The international race for leadership of the hydrogen fuel economy has already started

Countries such as Germany, Japan and Iceland are already ahead in the international race for supremacy in the future hydrogen economy, and will gain substantial political, commercial and environmental benefits, says a new report.

According to Hydrogen Futures: Towards a Sustainable Energy System, published by the Washington-based environmental think-tank, the Worldwatch Institute, governments wishing to be serious players in the hydrogen economy of the future need to introduce a number of policies to aid the development of their own hydrogen economies.

“The critical question is no longer whether we are headed toward hydrogen, but how we should get there, and how long it will take,” said Seth Dunn, author of the report. “Market forces alone will not move us along the best, fastest route to a hydrogen economy. Just as the [US] government catalysed the early development of the internet, there is a critical role for governments to play in speeding the creation of a clean hydrogen economy.”

Policies which governments should implement include: offering tax incentives to buyers of fuel cell vehicles; phasing out the $300 billion spent annually around the world to subsidise fossil fuel use; and boosting support for research and development aimed at improving hydrogen production and storage and cutting fuel cell costs, says Dunn. The problems that companies already involved in hydrogen energy technology are experiencing include the ‘chicken-and-egg’ scenario by suppliers of other alternative fuels. Car manufacturers are loathe to mass-produce hydrogen vehicles until the infrastructure is available to fuel them, and energy companies do not wish to build hydrogen refuelling stations if they do not anticipate significant demand for the fuel (see related story).

Dunn cites three countries that, he says, are among the leaders in the emerging hydrogen economy. Germany is leading the world in demonstrations of hydrogen and fuel cell vehicles, hydrogen-fuelling stations, and in the use of renewable energy to produce hydrogen from water through electrolysis. Japan is undertaking the most ambitions and comprehensive hydrogen initiatives in the world, and has plans to spend $4 billion by 2020. In Iceland, the first steps have already been taken towards turning the island into the world’s first hydrogen economy, with the beginning of the gradual replacement of petroleum in its buses, cars and fishing boats over the next 30 to 40 years (see related story).

“Just as the aggressive tapping of oil enabled the United States to eclipse Great Britain to become the economic and political power of the twentieth century, nations that move first to harness hydrogen could potentially erode US competitiveness,” said Dunn. The Bush administration may have already sown the first seeds of the country’s failure in the hydrogen race, with its energy policy, released in May this year describing the gas as merely “an important fuel of the distant future”. The federal budget for the US Energy Department’s hydrogen programme is currently only one fifth the amount proposed for clean coal technologies, and one tenth that for nuclear energy.

Leading multinational corporations are getting in on the act, with both Shell and BP establishing core hydrogen divisions within their companies; ExxonMobil, GM and Toyota teaming up to develop fuel cells; and Texaco becoming a major investor in hydrogen storage technology. The vehicle industry, in particular, is spending billions of dollars on hydrogen. DaimlerChrysler has committed $1 billion over 10 years to fuel cell development, and is working with Ford and Ballard Power Systems to put transit fuel cell buses on the road in Europe in 2002. General Motors aims to be the first car company to sell one million fuel cell vehicles, beginning mass production by 2010, and in June this year announced major investments in two companies specialising in hydrogen storage and delivery. Toyota has also announced that it is to start selling its fuel cell car in Japan in 2003.

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