Eur 21685 En

7/28/2019 Eur 21685 En

1/207

Institute forProspectiveTechnological Studies

Assessing the International Position of EU'sResearch and Technological Development

and Demonstration (RTD&D) on

Hydrogen and Fuel Cells

EUR 21685 EN

T EC H N I C A L R EP O R T SER I ES

EuropeanScience andTechnologyObservatory

7/28/2019 Eur 21685 En

2/207

European Commission

Joint Research Centre (DG JRC)

Institute for Prospective Technological Studies

http://www.jrc.es

Legal notice

Neither the European Commission nor any person

acting on behalf of the Commission is responsible

for the use which might be made of the following

information.

European Communities, 2005

Reproduction is authorised provided the source is

acknowledged.

7/28/2019 Eur 21685 En

3/207

About the JRC-IPTS

The Joint Research Centre (JRC) is a Directorate General of the European Commission, staffed with approximately 2,100 people, coming in the vast

majority from the 15 Member States of the European Union. The Brussels Support Services (including the office of the Director General and the

Science Strategy Directorate) and seven Institutes located in five different countries compose the main organisational structure of the JRC

(http//:www.jrc.org). The Institute for Prospective Technological Studies (IPTS) is one of the seven Institutes making up the JRC. The mission of the

JRC is to provide customer-driven scientific and technical support for the conception, implementation and monitoring of EU policies.

The Institute for Prospective Technological Studies (IPTS) is one of the seven Institutes making up the JRC. It was established in Seville, Spain, in

September 1994.

The mission of the IPTS is to provide prospective techno-economic analyses in support of the European policy-making process. IPTS prime

objectives are to monitor and analyse science and technology developments, their cross-sectoral impact, and their inter-relationship with the socio-

economic context and their implications for future policy development. IPTS operates international networks, pools the expertise of high level

advisors, and presents information in a timely and synthetic fashion to policy makers (http//:www.jrc.es).The IPTS is a unique public advisory body, independent from special national or commercial interests, closely associated with the EU policy-

making process. In fact, most of the work undertaken by the IPTS is in response to direct requests from (or takes the form of long-term policy support

on behalf of) the European Commission Directorate Generals, or European Parliament Committees. The IPTS also does work for Member States

governmental, academic or industrial organisations, though this represents a minor share of its total activities.

Although particular emphasis is placed on key Science and Technology fields, especially those that have a driving role and even the potential to

reshape our society, important efforts are devoted to improving the understanding of the complex interactions between technology, economy and

society. Indeed, the impact of technology on society and, conversely, the way technological development is driven by societal changes, are highly

relevant themes within the European decision-making context.

The inter-disciplinary prospective approach adopted by the Institute is intended to provide European decision-makers with a deeper understanding

of the emerging science and technology issues, and it complements the activities undertaken by other institutes of the Joint Research Centre.

The IPTS approach is to collect information about technological developments and their application in Europe and the world, analyse this

information and transmit it in an accessible form to European decision-makers. This is implemented in the following sectors of activity:

Technologies for Sustainable Development

Life Sciences / Information and Communication Technologies

Technology, Employment, Competitiveness and Society Futures project

In order to implement its mission, the Institute develops appropriate contacts, awareness and skills to anticipate and follow the agenda of the policy

decision-makers. IPTS Staff is a mix of highly experienced engineers, scientists (life-, social- material- etc.) and economists. Cross-disciplinaryexperience is a necessary asset.The IPTS success is also based on its networking capabilities and the quality of its networks as enabling sources ofrelevant information. In fact, in addition to its own resources, the IPTS makes use of external Advisory Groups and operates a number of formal or

informal networks. The most important is a Network of European Institutes (the European Science and Technology Observatory) working in similar

areas. These networking activities enable the IPTS to draw on a large pool of available expertise, while allowing a continuous process of external

peer-review of the in-house activities.

About ESTO

The European Science and Technology Observatory (ESTO) is a network of organisations operating as a virtual institute under the European

Commission's Joint Research Centre's (JRC's) Institute for Prospective Technological Studies (IPTS) - leadership and funding. The European

Commission JRC-IPTS formally constituted, following a brief pilot period, the European Science and Technology Observatory (ESTO) in 1997. After

a call for tender, the second formal contract for ESTO started on May 1st 2001 for a period of 5 years.

Today, ESTO is presently composed of a core of twenty European institutions , all with experience in the field of scientific and technological

foresight, forecasting or assessment at the national level. These nineteen organisations have a formal obligation towards the IPTS and are the nucleus

of a far larger network. Membership is being continuously reviewed and expanded with a view to match the evolving needs of the IPTS and to

incorporate new competent organisations from both inside and outside of the EU. This includes the objective to broaden the operation of the ESTO

network to include relevant partners from EU Candidate Countries. In line with the objective of supporting the JRC-IPTS work, ESTO aims at

detecting, at an early stage, scientific or technological breakthroughs, trends and events of potential socio-economic importance, which may require

action at a European decision-making level.

The ESTO core-competence therefore resides in prospective analysis and advice on S&T changes relevant to EU society, economy and policy.

The main customers for these activities is the JRC-IPTS, and through it, the European policy-makers, in particular within the European Commission

and Parliament. ESTO also recognises and addresses the role of a much wider community, such as policy-making circles in the Member States and

decision-makers in both non-governmental organisations and industry.

ESTO members, therefore, share the responsibility of supplying the IPTS with up-to-date and high quality scientific and technological information

drawn from all over the world, facilitated by the networks broad presence and linkages, including access to relevant knowledge within the JRC

Institutes.

Currently, ESTO is engaged in the following main activities:

A series ofSpecific Studies, These studies, usually consist in comparing the situation, practices and/or experiences in various member states, and can

be of a different nature a)Anticipation/Prospective analysis, intended to act as a trigger for in-depth studies of European foresight nature, aiming at

the identification and description of trends rather than static situations; b) Direct support of policies in preparation (ex-ante analysis); and c)Direct

support of policies in action (ex-post analysis, anticipating future developments).

Implementation ofFast-Trackactions to provide quick responses to specific S&T assessment queries. On the other hand, they can precede or

complement the above mentioned Specific Studies.

To produce input to Monitoring Prospective S&T Activities that serves as a basis of experience and information for all other tasks.

ESTO develops a Alert/Early Warning function by means of Technology Watch/Thematic Platforms activities. These actions are putting ESTO

and JRC-IPTS in the position to be able to provide rapid responses to specific requests from European decision-makers. 0Support the production

of"The IPTS Report", a monthly journal targeted at European policy-makers and containing articles on science and technology developments,

either not yet on the policy-makers agenda, but likely to emerge there sooner or later.

For more information: http//:www.jrc.es Contacts: [email protected]

7/28/2019 Eur 21685 En

4/207

7/28/2019 Eur 21685 En

5/207

7/28/2019 Eur 21685 En

6/207

Assessing the International Position of EUs RTD&D on Hydrogen and Fuel Cells

ii

Table of Contents

EXECUTIVE SUMMARY.............................................................................................IX

1. INTRODUCTION.......................................................................................................... 11.1 BACKGROUND ............................................................................................................ 11.2 OBJECTIVES ................................................................................................................21.3 APPROACH AND METHODOLOGY ................................................................................ 3

2. HYDROGEN ECONOMY FRAMEWORK....................................................................... 5

2.1 HYDROGEN ENERGY SYSTEM ...................................................................................... 52.2 MARKET DEMAND FOR HYDROGEN ECONOMY TECHNOLOGIES ................................. 102.3 H2/FC FUNDING ........................................................................................................ 11

3. EUPOLICY CONTEXT ............................................................................................. 14

3.1 EUROPEAN UNION .................................................................................................... 143.1.1General Energy Outlook ................................................................................ 143.1.2H2/FC Drivers, Barriers and Roadmaps........................................................143.1.3Government Funding of H2/FC RTD .............................................................15

3.2 EUMEMBERSTATES................................................................................................ 193.2.1Government Funding of H2/FC RTD .............................................................193.2.2Industry Activities........................................................................................... 21

4. CHARACTERISATION OF H2/FCRTD&D OUTSIDE THE EU................................. 24

4.1 USA ......................................................................................................................... 244.1.1General Energy Outlook ................................................................................ 244.1.2H2/FC Drivers, Barriers and Roadmaps........................................................254.1.3Government Funding of H2/FC RTD .............................................................274.1.4Industry Activities........................................................................................... 32

4.2 CANADA ................................................................................................................... 344.2.1General Energy Outlook ................................................................................ 344.2.2H2/FC Drivers, Barriers and Roadmaps........................................................344.2.3Government Funding of H2/FC RTD .............................................................354.2.4Industry Activities........................................................................................... 37

4.3 JAPAN ....................................................................................................................... 404.3.1General Energy Outlook ................................................................................ 40

4.3.2H2/FC Drivers, Barriers and Roadmaps........................................................414.3.3Government Funding of H2/FC RTD .............................................................424.3.4Industry Activities........................................................................................... 46

4.4 AUSTRALIA ............................................................................................................... 474.4.1General Energy Outlook ................................................................................ 474.4.2H2/FC Drivers, Barriers and Roadmaps........................................................484.4.3Government Funding of H2/FC RTD .............................................................49

4.5 CHINA....................................................................................................................... 524.5.1General Energy Outlook ................................................................................ 524.5.2H2/FC Drivers, Barriers and Roadmaps........................................................534.5.3Government Funding of H2/FC RTD .............................................................54

4.6 INDIA ........................................................................................................................ 564.6.1General Energy Outlook ................................................................................ 564.6.2H2/FC Drivers, Barriers and Roadmaps........................................................57

7/28/2019 Eur 21685 En

7/207


iii

4.6.3Government Funding of H2/FC RTD .............................................................574.7 SOUTH KOREA .......................................................................................................... 60

4.7.1General Energy Outlook ................................................................................ 604.7.2H2/FC Drivers, Barriers and Roadmaps........................................................614.7.3Government Funding of H2/FC RTD .............................................................61

5.H2/FCTECHNOLOGIES IN EUROPE:STRENGTHS,WEAKNESSES,OPPORTUNITIES,

THREATS.................................................................................................................. 66

5.1 SUMMARY................................................................................................................. 665.2 PUBLIC AWARENESS/DEMAND MANAGEMENT ......................................................... 695.3 BASIC RESEARCH ...................................................................................................... 755.4 SYSTEM INTEGRATION/DEMONSTRATION ACTIVITIES .............................................. 835.5 MANUFACTURERS,MARKETS AND APPLICATIONS ................................................... 87

ANNEXES ........................................................................................................................... 96

ANNEX I.OVERVIEW OF PUBLICLY FUNDED RTD&D IN THE EU, THE USA,CANADA,

JAPAN,AUSTRALIA,CHINA,INDIA AND SOUTH KOREA............................................ 96ANNEX II.OVERVIEW OF PRIVATELY FUNDED RTD&D IN THE EU, THE USA,CANADA,

JAPAN,AUSTRALIA,CHINA,INDIA AND SOUTH KOREA..........................................127ANNEX III.ANALYSIS OF H2/FCRTD&D PUBLISHING IN THE EU, THE USA,CANADA,

JAPAN,AUSTRALIA,CHINA,INDIA AND SOUTH KOREA..........................................157ANNEX IV.ANALYSIS OF H2/FC PATENTING IN THE EU, THE USA,CANADA,JAPAN,

AUSTRALIA,CHINA,INDIA AND SOUTH KOREA...................................................... 177

7/28/2019 Eur 21685 En

8/207


iv

List of Figures

Figure 1 Hydrogen Energy System........................................................................................ 5Figure 2 World Power Generation Capacity Additions 2000-2030 (Gigawatts)................. 11Figure 3 Total Energy R&D for OECD Countries (1974-1998) (public)............................ 11

Figure 4 Comparison of Studies on Fuel Cell and Hydrogen R&D funding....................... 12Figure 5 Skeleton proposal for European hydrogen and fuel cell roadmap ....................... 16Figure 6 Demonstration Projects across the EU .................................................................. 21Figure 7 Distribution of EU Fuel Cell Industry ...................................................................21Figure 8 US Total Energy RD&D (1974-2002) ..................................................................25Figure 9 Overview of the transition to a hydrogen economy ..............................................27Figure 10 US Fuel Cell Demonstrators..................................................................................31Figure 11 Canada Total Energy RD&D (1974-2002) ........................................................... 34Figure 12 Annual NRCan Budget for Hydrogen Fuel Cell and Infrastructure (CA$m) ....... 37Figure 13 Distribution of Canadian Fuel Cell Companies .................................................... 38Figure 14 Japan Total Energy RD&D (1974-2001) .............................................................. 41

Figure 15 METIs Scenario for Market Introduction of FCs and FC-Vehicles..................... 42Figure 16 Hydrogen R&D Budget Split (FY2002) - 9.1bn (69m) .................................... 43Figure 17 Japans Fuel Cells RTD&D Budget 1981-2002.................................................... 44Figure 18 R&D History on Stationary Fuel Cell Technologies............................................. 63Figure 19 Funding for the South Koran Fuel Cell program .................................................. 63Figure 20 Fuel Cell R&D Budget .......................................................................................... 64Figure 21 All Systems Built Region of Development ........................................................ 85Figure 22 Comparison of Number of Stationary Fuel Cell Demonstrators ........................... 86Figure 23 Geographic distribution of hydrogen patents worldwide ................................... 90Figure 24 Technology trends in hydrogen patents for H2 production development over

time........................................................................................................................ 91Figure 25 Technology trends in hydrogen patents for fuel cells and ICE development over

time........................................................................................................................ 92

7/28/2019 Eur 21685 En

9/207


v

List of Tables

Table 1 EU Funding of H2/FC RTD&D Since 1985 ......................................................... 17Table 2 Contracts related to hydrogen technologies awarded, or under negotiation, in the

first call for proposals of the 6th Framework Programme (FP6) ........................... 18

Table 3 Contracts related to fuel cell technologies awarded, or under negotiation, in thefirst call for proposals of the 6th Framework Programme (FP6) .......................... 18

Table 4 Examples of funding for H2/FC RTD&D across EU Member States .................. 20Table 5 H2/FC industry in Europe .....................................................................................22Table 6 H2/FC RD&D Activities for a Selection of European Companies .......................23Table 7 Review of US DoE EERE Hydrogen, Fuel Cells & Infrastructure Technologies

Program Budget 2003-2005 .................................................................................. 28Table 8 US Stationary Fuel Cells Programme Budget ....................................................... 29Table 9 Federal Government Funded Activity Budget (US$ million) ............................... 30Table 10 Recent Industry FC Industry Trends (US$ million ............................................... 32Table 11 H2/FC RD&D Activities for a Selection of US Companies ................................. 33

Table 12 US Strengths and Weaknesses .............................................................................. 33Table 13 Government funding of Fuel Cells and Hydrogen RTD&D in Canada 2000 2006

(CA$ million) ........................................................................................................ 36Table 14 Economic Impact of H2/FC Industry in Canada ................................................... 38Table 15 Revenue figures for Canadian Fuel Cell Industry 2003 (CA$ million) ................ 38Table 16 H2/FC RD&D Activities for a Selection of Canadian Companies ....................... 39Table 17 Canadian Strengths and Weaknesses ....................................................................39Table 18 Japans targets for fuel cell sales ........................................................................... 41Table 19 Origins of Japans Current Fuel Cell Programmes ( billion) .............................. 43Table 20 METI/NEDOs PEM MCFC & SOFC related budgets for FY2002 and 2003 (

billions).................................................................................................................. 45Table 21 Hydrogen Stations; Japan Hydrogen & Fuel Cell Demonstration Project ............ 45Table 22 H2/FC RTD&D Activities of a Selection of Japanese Companies .......................46Table 23 Japanese Strengths and Weaknesses .....................................................................47Table 24 Australian Fuel Cells and Hydrogen RD&D Projects........................................... 50Table 25 Australian Strengths and Weaknesses ................................................................... 51Table 26 Chinas Hydrogen and Fuel Cell RD&D Activities .............................................. 55Table 27 Chinese Strengths and Weaknesses....................................................................... 56Table 28 Indias Government Funded Hydrogen and Fuel Cell RD&D Activities ............. 58Table 29 Indian Strengths and Weaknesses ......................................................................... 59Table 30 KEMCO Investment in Energy Technology Development Projects, 2001 (million

Won)...................................................................................................................... 62Table 31 South Korean Strengths and Weaknesses ............................................................. 64Table 32 H2/FC RD&D Activities for a Selection of East Asian Companies .....................65Table 33 EUs strengths and weaknesses on H2/FC RTD&D.............................................. 67Table 34 EUs opportunities and threats on H2/FC RTD&D............................................... 68Table 35 Comparison of High Level Government and Industry Co-ordination .................. 69Table 36 Cross Comparison of H2/FC Visions - EU, US, Japan and IEA. .......................... 71Table 37 Political Strengths and Weaknesses. ..................................................................... 73Table 38 Other Areas Strengths and Weaknesses. ............................................................... 74Table 39 Average impact factors in various H2/FC technologies and of the most significant

nations ................................................................................................................... 78

Table 40 Topic Area Publications since 1994 (figures for the most important nations andgeographic areas total publications weighted by their impact factors) ............... 80

Table 41 Comparing publications (in the top ten) ............................................................ 82

7/28/2019 Eur 21685 En

10/207


vi

Table 42 Overview of installed Fuel Cell Capacity (%) ...................................................... 85Table 43 Summary of Company RTD&D Activity for Selected Companies ......................88Table 44 Technological Strengths and Weaknesses............................................................. 95

Exchange Rates

For the purposes of this study we have used the following exchange rates:

Currency/

UK Pound () 0.67

US Dollar (US$) 1.20

Japanese Yen () 132.37

Canadian Dollar (CA$) 1.56

South Korea (Won) 1388.24

Indian Rupee (Rs) 57.00

Chinese Yuan (CNY) 10.05

These rates are European Commission stated rates from September 2004. It is important tonote that their use in relation to R&D support levels do not take into account historicexchange fluctuations.

7/28/2019 Eur 21685 En

11/207

7/28/2019 Eur 21685 En

12/207


viii

Glossary of Terms

AFC alkaline fuel cell

APU auxiliary power unit

CaFCP California Fuel Cell Partnership (USA)CHP Combined heat and power

CNG compressed natural gas

CO carbon monoxide

CO2 carbon monoxide

CSIRO Commonwealth Scientific and IndustrialTechnologies Organisation (Australia)

CUTE Clean Urban Transport for Europe

DMFC direct methanol fuel cell

FC fuel cell

FCV fuel cell vehicle

GTL gas-to-liquids

H2 hydrogen

ICE internal combustion engine

JHFC Japanese Hydrogen Fuel Cell Project

LCA Life-cycle assessment

LNG liquefied natural gas

MCFC molten carbonate fuel cellMtoe million tons oil equivalent

NEDO New Energy and Industrial TechnologyDevelopment Organisation (Japan)

NOx nitrogen oxides

NG natural gas

PAFC phosphoric acid fuel cell

PEMFC proton exchange membrane fuel cell

REN Renewable energy

SOFC solid oxide fuel cell

WE-NET World Energy Network (Japan)

7/28/2019 Eur 21685 En

13/207


ix

EXECUTIVE SUMMARY

This SWOT analyses the EUs current competitive positioning in the evolving hydrogen

economy and specifically assesses hydrogen and fuel cell technology development. The studyhas investigated how national capabilities have developed and are continuing to develop andthe public and private sectors have adopted strategies to exploit the predicted commercialopportunities. It has drawn on results reported elsewhere in this report, which have providedan overview of past, current and planned future H2/FC RTD&D in the EU and other countriesacross the world.

Overall, the review of activity has shown that the EU does hold a strong position in manytechnology areas. It has well developed H2/FC RTD&D activities and is supporting this with asubstantial funding programme over coming years. Such activity is also being reflected atMember State level, though this is not uniform across the EU. Industrially, the EU has a

significant number of companies that are contributing to all aspects of technologydevelopment and commercialisation. The knowledge and expertise base that is beingdeveloped has the potential of being exploited across the world. However, the EU does facestrong and growing competition.

The EUs main competitors are the USA, Japan and to a lesser extent Canada. Each of thesecountries has established H2/FC RTD&D support frameworks and developed long termtechnology roadmaps describing technical milestones over the coming decades. However,other countries assessed (Australia, China, India and South Korea) are significantly less welldeveloped and are just beginning to develop H2/FC RTD&D activities and programmes.

Our overview SWOT analysis is based on an assessment that has been carried out on anumber of levels:

Public awareness/demand management Policy makers response to drivers and barriers Basic research Publicly funded H2/FC RTD&D (including bibliographic assessment) System integration/demonstration activities Manufacturers, markets and applications Industry H2/FC RTD&D activity (including

patent analysis).

The results of these assessments demonstrate that the results of the SWOT does not deliver

black and white conclusions, rather it provides a flavour of the current situation andidentifies issues that need to be expanded separately.

Public Awareness/Demand Management

High level governmental backing of programmes and activities although crucial is notsufficient to ensure the effective take up of H2/FC technologies. Visions and roadmaps needto be supported by concrete actions. The findings of this study have highlighted gaps betweenstrategic development of H2/FC RTD&D at national level and its translation into commercialopportunities. This is mainly true for the developing nations and those that have nottraditionally had significant levels of R&D support for new and renewable energytechnologies.

7/28/2019 Eur 21685 En

14/207


x

There are a number of ways in which hydrogen economy policies are supported at differentlevels but their importance is to generate coherence and increase confidence in the co-ordination of approaches. North America and the EU as a whole perform well across allaspects. Nationally within the EU the situation is slightly different. No Member State hasestablished a detailed technology roadmap for either hydrogen, fuel cells or both, though

many have set up R&D programmes for both areas. A number of roadmap activities are nowunder way in France, Italy, Norway, Germany and the Netherlands. There is little evidence ofany assessment of skills gaps that may exist at the national level nor programmes that may beestablished to address them. For the other countries, the situation is less well defined sincethey are only now creating the visions to support longer term planning.

The creation of bodies representing both industry and government are acting as importantfocal points for national and regional activity. Despite comparable approaches in othercountries, Canada stands out with the clearest approach for the development of fuel cells. Ithas identified national strengths and limitations (capability gaps, skills needs, etc.) andcreated the strategies needed to manage both effectively. Canada has accepted that it is not

capable of contributing to the development of technologies across the whole supply chain andis eager to support the development of international links for its industry. The creation of FuelCells Canada underlines this approach.Fuel Cells Canada was perhaps the first to act as both co-ordinator and international promoterof domestic industries.

In addition, Canada also led the field in realising the strength of clustering companies andproviding the finance to support this. There are a number of clusters spread across Canada,but predominantly in the west around Vancouver and Ballard. These have acted as catalystsfor commercial collaboration both within Canada and internationally. On the other hand, other

bodies such as the US Fuel Cell Council and World Fuel Cell Council have had strongeradvocating roles.

In Europe, apart from national hydrogen associations that have been established for a numberof years, there are now an increasing number of organisations focussed solely on fuel cells.These include Fuel Cells UK, Appice (Spain) and PACo (France), who have varied rolesincluding national co-ordination of industry efforts, public funding and international

promotion.

A summary comparison of political strengths and weaknesses across all countries examinedis shown on the following page. This is complemented by a summary comparison of the

strengths and weakness of other drivers and factors environment, energy sector, socio-economic, etc. across all companies examined.

An overall summary of findings is produced separately as a stand-alone document to providequick insight in, and relying fully on, the wealth of information collected, analysed and

presented thoroughly in the present report.

7/28/2019 Eur 21685 En

15/207


Political Strengths andWeaknesses.

Region

VariableEU USA Canada Japan Aust ralia China

Political Champion President Prodi President Bush None named None named None named None name

Policy Co-ordination

Being developed.Limited at national

level exceptregionally inGermany

Cross Departmental Cross Departmental Cross Departmental Under examination Under examina

Drivers Well defined Well defined Well defined Well defined Well defined Identified

RoadmapBeing developed.Limited at national

level.

Documented forhydrogen and fuel

cells


cells


cells

Early stages ofdevelopment

None to dat

GovernmentRTD&D Funding

Substantial underFP6.

National limitedexcept regionally in

Germany.

Rolling 5-yearprogramme in place

Some establishedprogrammes. Stated

commitment toincreased spending.

Series ofprogrammes but no

long termprogrammes

identified

Some establishedprogrammes. Stated

commitment toincreased spending.

Programmes dback to 1950

though currenfragmented

Public Procurement Some incentives atnational level

Active No specific activity No specific activity No specific activity Identified(Transport)

Installed Capacity 13MW 40MWLimited Canadiantechnology mainly

exportedNot identified Limited Limited

Strategic Actions

Development of EU-wide harmonised

roadmap (supportedby HyNet and

HyWays)IPHE Member - Notall Member States

IPHE MemberCluster development

IPHE MemberIPHE Member

Detailed review ofcurrent position.IPHE Member

Moves towardeveloping det

strategy.IPHE Memb

Industry AssociationSupport

Some national levelboth for hydrogen

and fuel cells

Both for hydrogenand fuel cells



Hydrogen None identifi

7/28/2019 Eur 21685 En

16/207

7/28/2019 Eur 21685 En

17/207


xiii

Basic research

It is generally accepted that the USA supports the largest R&D programmes, but figures are notreadily available for the purposes of this study to accurately assess the differences betweencountries. Consequently, the comparisons made in this study are at a high level and provide onlya broad understanding of the current and future competitive positioning of EU H2/FC RTD&D. Asummary of the public R&D funding for H2/FC technologies and the number of organisationsand people employed in the industry is presented below:

no.organisations 1

no.employees1

Public R&D funding fornext 5 years2

USA 3,800 US$1.7bn (1.4bn) Bush initiative

Canada 2,400 + 300 CA$1.1bn (700m)

Japan31bn + 100bn

(1.0bn)

METI + NEDO

China 60 350 100m MOST-programmes

India 20m

South Korea Won 300bn (220m) Nat FC Tech Plan

EU 240m FP6 + Quick Start

Germany 350 2,800 70m +400m Federal + States

UK 100 850 120m

Italy 70 850 90m

Denmark 20 210 40m Emphasises SOFC

Finland 20 100 20m Distributed energy

Norway 30 150 30mSweden 30 100 35m

Switzerland 55 400 40m

(1) Source: Fuel Cells Today, Fuel Cells Canada, Business Communications

(2) Note: R&D budgets are extrapolated in many cases from current H2/FC spending and are necessarily inaccurate

The US H2/FC R&D activities are spread from fundamental research through to systemdevelopment and demonstration. Support is available for the uptake of new technologies oncethey are developed, which is primarily focused at demonstrations, especially of vehicles. Supportis also provided for educational programmes for raising public awareness and spreading

commercial best practice. Each programme has well defined parameters aimed at differentaspects of the technology development value chain.

Many of the programmes identified in this study do propose elements that drive the uptake ofnew technology. Only in the USA does this appear to have been to be taken to the level that thereare substantial funds available from the public purse to support public procurement andexploitation that is not simply a demonstration project.

The EU as a whole holds a relatively strong position with respect to other countries and is by nomeans weak as compared to the USA. The recent announcement of substantial funding to supportH2/FC RTD&D (2.8bn over 10 years) has firmly established the EU as a leader of

developments. When combined with Member State level activity, which focuses on national

7/28/2019 Eur 21685 En

18/207


xiv

competencies, this position is enhanced. However, caution must be taken in understandingprecisely where much of the intellectual property lies that forms the basis of this Europeanactivity.

Basic research in hydrogen production seems to concentrate currently on steam reformation.Electrolysis used to be as active a research area but is now declining. The USA is well presentedin all major hydrogen production technologies: steam reforming, electrolysis and gasification. Inphotocatalytic, biochemical and thermochemical hydrogen production, Europe is very muchbehind Japan. Japanese are increasing their contribution to these technologies also.

The number of publications devoting to various technologies to store hydrogen has increasedrapidly during the last few years. Metal hydrides seems to be the hottest research area. China isclearly the most prolific publisher in the world. Both Korean and Indian organizations havepublished more in the field than organizations from any European nation. In hydrogen storage

technologies, Europeans can reach number two position only in the liquid hydrogen storage andalanates publications. However, in recent years both Japan and South East Asian nations haveincreased their publishing effort in the liquid hydrogen storage much more that the Europeanones have. If this trend continues, Europe will lose its number two position in just a few years.

In conversion, PEMFC is the most important technology worldwide; the share of patents forPEMFC has increased significantly especially in recent years. Japan focuses heavily on thistechnology, whereas the USA and the EU-15 have a broader research approach. Europe is theleading publisher of the SOFC related research, the most active nations being England, Denmarkand Germany. In direct methanol related fuel cell research, Europe is the leading publishertogether with the USA.

System Integration/Demonstration Act ivit ies

Demonstration programmes are a useful practical indicator of how technology development isprogressing towards commercialisation. This is not necessarily related to the country in which thedemonstration takes place and therefore it is not necessarily a measure of competitiveness. Forexample, Canadian technologies are being demonstrated almost everywhere but in Canada. Thelack of demonstrators in Canada only exemplifies a policy choice targeting the promotion ofcomponents and systems developments, not a lack of Canadian competitiveness in this area.

Outside the major players of North America, Japan and the EU, there is little industrial activity.However, it is important to understand this in context, since the H2/FC industry as whole is not

large. The possibility of strategic support in any of the minor countries such as China, SouthKorea or India could have a significant impact.

North America has almost the same number of installed units as its main competitors combined.Japan and the EU have similar numbers of installations, but if this is considered in terms ofgeographical size or population, then Japan has a significant lead.

In terms of installed stationary capacity, the USA leads efforts though this is predominantly usingPAFC and PEM. The situation regarding MCFC, SOFC and AFC is more even when comparedto the EU. Japan does have a number of installations, but not to the US levels, and Canada hashighlighted that this is an area where it has not provided sufficient support in the past.

7/28/2019 Eur 21685 En

19/207


xv

In the USA, a minor but significant budgetary change is the increased emphasis on safety codesand standards, which are an important requirement for future commercialisation. A tripling of the

budget reflects the longer term aspirations of the US Government in ensuring that the potentialbarriers to market penetration are addressed at an early stage.

Manufacturers, Markets and Applications

Electrolysis and steam reforming are currently the most common production methods andpressurised hydrogen the most common storage technology. However, this does not accuratelyassess areas that are being researched, but represents how the companies are using theirtechnology in collaboration with the fuel cell industry.

There are a significant number of international commercial partnerships across technology andapplication development areas. How these relationships affect a true assessment of industrialactivity across the EU is difficult to determine and should be examined in more detail. Althoughthese partnerships provide the opportunity to make commercial progress, they do have thepotential to restrict the development of made in EU technologies. There are short term benefitsthat these partnerships offer, but in the long term there is a risk that the EU could provide lowvalue expertise that could easily be transferred to third countries such as China and South Korea.

There is a need to assess H2/FC RTD support in terms of a companys overall RTD support. Thisis straightforward for small companies, whose sole activity is the development of H2/FCtechnologies. However, for larger companies the significance of this activity may be muchsmaller in respect to its other activities. An understanding of this would support a moretransparent assessment of the priority that H2/FC RTD&D is taking.

In Europe there is just one independent, publicly quoted fuel cell developer, whereas around 12companies in North America have a market capitalisation in excess of US$3bn (2.5bn).Moreover, in Europe FP6 programmes are dominated by large corporations and provide max50% funding, while in the USA 80% for R&D is not unusual. The mobilisation of this level ofsupport provides strong backing to future R&D plans.

Traditionally, Japanese engineering and technology industries have had very close relationshipswith Government funding programmes. The same is true for hydrogen and fuel cells. Japansestablished industries are leading the way in development of new technologies and concepts,particularly the automotive manufacturers and electronics companies. For example, the big push

in hybrid engine technology believed to be the major stepping stone towards FC and H2 intransport came from Japanese manufacturers Toyota and Honda.

A summary comparison of technological strengths and weaknesses across all countriesexamined is shown on the following page:

7/28/2019 Eur 21685 En

20/207


Technological Strengths andWeaknesses.

RegionVariable EU USA Canada Japan Australia China

Codes andStandards

National levelcollaboration notall Member States

Strong lead Strong lead Strong leadNo substantial

activityNo strategy

Hydrogen

Production -General

Storage Limitedto traditionalDistribution

(fuelling stations)

Production (Steamreforming)

Storage - GeneralStorage Limited

to traditionalDistribution

(fuelling stations)

Production(hydrolysis)

Storage Limitedto traditionalDistribution

Production (Steamreforming, Photo-catalytic, Bio- andThermochemical)Storage Limited

to traditionalDistribution

(fuelling stations)

Production -Limited

Storage - LimitedDistribution

Production Limited

Storage Metahydrides, Nano

materialsStorage - Limite

Distribution

Fuel CellsMCFC, SOFC,

AFC, PEM, PAFC,DMFC

MCFC, SOFC,AFC, PEM, PAFC,

DMFC


DMFC


DMFC


DMFC

MCFC, SOFCAFC, PEM, PAF

DMFCApplication areas

of interestAll All All All All

Transport andremote power

InternationalCollaboration

Developed DevelopedStrongly

DevelopedDeveloped Limited None

RTD&D Structure

DevelopedGenerally morefragmented atnational level

(except regionallyin Germany)

Well developed blue sky through to

demonstrators

DevelopedPoor level of

demonstrators

Well developed blue sky through to

demonstratorsUncoordinated Uncoordinated

Research BaseLarge andaccessible

Large andaccessible

LimitedLarge andaccessible

LimitedLarge andaccessible

Public Private

CollaborationAdvanced Advanced Advanced Advanced Limited Limited

General RTD&DFocus

H2/FC Minorcompared to other

energytechnologies


energytechnologies


energytechnologies


energytechnologies

H2/FC nascentH2/FC nascen

Other R&DPriorities

7/28/2019 Eur 21685 En

21/207


xvii

The majority of H2/FC activity across the EU is focussed in Germany and to a lesser extent inthe UK. Germanys strength is characterised by high concentration of fuel cell and hydrogentechnology developers and demonstration projects and by the highest number of H2/FC

patents produced. Germany exemplifies the strengths required to build a competitive industryand mimics many of the strengths that are being exhibited by the EUs main competitors.

This SWOT analysis has enabled a clearer picture to emerge of how the EUs H2/FC RTD&Dcurrent activities compare. The EUs internal capability and organisation in terms of strengthsand weaknesses on H2/FC RTD&D are summarised as follows:

EUs strengths and weaknesses on H2/FC RTD&D

INTERNAL Strengths Weaknesses

Political

High level ministerial supportDeveloping cross department policiesWell defined drivers

Development of an EU wide harmonisedroadmap (supported by the EU project HyNetand HyWays) fostering and encouragingindividual national roadmaps

Substantial R&D budgetsNational R&D programmes (particularly in

Germany at both national and regional levels).Some incentives to support technology

adoption at national levelDemonstration programmes

Currently no incentives for public procurementLack of understanding of current strengths and

weaknesses

Uneven spread of expertise and activity acrossEUEU FPs previously too inflexible/slow to

respond to changing R&D needsNational priorities vary (although wider

research approaches may help identify thebest technologies)

Lack of pan-EU co-ordination of effortH2/FC lags other energy R&D fundingLack of national roadmaps

RegulatoryLegal

Establishing international codes and standardsNational bodies are collaborating

Issue of pan-EU co-ordination

Environmental

Kyoto targets (EU and national level)Clean air targets (EU and national level)Recognition of longer term requirements for

new and renewable energy resources

Differing priorities across EU-MS

Socio-Economic

Access to large skill baseHigh quality scientific and engineering base

suitable for future commercial needsIndustrial competitiveness (historic)Competitiveness as an issue regarding H2/FC

technologiesHigh transport fuel costs

Education/raising awareness minimal acrosswhole EU (large variances)

Addressing needs of Accession CountriesIssue of pan-EU incentives vs national

frameworks

Technological

SOFC, PEM, MCFC (partly using US co-developed technology)

Hydrogen technologies generallyNational R&D institutions publishing peer

reviewed reportsPatents (mainly Germany)Good grasp of CHP potentialsWell developed system integration know how

Demonstration projects that exploit EUdeveloped technologies

AFC, PAFCNo evidence of capability from Accession

CountriesReducing costs of technology90% of EU patents from Germany

CommercialIndustrial(Financial)

Industry base covers all technologiesPublic private partnershipsComponents industry (materials, volume

manufacturing)Industry clusters (predominantly in German)

Knowledge of industry shape unknown (what isinfluence of non-EU companies)

Making technologies competitiveAccess to venture capital funding to support

industry

The external (non-EU) factors in terms of opportunities and threats on H2/FC RTD&D aresummarised as follows:

7/28/2019 Eur 21685 En

22/207


xviii

EUs opportunities and threats on H2/FC RTD&D

EXTERNAL Opportuni ties Threats

PoliticalSupport for the creation of marketsInternational trade and R&D collaborative

agreements

US taking lead on global developments (e.g.IPHE)

RegulatoryLegal

Development of international regulations,codes and standards

Federal/Member State policies not yetharmonised

EnvironmentalDrive international agenda towards adoption of

clean technologies

Socio-economic

Filling knowledge gaps (complementingexisting capability)

Low cost workforce: manufacturing, R&DOff-shoring by EU companiesComplexity of forming a cross-border

consensus

Technological

International partnering to developtechnologies

Introduction of technology demonstratorsInwards/outward technology and knowledge

transferFuelling networksSustainable transport (two, four-wheels)Domestic/district combined heat and powerRemote, auxiliary, emergency power

applicationsSustainable hydrogen production (all routes)Hydrogen storage (all technologies)System integration (balance of plant

technologies, etc)Hybrid systemsWidely existing natural gas pipeline grid

Other renewable technologies adoptedCompetitors establish strong partnershipsInnovation lags competitorsPEM (Canada, US, Japan)PAFC (US, Japan)SOFC (Japan, US)MCFC (US, Japan)H2 production (Japan, US)H2 storage (US, Japan, other Asia)All technologies - longer-term (China, South

Korea, etc.)Transport applications (US, Japan, Canada)Small stationary (US, Canada, Japan)Large Stationary (US, Japan)Portable application (Japan, USAll applications longer term (South Korea,

China, etc.)

CommercialIndustrial(Financial)

Cost competitive application of technologies forniche markets

PatentingLicensing technologyAll technology areasMergers and acquisitions

Domestic infrastructure creates nicheopportunities not accessible to overseascompanies

Competitors establish lead industriesSupport from financial markets concentrated

on competitorsFailure to meet market needsCommercial scale manufacturingMergers and acquisitionsEmergence of new players China, India,

South Korea

7/28/2019 Eur 21685 En

23/207


1

1 INTRODUCTION

1.1 BACKGROUND

Hydrogen and fuel cells stand out as interesting medium to long-term options for solving theever-increasing demand for energy and at the same time address the concerns related to

peoples health, the environment and energy security. Opinions differ broadly when it comesto outlining roadmaps, though. Economic interests at stake are enormous and all major global

players are investing in RTD&D. Institutional players are trying to keep track of this fast-evolving scene. International cooperation is considered key to accelerate progress in fuel celland hydrogen technologies. The European Commissions High Level Group for Hydrogenand Fuel Cells established in October 2002 recently recommended creating a Hydrogen andFuel Cell Technology Platform to ensure coherence in strategic approach and action, in line

with the building of the European Research Area in non-nuclear research energy. The HighLevel Group for Hydrogen and Fuel Cells has indeed proposed five actions to a hydrogenfuture in Europe:

Creation of a Political Framework that enables new technologies to gain market entry Definition and implementation of a European Strategic Research Agenda Definition and implementation of a Deployment Strategy Elaboration of a European Roadmap for hydrogen and fuel cells Creation of a European Hydrogen and Fuel Cell Technology Platform/Partnership steered

by an Advisory Council to stimulate and implement these actions1.

Limited time and resources have been dedicated so far to perform comparative analyses ofhydrogen and fuel cell initiatives worldwide so as to assess the EU competitive and pre-competitive position vis--vis its main competitors.

Particular attention is raised by the USA, which is fast moving towards a leading role in thearea of hydrogen-powered fuel cells and hydrogen RTD&D. Indeed, the US proposed in April2003 at the International Energy Agency the establishment of the International Partnership forthe Hydrogen Economy aimed at fostering collaboration in pre-competitive R&D. The

partnership kicked off in November 2003. To date, Australia, Brazil, Canada, China, France,Germany, Iceland, India, Italy, Japan, South Korea, Norway, Russia, the UK and the USA, as

well as the European Commission have signed up to the agreement, which aims to leveragelimited resources to resolve technical and regulatory issues. Additionally, the US departmentof Energy has adopted a detailed multi-year RD&D plan based on the National HydrogenEnergy Roadmap adopted in November 2002. The agreement on the Fuel Cell Annex to theUS-EU Non-Nuclear Energy Co-operation Agreement between the US and the EU in June2003 highlights the importance of bilateral co-operation in the development of hydrogen as anenergy source.

Other countries or grouping of countries are actively supporting RTD&D in the area ofhydrogen and hydrogen-powered fuel cells: the Canadian Office of Energy R&D, which co-ordinates the Government of Canadas participation in international energy R&D, the Energy

1 Hydrogen Energy and Fuel Cells. A Vision of Our Future, Interim and Summary Reports, High level Groupfor Hydrogen and Fuel Cells, June 2003.

7/28/2019 Eur 21685 En

24/207


2

Working Group of the Asia-Pacific Economic Co-operation2 as well as the JapaneseGovernment are certainly worth mentioning in this regard.

The International Energy Agency (IEA) is playing an important role as an international forumfor discussions and policy-making. Background studies such as Automotive Fuels for the

Future and Bus Systems for the Future produced by the IEA for mobile applicationsprovide useful input into an overall analysis of where technologies stand. Additionally, theIEA through the newly created Hydrogen Co-ordination Group is compiling an inventory onon-going RTD programmes and activities relevant to hydrogen and covering all applicationswhich will be ready in 2004. Nonetheless comparative information and analysis on where

public and private RTD&D is heading to and how are missing in an area in whichinternational cooperation is considered to be very important to accelerate progress.

Philippe Busquin presented on 18 March 2004 current and future key EU initiatives for atransition from a fossil fuel-based economy to a hydrogen-based one. Some 100 million ofEU funding, matched by an equivalent amount of private sector support, is currently being

awarded to research and demonstration projects for hydrogen and fuel cell after the first callfor proposals of the 6th EU Research Framework Programme (FP6 2002-2006). This will bereinforced via further calls for R&D proposals worth a public and private sector support of

300m (EU funding 150m). The European Growth Initiative earmarks an indicative 2.8bn public and private funding for these partnerships over the next ten years.

1.2 OBJECTIVES

The study is aimed at gathering a comprehensive body of knowledge about on-going andplanned RTD&D in the area of fuel cells and hydrogen for generic, transport-oriented and

stationary programmes and activities outside the EU with the purpose of understanding thecurrent situation of international competition and assessing the position of the EU on theworld scene. More specifically, the objectives of the work are:

Provide an overview of existing national and company strategies and other longer termexpectations to hydrogen energy worldwide;

Gain insight of the interaction between public and privately-funded RTD&D; With patent and bibliographic analysis, analyse the diffusion of and describe trends in

hydrogen and fuel cells technology, with particular emphasis on the way the research isaccumulating;

Analyse regional/national characteristics of hydrogen and fuel cell research andtechnological development for the USA, Canada, Japan, Australia, China, India and SouthKorea;

Identify strengths, weaknesses, opportunities and threats of the hydrogen and fuel cellsRTD&D in the EU with respect to that of the USA, Canada, Japan, Australia, China, Indiaand South Korea with foreseen trend development of these;

Summarise, synthesise and present all conducted work for a readable and communicativereport.

2 The Asia-Pacific Economic Co-operation (APEC) comprises Australia, Brunei, Canada, Indonesia, Japan,South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and the United States of Americaas founding members as well as Chile, China, Honk Kong, Mexico, Papua New Guinea, Peru, Russia, Taiwanand Vietnam.

7/28/2019 Eur 21685 En

25/207


3

Findings are organised according to different levels of analysis and are geared towardsproviding IPTS with suitable material to outline sound action lines for EU policies in the fieldof transport applications of hydrogen and fuel cells RTD&D. The study examines publiclyand privately funded research, the number of scientific research publications and the numberof international patent registrations and international standards.

Findings are aimed at providing direct input to the recently launched Fuel Cell and HydrogenTechnology Platform/Partnership and useful information to the Technology PlatformERTRAC (European Road Transport Advisory Council).

1.3 APPROACH AND METHODOLOGY

SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is an established method forassisting the formulation of strategy. SWOT analysis aims to identify the strengths andweaknesses of an organisation and the opportunities and threats in the environment. Having

identified these factors strategies are developed, which may build on the strengths, eliminatethe weaknesses, exploit the opportunities or counter the threats.

SWOT Analysis provides a snapshot of how resources and competencies stand up in thebroader environment in this case examining how the EUs H2/FC RTD&D activitiescompare to those of major competitors in the evolving energy and environment marketplace.The framework of the SWOT analysis draws on the information collected within this study onwho is doing what globally in the H2/FC RTD&D. From this we have assessed:

Internal (EU) capability and organisation in terms of strengths and weaknesses as well External (non-EU) factors in terms of threats and opportunities.

SWOT analysis has its origins in the 1960s.3 In more recent years SWOT analysis has beenseen as somewhat outdated and superseded by resource-based planning4 and competency-

based planning5. The resource-based view focuses on the internal resources, capabilities andcore competencies of the organisation, and advocates building strategies on these foundationsto assure the competitiveness of the organisation and the attractiveness of the industrial sector.Likewise the competency-based view identifies an organisations competencies as thefoundation for strategy development.

These more contemporary approaches to strategy formulation are developments of the internal

appraisal of SWOT analysis rather that a replacement for it. The advantage of SWOT analysisis its attempt to connect internal and external factors to stimulate new strategies. Hence,resource and competency-based planning can enrich SWOT analysis by developing theinternal perspective whilst keeping internal and external perspectives in play simultaneously.Rather than seeing SWOT analysis as an outdated technique therefore, it is possible to see itas a firm foundation for resource and competency-based planning.

3 Learned, E.P., Christensen, C.R., Andrews, K.E., Guth, W.D., 1965. Business Policy: Text and Cases.Irwin, Homewood, IL.

4 Wenerfelt, B., 1984. A resource-based view of the .rm. Strategic Management Journal 5, 171180.Grant, R.M., 1991. The resource-based theory of competitive advantage. California Management Review33 (3), 114135.

5 Ulrich, D., Lake, D., 1990. Organizational Capability: Competing from the Inside Out. Wiley, New York.

7/28/2019 Eur 21685 En

26/207


4

We have not assessed commercial opportunities specifically. Currently, market opportunitiesfor both fuel cells and hydrogen are widely reported with predictions for usage based on theexpected timescales for the technologies to mature. For the purposes of this study, thesecommercial opportunities are open for all, on the assumption that globalisation/open marketswill remain so for the foreseeable future.

This SWOT analysis does not go into technological detail, but provides a more generalassessment of past, current and future H2/FC RTD&D and highlights areas where greaterdepth of analysis and understanding may be valuable in the future.

The SWOT analysis has been performed using three streams of information:

Screening of H2/FC publicly and privately funded RTD&D programmes in the EU, EUMember States, Norway, USA, Canada, Japan, Australia, China, India and South Korea,along the following categories: (a) public programmes: programme owner, budget, time

period, research topics, name and reference (Annex I); (b) private programmes: company,visions, targets, future key research areas, main action points, name and reference (Annex

II); A bibliographic analysis considering H2/FC-related scientific articles and conference

papers appearing in Compendex and Inspec databases since 1994. The phases of hydrogenproduction, storage, conversion and use form the backbone of the analysis showing thetrend in the number of publications and further detailing specific technologies andauthorship rates per world region (Annex III);

A quantitative analysis of H2/FC patenting in the considered countries and world regionscovering World Patents and European Patents and subsequently analysed per technologytrend and geographic trend. (Annex IV).

The preliminary findings of the SWOT analysis were commented by international experts inthe field and further refined at an expert workshop held in June 2004.

The report presents sets off by providing the reader with an overview of the main aspectscharacterising the hydrogen economy and then moves on to analyse:

The European policy context, including EU and Member States strategies; A characterisation of H2/FC RTD&D outside the EU The SWOT analysis of H2/FC technologies in Europe, based on the information and

analyses indicated above, and;

A brief discussion of options for a European H2/FC strategy.

7/28/2019 Eur 21685 En

27/207


5

2 HYDROGEN ECONOMY FRAMEWORK

2.1 HYDROGEN ENERGY SYSTEM

In modern innovation theory, innovation is no longer considered as an isolated event in spaceand time but a path-dependent process, which is influenced by various actors with differentskills and knowledge. Innovations always take place in a context that has a unique historycharacterised by the interdependent development of various technologies, institutions andactors. Hence, in analysing firm behaviour or formulating public policy with respect toinnovation, it is necessary to the level of the system as a whole.

To reach these goals, it is suggested that the international position of EUs research andtechnological development and demonstration on hydrogen and fuel cells is assessed

according to four critical development areas for technology adaptation. These areas include:

Basic research System integration/demonstration activities Manufacturers, markets and applications stationary, transportation and portable Public awareness/demand management.

The hydrogen energy system is depicted in Figure 1.

Figure 1 Hydrogen Energy System

Hydrogen Production

Hydrogen is an energy carrier that can be produced from a range of sources. Currently, nearly96% of all hydrogen production uses fossil fuels. The steam reforming of natural gas is themost used process, used in more than 90% of total hydrogen production. It is possible to useheavier hydrocarbons, such as coal, in association with partial oxidation processes, but thecapital investment required is higher for this solution than for the steam reforming.

7/28/2019 Eur 21685 En

28/207


6

Most hydrogen is currently produced in refineries as a co-product of catalytic reforming, animportant stage in the formulation of gasoline. The implementation of electrolytic hydrogentechnology, which costs significantly more, remains marginal.

Steam reforming and oxidation of fossil fuels involve significant CO2 emissions. Therefore,

the focus has been on producing hydrogen using emerging technologies that do not emit CO2.These include:

Coal gasification with CO2 capture and storage Natural gas reforming with CO2 capture and storage Electrolysis of water with carbon-free sources of electricity Cogeneration in a high temperature gas-cooled nuclear reactor Biomass gasification.

Breakthrough technologies, such as photoelectrochemical water splitting and algal systemsfor water production, are speculative and unlikely to be practical before 2050.

Distribution

Hydrogen is more expensive than conventional fuels partly because of relatively high distribution

and retail costs. Hydrogen is a very light gas, which is a handicap for storage and transmission.It is usually delivered compressed in cylinders or pipes, or else as a liquid (253C). The mostcommonly used system of transmission is the pipeline, with the world network totaling over2,500 km. Most pipe systems are located in Europe (1,500 km) and the United States (900km).

Pipeline transport of hydrogen involves relatively high pressures (between 10 and 100 bars)

and may require the use of special materials. Pressure at the fuel station needs to be increasedto 600-800 bars for gaseous on-board storage. Such pressurisation is energy-intensive,requiring between 0.05 and 0.1 GJ electricity per GJ hydrogen (and up to 0.15 GJ if thehydrogen were delivered at atmospheric pressure).

The International Energy Agency gives estimate for unit supply cost of nine sources ofhydrogen. These estimates include production and distribution to the retail customer. Theyreflect costs for a system with full economies of scale and cost reductions achieved through

progressive improvements in commercial scale production (technology learning). Thetechnology learning effects depend on there being sufficient installed capacity. If installationof each type of capacity were to be limited, these cost reductions could not be counted upon.

Natural gas or coal with CO2 capture and storage is the least costly source ($12-$18/GJ). Thenext least costly group of technologies consists of biomass, onshore wind and nuclear, allwithin a range of $14-$30/GJ. The most costly technologies ($27-$82/GJ) are hydrogen

production from electrolysis using offshore wind, solar thermal, and solar PV.6

In the future, gains should be possible at the hydrogen distribution. Research undertaken inthe United States shows that non-negligible gains could be made by developing smallhydrogen production units located at service stations. This would also, at least initially,obviate the need for heavy investment in a dense hydrogen pipe network. The US Departmentof Energy has set an objective of $12.50/GJ by 2010 for this type of system.

6 IEA. 2003. World Energy Investment Outlook 2003, Paris: OECD.

7/28/2019 Eur 21685 En

29/207


7

The distribution and retail costs depend on the configuration of the hydrogen supply systemand on the scale of hydrogen demand. If there is low demand (such as in a transition period),decentralised production and/or delivery of hydrogen by trucks to refuelling stations may bethe best option: the cost during the transition period to a full-scale hydrogen economy is oneof the key problems. Over the longer term, a hydrogen pipeline distribution system would be

a less costly solution; and it would also be necessary for CO 2 capture. The energy efficiencyof central production would also be significantly higher and the investment costs lower.

Storage

There are currently two storage alternatives under review: the storage of compressedhydrogen at 350 or 700 bar and the storage of liquefied hydrogen (253C). Most automobilemanufacturers are leaning towards high-pressure storage for their demonstration operations.However, neither of these solutions is fully satisfactory. Using compressed hydrogen storagelimits vehicle range. Difficult for the general public to implement, storage in liquid form isalso energy-intensive: at best, the operation consumes 35% of the energy available in the tank(not counting the energy required to produce electricity for the liquefaction unit). While liquidand gaseous storage are proven technologies, binary metal hydrides and carbon nanotubes arestill at a laboratory stage.

On-board hydrogen storage is a high-cost factor. The most favourable costs to be announcedare in the vicinity of1,000/kgof stored hydrogen. Some sources mention values that are fourtimes as high. But it would take 4 to 5 kg of hydrogen to ensure a satisfactory range (400 to500 km) to a vehicle. In other words, it would cost something like 4,000-5,000 to storehydrogen on board a HFCV. Mass production would reduce the tank cost, but only in therange of200-500 per kg of hydrogen, according to the US Department of Energy.

From a strictly economic perspective, it is hard to choose between the on-board storagesolutions (compressed or liquefied hydrogen). For compressed hydrogen technologies, thewell to fuel tank cost ranges from 20 to 50/GJ. The most economical solution uses naturalgas as the raw material; the cost of applications based on coal and biomass is 30% and 50%higher, respectively. The highest costs (35-50/GJ) are associated with the electrolysis ofwater. Of course, this ranking could change in the event of tension affecting natural gas

prices. By comparison, conventional oil-based motor fuels obtain a well to fuel tank priceof8/GJ, given a crude price of $25/bbl7.

Seeking to get around the constraints associated with hydrogen storage/distribution, severalresearch teams set out to adapt fuel cell systems to run on liquid motor fuels (e.g. methanol or

gasoline) that would be easier to store on board. They did this by associating to a fuel cells anhydrogen production unit (reformer) compatible with these motor fuels. These projects haveencountered major development difficulties: the start-up time is still long (several minutes);energy consumption is high at start-up; the management of transient operating conditionscontinues to be difficult; and the problems related to the emission of CO2 and pollutants (NOx,etc.) have not been solved. In August 2004, the US Department of Energy stopped financingresearch programs in the area. General Motors had previously announced that it wasabandoning its research activities in this field.8

7 Well-to-wheels analysis of future automotive fuels and powertrains in the European context, EUCAR,JRC, CONCAWE, November 2003

8 DOEs original intent in funding development of fuel cell vehicles (FCVs) powered by hydrogenproduced by reforming gasoline on-board the vehicle was to bridge the gap from todays gasoline/diesel-powered ICE engines to higher efficiency FCVs powered by hydrogen produced in distributed or centralfuel processing stations and stored on-board the vehicle. The efficiency gap has been largely bridged by

7/28/2019 Eur 21685 En

30/207


8

Conversion

Fuel cells convert oxygen and hydrogen into electricity. While the use of fossil fuels releasesCO2 emissions into the atmosphere, expected improvements in the efficiency of fuel cells willresult in much lower emissions compared to conventional coal or gas plants. Moreover, the

CO2 released is in concentrated form, which makes its captureand sequestration much easier.

A major advantage of fuel cells is their flexibility. They come in different sizes, from a fewwatts for specific applications to many megawatts, suitable for larger-scale electricitygeneration. The future success of fuel cells is not solely intertwined with the concept of ahydrogen economy. SOFC technology is proving that current hydrocarbon-based fuels can beused efficiently and with minimal resulting emissions.

Factors that limit their use now are their high capital cost compared to conventionalalternatives, their relatively unproven status and limited commercialisation, and the fuelchoice for hydrogen production and its cost.

There are many fuel cell technologies, but the most prominent are:

Polymer Electrolyte Membrane Fuel Cells: Polymer electrolyte membrane (PEM) fuelcells structure is based on a Teflonbackbone. Because of this, they are relatively strong,stable substances. PEM fuel cells typically operate at temperatures no higher than 60C to80C because of the membranes structural limitations. Operating PEM stacks at highertemperatures (120C for transportation and 150C for stationary applications), however,would yield significant energy benefits. Heat rejection in fuel cell systems is easier athigher temperatures, permitting the use of smaller heat exchangers. A number of researchgroups are expected to report on polymer electrolyte membranes that are able to workefficiently at temperatures up to 250C. PEM fuel cells are widely considered thetechnology of choice for passenger cars. Market analysts9 predicts that PEM fuel cells willrepresent a North American market value of about $340 million by 2007. This representsabout 1.7 times the estimated value of the SOFC market for 2008.

Solid Oxide Fuel Cells:These fuel cells use ceramic materials, which can achieve veryhigh operating temperatures, reaching 1,000C. The electricity-generating efficiency ofthese fuel cells can reach 50% and, combined with a gas turbine, efficiencies can reach60% to 70%. The conversion of fuel to hydrogen takes place inside the cell. The use ofsolid materials is advantageous because it avoids electrolyte leakage and offers greaterstability. The high operating temperature requires costly ceramic materials. Research iscontinuing to produce materials that would reduce costs. There are several projects at the

demonstration stage. Direct Methanol Fuel Cells: In Direct Methanol Fuel Cell, liquid methanol is oxidised

directly at the anode. Recent advances in direct methanol fuel cell research anddevelopment have been substantial, with the direct methanol fuel cell achieving asignificant fraction of the performance of direct hydrogen/air fuel cells. However, thereare critical obstacles to be overcome. To achieve high current, the necessary amount ofexpensive platinum catalyst is still much greater than the amount used in hydrogen/air

polymer electrolyte fuel cells. Methanol fuel crosses through the membrane from theanode to the cathode; this undesired methanol crossover decreases the performance andwastes fuel. Importantly, a direct methanol fuel cell system does not require a hydrogenstorage system or a reforming subsystem. This advantage, in terms of simplicity and cost,

hybrid (battery/ICE) technology available today and in production at performance levels comparable tothe projected performance of mature FCV technology operating on reformed gasoline.

9 BCC Inc. report E-122: fuel cells for large scale applications

7/28/2019 Eur 21685 En

31/207


9

means the direct methanol fuel cell system presents an attractive alternative to hydrogenor reformate-fed systems. In addition, a direct methanol fuel cell is considered a zeroemission vehicle.

Phosphoric Acid Fuel Cells:These were the first fuel cells to be commercialised, withmore than 200 units in operation worldwide. Phosphoric acid fuel cells use liquid

phosphoric acid as the electrolyte and operate at temperatures between 150C and 200C.Their electricity generation efficiency is relatively low, around 40% or less. If used incombined heat and power (CHP) mode, the efficiency can rise to 80%. Hydrogen comesfrom an external source, typically natural gas. These fuel cells now cost around 4,000 perkilowatt. Because of their low efficiency, these systems are likely to be replaced in thefuture by more advanced technologies, offering much higher efficiencies.

Molten Carbonate Fuel Cells: These fuel cells use lithium-potassium carbonate salts,which are heated to around 650C to conduct the ions to the electrodes. Because of thishigher operating temperature, molten carbonate fuel cells can achieve much higherelectricity-generating efficiencies, approaching 60%, and 85% if they produce heat alongwith electricity. The reform process takes place inside the cell, which eliminates the need

for an external reformer and therefore reduces costs. Another advantage is that theelectrodes can be made of nickel, which is cheaper than the platinum used in phosphoricacid systems. The main disadvantages are related to the durability of the stack, which isthe electricity production unit of the fuel cell. Commercially available molten carbonatefuel cells are expected to have a stack lifetime of five years with 25 years for the balanceof plant.

Alkaline Fuel Cells (AFC): operate at approx. 80C and have been extensively used inspacecraft and submarines. They have been tested to drive road vehicles such as minivans,using hydrogen as fuel.

Stationary applications

The major challenge facing fuel cells is their high initial cost. The cost of a fuel cell today isin the order of 4,000 per kW or more. A diesel generator or gas turbine would cost three toten times less. The development of less costly materials will help reduce costs. Theconversion of fuel to hydrogen inside the cell will also lower costs. Moreover, higheroperating temperatures allow for the exhaust heat to be used for space heating, water heatingor additional power production.

The fuel cells that are expected to achieve commercial viability in electricity generation firstwill involve the reforming of natural gas. The International Energy Agency estimates thatalmost all the fuel cells in use for electricity generation by 2030 will be for distributed power

generation. Fuel cells are expected to become competitive in distributed generation whencapital costs fall below 1,000 per kW, just over a quarter of current costs, and theirefficiency approaches 60%.

First pre-commercialized SOFC systems are expected to reach the market in 2004-2005depending on the individual markets: mainly larger stationary for North America (such asCombined Heat and Power CHP or power plant) and residential systems for Europe. Otheremerging markets include Japan, Australia, China and South Korea.

Automot ive applications

The costs of fuel cell systems and vehicles constitute a major uncertainty. Today, the cost of

fuel cells manufactured in a limited series exceeds 3,000/kW, compared to 30-50/kW formass-produced conventional ICEs. Most studies suggest that fuel cell cost will declinesubstantially with mass production and learning. The required fuel cell output in kW terms is

7/28/2019 Eur 21685 En

32/207


10

still unclear, but may be far less than current cars and light trucks. The life span of the fuelcell system currently is shorter than a normal vehicle life span. Although its durability isexpected to improve, the fuel cell may require replacement twice or three times during thevehicle life. These various uncertainties imply a wide range of cost estimates. At the low end,a fuel cell vehicle might eventually be no more expensive than a comparable ICE vehicle,

except for the hydrogen fuel tank. At the high end, the incremental cost of fuel cell cars couldremain greater than 10,000, probably too expensive to achieve commercial success. A recentIEA study estimated a long-run cost of 6,000 to 6,500 in excess of that of an ICE vehicle,even with fuel cell retail costs of 100 per kW (including on-board hydrogen storage) 10.

The total investment required in order to achieve a substantially hydrogen-powered transportsystem will depend both on the rate at which costs are reduced and the timing of thedevelopment of this system. Fast transition would be more expensive, particularly if itoccurred so fast as to render current investments obsolete before they were fully amortised.Another key factor is the rate of learning (cost reduction) achieved though increased

production. Different learning rates could result in widely different future costs. With

optimal learning and cost reduction, a mature fuel cell vehicle market could be reached at anincremental cost of several hundred billion dollars, but if cost reductions are slow, theincremental costs of achieving a mature market could be around $5 trillion, which wouldclearly reduce the likelihood of widespread hydrogen use in transport.11.

Portable applications

Demand for use in portable appliances is relatively insignificant in energy terms, but may behighly important in other ways. Demand from this sector is likely to be the first to emerge andwhile the energy demand for each fuel cell is very small, the potential size of the market couldlead to substantial cash flows for fuel cell manufacturers. This income could fund further

R&D accelerating further improvements in efficiency and cost reductions. In addition, thepotential benefits in terms of achieving public acceptance of fuel cells are considerable.

Many analysts suggest that portable appliances such as lap top computers, personal digitalassistants (PDAs), mobile telephones, etc. may be the first mass market for fuel celltechnology. Several major companies are currently working on fuel cell powered versions ofsuch appliances. Micro fuel cell technology has the potential to increase operating life for

portable electronic devices, delivering power up to 50 times longer and reducing fuellingtimes to less than a minute. This might outweigh the fact that refuelling appliances may, atleast initially, not be as convenient. Mid range fuel cell technology has potential applicationsfor cordless appliances, power tools, wheelchairs, bicycles, boats, home energy systems,

military field radios and portable computers. It also worth noting that portable appliancesoperate on DC power and there is therefore no need for costly inverters.

2.2 MARKET DEMAND FOR HYDROGEN ECONOMYTECHNOLOGIES

Market demand for hydrogen economy technologies is poorly understood. Many publishedstudies use broad presumptions based on expected growth in energy demand and how existingand new technologies are expected to satisfy that demand. Recently the IEA produced a

10 IEA. 2001, Saving Oil and Reducing CO2 Emissions in Transport: Options & strategies, Paris: OECD.11 IEA. 2003. World Energy Investment Outlook 2003, Paris: OECD.

7/28/2019 Eur 21685 En

33/207


11

report, which summarised this expectation of growth and how traditional and newtechnologies could be exploited.Figure 2 represents those estimations.

Figure 2 World Power Generation Capacity Additions 2000-2030 (Gigawatts)

Source Moving to a Hydrogen Economy: Dreams and Realities IEA 2003

The study predicts that despite the expected growth H2/FC, they will play only a minor role inthe overall energy economy.

2.3 H2/FC FUNDING

Government funding of H2/FC RTD&D is growing across the globe. All countries examinedin this study have increased their support over recent years and, while some are planningfurther increases in the future, others such as the US and EU have introduced major revisionsto their support programmes. However, the H2/FC budgets are still small when compared tospending in other energy areas as Figure 3 demonstrates.

Figure 3 Total Energy R&D for OECD Countries (1974-1998) (public)

0

2 , 0 0 0

4 , 0 0 0

6 , 0 0 0

8 , 0 0 0

1 0 , 0 0 0

1 2 , 0 0 0

1 4 , 0 0 0

1 6 , 0 0 0

1 9 7 4 1 9 7 7 1 9 8 0 1 9 8 3 1 9 8 6 1 9 8 9 1 9 9 2 1 9 9 5 1 9 9 8

US$(millions)

Y e a r

0

2 , 0 0 0

4 , 0 0 0

6 , 0 0 0

8 , 0 0 0

1 0 , 0 0 0

1 2 , 0 0 0

1 4 , 0 0 0

1 6 , 0 0 0

1 9 7 4 1 9 7 7 1 9 8 0 1 9 8 3 1 9 8 6 1 9 8 9 1 9 9 2 1 9 9 5 1 9 9 8

US$(millions)

Y e a r

Energy Conse rva t ion

Power & S t o rage Techno l og ies

Renew ab l e Energy

Foss i

Eur 21685 En

Documents

Transcript of Eur 21685 En