Memorandum submitted by Air Products PLC (LCT 22)

 

About Air Products PLC

Air Products is the world's largest hydrogen manufacturer and the market leader in hydrogen fuelling stations, having built over 100 stations and completed more than 90,000 safe vehicle fuellings. The company is leading efforts to develop a hydrogen infrastructure here in the United Kingdom, having supplied hydrogen fuelling facilities to Transport for London, the University of Birmingham, the University of Loughborough, Yorkshire Forward (Rotherham), CnEs Stornoway and Camden Council. These innovative projects represent the first steps in establishing hydrogen's place in the UK energy mix.

1.0 Executive Summary

1.1 Air Products is concerned that the UK is failing to prioritise the need to invest in hydrogen. As a transport fuel, hydrogen is a reality today and the UK is at a tipping point in terms of the need for investment.

1.2 Hydrogen and the necessary infrastructure can address long term issues associated with carbon emissions, air pollution, safety and energy storage.

1.3 A 'hydrogen fuel cell - electric hybrid' vehicle solves the problems associated with both emissions by conventional vehicles at the point of use and the inability of electric vehicles to offer equivalent range and performance of conventional vehicles. 'Hydrogen fuel cell - electric hybrid' vehicles provide the same value proposition as the petrol/diesel vehicles we drive today.

1.4 Hydrogen is also a solution to the problem of intermittent energy associated with some forms of renewable energy and the demands that electric cars would put on the grid.

1.5 Government procurement has the potential to drive hydrogen towards commercialisation. However it can also undermine the roll out of hydrogen development by focusing only on electric vehicles and recharging infrastructure.

1.6 Investment in low carbon technologies has the power to drive the UK economy and generate new jobs across sectors, including manufacturing and research.

1.7 New plasma gasification and molten carbonate fuel cell technologies are being positioned for UK roll out by Air Products to allow the generation of renewable power and/or green hydrogen from biogas or municipal solid waste thereby helping the government achieve multiple objectives.

 

2.0 Has the Government done enough in its stimulus package?

2.1 The £250 million investment pledged by the Government into ultra low carbon vehicles is welcome. It is crucial that the UK Government builds the infrastructure for low carbon vehicles and offers incentives for the purchase of low carbon vehicles.

2.2 The proposals for low carbon transport announced in the budget were, however, too focused on the short term solution of plug-in electric vehicles. All of the £250 million additional funding is going towards electric cars, with the vast majority used as an incentive for consumers to buy electric powered vehicles and to build the recharging infrastructure.

2.3 The Government should not neglect the need to build a wider technological infrastructure needed to support hydrogen fuel cell - electric hybrid vehicles as part of this initiative.

2.4 Centralised green hydrogen and synthesis gas production technologies should be also supported and not just hydrogen fuel cell applications in order to facilitate a wider industry transition to green technologies to allow the majority of supplies to the new hydrogen applications to be sustainable.

 

3.0 Which technologies have the biggest potential?

3.1 The future of low carbon technologies will include a mixture of different technologies and solutions. One of the key transformational technologies that will be in that mix is hydrogen fuel cell technology. UK investment in hydrogen fuelling infrastructure and hydrogen production technology is already starting to tackle the carbon emissions that are causing climate change and cutting air pollution in our cities. The UK has the potential to be a leader in hydrogen technologies creating jobs and driving the UK economy.

3.2 It is important that the Government does not only focus its energies on traditionally supported renewable energy sources at the expense of energy sources which can provide multiple products including green hydrogen. These other 'sustainable' energy sources have larger carbon footprints equivalent to renewable, but they have the potential to leap frog existing technologies if given the right government support.

3.3 A 'hydrogen fuel cell - electric hybrid' vehicle has a much broader user-potential than current plug-in electric vehicles. The batteries used to power electric vehicles cannot offer the same range, performance and refuelling time of a conventional vehicle and will therefore be attractive only to a niche market. By contrast, electric-hydrogen hybrid vehicles can compete with conventional vehicles in terms of range, performance and refuelling time and like electric vehicles give off no emissions at the point of use.

3.4 Hydrogen also addresses the further problem of air pollution. The only emissions from a hydrogen vehicle, at the point of use, are water and energy. The UK is subject to the highest levels of dangerous traffic fumes of any country in Europe and most of these fumes are focussed on Britain's cities. Air pollution is linked to respiratory disease, strokes and lower life expectancy as well as more minor ailments like eye and lung irritation.

3.5 A further benefit of hydrogen is that it addresses problems associated with the intermittent energy generated by renewable energy sources. The UK offers a vast resource in terms of renewable energy sources. In the future, it may be possible to generate large amounts of energy from this island's access to offshore wind and tidal power. There have, however, been problems identified with wind and other renewable forms of energy because of their intermittent nature. The outcome of sourcing energy from most renewables is that the energy supply is subject to uncontrollable conditions, including seasonal variation and is therefore not available on demand.

3.6 For intermittent renewable energy sources to be effective there needs to be facilities for the energy produced to be stored and large-scale electricity storage is not possible with current technologies. Batteries are not suitable for this purpose because they typically lose energy over time and so would not be effective for long term energy storage. By contrast, hydrogen is a very efficient energy carrier. Excess energy created by a renewable energy source can therefore be used to generate hydrogen, which can be converted back to electricity to feed the grid when required or alternatively used to fuel cars.

3.7 In addition, electric cars all being charged for several hours at a time during the same period of time stands to put considerable pressure on the grid and could potentially lead to "brown outs". Hydrogen would be able to take some of the pressure off of the grid by reducing the amount cars that are charged.

3.8 Plasma gasification plants and 'bio gas energy stations' also offer tremendous potential to produce heat, power and hydrogen from renewable sources.

3.9 The UK regions have begun to already invest in hydrogen and infrastructure but it needs political support and further investment if the UK is to realise its potential to be a leader in low carbon transport.

 

4.0 What is needed to achieve the development and deployment of them?

4.1 Hydrogen should be included in the RTFO as a matter of urgency.

4.2 The potential of supplying hydrogen and power from renewable feedstocks should be recognised in terms of improved support as a facilitator for future positioning of green hydrogen supply technology for when the vehicle market begins to open.

4.3 Sustainable green hydrogen supply from sources which have the option to supply both power and hydrogen should have the incentives for hydrogen supply equalised to that of power i.e. RoCs and other power support methods.

4.4 A minimum zero or ultra low emission quota for large car companies should be considered to accelerate the introduction of clean vehicles.

4.5 The incentive applied to electric cars should also apply specifically to hydrogen vehicles. Hydrogen vehicles are a form of electric vehicle only that the power is coming from a fuel cell rather than a battery or both. Even if this is not something that consumers can act on immediately, it would demonstrate that the UK Government has not discounted the potential of hydrogen and keep it in the forefront of people's minds.

4.6 In order to deliver the full potential of hydrogen as a low carbon fuel a hydrogen infrastructure, including the means to distribute hydrogen from the producer to the end user, to be created (i.e. fuelling stations). Hydrogen vehicles need to be produced in higher numbers to create economies of scale. It should be recognised in Government policy that the technology exists today to mass produce hydrogen powered vehicles and to put in place the necessary infrastructure. Daimler, Honda and Toyota have all said they expect the first stage mass production of hydrogen vehicles to begin to occur between 2013 and 2015. This is likely to be before any serious family sized, mass produced battery vehicle will.

4.7 Government investment in hydrogen powered fleets, as Transport for London is doing by using 5 hydrogen buses on a bus route from 2010, will be essential in moving these vehicles from demonstration to a commercial phase. Public procurement can make new technologies more cost effective by bringing the technology down its cost curve, more visible and can help to reduce the early adopter risk of investing in these technologies and thereby encourage their further development.

4.8 The car scrappage scheme is a welcome policy in terms of its potential impact on consumers purchasing. It is disappointing, however, that the Government has sought, through this scheme, to subsidise the car industry in the UK by encouraging people to buy new cars, without insisting on research, development and deployment that would hasten the move away from conventional fuels.

5.0 How realistic are the Committee on Climate Change's projections for the use of different types of new technologies?

 

5.1 The projections made by the Committee on Climate change are very conservative in their expectations for hydrogen. They suggest that hydrogen does not have a future for all forms of transport and that they will only be an option should battery technologies fail to materialise.

5.2 In fact, hydrogen vehicles are closer to commercialisation than many think. Hydrogen is already a realistic transport fuel today. In California an extensive hydrogen powered fleet already exists with further plans to extend the network of fuelling stations. Honda recently announced it will put hydrogen vehicles on sale in selected show rooms within the next 5 years.

5.3 The primary production method envisaged for sustainable hydrogen throughout much of the King report has been via wind energy and electrolyser. In actual fact, whilst there will be a niche for green electrically produced hydrogen, it will not be the primary method used to achieve the most reliable, lowest cost product. Energy stations and plasma gasification processes offer substantially reduced costs at scales industry will require to deliver the necessary quantities. Hydrogen liquefaction integrations with other process plant have been patented and designed and are waiting for the volumes to materialise before companies begin to commit to build them.

5.4 If industry has to pay a realistic price for carbon emitting solutions to avoid such costs will become more commercial. They will likely be large scale and reliable. These will offer the building blocks for the future sustainable hydrogen economy.

 

6.0 How important is it to the UK economy that it becomes a leading developer and exporter of low carbon technologies? What Government policy needs to be in place to do this?

6.1 Investing in the development of hydrogen in the UK is one of a number of ways that the UK can seize the opportunity to become a world leader in the environmental markets. Other countries, including Japan and the U.S. State of California are already investing heavily in research and development around hydrogen and fuel cell technologies through "hydrogen highway" initiatives.

6.2 The UK has some of the most innovative fuel cell companies in the world. Investment in new green technologies, such as hydrogen fuel cells, has the potential to generate new sources of revenue for the UK as well as new skilled jobs. A large number of permanent scientific and industrial jobs could be created from manufacturing parts, to building the hydrogen infrastructure and developing technology. Government needs to ensure that development and scientific expertise is not leached away from the UK by countries which offer an accelerated market penetration potential in the early stages of this technology transition.

 

7.0 Are we seeing impacts of a downturn on demand and investment in low carbon technologies? If so, how can this be addressed given the need to meet long term targets? What obstacles to investment are there?

7.1 We believe we are seeing companies be much more selective in the technologies they pursue. Larger companies are not commercialising the innovations of the entrepreneurial SME sector. Some companies are hoping to delay market change because investment in new manufacturing and plant cannot be made at the moment.

7.2 In general hydrogen business is down 20% because oil demand is down and electronics/consumer products are down.

 

May 2009