in determining their likely competitive success, other characteristics are important as well. One of the important goals of the nation’s hydrogen program is to reduce emissions of CO2 into the atmosphere. Therefore, it is important to estimate whether shifts from gasoline-fueled automobiles to hydrogen-fueled vehicles or other substitutions from direct use of fossil fuels to hydrogen would reduce CO2 emissions and, if so, by how much. For each of the technological pathways considered, estimates were developed regarding the amount of CO2 that would be released into the atmosphere per kilogram of hydrogen produced. As a point of comparison, estimates were made of the CO2 that would be released into the atmosphere per gallon of gasoline use.

Since a goal of the committee’s analysis is to compare costs and CO2 release from gasoline with those from hydrogen, it was important to adjust the gasoline costs and CO2 releases to account for engine efficiency differences between gasoline-powered and fuel cell vehicles (FCVs). For gasoline-powered vehicles, the committee chose a gasoline hybrid electric vehicle (GHEV).

A second important goal of the hydrogen program is to improve energy security by substituting secure domestic resources for imported energy resources, particularly those that may be traded in unstable international markets. In motor vehicles, the use of hydrogen reduces the use of gasoline and therefore could reduce the imports of crude oil or petroleum products. However, if natural gas is the feedstock used to produce hydrogen, this substitution will increase the importation of natural gas, a commodity that may be subject to international market instability just as in the petroleum markets. On the other hand, if coal, biomass, wind, or solar energy are used to produce hydrogen, energy security could be improved. The committee developed estimates of the amount of natural gas that would be needed for technologies using natural gas to produce hydrogen; those data are presented in Chapter 6.

COST ESTIMATION METHODS

For each hydrogen production pathway and for both states of technology development (current and possible future), the committee developed engineering–economic models to estimate the primary inputs of feedstocks, of electricity or other energy, and of capital equipment for each standard-sized plant and to estimate the resulting outputs of H2 and CO2. Within the models, a distinction is made between pathways in which the CO2 is sequestered and those in which it is released back into the atmosphere. Additional costs of CO2 separation, capture, compression, transport, and sequestration are included for processes in which most of the CO2 is sequestered.

Prices of feedstocks and electricity, costs of major pieces of capital equipment, operation and maintenance (O&M) costs, and rates of return on investment are used to translate physical measures of inputs to total costs of operating the plant annually. The total annual cost and the total annual average hydrogen output together give the cost per kilogram of hydrogen produced.

The original engineering–economic models were developed for the committee by SFA Pacific (an engineering and economic consulting firm located in Mountain View, California), working closely with a member of this committee. Committee members extensively reviewed all of the original models and subsequently modified or replaced many of them. Most of the models of current technologies using fossil fuels still correspond closely to the original models, although the committee made some changes in these models. The models of possible future technologies were modified greatly to correspond with the best judgments of the committee members about technological possibilities and the economic parameters. The final models used to analyze renewable technologies for hydrogen production were based almost entirely on analysis by committee members. Thus, the final versions of the models and the resulting cost estimations reflect the overall judgment of the committee.

Committee judgments, and thus the final parameters in the models, are based on a combination of information derived from many presentations by experts and industry representatives, SFA Pacific data, the expertise and experience of committee members, and committee follow-up on specific issues with outside experts. Many components of the cost estimates rely heavily on technical and economic judgments by members of the committee and on the information gathered during the course of the study. Thus, ultimately, the quantification represents collective judgments of the committee members. As such, the estimates, although they may look precise, are simply estimates.

There remains significant uncertainty about what the actual costs of the technologies would be under current conditions. Costs are site-specific, particularly for wind and solar-based technologies; only single representative costs are reported. And the uncertainty about possible future technologies is substantially greater. In addition, because these cost estimates are so heavily dependent on the judgment of committee members, other people may well make very different technical and economic judgments, particularly about the possible future technologies. Therefore, costs could be either higher or lower than the committee’s estimates.

The committee’s analysis generally is based on the assumption that critical technology development programs will be successful. The committee needed estimates of what might possibly be achieved with concerted research and development in order to determine the impact on petroleum consumption and CO2 emissions of an optimistic but plausible future. The committee is not predicting that the requisite research and development will be pursued, or that all of these technical advances necessarily will be achieved, even with a concerted R&D program. The committee simply needed a framework for its further analysis. If the research



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