The Case for Hydrogen as an Industry Transformer

Special Feature By John McCormick

Wondering where the automotive industry is headed? Spend time with General Motors Corp.'s research and development chief, Larry Burns and you will come away with a pretty good idea.

I was fortunate enough to catch up with this far-sighted Detroit executive at a recent auto show. Our conversation ranged far and wide, from the ramifications of Hurricane Katrina, to the hegemony of the energy companies, to the major progress GM is making towards a commercially viable hydrogen fuel cell vehicle.

Like any large automaker, GM is concerned about the effect on sales of higher fuel prices, whether induced by hurricanes or other causes. But Burns believes that there will not be a radical change in consumers" choice of vehicles. "That’s not what happened in the previous oil shocks,” he points out. The bigger concern, not just for the automotive industry but for the entire economy, is the threat of a global recession.

The way Burns sees it, the big energy companies have little incentive to invest in new capacity production that carries the risk of being in excess of demand for fuel. “As such, the oil companies have the favorable perfect storm,” Burns argues, “in that they have capacity short of demand and they have constraints in their supply chain that explain away why they have to raise prices.”

The result is an “outrageous” transfer of wealth to the oil industry, as evidenced by the fact that ExxonMobil’s profits are greater than GM’s market capitalization. What galls Burns is that the auto industry has been driven to the point where it is giving its cars away and the oil industry is making the money on supplying fuel.

The potential long term answer to this dilemma is the hydrogen fuel cell vehicle. Burns plans to have an 'automotive competitive’ FCV ready by 2010, meaning a running vehicle that could be put into production on an equal footing - in terms of costs, performance and durability - with a conventional automobile. To hydrogen skeptics out there, this goal - the most aggressive of any the major automakers engaged in FCV development - seems optimistic, to put it mildly. But Burns points to dramatic progress at GM on improving the FCV hardware; for instance, the fuel stack power density (a measure of output versus size) has improved by a factor of 14 in the last seven years.

Today, GM’s fuel cell team has not reached its objective of $50 per kilowatt output for the hydrogen fueled powertrain, a figure that would make it cost competitive with a conventional internal combustion engine. But Burns is more confident than ever before that this competitive target can be met over the next five years.

Once the feasibility of FCVs is proven by GM, DaimlerChrysler, Ford, Toyota, Honda, VW and the other leading automakers all working hard in this field, then in Burn’s vision, the whole paradigm could change for the auto industry and the energy companies.

Currently, there is a proliferation of different powertrains and transmissions, from gas to diesels to hybrids. “So you’ve got a wide range of fuels that are rivals, a wide range in the cleanliness of fuels around the world, and the auto industry is carrying all that structural cost,” Burns contends. Instead, the auto industry will perfect and simplify the hydrogen fuel cell system and by doing so, shift the focus of competition to the energy companies, who will be forced to develop the multiple available sources of hydrogen.

All this presupposes that the automakers will not trip over themselves in their efforts to develop and refine the fuel cell vehicle itself. As Burns puts it: “If every automaker goes down a separate path to get to a hydrogen economy, we will be saying, ‘mine’s better than your’s’, and we’re going to be fighting each other in front of governments, in front of energy companies, in front of suppliers; that’s not going to shift the industry.”

One obvious answer would be collaboration at the highest level. Joint fuel cell technology development by GM and Toyota has been discussed repeatedly by both companies, but so far no deal has emerged. Clearly, Burns sees advantages to a GM/Toyota alliance on FCVs. “The benefits would be significant,” he notes, “in terms of accelerating the transformation to hydrogen and fuel cells.”

In 2010, we should know whether GM’s pioneering FCV role has borne fruit. And the ensuing decade will determine whether an industry transformation is to be realized or not.

John McCormick is a columnist for Autos Insider and can be reached at john.mccormick@detnews.com

Letter from Bob Gordon to John McCormick

Dear John;
Great Article on GM and H2

I had been wondering when GM would wake up; before they died in their sleep...apparently they are stirring!

The conspiracy theories have had the wrong players...the oil companies and our government, not the car companies...who sell iron and really don't care if they run on dog pooh methane.

But the government spenders really care...imagine what would happen to the tax revenues if the gasoline tax receipts were cut in half...the money to replace it would have to come from somewhere...the republicans do not want an increase in income taxes and the democrats don't want to have to cut social services...so by keeping MPG at a high level the taxes on the gasoline is available to fix the roads and keep the infrastructure fairly well maintained and everyone but the consumer and car companies are happy...especially the oil companies and their owners.

If you read all of our editorial remarks you will find that we have been a proponent of H2 from water for the past 10 years. Another A player in my conspiracy scenario is the "Greener's"...the sierra club and other so called do gooders...they seem to be more against nuclear energy than against emissions or high gas prices...and because H2 from water will require a cheap and renewable source of electricity to power the electrolysis, they are very quiet about the high cost of gasoline.

All this aside, I would like to republish your story on www.theautochannel.com...see you at NAIAS.

Let me know what youy think bgordon@theautochannel.com

Bob Gordon Principal and Executive Editor The Auto Channel