Location, Location, Location

There is uproar over the cost of gasoline. Congress is threatening a windfall tax on oil companies. State governments are suing. Even former oilman President George Bush announced that “we are addicted to oil.”
The IRS now lets us deduct 44.5 cents per mile for our business driving. Odds are that you are not making money on that, unless you drive a hybrid like the Toyota Prius that I own.
A hydrogen future is being promoted as a way to end our dependency on oil, but will hydrogen ever be less expensive than gasoline? The long-term answer is yes. Cheap hydrogen has the same theme as buying the right house – “location, location, location.” In Torrance, the major oil refiners use hydrogen to make our gasoline cleaner and high octane. In Torrance, there is a hydrogen pipeline. That pipeline is being extended to a new hydrogen fueling station, where hydrogen will be less expensive than gasoline. Hydrogen is expected to cost under $3 per gasoline gallon equivalent at the pump.
Also in Torrance is the U.S. headquarters of three leading vehicle corporations – Toyota, Nissan and Honda. Honda is leasing its FCX fuel cell vehicle for $600 per month including maintenance. Those driving the FCX a typical 1,000 miles per month are paying 60 cents per mile for vehicle costs and will pay another 5 cents per mile for fuel. At 65 cents per mile, the IRS is coming out ahead. But this is 2006, and we are just getting started.
Over the next five years, a number of factors will cut that cost in half. Volume manufacturing is far less expensive than the current one-at-a-time build by engineers. Scientists and engineers are reducing cost and complexity. Hydrogen PEM fuel cells now use less than 5% of the platinum of early designs. A Toyota engineer bragged that there fuel cell uses 70% fewer components than an earlier version they had used from Ballard.

General Motors will use a single chassis for a wide range of hydrogen vehicles including sedans, light trucks and SUVs. Range is being extended with light aerodynamic vehicles like the new Honda FCX Concept which will start limited commercial production around 2010. With new hydrogen storage it will have a cruising range of up to 350 miles. This excellent range is with hydrogen stored at 5,000 psi. Other vehicle makers are considering 10,000 psi.
More vehicles fleets will discover that they are in the right “location, location, location.” In Vancouver, Canada, hydrogen fleets are expanding in anticipation of the 2010 Winter Olympics. 200 kg/hour of hydrogen that is no being vented into the air will be captured and used to fuel vehicles. GE Power has announced plans to expand with large scale electrolyzers. Using GE wind turbines and GE electrolyzers, renewable hydrogen to the pump is forecasted at $3.50 per gasoline gallon equivalent at the pump.
When successful, disruptive technology often drops in cost by over 90%. This has been the case with photovoltaics, wind power, and most computer technology. Expect the same with hydrogen transportation.

John Addison is the author of the book Revenue Rocket (Executive Summary at www.optimarkworks.com). John Addison’s articles have appeared in H2Nation Magazine. Since 2002, John has been a Board member of the California Hydrogen Business Council. John Addison is president of OPTIMARK Inc. a firm that helps with marketing strategy and partner development. He teaches extension courses for the University of California at Davis and at Santa Cruz. He is a popular speaker in the Americas, Europe and Asia.
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