute on July 9, 2004. Watch the event (Anne's presentation starts at 02:38:35.)

On the technology front How utilities can save America from its oil addiction
Utility companies which have traditionally viewed themselves as providers of "power" for lighting homes or powering computers, can now break the dominance of Big Oil in the transportation energy sector and introduce much needed competition in the transportation fuel market. Gal Luft explains how.

Comparing Hydrogen and Electricity for Transmission, Storage and Transportation

Study: Coal based methanol is cheapest fuel for fuel cells
A recently completed study by University of Florida researchers for the Georgetown University fuel cell program assessed the the future overall costs of various fuel options for fuel cell vehicles. The primary fuel options analyzed by the study were hydrogen from natural gas, hydrogen from coal, and methanol from coal. The study concluded that methanol from coal was the cheapest option, by a factor of almost 50%.

Major improvement in fuel economy and range of Honda's fuel cell vehicles
The 2005 model Honda fuel cell vehicle achieves a nearly 20 percent improvement in its EPA fuel economy rating and a 33 percent gain in peak power (107 hp vs. 80 hp) compared to the 2004 model, and feature a number of important technological achievements on the road to commercialization of fuel cell vehicles.

Biodiesel fueled ships to cruise in Canada
A Canadian project will test the use of pure biodiesel (B100) as a fuel supply on a fleet of 12 boats of various types and sizes, 11 boats on pure biodiesel (B100) and one on a 5-percent blend (B5).

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Back Issues

Hydrogen or electricity? A nuclear fork in the road

Many groups have joined the hydrogen discussion, each bringing a different set of assumptions and a different definition of what "the hydrogen economy" means to them. Hydrogen and "the hydrogen economy" are of particular interest to the US nuclear energy community because of their potential to steer next generation reactor design decisions to meet a presumed niche opportunity for hydrogen production via high-temperature thermo-chemical processes or high-temperature electrolysis. We should, therefore, seriously consider the future hydrogen market and understand the source for the momentum to develop "the hydrogen economy."

It is useful to review nuclear energy’s strengths and define what "the hydrogen economy" means to the nuclear energy community to set the stage for cataloging which sub-topics ought to be discussed. Nuclear energy is mankind’s only non-greenhouse-gas(GHG)-emitting, ‘round-the-clock, regardless-of-the-weather, stationary energy source. Nuclear energy is particularly adept at making electricity.

"The Hydrogen Economy" is understood to imply a reconfiguration of the US transportation system into one based on hydrogen as the fuel in replacement of the transportation sector's present energy source, petroleum. The hydrogen fuel, it is further understood, will be the energy carrier by which stationary-source energy is carried to the transportation sector. Since transportation accounts for a full third of US’ annual energy consumption, and about two thirds of US petroleum consumption, it is only reasonable that all stationary energy source communities should want to realistically survey the issues that will effect the possibility and timing of an opportunity to broadly extend their stationary-source energy to the transportation sector.

Currently, hydrogen is used by many industries ranging from fertilizer to metallurgy. Hydrogen’s largest use, however, is in the refinement of crude oils into the gasoline that fuels our present system of mobile transportation. Hydrogen is both incorporated into the gasoline product through the hydro-cracking of long-chained molecules and applied to the removal of impurities as hydrides. Capturing the present hydrogen market is certainly not a significant opportunity. In fact, as long as transportation continues to be petroleum based, there is no big hydrogen opportunity worthy of a dedicated plant level of focus.

Nearly all hydrogen in use today is, itself, being "produced" by stripping hydrogen from natural gas through steam reformation of methane. There is no technical advantage to reforming methane in preference to electrolysis of water, there is only a price advantage of about a factor of two. Today, natural gas is trading with a floor price of about 5 USDollars/MBtu. That price will need to rise permanently above 9 USD/MBtu before methane reformation will quantitatively yield the hydrogen supply market to electrolysis using electricity costing 4 ¢/kWh (all figures based on 2004 valuations). Less-expensive off-peak electricity may find limited opportunity in hydrogen production if the price of natural gas approaches the break point. The natural gas industry, itself, does not think the recent runup in natural gas prices represents a continuing trend or that 9 USD/MBtu (2004) will be approached through its present planning period of two decades1.

Hydrogen Facts & Economics

Hydrogen’s one attribute is that it produces only water at the endpoint of use. This gives the impression that it is a "clean," environment-friendly fuel. As it is an energy carrier, hydrogen can be produced by electrolyzing water with any domestic electricity source or it can be stripped from any fossil fuel. Anything that has hydrogen can be stripped of its hydrogen. This has the appearance of promoting national security through domestic source versatility. The truth, however, about whether hydrogen best serves our national security and energy security goals depends upon how its burden of application weighs on the national economy in comparison to other options. Similarly, the truth about its supposed cleanliness depends upon its production heritage. A hydrogen auto using hydrogen derived from coal-fired electricity is actually several times more polluting than a gasoline-powered auto.

Among hydrogen’s deficits are that it is a low-energy-density gas (at standard conditions) with significant handling and containment problems. It is the smallest and leakiest of gas molecules (i.e., four times smaller and leakier than methane). It embrittles both metals and plastics. Its low normal energy density requires that it be compressed or liquefied to force it into a state of having a reasonable effective energy density for a fuel. The act of compressing or liquefying it consumes ten to thirty percent of its energy value. Simply transporting the compressed or liquefied hydrogen from points of production to fueling stations is estimated to cost fifteen times more than room-temperature liquid distribution simply due to physical volume issues associated with reinforced, high-pressure-gas tanks or insulated, liquefied-gas tanks.

The American Physical Society’s March 2004 assessment of the present state of hydrogen vehicle technology is that a factor of ten to one hundred improvement in cost and performance is needed in order for hydrogen vehicles to become competitive2. The hydrogen community’s reply to that challenge includes an assumed reconfiguration of automobile manufacturing to lighter, carbon fiber-reinforced, thermoplastic vehicles, assumed improvements in fuel cell efficiencies, assumed resolution of storage and materials issues, general denial of the magnitude of capital infrastructure costs and heavy emphasis of the endpoint energy use efficiency of electric drive systems relative to internal combustion engines (ICEs). Much of the competitiveness gap lies with the core hydrogen technologies, the storage system and the fuel cells. At present, these account for a quarter of a million dollar competitiveness gap for an average family sedan or minivan. Of course, every manner of efficiency gain proposed by the hydrogen community can and will first be applied to petroleum vehicles thus eliminating non-hydrogen-based factors as tools to help close the gap. And, in the final analysis, even if all hydrogen materials issues are resolved, there still remains one critical, unsolvable barrier between hydrogen and economic viability for the masses.

Any serious attempt at a hydrogen economy would promptly overwhelm methane resources and necessarily have to be supplied with electricity-derived hydrogen. And, of course, hydrogen use ends with electricity coming out of a fuel cell. So, hydrogen use is really a loop that starts and ends with electricity. Unfortunately, the efficiency of that electricity to hydrogen to electricity loop is only twenty-five percent3. Four power plants making electricity with only one plant’s electricity actually being used is unacceptable in any situation, particularly so at a time of global energy-related challenges. This problem is essentially unsolvable because it is rooted in the thermodynamics of irreversible losses. If hydrogen were extremely convenient or otherwise cost-effective or particularly safe, we might overlook its inefficiency. But hydrogen has none of those attributes either. Inefficiency — particularly hydrogen’s inefficiency relative to the direct use of electricity — is pure hydrogen’s critical, fundamental, unsolvable drawback.

One Alternative to Pure Hydrogen Fuel: Methanol

One candidate for a post-petroleum fuel is the alcohol methanol. Methanol is a room-temperature liquid that can be produced from any number of carbon sources in a long-term (i.e., post-natural gas) scheme ranging from the most-expensive route using carbon dioxide that is harvested from the atmosphere (for a net zero greenhouse gas emission loop) to using coal in a modified coal syngas plant. Both of these production schemes could utilize nuclear/renewable hydrogen. Coal-based methanol production utilizing nuclear hydrogen to supplement the hydrogen found in coal itself could easily supply our transportation fuel for centuries. Methanol is a very reasonable and versatile fuel with many advantages over pure hydrogen. As a room-temperature liquid, methanol would be handled and distributed with exactly the same type of infrastructure by which liquid gasoline is distributed today. Thus, it has none of the handling or materials complications that come with a pure hydrogen fuel. Think of methanol as still using hydrogen as the energy carrier, but also choosing to carry the energy carrier on a carbon atom for all the handling and materials benefits that come with a room-temperature liquid.

Methanol can power flexible fuel vehicles, cars that can run on blends of gasoline and alcohol fuels. Indy-500 race cars burn pure methanol (called M100 in the racing community) for its safety advantages as a fuel with a lower burn temperature. Methanol can also be converted directly to electricity in direct methanol fuel cells (DMFCs). In fact, DMFCs with small methanol tanks are already on the market, sold as "disposable batteries" for small electronic applications.

Methanol’s largest use today, however and very importantly, is by the petrochemical industry to make countless industrial and consumer products such as synthetic textiles, recyclable plastics, household paints and adhesives. The facts that methanol is a good fuel, that it has the convenience of being a room-temperature liquid, that it can be manufactured domestically by a variety of methods and that it also is an important primary feed material for the petrochemical industry make methanol a more useful post-petroleum commodity than pure hydrogen.

Essentially all methanol production today is, like hydrogen, from natural gas. The common heritage of hydrogen and methanol from natural gas implies that the methanol and petrochemical industries will also be affected by an eventual rise in natural gas prices. Thus, hydrogen and methanol markets should be considered simultaneously. Decades in the future, a combination of events including rising methane and petroleum prices, pressure on coal and the dual uses of methanol as fuel and plastics synthesis feed may have proceeded such that nuclear energy might find justification in considering the application of very high-temperature reactor technology to methanol production on a dedicated plant scale.

Will the Real Energy Carrier Please Stand Up?

There is only one transportation alternative relevant to this discussion that is less expensive than petroleum. Most people don’t realize it, but electric transportation is already, today, less expensive per mile driven than gasoline-based transportation. While hydrogen needs a few miracles and several decades - as well as severe petroleum price escalation - to hope to approach some manner of competitiveness relative to petroleum, electricity is already cheaper. Improvements in battery energy densities have essentially solved the perceived range problem. One quarter ton mass of today’s battery technology gives an average metal-chassis car about one hundred miles of range and allows one to run errands around town for about half the cost of powering the same vehicle with gasoline4.

A large fraction of our routine personal transportation can be comfortably met with today’s electricity storage and drive technology. This doesn’t mean every car will or must or should become all-electric. Nonetheless, a large fraction of the US transportation market can, today, be transferred from petroleum to electricity.

We are already seeing a rapid embrace of hybridization by automakers and consumers. We will soon start to see the gasoline versus electric ratio shifting in favor of electricity in some models. Adding battery capacity and plug-in capability for overnight charging are simple modifications to an already-hybridized vehicle. In fact, hybrid owners are already making these modifications themselves and manufacturers have indicated that Plug-in Hybrid Electric Vehicles (PHEVs) may be manufactured as soon as the 2007 model year. Some models of hybrids will evolve from being gasoline-based with electric assistance into being electricity-based with relatively minor gasoline backup. Why will this happen? Because electricity is cheaper.

Electricity is very unlikely to relinquish transportation market share once it has gained it. Electricity is clean, efficient, safe, familiar and cost-effective. An EPRI study found that the majority of people surveyed preferred plugging in a vehicle to fueling at the gas station 5. Finally, overnight charging perfectly fits our present grid functioning which tends to be electricity rich during night-time, off-peak hours.

Rather than speculating on a revolution in transportation based on a thermodynamically inefficient fuel and an altogether new infrastructure, perhaps the US nuclear energy community should notice that the transportation evolution - based on a familiar energy carrier and existing technology - has already begun.

The Hydrogen Economy: Roots in Renewable Energy

The strength of the relationship between "the hydrogen economy" and renewables can not possibly be overstated. The wind doesn’t always blow and sunlight isn’t always striking every solar panel. Renewable energy desperately needs a very big battery, a load leveler. Without some form of energy storage, renewables - which not counting hydroelectric power account for about 2% of US power generation today - are physically limited to less than a twenty percent share of the grid. At twenty percent, renewables are more of a headache than a resource for a grid manager. Electricity storage tools are expensive. Very expensive. Too expensive to justify on their own or at societal scale. But, maybe one can assemble enough little problems, like load leveling and urban air pollution and energy security, into something that looks like one big problem worthy of one big predetermined solution...

You don’t have to dig too deeply into the hydrogen literature before you encounter discussions of "hydricity." Imagine all energy in a society as a flowing energy commodity that is readily and repeatedly being converted between two carriers, electricity and hydrogen, as needed, in real time, to meet all the energy needs of society - energize the grid, provide all mobile transportation fuel, provide energy storage and load leveling. Clean and instantaneous. The renewable vision is that hydrogen will be the renewable society’s electricity storage tool, load leveler and transportation fuel. In such a vision, we would no longer think of electricity or hydrogen or conversion efficiencies. All energy just becomes hydricity. The collective capacity of every car’s hydrogen tank is society’s energy storage reservoir. Parked cars are not just connected to the grid, they become part of the grid. The lean grid is automatically supported from the huge resource of all parked cars’ fuel cells tapping hydrogen from their tanks. And vice versa, replenishing all cars’ hydrogen tanks when the grid is rich. Never mind that an electricity to hydrogen to electricity loop delivers only one fourth of the original usable electricity. Apparently conversion efficiencies don’t matter. Renewables are, after all, renewable.

For those who have been wondering why this initiative is being called the hydrogen "economy" rather than the hydrogen "transportation system," here is your answer. For those who have been wondering why there is a focus on developing energy independence through hydrogen transportation when electricity is obviously already much more capable, efficient and cost effective, here is your answer. "The hydrogen economy" is, at its core, an attempt to integrate renewable energy’s desperately needed load leveler into general commerce.

My sincere advice to fellow greens of the renewable energy community is as follows: recognize that the twenty five percent loop efficiency problem with hydrogen is essentially unsolvable because it is rooted in thermodynamics - hydrogen will never be an acceptable load leveler; instead work to minimize the weather-dependent grid limitation problem of renewables by focusing on improvement of the North American grid infrastructure and encouraging utilization of more-efficient (i.e., on the order of 80% returned electricity) electricity storage tools like vanadium redox flow batteries (VRB).

Electricity Will Always Be Nuclear Energy’s Primary Mission

It is usually difficult to predict the future. In this case, however, the economic realities are overwhelming and the hybrid evolution has already begun. Electricity is the energy carrier that will be carrying stationary-source energy to the transportation sector in the 21st Century. Affordable Plug-in Hybrid Electric Vehicles will begin appearing on dealers’ lots in the next few years. Grid-distributed electricity will gain significant US transportation market share because it is a less expensive form of personal transportation. Being clean, efficient, convenient and wholly supportive of our national security and energy security goals will further solidify its hold. Nuclear energy’s opportunity regarding transportation is in providing low-cost, non-GHG electricity. Therefore, the US nuclear energy community should concentrate on our fundamental issues - passive safety, proliferation resistance and closing the fuel cycle - to ensure that nuclear energy continues to be available, viable and sustainable as the lowest-cost source of grid electricity. Commit this to memory: Electricity will always be nuclear energy’s primary national mission.

David Barber has degrees in Physics, Radioecology and Chemical Engineering. He has been active in nuclear systems research, development and demonstration for fifteen years. This article was derived from a position paper entitled Nuclear Energy and the Future, the Hydrogen Economy or the Electricity Economy? The author can be reached at dbinid@msn.com for discussion or to request a copy of the original position paper.

1Balancing Natural Gas Policy — Fueling the Demands of a Growing Economy, National Petroleum Council, September 25, 2003.

2The Hydrogen Initiative, American Physical Society, March 2004.

3See, for example, Bossel’s thermodynamics analyses or the CATO Institute’s Briefing Paper No. 90, Hydrogen’s Empty Environmental Promise, by Anthrop.

4 Advanced Batteries for Electric Drive Vehicles, EPRI 1009299, May 2004 (March 2003 report available for download here.)

5 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options for Compact Sedans and Sport Utility Vehicles, EPRI 1006892, July 2002.