Most hydrogen is reformed from natural gas and oil. The United States creates as much as one-third of the world’s total hydrogen. Most of the current U.S. production is from steam reformation of natural gas, where hydrogen is extracted from CH₄ and H₂0.

About half of the United States hydrogen is used in the oil refining process. Praxair, a world leader in supplying industrial hydrogen explains, “By using hydrogen, heat and a catalyst, refineries can improve gasoline yields by cracking heavy oil molecules into lighter, more valuable fuels.” Praxair includes these benefits of hydrogen in oil refining:

• Higher gasoline yield
• Environmentally clean – no flue gas
• Improved gasoline octane quality and sensitivity
• Enhance feedstock
• Helps meet Clean Air Act regulations
• Lowers sulfur content of fuels
• Improves production flexibility

Critics of the Hydrogen Economy tend to ignore its multi-billion dollar success. Instead they focus on a worst case scenario – use coal generated electricity to reform natural gas, and then put the hydrogen in a truck that must drive one thousand miles, and then put the hydrogen in a million-dollar demonstration fuel cell vehicle. Call this dumb hydrogen.

With this type of scenario planning, IBM would never have made a computer. The initial market was seven computers in the planet. Computers were too expensive, slow, and unreliable. Today, of course, over one billion people hold more computing power in the palm of their hands than the first vacuum-tube monsters.

In transportation, smart hydrogen will drive growth, not dumb hydrogen. Smart hydrogen starts by making gasoline and diesel increasingly clean. Volumes increase. Production cost of hydrogen decreases. Smart hydrogen then expands by going into increasingly cost-effective hydrogen vehicles at reasonable costs. In Torrance, California, hydrogen is being pipelined to the fueling pump. $500 per month Honda FCX cars will use the hydrogen. $59,000 modified Toyota Priuses will use the hydrogen in conventional engines. Fuel costs will be competitive with gasoline. From where does this smart hydrogen come? It comes from the same hydrogen pipeline being used by the oil refiners. There are 1,500 km of hydrogen pipelines in the USA.

Armory Lovins, in his paper Twenty Hydrogen Myths states that “Producing hydrogen is already a large and mature global industry…. Globally, about 50 million metric tons of hydrogen is made for industrial use each year. The U.S. Department of Energy (DOE) reports that about 48% of global hydrogen production is reformed from natural gas, 30% from oil, and 18% from coal. Only 4% of the world’s hydrogen comes from electrolysis.”

Half of the California hydrogen fueling stations make hydrogen on-site, using electrolysis to split water into hydrogen and oxygen. Most use photovoltaics to power the electrolysis. In Palm Springs, wind is used for one station. Solar and wind hydrogen is green. It is also more expensive than the hydrogen in Torrance. It will take volume and improved technology to make green hydrogen cost-effective.

The United States has the potential to replace its dependency on foreign oil with fuel that is created at home. Short term, biofuels promise to be a big part of the equation. Long term, hydrogen could be a major fuel.

John Addison is the author of the book Revenue Rocket (Executive Summary at http://www.optimarkworks.com/) and the upcoming book Cleantech Marketing. Since 2002, John has been a Board member of the California Hydrogen Business Council (www.californiahydrogen.org). John Addison is president of OPTIMARK Inc. a firm that helps with marketing strategy and partner development. He is a popular speaker in the Americas, Europe and Asia.

I received an email from a friend last week asking me what I thought Shell’s announcement meant about their intent in Solar. I did not reply directly, not wanting to give a reply that was not based on any more knowledge than he had himself. However there seems to have been a flurry of announcements since then so I decided I had to try to assimilate them and decide on where I think Shell is going on renewables, so here goes:

Solar – on February 2, Shell announced that it had sold it crystalline silicon solar business to Solarvalue, lock, stock and barrel. This includes more than 500 employees as well as the mononcrystalline silicon ingot plant in Washington state and the manufacturing assembly plant in Camarillo. This transfer will make Solarvalue the largest US manufacturer and remove Shell from the equation completely. One Shell spokesman cited the silicon shortage and the difficulty in supplying product this past year as a major factor: I find this a little surprising since the silicon ingot manufacturing capability should have provided at least a little insulation from the current silicon shortage. Shell assert that they are still intent on supplying solar to the developing world and have signed a letter of intent with Good Energies to do so. Fine words – but they could even keep their promise without manufacturing! Not included in this transaction was Shell’s CIS technology, which they declared they would “further explore … technology and consider joint development” with St Gobain the French glass manufacturer. This does not seem to commit Shell to anything but cooperation and I strongly believe that EE Times was misled when, on February 20 they stated ” (Shell) announced last week that it will be devoting all of its billion-dollar R&D budget to CIS-based thin-film panels”. I suspect the actual investment is much closer to zero!

Wind – “Shell’s share of wind energy capacity is currently greater than 350MW, and is expected to reach approximately 500MW in 2007”, far short of industry leaders Ibedrola and FPL who each own over 3.25GW now! However Shell is already involved in several new wind projects in Europe, China and the US. Moreover they have been linked (but not yet convincingly) to a possible takeover of the Danish wind giant Vestas. It looks like Shell clearly favor wind over solar!

Biofuels – “Shell has an established position as the world’s largest marketer of Biofuels, as well as a leading developer of advanced Biofuels technologies”. I have no doubt that they do intend to milk this avenue for all that it is worth! Despite its potential drawbacks (see Heather Rae’s blog) it is less oily than its mainstream business yet is relatively easy to integrate into its current operations. Moreover it is likely to play a huge part in the developing African and Asian economies – especially China! While we might bemoan that it is not green, but yellow – or even something else, at least it is a certain step in the right direction of introducing an increasing degree of sustainability to energy supply – and that has to be good.

I have not tried above to form any conclusions on Shell’s intent with hydrogen and fuel cells: like all of their competitors they are heavily involved with the developing technologies but, understandably, have yet to demonstrate any clear commercial intent. As their CEO has said “we aim to develop at least one alternative energy such as wind, hydrogen or advanced solar technology, into a substantial business … (and) … continue our efforts to further expand our position as the largest marketer of Biofuels”. I don’t think any of my conclusions are at variance with this!

American Superconductor (AMSC) and the Tennessee Valley Authority (TVA), the largest public power provider in the U.S., have announced the start of production of two 12 megaVAR (MVAR) SuperVAR dynamic synchronous condensers.  When the first of these machines ships the first of the two machines in late 2006, the superconductor community will at last be able to point to a high temperature superconductor (HTS) device installed as part of a permanent electrical power system.

The SuperVAR is designed to stabilize grid voltages and increase service reliability, and can help maximize transmission capacity.  The device, which is effectively a superconducting electric motor designed to provide reactive power (VARs) to a power grid, is one of several tools in the toolbox of flexible AC transmission system (FACTS) technologies.  FACTS is seen by engineers as key to meeting electric power delivery, reliability, and quality requirements for the nation’s aging grid.  They are also seen as essential tools for integrating distributed and renewable energy generation into power systems.  

TVA’s decision to take on the 12MVAR machines follows extensive testing of the prototype DSC on a 13.8kilovolt circuit serving a 50MVA steel mill operated by the Hoeganaes Corporation.  Since it was first synchronized with the grid in January 2005, the device has reportedly operated successfully through over five million voltage sags and surges.

While propriety between partners can sometimes obscure a darker truth, it appears that Hoeganaes was a solid success, technically speaking, and that the additional devices were indeed not ordered as further proof technology and functionality.  Mike Ingram, Senior Manager of Transmission Technologies at TVA told Superconductor Week the devices on order “will solve a real problem on our system.”  

At 12MVAR, the two systems commissioned by TVA will each be rated 33% higher than the 8MVAR prototype, and will include a number of technology and engineering improvements.  With commercial applications typically calling for systems in the 50 to 150MVAR range, the 12MVAR DSCs will still be far smaller than the large-scale devices sought for most commercial applications.  

Scaling these machines to larger power ratings will likely involve real technical challenges, and whether the commercial rewards to such risks are worthwhile remains to be seen.  However, in addition to reaching a broader market, AMSC expects larger machines to cost less in terms of cost per kVAR, making them more competitive with other solutions such as STATCOM.  

With luck, the SuperVAR could provide AMSC with a real commercial (rather than R&D) driver for HTS wire demand, helping to generate the long-awaited economies of scale that could bring HTS wire costs closer to targets set by the DOE and others.  We covered some cost and technical details in Superconductor Week issue 2002, and provide an analysis in a forthcoming issue of how the SuperVAR fits in terms of functionality and economics within the FACTS market.  Regarding FACTS in general, one expert was unambiguous about the future: “The market will grow, and trends both in energy generation and in consumption will push that growth.”

Mark Bitterman, Executive Editor, Superconductor Week
http://www.superconductorweek.com

Earlier in my career, I was heavily involved in the establishment of the first wide-scale emissions trading program: the sulfur dioxide (SO2) allowances that were created as part of the acid rain mitigation provisions of the U.S. Clean Air Act of 1990. By virtually all accounts, the SO2 allowance market has been highly successful in enabling significant SO2 reductions across the U.S. at much lower cost to society than would otherwise have been the case. This experience should serve as a useful model for how to deal with greenhouse gas (GHG) emissions that contribute to global climate change.

Unfortunately, at least for U.S. stakeholders, that really hasn’t happened yet. Leadership in emissions trading markets has now shifted to Europe, where the EU countries have adopted a GHG trading scheme similar in structure to the U.S. SO2 allowance program, except instead applied to GHG emissions.

Because of a lack of any federal initiative to date in the U.S., it has been the states that have taken the lead in developing trading markets for GHG emissions. For instance, several states have sought to impose GHG trading schemes, such as the Regional Greenhouse Gas Initiative in the Northeastern U.S. But, these remain as yet concepts, still to be implemented in the future.

As of today, the only markets in the U.S. aiming to address global climate change are the so-called “REC” markets. Rather than markets on the GHG emissions themselves, several states have encouraged the penetration of cleaner power generation technologies by creating tradeable renewable energy credits (RECs) associated with each kilowatt-hour of electricity from a REC-eligible source.

In my view, the state-level REC markets have two fundamental flaws:

1. Many states with RECs have implemented different definitions of what sources qualify for REC treatment. In turn, this means that, rather than one nationwide REC market, we instead have separate REC markets for each state that have created RECs. While a number of firms (such as Evolution Markets) offer brokerage services in these various REC markets to help counterparties find each other and facilitate transactions, inevitably such balkanization of the REC markets serves to reduce the ability to transact relative to what could be achieved with a national market. Without adequate market “liquidity”, commodity markets tend to wither away into idleness. If that happens to the REC markets (as it has to some already), then the program is effectively useless. To advocates who claim that their renewable source of energy has an additional monetary value that can be monetized through REC trading, I can only say: “Watch out.”
2. More fundamentally, REC markets do not address the problem of emissions directly, but rather address them only indirectly by encouraging the adoption of new renewable energy sources. But, other than the significant difference in emissions, is wind or solar energy really “better” than coal-based energy? Is it better than reducing electricity consumption by an amount that offers the same environmental benefit? Why shouldn’t there be any incentive for owners of pre-existing coal-fired powerplants to reduce their GHG emissions by 99%, or even 9%? And, why should wind or solar energy qualify for RECs just by regulatory edict, but not some potential future zero-emission energy source (such as ocean or fusion)?

For these reasons, I believe REC markets are doomed to eventual failure, hopefully to be replaced by a true U.S. cap-and-trade GHG market. The good news is that most proposals for addressing climate change that have been increasingly emerging in the U.S. Congress include cap-and-trade mechanisms of one form or the other. It may take a few more years, but I am optimistic that a bill of this type will eventually be passed and signed into law. Once imposed, we can sweep the various state REC markets into the dustbin.