Why Obama May Give Hydrogen Fuel-Cell Cars Another Chance

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May 17 2012 12:28 PM

Giving Hydrogen Fuel-Cell Cars Another Chance

Obama slashed Bush-era funding for the clean-energy vehicle. Now he may reverse course.

A hydrogen fueling station and fuel cell vehicle.
Scott Tucker fills up a hydrogen fuel-cell vehicle at a Shell fueling station in Torrance, Calif.on July 8, 2011

Photograph by Tim Rue/Bloomberg via Getty Images.

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Three years ago, the Obama administration abandoned another of its predecessor's central tenets—that the future of vehicle propulsion was zero-emission hydrogen fuel cells. Energy Secretary Steven Chu, backed by Obama, instead launched an aggressive program to develop a new generation of high-performance batteries, the factories in which to manufacture them, and the vehicles they would power. Lithium-ion technology and electrified cars offered the best chance of achieving three key policy objectives, the administration asserted: get the country off of oil, reduce emissions of CO2, and invigorate a new age of American manufacturing.

But electric vehicles are off to a sluggish start in the United States and around the world. Battery costs seem likely to be high for the foreseeable future, and consumers are not buying electrified cars at the rates originally foreseen. Major oil companies are getting the impression that they can relax: The gasoline age will still be with us for at least another two decades, they believe, perhaps even longer.

No one can say whose bet will prove a winner—Obama's or the oil companies'. Yet it is fair to ask: Would the president have been wiser to hedge his gamble by sustaining the George W. Bush-era hydrogen fuel-cell program while also pursuing electrification? The answer is found in a habit of some of the biggest risk-takers of all—venture capitalists, who tend to spread their wagers around rather than hoping a single flash of intuition will pay off. Now it seems that the Obama administration may be reconsidering its distribution of chips—and that change can’t come soon enough. Just as Washington has incubated the battery and electric car industries, it ought to play a larger, proactive role in fuel cells, which solve some of the main problems hobbling batteries (though they have their own challenges).

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Fuel cells are technically similar to batteries. Both contain three main parts—two electrodes separated by a liquid, called electrolyte. But while batteries store electricity made elsewhere, fuel cells create their own from a variety of substances, including hydrogen, which carmakers currently favor.

Industry and Department of Energy officials say that Chu seems to have softened his early rejection of hydrogen fuel cells. John Hofmeister, the former president of Shell USA and the incoming chairman of the Energy Department's technical advisory committee on fuel cell vehicles, said Chu made supportive remarks about the potential for hydrogen fuel-cell vehicles while speaking at a recent, closed event.

If Chu has changed his early hostility toward hydrogen fuel cells, he does so as a handful of major carmakers are readying models for as early as 2015. Toyota, Honda, Mercedes-Benz, and Daimler have announced plans for hydrogen fuel-cell propelled vehicles. General Motors says that as soon as 2016 it may release its own hydrogen fuel-cell vehicle, but it’s watching for the launch of supporting infrastructure—primarily new refueling stations.

The lack of fueling stations is a major obstacle to the rollout of hydrogen fuel-cell vehicles. A mature fleet will require 11,000 stations coast to coast at a cost of $20 billion to $25 billion, according to General Motors. Unless forced by Washington, oil companies, which generally do not produce hydrogen, have no motivation to add rival hydrogen fueling to their gasoline stations. So the industry’s calculus is that by and large hydrogen must be sold at new, dedicated fueling stations.

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