A First Step to Cutting Reliance on Oil- Develop the Hydrogen Fuel Cell Industry ASAP

WHICH events of recent days are likely to have the most significant long-term impact on American business and the economy?

By TOM REDBURN NY Times

To my mind, it was not the Bush administration’s new team of economic policy makers, who dominated the headlines last week. Nor the efforts to clean up Wall Street. And not the buildup of troops to fight a war in Iraq, either.

No, my money is on the barely noticed introduction by Honda and Toyota of a handful of experimental fuel cell vehicles to be tested by the State of California.

The possibility of running cars on fuel cells has been heavily promoted in business circles in recent years, and for good reason. Imagine a global economy no longer dependent on oil and the internal combustion engine. Fuel cells, because they produce energy from pure hydrogen rather than from petroleum, emit only water and heat as waste, potentially generating power without burning fossil fuels.

By making it possible to shift from petroleum to other primary energy sources, fuel cells could ease the threat of global warming without taking away the freedom and mobility that Americans and Europeans take for granted — and the rest of the world is determined to get for itself. China and India, with more than one-third of the world’s population, could sustain rapid growth for decades without choking the sky with pollutants and climate-damaging carbon dioxide.

But this vision of a truly sustainable economic future is far from inevitable. The technological challenges to building a commercially successful fuel cell vehicle are overwhelming. And who would supply them? Recasting the entire petroleum-based infrastructure to produce and deliver hydrogen safely to hundreds of millions of such vehicles presents a classic chicken-and-egg problem of immense proportions.

Every major automaker and oil company has a hydrogen or fuel cell research effort under way; supporters say they recognize that fossil fuels can’t last forever. Environmentalists carp that industry is simply trying to preserve the status quo and avoid more immediate steps to improve the fuel efficiency of conventional automobiles.

In a generally positive article on the efforts of General Motors to reinvent the automobile, Wired magazine noted that Rick Wagoner, G.M.’s chief executive, likes to call the fuel cell car "the holy grail," but that the description "may be a truer assessment than he intends." After all, as David Redstone, editor of Hydrogen & Fuel Cell Investor, a newsletter, told the magazine: "The holy grail is something you spend your entire life looking for. The whole point is that you never find it."

No one knows for sure whether a hydrogen economy is a possible dream.

"The oil companies and automakers are not doing this because they want to kill it," said Steven Taub, an expert on alternative fuels at Cambridge Energy Research Associates in Cambridge, Mass. "But they are not doing this because they know it’s the future, either. They’re doing it because they don’t know whether or not it’s the future."

It’s worth the risk to find out.

Bolstered by modest support from the government and a new commitment from the Bush administration, American automakers and other companies are already investing in fuel cell research. But an effort to put tens, if not hundreds of thousands, of vehicles on the road within a decade, which many analysts regard as feasible, would require a substantial commitment from Washington to help jump-start the market and support the investment in a supply infrastructure.

THIS shouldn’t mean giving up on less ambitious efforts, as both the White House and the auto industry have done in abandoning the research program to build a very fuel-efficient car using existing technology. If nothing else, as an insurance policy to avoid being usurped again by Japanese automakers, Detroit should also be investing more in fuel-efficient hybrid electric-gasoline vehicles like the Toyota Prius.

True, big federal programs like the Interstate System of highways, the development of the Internet and the creation of the semiconductor chip (which grew out of the space program) have gone out of fashion. But even in an era in which markets have rightly assumed a much greater role in allocating resources, government commitment is needed to set ambitious goals in crucial areas.

And when the nation is preparing to spend at least $100 billion to liberate Iraq from Saddam Hussein and much more to maintain stability in the Persian Gulf, nothing is more crucial than investing a fraction of that sum to help liberate the world economy from its addiction to Middle East oil.