High Level Group on Hydrogen

Bellona’s comments to EU’s High Level Group on hydrogen draft report

Chapther 1 – Vision
Do you have any comment to the overall vision presented?

Bellona supports in general the discussions in this chapter, but wants focus on some areas where the HL-group in our opinion, needs further discussion.

SOURCES OF HYDROGEN AND ELECTRICITY

In the transition period, which may last for 30 to 40 years, fossil fuels as coal, oil and natural gas will play an important role as a source of hydrogen. The reason for this is that it will take energy and time to produce the equipment required for replacing the energy output from those sources.

The main challenge is to make the hydrogen and electricity produced from these sources cleaner. This calls for the de-carbonization of the fossil fuels required and permanent sequestration of the CO2 produced. Identification of the locations suitable for that must be identified i.e. saline aquifers, empty oil and gas fields or the use of CO2 in enhanced oil recovery (EOR). The planning, construction and operation of the infrastructure required should not be excluded from the efforts in making a cleaner new energy age.

— Renewable energy.

Much of the renewable energy production is connected to the production of electricity (wind, solar, tide, etc). The renewable electricity produced today is on the average not cost competitive with the present market prices. The transition to a drastic increase in the production of renewable energy will require a huge investment in new production capacity for windmills and solar panels. The potential for making Europe a leading technology- and production-center does exist, but has to be cultivated by predictable regulatory instruments. Active use of “Green certificates”, compulsory share of “green energy” in the distributors portfolio are examples of how such development can be promoted.

— Nuclear electricity.

“Clean nuclear electricity” is introduced by the HLG as one of the means to transfer the existing energy system into a sustainable system. The fission based nuclear industry has a long way to go before Bellona can accept this inclusion.

Firstly, the main problem unsolved is the storage of radioactive waste. There exists no common standard in Europe for how this waste should be handled and each of the nations defines their own standards. This is highly unsatisfactory.

The EU-Commission is working on defining a set of standards called the “Nuclear Package”. But the lack of agreements within the industry and between the industry and the regulators make it unlikely that the implementation of the package will bring the risk of accidents in handling, transport and long term storage to an acceptable level.

Secondly, most of the population in Europe has a strong feeling that the nuclear reactors represent a high radiation risk. The Chernobyl – effect has not evaporated. This is in particular true when discussing nuclear plants in the new EU-nations as well as plants in Russia, Ukraine, and other earlier Soviet states.

Thirdly – the operation of a nuclear reactor is a prerequisite for making nuclear warheads. The operation of nuclear reactors leads to the need for processing, reprocessing and transportation of uranium and plutonium across Europe. The transports are exposed to terrorist attacks with the following risk for the raw material for nuclear weapons falling into the wrong hands.

Bellona does not agree to include an industry that imposes so many risks to the society in the definition of sustainable energy producers.

THE “ROAD MAP”

The HLG has drawn up a proposal for a road map towards the hydrogen age. The opinion of Bellona is that the proposal will not take us to the goals set by the EU and will need adjustments. The main focus should now be directed at creating a basis for a market for the new products. This will call upon a close cooperation between the research communities, the industrial sector and the regulatory authorities and could start with the bodies already in place in Europe. However a strong commitment from the authorities is required in order to secure the build-up with regulatory and financial guarantees.

To illustrate this point we have chosen to look at the sector of transportation.

— How to reach the proposed milestones in the transportation sector

According to a communication ((COM, 2001) 547) from the commission on alternative fuels for road transportation and on a set of measures to promote the use of bio-fuels, a development goal is set at a substitution of 5% transportation fuels with hydrogen within 2020. This goal reflects a substitution of 17 Mtoe fuel energy according to IEA “World energy outlook 2002”. This amount of energy is equivalent to some 45 mill personal fuel cell vehicles with normal annual driving distances, assuming that in 2020 hydrogen only will be used in passenger cars. To achieve this goal, vehicle stocks have to be replaced quite rapidly, with a market growth of at least 70% p.a. from 2006. Within 2020, hydrogen fuel cell cars must completely dominate the market with some 18 mill. vehicles sold each year. Current sales of vehicles are about 14 mill vehicles a year.

Proposed goals, passenger vehicles

*) Primary energy is roughly the same for NG and renewable electricity pathways

This illustrates that a very focused attention has to be put on the industrial production of fuel-cells and hydrogen production/distribution systems based on present technology as soon as possible. This will not stop the search for improved systems to handle the technological challenges – rather it will act as a catalyst for the research and development for improved solutions.

The second point illustrated by this table – is that a massive investment in development of alternative, temporary systems like the use of methanol and natural gas for transport sector – should not be promoted. This will only contribute to building up new barriers towards the transition into the hydrogen and divert the focus of the development.

Chapter 2 – The energy challenge
Do you have any comments on the analysis of the challenges?

THE ENERY DEMAND – BREAKING THE CURVE

Bellona does agree with the general description of the challenges as developed in this section and find that the overall goal represented by the “Sustainability triangle” is a good representation.

However, when predicting the growth in energy demand – HLG pays little or no attention to the potential of reducing the demand caused by the effect of increased efficiency in the use of energy.

Examples of areas which represent possibilities for breaking the automatic addition of about 2.4 per cent energy demand per annum are among others the potential of improved insulation of buildings, the use of solar panels in buildings, increased efficiency in electrically operated appliances, and so on. Research directed towards those areas combined with regulatory means might contribute to a break in the incremental demand curve not only in Europe, but even more in the developing economies.

THE DISTRIBUTION – HOW TO CREATE SOCIAL BENEFITS?

The introduction of hydrogen together with electricity as the main carriers of energy represents a substantial challenge to the society. Although in the future, the production of hydrogen by means of electricity should be decentralized, there will still for some time be a need for large centralized production units. The distribution channels will most likely be based on existing systems of either electricity or gas pipeline grids.

In order to create a “leveled playing field” for an integrated market for energy, great attention has to be paid to the organization of the distribution systems.

In this context Bellona would also like to point to the danger of creating new distribution channels for alternative liquid fuels based on synthesized hydrocarbons in combination with fuel cells for mobile use. Hydrogen and fuel cell technology should exclusively be prioritized to prevent a technological lock- in. Half- way technologies must not be allowed to get a firm grip.

THE NEEDS FOR CLEAN FOSSIL FUELS TO BRIDGE THE GAP.

The road to replace the dependence on fossil fuels with non-fossil fuels is long. In the interim period de-carbonization of fossil fuels should be introduced together with the development of an infrastructure for the collection, transport and sequestration of the CO2 . If EU shall be able to compel with the obligations in the Kyoto-protocol and beyond – effective measures have to be planned and put into operations before 2008. The North Sea basin provides a number of opportunities for permanent sequestration and part of the CO2 might even be put into efficient use by improving the production potential in existing oilfields.

Chapter 3 – Technologies
Do you have any comments on the analysis of the technologies presented?

UNDERSTANDING THE BENEFITS

Bellona is in general agreement with the benefits of hydrogen technologies, but it’s important to point out that hydrogen technologies will improve.

Today, hydrogen technologies, such as fuel cells, novel storage and compression systems and infrastructure solutions show great benefits over conventional technologies in a variety of fields according to a range of analysis. Conventional technologies are much more mature than hydrogen technologies, and it’s is therefore reasonable to expect relatively larger improvements ahead for hydrogen technologies, in terms of efficiency, environmental impact and cost than what is understood today.

Chapter 4- What can Europe do?
Do you have any comments on the analysis and the recommendations put forward, especially regarding the Strategic Research Agenda?

MORE EMPHASISE ON THE MARKET SIDE

Bellona thinks the report has to emphasise more on the market side, not just research. HLG says at line 934 “Support for commercialisation just as important as that for research”, but a major focus of concern in the report is research. The draft concludes that it should be made a “Technology Partnership”, where also the research is the main topic. Bellona see the need for further research and development but thinks the development of hydrogen technology now have come so far down the road that it is equally important with a pull from the market as a push from governmental grants for research.

Bellona fully agree when the HLG on line 816 state that “The initial benefits arising from the commercialisation of hydrogen and fuel cells will mainly be on the “public reward” side.” Bellona also agree when HLG in line 835 says “[] government intervention will certainly be necessary to stimulate and provide temporary support for the emergence of the main stationary and transport markets, []”. The hydrogen cars will need midwifery through a stimulated market. Without it, it will not be possible to reach mass production, which will increase the efficiency of the production and lower the price. Bellona can not see any other ways to do this than making an “artificial” market initially.

Many see 2010 as a possible year for production of a larger number of hydrogen vehicles. It is just 7 years to 2010. After 2010 we have to have a rapid growth in car- and hydrogen production towards EU’s goal for alternative fuels in 2020 (see under chapter 1). It is time to start planning a framework condition for the hydrogen market.

A living marked will also open up possibilities for a lot of actors who are able to refine technology who developed through i.a. EU’s programs for research. A living market is then not just important for getting the cost down through mass production, but also for activity on developing.

To get the market started we first need means that will put a larger number of fleet vehicles out on the roads with the first filling station. From there we need means that are able to give us mass production and the first web of filling station across Europe. Upon reaching this stage, it should be possible to end the midwifery.

The means have to be stable over a long period of time to make it possible for business to plan. Bellona has good experience with certificate systems like green certificates on electricity or the ZEV-mandate in California. Organised this way, it is not depending on budgets that are changed every year and because of this it gives us a stable condition. The ZEV-mandate gave the automotive industry a stable goal to reach for years and are known for have given the electric and hydrogen cars a tremendous push forward.

We recommend the HLG to stronger discuss how it is possible to get the work with means started, and how it best can organise the work to make good sets of means.

Chapter 5 – Concluding remarks?
Do you have any comments on the recommendations?

Bellona has four points we want to emphasise (described in more detailed above):

 

1. CO2 sequestration. In the transition period to renewable, use of fossil fuels with CO2 sequestration for hydrogen production seems as a reasonable possibility. It needs more stress on investigation of this prospect.

    

2. Nuclear energy. “Clean nuclear electricity” is introduced by the HLG as one of the means to transfer the existing energy system into a sustainable system. Bellona does not agree to include an industry that imposes so many risks to the society in the definition of sustainable energy producers. The fission based nuclear industry has a long way to go before Bellona can accept this inclusion.

    

3. Methanol. Hydrogen and fuel cell technology should exclusively be prioritized to prevent a technological lock- in on methanol or natural gas. Half- way technologies must not be allowed to get a firm grip.

    

4. Market stimulation. Support for commercialisation just as important as that for research. Bellona wants more stress on this in the conclusion. We recommend the HLG to stronger discuss how it is possible to get the work with means started, and how the work to make good sets of means best can be organised.

    

Do you have any other comments on the document?

Bellona fully supports the HL-groups vision on the overall proposed solution; An energy usage-system based on hydrogen and electricity as the energy carriers.

We also agree that the introduction of fuel cells as the most energy efficient way to convert the energy needed into useful service for the society (transport, lighting and heat). The main challenge in this respect is: “how to produce the hydrogen and electricity in a sustainable way”