Industries Seek Fuel-Cell Funding

Nearly a year after President Bush touted a push toward fuel-cell cars as a top environmental priority, the auto and oil industries are starting to shop around Washington for taxpayer help in bankrolling the billions of dollars they say will be necessary to get the futuristic vehicles out of the lab and onto the road.

By JEFFREY BALL
Staff Reporter of THE WALL STREET JOURNAL

In a meeting last week with Senate members and staff, a General Motors Corp. official estimated it would cost $10 billion to $15 billion to build enough hydrogen fueling stations to start making fuel-cell vehicles a viable option for consumers. A Royal Dutch/Shell Group official put the figure at around $19 billion.

The discussion of how much money it is likely to take to start making the fuel-cell vision a reality comes as the Bush administration prepares to host an international conference this week in Washington where government officials from around the world are scheduled to discuss how to coordinate their hydrogen efforts.

GM’s and Shell’s estimates each overwhelms the approximately $2 billion the Bush administration has proposed spending over five years on a hydrogen push that President Bush announced in his State of the Union speech in January. While the administration’s hydrogen request — now a part of the pending energy bill — would focus on research, the GM and Shell figures would pay to install an initial wave of hydrogen fueling stations around the country.

Fuel cells are touted by auto makers and environmentalists as the ultimate solution to reducing pollution and global-warming emissions from cars and trucks. The devices convert hydrogen into electricity to power a vehicle’s wheels. That process itself doesn’t produce any emissions, but emissions do result from extracting the hydrogen from fossil fuel, whether it is done on board the vehicle or in a centralized refinery. Environmental activists argue the Bush hydrogen program won’t deliver sufficient environmental benefits because it relies on making hydrogen largely from fossil fuels. Administration officials have said they are researching how to cost-effectively produce hydrogen from renewable energy sources.

Amid that debate, GM and other automakers are expressing increasing confidence that they will figure out how to build reliable fuel-cell cars. The question gaining increasing attention is how to build an infrastructure of hydrogen stations where those cars could fill up.

HYDROGEN PUMPS?

General Motors and Shell have begun floating estimates of how much they think it’ll cost to build an initial network of hydrogen fueling stations to fill up the fuel-cell vehicles the auto industry says it wants to build. Their message: Washington will have to help pick up the tab.

GM and Shell officials stressed that their estimates of the cost of a hydrogen fueling network are only a start — and indeed are largely a guess. GM said its $10 billion to $15 billion figure would pay to build 11,700 new fueling stations, enough so a driver would always be within two miles of a hydrogen station in major urban areas and so there would be one station every 25 miles along major highways. That concentration of urban hydrogen stations would support about one million fuel-cell vehicles, GM said.

Shell said its $19 billion estimate would reconfigure about 44,000 existing gas stations — one-quarter of the U.S. total — to dispense hydrogen too. But Phil Baxley, vice president of Shell’s Shell Hydrogen unit, said even that figure could be "almost idealistic." He noted that a prototype hydrogen fueling station that Shell and GM are trying to install in the Washington, D.C., area is turning out to be more expensive than planned. For instance, he said, the station’s pavement will have to be thicker than expected to satisfy safety concerns in the local area about trucks carrying hydrogen , which is highly flammable.

GM and Shell executives said that they aren’t asking the federal government for a specific subsidy — yet. But they made clear that they think Washington will have to come up with tax breaks or other incentives to make the companies comfortable investing real money toward what boosters call a "hydrogen economy."

"You’re looking at tax breaks early on to help us get comfortable with the costs we’re incurring and the risks were taking," Mr. Baxley said. "If we could get comfortable that we could manage the risk early on, then as an industry we’d be much more comfortable in taking the risk."

Byron McCormick, GM’s executive director of fuel-cell activities, likened investment in building a hydrogen infrastructure in the 21st century to investment in the railroads in the 19th century or in the interstate-highway system in the 20th century. "We’re not going to Washington or anyplace else with the idea of somebody writing out a check for $15 billion at this point," he said. But he added: "There’ll be a point in time — maybe it’s a year or two away — where these kinds of how-do-you-get-it-funded decisions will be more important than the technology."

Write to Jeffrey Ball at

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