A national laboratory of the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy National Renewable Energy Laboratory Innovation for Our Energy Future Transitioning to a Hydrogen Technical Report NREL/TP-540-39423 Future: Learning from the February 2006 Alternative Fuels Experience M. Melendez NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 Transitioning to a Hydrogen Technical Report NREL/TP-540-39423 Future: Learning from the February 2006 Alternative Fuels Experience M. Melendez Prepared under Task No. HS06.1002 National Renewable Energy Laboratory 1617 Cole Boulevard, Golden, Colorado 80401-3393 303-275-3000 • www.nrel.gov Operated for the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by Midwest Research Institute • Battelle Contract No. DE-AC36-99-GO10337 NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. 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Box 62 Oak Ridge, TN 37831-0062 phone: 865.576.8401 fax: 865.576.5728 email: mailto:[email protected] Available for sale to the public, in paper, from: U.S. Department of Commerce National Technical Information Service 5285 Port Royal Road Springfield, VA 22161 phone: 800.553.6847 fax: 703.605.6900 email: [email protected] online ordering: http://www.ntis.gov/ordering.htm Printed on paper containing at least 50% wastepaper, including 20% postconsumer waste Table of Contents Background.................................................................................................................................................1 Project Description and Goals....................................................................................................................1 Transportation Transition............................................................................................................................2 Project Phases.............................................................................................................................................3 Literature Review....................................................................................................................................3 Collecting Expert Feedback....................................................................................................................5 Expert Feedback and Strategies..............................................................................................................7 Issues and Questions from the data.........................................................................................................9 Major Messages from the Analysis...........................................................................................................10 Conclusions and Recommendations.........................................................................................................11 Acknowledgements...................................................................................................................................13 Acronyms..................................................................................................................................................14 Appendices................................................................................................................................................15 Appendix A: AFV Lessons Learned Literature Summary...................................................................16 Appendix B: Barriers Questionnaire.....................................................................................................18 Appendix C: Strategies Questionnaire..................................................................................................19 Appendix D: Strategies Most Important for Each Barrier....................................................................20 iii Background In 2003, President George W. Bush launched the Hydrogen Fuel Initiative, which envisions a future hydrogen economy for the United States. A hydrogen economy would increase U.S. energy security, environmental quality, energy efficiency, and economic competitiveness. Transitioning to a hydrogen economy, however, presents numerous technological, institutional, and economic barriers. These barriers apply not only to the development of fuel cell vehicles and stationary fuel cells but to the development of a hydrogen fueling infrastructure. The President asked the U.S. Department of Energy (DOE) to lead the efforts to overcome these barriers. This effort is managed through the Office of Energy Efficiency and Renewable Energy (EERE) and spearheaded by the Hydrogen Fuel Cells and Infrastructure Technologies Program (HFC&IT) Since 1977, the National Renewable Energy Laboratory (NREL) has worked closely with DOE to develop and evaluate advanced transportation technologies, such as alternative fuels and hybrid electric vehicles. This work has been done in partnership with EERE’s FreedomCAR and Vehicle Technologies (FCVT) Program. NREL’s work with alternative fuels programs, such as Clean Cities, the Advanced Vehicle Testing Activity, and others has resulted in extensive knowledge in and experience with the implementation of alternative fuels. Because hydrogen vehicles face many of the same implementation challenges as other alternative fuel vehicles (AFVs), the lessons learned in this arena can guide the transition to hydrogen. This project was funded by the Systems Integration Program at NREL. It was designed to identify key concepts and lessons learned through the evaluation and deployment of alternative fuels. It marries the experience of FCVT programs with the technologies of the HFC&IT programs to suggest the most and least successful implementation strategies to pursue in the transition to a hydrogen-based transportation system. Project Description and Goals The challenges faced by alternative fuels during the last 20 years have much in common with those that face hydrogen (i.e., building markets simultaneously for new vehicle technologies, new fuels, and new infrastructure to support them both). The United States set goals in the 1980s and 1990s to derive a substantial portion of its fuel for transportation from non-petroleum alternative fuels by the early 2000s (10% in 2000, 30% in 2010). Although progress has been made through government and private efforts, these goals have not been met for a variety of reasons. To increase the chances for a timely and successful transition to hydrogen, the experiences of the alternative fuels industry must be understood and used to shape hydrogen transition strategies. The National Academy of Science (NAS) once suggested that “DOE might have its greatest impact by leading the private economy toward transition strategies rather than to ultimate visions of an energy infrastructure markedly different from the one now in place.1” The NRC also encouraged DOE to build upon past experience with alternative fuel technologies and their introduction into the marketplace. 1 “The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs,” pages 2-10, 2004, National Academies Press 1 A wealth of practical knowledge concerning alternative fuel technologies, products, national policies, and market introduction exists within industry, regulated fleets, and voluntary programs. Issues relating to consumer choice, capital investment, business decision making, manufacturing, and infrastructure construction will need to be understood in the alternative fuels context if the hydrogen transition is to occur efficiently. The overall objective of this project is to assess relevant knowledge within the alternative fuels community and recommend transitional strategies and tactics that will further the hydrogen transition in the transportation sector and help avoid stranded assets in the alternative fuels industry. Transportation Transition Transitioning personal transportation in the United States is a daunting challenge. The country has been firmly entrenched in petroleum-based, internal-combustion technology for nearly 100 years, encompassing not only the vehicle systems and refueling infrastructure but in vehicle maintenance and parts, fuel production and distribution, and in government policies. Because of this, movement away from a petroleum-based system to one of alternative fuels (including hydrogen) requires many changes or decisions to occur in parallel. For instance, not only would a vehicle manufacturer need to offer AFVs for sale but the fuel needs to be produced and distributed to a new refueling location to support the vehicles. In addition, laws and tax issues need to be worked out to allow for the use of such alternatives. The greatest challenge of the transition is to get all the critical elements spatially and temporally aligned. Table 1 shows the broad range of critical decision makers involved in transportation transition. In some cases, one person may fulfill two decision-making roles (such as when drivers make their own purchase decision versus when central fleet purchasers control the vehicles others operate). Table 1 also shows whether these decision makers are required to make behavioral changes to allow for the transition to various types of alternative transportation fuels. Table 1. Critical Decision Makers Involved in the Hydrogen Transition Alternative Transportation Technology Decision Maker Ethanol Hybrid Biodiesel Blends E85 CNG LPG H2 Auto Manufacturer X X X X X Auto Purchaser X X X X X Auto Driver X X X Auto Regulator X X X X X Fuel Producer X X X X Fuel Deliverer X X X X X Fuel Station Operator X X X X Fuel Regulator X X X X X X Fuel Purchaser X X X X X X Finally, Table 1 illustrates the complexity of coordination of each of these decision makers—so many people are required to make various transitions occur. For example, hybrid vehicle deployment requires that an auto manufacturer produce a hybrid vehicle, that a regulator certifies that vehicle for safety and 2 emissions, and that a consumer chooses a new vehicle technology. With E85 vehicles, not only must the manufacturer, regulator and consumer select the new technology, but a fuel producer and distributor must decide to participate in the emerging market, fuel regulators must establish codes and standards for the new fuel, stations must elect to offer the fuel for sale, and the person purchasing the fuel must elect to refuel their vehicle with E85. Hydrogen has the challenges of coordination of these stakeholders, plus potential issues with driving differences and utility of the hydrogen vehicle that affect the driver. With each additional decision maker the coordination to make the transition becomes more challenging. Project Phases The first step in understanding lessons learned in the deployment of alternative fuels and their application in the hydrogen transition was a review of topical literature (Phase I). Literature results were used as the basis for collecting input from experts involved in the deployment of alternative fuel and advanced technology vehicles (Phase II). These experts would ideally include technology developers, auto makers, alternative fuel providers, technology advocates, fleet customers, non-fleet customers, and policy makers. Because of limited resources and timing, this analysis focuses on two groups of stakeholders: in-house NREL engineers and scientists with expertise in the development and deployment of advanced technology vehicles (technology developers) and Clean Cities coordinators with expertise in building support for advanced vehicle technologies at the local level (technology advocates). Phase I—Literature Review A literature search for topics related to lessons learned in alternative fuels deployment was conducted. Nearly 40 relevant papers from an array of organizations—such as universities, government agencies, and environmental groups—were reviewed (Table 2). Literature Highlights The majority of papers were written by authors well • Universities—Past 15 years addressed known in the alternative fuels industry. Their technology but not market factors analyses were based upon up to 15 years of • U.S. Government/National Laboratories— observations in the alternative fuels transition. Most Anchor fleets led to most stable papers relied on this experience to draw conclusions infrastructure; fleets alone are not enough about the effectiveness of various strategies utilized • Non-Governmental Organizations (NGOs)— in AFV deployment activities. To most effectively Infrastructure incentives are critical summarize literature results for this study, a • Private Sector—Need public support compilation of the each paper’s main conclusions were documented and weighted based upon the • Other Government—Government should number of references in the literature. The complete share risk/stations should be located near fleets and along interstates breakdown of paper content is shown in Table 3. 3 Table 2. Summary of Organizations Represented in Literature Review Organization Number Universities 5 U.S. Government/National Laboratories 12 NGOs 9 Private Sector 4 Other Government 3 Table 3. Summary of Paper Perspectives/Content in Literature Review Source Number Data Analysis 2 Personal Insights 25 Modeling Results Analysis 4 Human Factors 2 Most of the literature reviewed emphasized specific barriers that are critical to overcome to successfully deploy AFVs. The most noted barriers from the literature are: • Availability of alternative fuel refueling infrastructure • Inconsistency in public policy and leadership messages • High costs of constructing refueling infrastructure • Low oil prices • Poor perceived or actual performance of AFVs (safety, power, attributes, range, reliability, etc.) • Competition against conventional fuel economies of scale • High costs of purchasing AFVs (compared with conventional vehicles) • Availability of AFVs • Lack of customer awareness and market acceptance • Lack of economic incentives • Alternative fuel availability • Lack of AFV service and maintenance training and technicians • Lack of trained fueling station operators • Poor fuel properties of alternative fuels • Inconsistent codes and standards The overall perspectives and outlooks from the literature were as varied as the authors. Government authors tended to focus more on the policy issues necessary for transition, while private sector writers addressed market factors and government support. In particular, much of the literature wrangled with the fleet concept that was the basis for alternative fuel deployment and how it related to consumer market development. The authors also identified and evaluated strategic focus areas used by the alternative fuels industry to overcome these barriers. The following list represents key activities that could be valuable in coordinating decision-makers and promoting advanced transportation technologies. 4 • Fleets (private, state, federal) • Niche markets (airports, taxis, school buses, transit vehicles) • Outreach and education • Partnerships • Tax incentives • Grants and other financial incentives • Regulatory incentives • Research and development • Demonstration projects • Alternative fuel blends • State and federal leadership and program messages Barriers and strategies were ranked by the total number of times they were mentioned in the literature. They were then used as the basis for collecting feedback on AFV lessons learned feedback from two stakeholder groups. Results for the barriers are shown in Table 4 and the strategies are discussed below. Phase II—Collecting Expert Feedback: Barriers The literature search identified a set of barriers and strategies that were of particular concern to the deployment of AFVs. This information was used as a basis for gathering information from experts in the AFV arena—in this case NREL scientists and Clean Cities coordinators. NREL Transportation Technology Engineers/Scientists Working in partnership with public and private organizations, NREL researches, develops, and demonstrates innovative vehicle and fuel technologies that reduce the nation's dependence on imported oil, and improve our energy security and air quality. NREL’s goal is to help industry introduce advanced, low emission, economically competitive vehicles and fuels into the marketplace. Work in this area supports several NREL programs and is led by the Center for Transportation Technologies and Systems, which has a staff of more than 50 transportation-related engineers and scientists. NREL personnel involved in this data gathering were engineers and scientists who approached the issue from both a scientific and strategic management point of view. Participants represented professionals who have been involved in alternative fuels research, development, and deployment for up to 20 years. The objective of the NREL input was for a scoping of the work and initial validation of the barriers and strategies identified in the literature review. To assist with this scoping, six research scientists participated in a meeting to discuss the literature findings. The barriers were discussed in detail and prioritized by participant vote, which determined the top five barriers most critical to the deployment of advanced transportation technologies. The barriers were ranked based on the total number of votes they received. In addition, the NREL scientists identified two barriers that were not identified in the literature: • Lack of dealer/sales staff knowledge • Complexity of change is large The NREL ranked barriers are shown in Table 4. 5 Local Clean Cities Coordinators Clean Cities was developed in 1993 in support of the goals of the Energy Policy Act (EPAct) of 1992. It is a network of 88 volunteer coalitions, which develop local public/private partnerships to promote alternative fuels and vehicles, fuel blends, fuel economy, hybrid vehicles, and idle reduction. Through its coalitions, Clean Cities draws local stakeholders from the public and private sectors. Stakeholders include local, state, and federal agencies; public health and transportation departments; transit agencies; auto manufacturers; car dealers; fuel suppliers; public utilities; and professional associations. Clean Cities believes that by building strategic partnerships on the local and national levels, it’s possible to align the most critical elements and decision-makers to transition from petroleum-based motor fuels. Clean Cities has been successful at implementing a national goal at a local level. Through their affiliation with Clean Cities, stakeholders have learned a lot about deploying AFVs and advanced technologies. Clean Cities coordinators are supporters of alternative fuel technologies that work in local and regional communities and organize local efforts to advance the goals of Clean Cities. From science and engineering to marketing and grant writing, these individuals have diverse backgrounds. Their common thread is that each coordinator supports advanced vehicle technologies on the local level, working closely with the key decision makers in their area. To collect input from coordinators, presentations were made at the following four regional Clean Cities meetings. • Midwest and southeast regions (July 2005) • Western region (August 2005) • Central region (September 2005) • Northeast region (October 2005) During each meeting, the overall project and objectives were presented, as well as the results from the literature review. General discussion was encouraged as time permitted and followed up with a questionnaire to quantify the significance of each (see Appendix B). Respondents were asked to rate each barrier from 1 to 5 (least to greatest) on the importance on their deployment activities. Barriers were ranked from these results by averaging the ratings of each barrier. Overall, more than 65 coordinators participated in the discussions, and 20 (of 88) coordinators responded to the questionnaire. In addition to the barriers identified in the literature, Clean Cities’ coordinators identified one additional barrier: • No real commitment from original equipment manufacturers (OEMs). Complete results from the questionnaire barrier ranking are shown in Table 4. 6