One of the new year announcements to come from Washington is the fuel cell program in which the government is portraying itself as the partner to the auto industry. This partnership certainly calls out for an explanation, especially the explanation as to who is footing the bill. The auto industry is about the biggest in the US economy. Directly and indirectly, taxes are paid to the government every time a car or a car part is sold. When government undertakes any scheme involving money, directly or indirectly that money will come from the taxpayer. The tax dollars to fund this partnership have to come from somewhere and from someone. If the amount of money the government is giving to the auto industry fuel cell program is less than or equal to their taxation payments, then an industry tax break would accomplish the same result, if not a better one than the partnership. An industry tax break would put more money into the hands of the auto makers than a partnership with the government. With the partnership, there are highly paid government bureaucrats and their consultants "advising" the auto industry.
If the auto industry is really employing the best qualified people in their research and development programs, why then would they need the involvement of the government's advisors and consultants? It could be the result of government personnel applying the economic theories of John Maynard Keynes to automotive technology, that is, the notion that the auto industry is not doing what's best for the economy. The growth of the auto industry resulted directly from government having made itself a partner to the road building industry a half a century ago. This followed government programs to reign in America's privately owned, profitable public transport systems.
The antitrust laws and regulations enacted by the Interstate Commerce Commission restrained the railroads. The railroads were at one time America's biggest corporations, the biggest employers and the biggest corporate taxpayers. Actually, they were the biggest tax collection agency, since all the were really doing was collecting a surcharge from the customers, then sending it to Washington. Privately owned intercity railroads as well as privately owned streetcar and electric transit operations all became subject to stringent and restrictive regulation, while paying up to 93-percent taxation rates on their profits. Private municipal electric companies were forced, under antitrust laws, to sell off their electric transit divisions. The combination of government action undermining successful, efficient, privately owned mass transportation companies and socialized state-sponsored road building, gave the auto industry its boost and made it into America's biggest employer.
The auto industry is dependant on the availability of an abundance of low-priced fuel, to power up the automobiles. Oil is a finite resource. The Caspian area north of Afghanistan may only hold less than half of the reserves of Saudi Arabia. As future oil production declines, drastic price escalations may be expected. The move away from oil and to a renewable domestically available fuel is believed to offer long term hope for the auto industry as well as the North American economy. The government officials may want to be able to stand up in front the people at a future time to declare that their programs have saved jobs. At an earlier time, government participation in road building did create jobs in one area of the economy, by destroying about an equal number of jobs in another of the economy, namely in the railroad and commercial transportation industry.
If the fuel cell program is successful, it will be paid for directly or indirectly by taxpayers. Money will be taken from other sectors of the economy and re-directed to the auto industry fuel cell program. Money that other industries could have used in research and development creating new products and services would instead be used to fund the government's partnership. What will not be seen would be the hundreds of companies that would lose their competitiveness, costing thousands of unseen jobs in smaller industries, because of a government partnership that had re-directed the use of money. Attention would instead be focused on the thousands of auto industry jobs that were saved, that is, if the fuel cell program is actually successful.
The fuel cell is not a modern piece of technology. The concept is about 200-years old. A fuel cell is essentially reversed electrolysis. In a high school science class, hydrogen is split from oxygen through electrolysis of water. Pieces of metal called electrodes are connected to the negative and positive terminals of a car battery at one end and the other end inserted into a basin of water. Hydrogen bubbles appear at one electrode while oxygen bubbles appear at the other electrode. In a fuel cell, hydrogen is pumped in at one side and air on the other side. Electricity is produced when the hydrogen reacts with the oxygen in the air, inside the fuel cell. Typically, a 1-kilowatt (1.35-Horsepower) fuel cell costs about US$2,500.00. The fuel cell powerplant of a 135-Horsepower car would cost $250,000.00 and the government partnership intends to reduce this cost for the private car.
In public transit, the fuel cell has revealed some contradictions. Municipal transit systems like Seattle, San Francisco and Vancouver (Canada) operate large fleets of electric trolleybuses. A fuel cell bus shares some components with a trolleybus (both use electric traction motors) and would operate out of the same garages. In terms of energy efficiency, fuel cell buses are quoted as being 30-percent efficient in city transit use, compared to 15-percent for a diesel bus. The electrolysis of water in the trolleybus garage, is about 70-percent efficient, while the PEM fuel cell generated electricity at a rate of 46-percent, for an overall 30-percent from the electrical power supply to the bus drivewheel (94-percent electric motor efficiency). The problem is that the time honored trolleybus operates at well over 70-percent from the same electrical power supply to the bus drivewheel. If the electricity is coming from a natural gas turbine power station operating at 40-percent efficiency, the overall efficency from power station energy supply to bus drivewheel works out to 12-percent for a hydrogen powered fuel cell bus and about 30-percent for a trolleybus.
In railway operations, the efficiencies would be similar, especially if the electricity came from either a coal or natural gas thermal power station. A hydrogen fueled PEM fuel cell locomotive would deliver an overall all efficiency of 12-percent, from the power station coalbunker to the locomotive drawbar. A more efficient SOFC fuel cell, which operates at high temperature and is unsuitable for automobile use, could raise fuel cell locomotive efficiency to 18-percent, from the power station coalbunker to the drawbar. Back in the halcyon days of steam on the rails in France, the renowned steam locomotive designer, Andre Chapelon, developed steam locomotives that regularly operated in the 12-percent efficiency range. Many years later in Argentina, a former student of Chapelon named L.D.Porta, refined an old steam locomotive to operate at 18-percent efficiency while burning low-grade coal on the Rio Turbio Railway system. .
The automobile fuel cell initiative could avoid many of embarrassing comparisons that can be made in transit bus and railway operations. For the automobile industry, the politically correct partnership would be extended to include the wind energy program and the solar energy industry to supply the clean renewable electrical energy to energize the fuel cell autos. For fuel cell and battery-powered cars to be recharged, large amounts of electric power will be needed. Batteries release heat while being charged up, they release heat while being discharged and they can only return about half the power required to re-charge them. The initiative to increase the use of electricity in private transportation has implications, as was highlighted by California's electricity debacle during the summer of 2001.
America and Canada are presently operating very close to the maximum limit of their electrical generating capacity. If fuel cell development is successful in producing a low cost fuel cell within a short period of time, demand for electricity would soar as fuel cell powered automobiles begin to roll off the production line. Brownouts and blackouts would likely result in a price-controlled power market. Power price escalations responding to soaring demand would likely result in an unregulated power market regime. The government's initiative in forming a partnership with the automobile industry to produce low cost automotive fuel cells, has the potential of causing a major economic debacle in the power industry's long term future. One of the reasons for this stems from the government's idea of power deregulation, a charade in which the State tells of the merits of a free power market. The State cancels a few regulations and leaves most of them in place or even adds new hidden regulation. Left on their own, the auto industry would take many years to develop a low-cost fuel cell. This lead-time would be needed by the power industry to assess the impact of the new technology and then decide on how to respond more appropriately. An accelerated fuel cell development program combined with a power industry held in a regulatory straight jacket is a formula for economic chaos.
January 22, 2002
