Big Oil is the Biggest User of Hydrogen

Hydrogen is a multi-billion dollar business. 50 million metric tons of hydrogen is sold annually. World hydrogen production is doubling every decade. The biggest growth driver is oil refineries’ need to make lower-sulfur fuels. Other growth drivers are the use of hydrogen in making fertilizer, food processing, semiconductor manufacturing, and by other growth industries. You use hydrogen in your vehicle. Gasoline is a hydrocarbon. Hydrogen is used to make gasoline achieve high-octane efficiency. Hydrogen is also used to make modern gasoline burn with far-less damaging emissions. The food you eat was probably grown with fertilizers that were processed with hydrogen. Many food oils are processed with hydrogen.

Most hydrogen is reformed from natural gas and oil. The United States creates as much as one-third of the world’s total hydrogen. Most of the current U.S. production is from steam reformation of natural gas, where hydrogen is extracted from CH4 and H20.

About half of the United States hydrogen is used in the oil refining process. Praxair, a world leader in supplying industrial hydrogen explains, “By using hydrogen, heat and a catalyst, refineries can improve gasoline yields by cracking heavy oil molecules into lighter, more valuable fuels.” Praxair includes these benefits of hydrogen in oil refining:

  • Higher gasoline yield
  • Environmentally clean – no flue gas
  • Improved gasoline octane quality and sensitivity
  • Enhance feedstock
  • Helps meet Clean Air Act regulations
  • Lowers sulfur content of fuels
  • Improves production flexibility

Critics of the Hydrogen Economy tend to ignore its multi-billion dollar success. Instead they focus on a worst case scenario – use coal generated electricity to reform natural gas, and then put the hydrogen in a truck that must drive one thousand miles, and then put the hydrogen in a million-dollar demonstration fuel cell vehicle. Call this dumb hydrogen.

With this type of scenario planning, IBM would never have made a computer. The initial market was seven computers in the planet. Computers were too expensive, slow, and unreliable. Today, of course, over one billion people hold more computing power in the palm of their hands than the first vacuum-tube monsters.

In transportation, smart hydrogen will drive growth, not dumb hydrogen. Smart hydrogen starts by making gasoline and diesel increasingly clean. Volumes increase. Production cost of hydrogen decreases. Smart hydrogen then expands by going into increasingly cost-effective hydrogen vehicles at reasonable costs. In Torrance, California, hydrogen is being pipelined to the fueling pump. $500 per month Honda FCX cars will use the hydrogen. $59,000 modified Toyota Priuses will use the hydrogen in conventional engines. Fuel costs will be competitive with gasoline. From where does this smart hydrogen come? It comes from the same hydrogen pipeline being used by the oil refiners. There are 1,500 km of hydrogen pipelines in the USA.

Armory Lovins, in his paper Twenty Hydrogen Myths states that “Producing hydrogen is already a large and mature global industry…. Globally, about 50 million metric tons of hydrogen is made for industrial use each year. The U.S. Department of Energy (DOE) reports that about 48% of global hydrogen production is reformed from natural gas, 30% from oil, and 18% from coal. Only 4% of the world’s hydrogen comes from electrolysis.”

Half of the California hydrogen fueling stations make hydrogen on-site, using electrolysis to split water into hydrogen and oxygen. Most use photovoltaics to power the electrolysis. In Palm Springs, wind is used for one station. Solar and wind hydrogen is green. It is also more expensive than the hydrogen in Torrance. It will take volume and improved technology to make green hydrogen cost-effective.

The United States has the potential to replace its dependency on foreign oil with fuel that is created at home. Short term, biofuels promise to be a big part of the equation. Long term, hydrogen could be a major fuel.

John Addison is the author of the book Revenue Rocket (Executive Summary at and the upcoming book Cleantech Marketing. Since 2002, John has been a Board member of the California Hydrogen Business Council ( John Addison is president of OPTIMARK Inc. a firm that helps with marketing strategy and partner development. He is a popular speaker in the Americas, Europe and Asia.

What is Bush Talking About?

President Bush made a well-publicized speech at Johnson Controls in Milwaukee on Feb. 20, in which he touted advanced technologies that will radically reshape the energy sector. “We’re on the edge of some amazing breakthroughs,” Bush claimed.

Bush Feb. 20 Speech

I guess the good news is that the President is increasing his efforts from the bully pulpit to be talking about the energy challenges we face. Nevertheless, I’m a bit perplexed.

In the speech, he talks about hybrids and plug-in hybrids, cellulosic ethanol, clean-coal, solar and wind energy, hydrogen and fuel cells, nuclear, and so on. As anyone working in advanced energy technologies for a while would know, there’s nothing really new here. All these technologies are theoretically viable, having been known about for years, and some work quite well today. However, it is simply that the economics for most of these don’t pass muster under current market and policy conditions.

If electricity were 50 cents/kwh and gasoline $10/gallon, many of these technologies would be rapidly penetrating the markets everywhere in the U.S. right now. But, I can’t imagine Bush is going to shift his stances and start proposing higher taxes on conventional energy sources to make the economics of these emerging energy technologies suddenly compelling.

Has he been informed about some technological, performance or cost breakthrough that’s just around the corner that I don’t know about? If not, then why he is so damned optimistic? And, will such boasting come back to haunt proponents of advanced energy as yet another case of overexuberant hype?

Wither Shell in renewables?

I received an email from a friend last week asking me what I thought Shell’s announcement meant about their intent in Solar. I did not reply directly, not wanting to give a reply that was not based on any more knowledge than he had himself. However there seems to have been a flurry of announcements since then so I decided I had to try to assimilate them and decide on where I think Shell is going on renewables, so here goes:

Solar – on February 2, Shell announced that it had sold it crystalline silicon solar business to Solarvalue, lock, stock and barrel. This includes more than 500 employees as well as the mononcrystalline silicon ingot plant in Washington state and the manufacturing assembly plant in Camarillo. This transfer will make Solarvalue the largest US manufacturer and remove Shell from the equation completely. One Shell spokesman cited the silicon shortage and the difficulty in supplying product this past year as a major factor: I find this a little surprising since the silicon ingot manufacturing capability should have provided at least a little insulation from the current silicon shortage. Shell assert that they are still intent on supplying solar to the developing world and have signed a letter of intent with Good Energies to do so. Fine words – but they could even keep their promise without manufacturing! Not included in this transaction was Shell’s CIS technology, which they declared they would “further explore … technology and consider joint development” with St Gobain the French glass manufacturer. This does not seem to commit Shell to anything but cooperation and I strongly believe that EE Times was misled when, on February 20 they stated ” (Shell) announced last week that it will be devoting all of its billion-dollar R&D budget to CIS-based thin-film panels”. I suspect the actual investment is much closer to zero!

Wind – “Shell’s share of wind energy capacity is currently greater than 350MW, and is expected to reach approximately 500MW in 2007”, far short of industry leaders Ibedrola and FPL who each own over 3.25GW now! However Shell is already involved in several new wind projects in Europe, China and the US. Moreover they have been linked (but not yet convincingly) to a possible takeover of the Danish wind giant Vestas. It looks like Shell clearly favor wind over solar!

Biofuels – “Shell has an established position as the world’s largest marketer of Biofuels, as well as a leading developer of advanced Biofuels technologies”. I have no doubt that they do intend to milk this avenue for all that it is worth! Despite its potential drawbacks (see Heather Rae’s blog) it is less oily than its mainstream business yet is relatively easy to integrate into its current operations. Moreover it is likely to play a huge part in the developing African and Asian economies – especially China! While we might bemoan that it is not green, but yellow – or even something else, at least it is a certain step in the right direction of introducing an increasing degree of sustainability to energy supply – and that has to be good.

I have not tried above to form any conclusions on Shell’s intent with hydrogen and fuel cells: like all of their competitors they are heavily involved with the developing technologies but, understandably, have yet to demonstrate any clear commercial intent. As their CEO has said “we aim to develop at least one alternative energy such as wind, hydrogen or advanced solar technology, into a substantial business … (and) … continue our efforts to further expand our position as the largest marketer of Biofuels”. I don’t think any of my conclusions are at variance with this!

All in One Hydrogen (H2) Generation and Flue Gas clean up (NOx, SOx, Hg)

I met with SRT Group recently, whose technology I find quite unique. They are under-resourced, and need some integration and scale up work done to prove out the concept for commercial use, but kept me captivated nonetheless. As advertised the technology has the potential to become a highly economic replacement for current coal fired power plant emissions systems.

The basic premise is using a closed loop hydrogen bromine electrolysis solution for flue gas clean-up (NOx, SOx, Hg), where one of the by products is hydrogen. A couple of fascinating claims:

  • The more sulphur in the flue gas, the more hydrogen you get.
  • The multi-pollutant removal system will basically pay for itself with production of hydrogen and other by products.

SRT’s technology is based on the Ispra Mark 13A process, which was developed by the European Research Centre and demonstrated successfully at the 30 MWt scale in Sardinia, Italy from 1989-91 to remediate SOx only. They have gotten hold of this process in the mid 1990s, and developed additional IP to expand it. Partial list of US patents includes: 5,443,804, 6,093,306, 5,219,671.

Process involves using a recycled hydrogen bromine electrolysis system

Stage 1: Flue gas is reacted in a bromine water solution, reducing the flue gas pollutants to a water solution of mercuric bromide precipitate, sulfuric acid, and nitric acid, and hydrogen bromide.

Stage 2: The hydrogen bromide is then electrolyzed to produce pure hydrogen, and bromine to be recycled.

Keys of note:

  • Removes all 3 major pollutants, NOx, SOx, Hg, in one step, reducing them to saleable product streams (H2, sulfuric and nitric acids)
  • All fluid recycled process, no consumable reagents, and no waste stream to dispose of, the bromine is not a fuel, but a recycled carrier
  • Small footprint
  • Produces significant H2 by volume as a byproduct of the clean-up. Note: electrolyzing Hydrogen bromide is a much less power intensive process than water electrolysis (about 40% of the electricity), a major factor in making this process attractive. Also quite interesting, hydrogen bromide electrolysis performance improves tremendously at slightly higher temperature (c. 100-150 C), and higher concentrations, meaning the process is very optimizable.
  • As sulfur is a reagent in this process, the higher the sulfur content of the flue gas, the more hydrogen is produced

Following the demonstration in Italy (for SOx remediation), EPRI promoted instead its limestone forced oxidation process for coal plants as a cheaper process, without including the advantages of NOx and mercury control (patented by SRT later), and hydrogen product value in the analysis. SRT believes that including these the process is highly economical. Data is available on this pilot. SRT has done additional work and patenting on expanding the process.
Conceivably would make hi sulfur eastern coal more valuable, perhaps even than western coal.

The next stage for SRT for which they are seeking funding is to develop a small scale prototype to confirm the multi-pollutant results, and inform the design of a scaled up system.

SRT Group is an R&D firm in Florida, operating predominantly under government grants with its work done with commercial partners and through university laboratories. The President is Robin Parker, a technology evangelist who has been working with this technology for some years, and courteously took the time to walk me through the details of his process. He can be reached at

American Superconductor’s SuperVAR Will Provide a Real Solution for Power Grid

American Superconductor (AMSC) and the Tennessee Valley Authority (TVA), the largest public power provider in the U.S., have announced the start of production of two 12 megaVAR (MVAR) SuperVAR dynamic synchronous condensers.  When the first of these machines ships the first of the two machines in late 2006, the superconductor community will at last be able to point to a high temperature superconductor (HTS) device installed as part of a permanent electrical power system.

The SuperVAR is designed to stabilize grid voltages and increase service reliability, and can help maximize transmission capacity.  The device, which is effectively a superconducting electric motor designed to provide reactive power (VARs) to a power grid, is one of several tools in the toolbox of flexible AC transmission system (FACTS) technologies.  FACTS is seen by engineers as key to meeting electric power delivery, reliability, and quality requirements for the nation’s aging grid.  They are also seen as essential tools for integrating distributed and renewable energy generation into power systems.  

TVA’s decision to take on the 12MVAR machines follows extensive testing of the prototype DSC on a 13.8kilovolt circuit serving a 50MVA steel mill operated by the Hoeganaes Corporation.  Since it was first synchronized with the grid in January 2005, the device has reportedly operated successfully through over five million voltage sags and surges.

While propriety between partners can sometimes obscure a darker truth, it appears that Hoeganaes was a solid success, technically speaking, and that the additional devices were indeed not ordered as further proof technology and functionality.  Mike Ingram, Senior Manager of Transmission Technologies at TVA told Superconductor Week the devices on order “will solve a real problem on our system.”  

At 12MVAR, the two systems commissioned by TVA will each be rated 33% higher than the 8MVAR prototype, and will include a number of technology and engineering improvements.  With commercial applications typically calling for systems in the 50 to 150MVAR range, the 12MVAR DSCs will still be far smaller than the large-scale devices sought for most commercial applications.  

Scaling these machines to larger power ratings will likely involve real technical challenges, and whether the commercial rewards to such risks are worthwhile remains to be seen.  However, in addition to reaching a broader market, AMSC expects larger machines to cost less in terms of cost per kVAR, making them more competitive with other solutions such as STATCOM.  

With luck, the SuperVAR could provide AMSC with a real commercial (rather than R&D) driver for HTS wire demand, helping to generate the long-awaited economies of scale that could bring HTS wire costs closer to targets set by the DOE and others.  We covered some cost and technical details in Superconductor Week issue 2002, and provide an analysis in a forthcoming issue of how the SuperVAR fits in terms of functionality and economics within the FACTS market.  Regarding FACTS in general, one expert was unambiguous about the future: “The market will grow, and trends both in energy generation and in consumption will push that growth.”

Mark Bitterman, Executive Editor, Superconductor Week

GM Goes Yellow

Wednesday, February 22, 2006

“Live Green, Go Yellow”
GM’s E85 Campaign

Between the SBX snowboard event and Evan Lysacek’s courageous come back in the Olympic free skate, you may have caught General Motor’s advertisement for E85, part of GM’s campaign to promote its “flex fuel” vehicles – cars and trucks that run on fuel comprising 85 percent ethyl alcohol (ethanol) and 15 percent petroleum.

“Let’s create a greener future with cleaner air, renewable energy. GM is harnessing the power of corn. Now you can too.” Young, active, multi-racial, urban and rural, the ad’s actors say, “What if an answer to our dependence on oil was growing right in front of us? What if we could lower greenhouse gas emissions with a fuel that grew back every year? What if a company had already built over 1.5 million cars and trucks that could run on this fuel? What if they were willing to build a whole lot more? What if we could live green by going yellow? Yellow is the E85 ethanol. And one car company will lead us there. Go to”

Primarily an air quality and greenhouse gas reduction pitch, the campaign assumes we all know what “living green” is – and that whatever it is, we want it, and ethanol is it. GM presumes, or hopes, that the “ethanol=green” message is enough to win over consumers.

GM’s campaign steers clear of fuel efficiency, possibly because of the company’s position on Corporate Average Fuel Economy (CAFE) standards for the internal combustion engine: “[GM’s] CAFE reflects which products its customers choose. In recent years, consumer trends for larger models, higher performance engines, and more features have offset much of the fuel economy increases from technologies we’ve implemented.” (Other American car manufacturers voiced similar sentiments at the Great Energy Efficiency Debate sponsored by the Alliance to Save Energy in Washington, DC, May 2005 saying, “we’re just giving consumers what they want.” The representative from Toyota, the maker of the Prius hybrid, listened contentedly as Detroit sputtered in defense of its position on fuel efficiency.)

How efficient, then, is ethanol? E&E Publishing’s Greenwire reports “ConocoPhillips CEO James Mulva pointed out that E85 gets only 75 percent fuel efficiency of traditional gasoline.” (“Oil companies question feasibility of E85 in national fuel strategy”)

The GM ad steers clear of messaging around domestic job creation – possibly because ethanol can just as likely come from Brazil as Iowa. The campaign steers clear of national security (reduced dependence on foreign oil). And the campaign doesn’t get into the problematic issue of competition between fuel and food crops (after all, it’s a marketing campaign).

As far as marketing “green” goes, it’s clever, youthful and provocative, particularly when compared with Detroit’s other media buys. The website, branded with integrated print and tv advertising, provides information about E85, a cornulator (a ‘corny’ twist on environmental offset calculations), ‘cobcasts’ (videos of Americans extolling corn), a ‘stalk car’ race (a game), and a schwag shop (t-shirts, screensavers) as well as links to the National Ethanol Vehicle Coalition and DOE’s Energy Efficiency and Renewable Energy (among other) websites.

But I can’t help but wonder…what if GM gave consumers fuel efficiency and better air quality and reduced emissions? That would be downright chartreuse.

:: When you’re really good, you get the gold! Just in time for the winter Olympics, SmartPower received its own Gold Medal for Best Television Advertising Series in the Third Annual Services Industry Advertising Awards (SIAA) – joining the likes of Verizon, Marriott, MasterCard and Time Warner Cable. ::

On U.S. Greenhouse Gas Trading Markets

Earlier in my career, I was heavily involved in the establishment of the first wide-scale emissions trading program: the sulfur dioxide (SO2) allowances that were created as part of the acid rain mitigation provisions of the U.S. Clean Air Act of 1990. By virtually all accounts, the SO2 allowance market has been highly successful in enabling significant SO2 reductions across the U.S. at much lower cost to society than would otherwise have been the case. This experience should serve as a useful model for how to deal with greenhouse gas (GHG) emissions that contribute to global climate change.

Unfortunately, at least for U.S. stakeholders, that really hasn’t happened yet. Leadership in emissions trading markets has now shifted to Europe, where the EU countries have adopted a GHG trading scheme similar in structure to the U.S. SO2 allowance program, except instead applied to GHG emissions.

Because of a lack of any federal initiative to date in the U.S., it has been the states that have taken the lead in developing trading markets for GHG emissions. For instance, several states have sought to impose GHG trading schemes, such as the Regional Greenhouse Gas Initiative in the Northeastern U.S. But, these remain as yet concepts, still to be implemented in the future.

As of today, the only markets in the U.S. aiming to address global climate change are the so-called “REC” markets. Rather than markets on the GHG emissions themselves, several states have encouraged the penetration of cleaner power generation technologies by creating tradeable renewable energy credits (RECs) associated with each kilowatt-hour of electricity from a REC-eligible source.

In my view, the state-level REC markets have two fundamental flaws:

  1. Many states with RECs have implemented different definitions of what sources qualify for REC treatment. In turn, this means that, rather than one nationwide REC market, we instead have separate REC markets for each state that have created RECs. While a number of firms (such as Evolution Markets) offer brokerage services in these various REC markets to help counterparties find each other and facilitate transactions, inevitably such balkanization of the REC markets serves to reduce the ability to transact relative to what could be achieved with a national market. Without adequate market “liquidity”, commodity markets tend to wither away into idleness. If that happens to the REC markets (as it has to some already), then the program is effectively useless. To advocates who claim that their renewable source of energy has an additional monetary value that can be monetized through REC trading, I can only say: “Watch out.”
  2. More fundamentally, REC markets do not address the problem of emissions directly, but rather address them only indirectly by encouraging the adoption of new renewable energy sources. But, other than the significant difference in emissions, is wind or solar energy really “better” than coal-based energy? Is it better than reducing electricity consumption by an amount that offers the same environmental benefit? Why shouldn’t there be any incentive for owners of pre-existing coal-fired powerplants to reduce their GHG emissions by 99%, or even 9%? And, why should wind or solar energy qualify for RECs just by regulatory edict, but not some potential future zero-emission energy source (such as ocean or fusion)?

For these reasons, I believe REC markets are doomed to eventual failure, hopefully to be replaced by a true U.S. cap-and-trade GHG market. The good news is that most proposals for addressing climate change that have been increasingly emerging in the U.S. Congress include cap-and-trade mechanisms of one form or the other. It may take a few more years, but I am optimistic that a bill of this type will eventually be passed and signed into law. Once imposed, we can sweep the various state REC markets into the dustbin.

Energy Efficiency – California Dreamin’

Wednesday, February 15, 2006

Energy efficiency, the red-headed stepchild of energy planning, is re-gaining recognition by utilities and their regulatory agencies – in some U.S. markets and in some states – for its cost-effective role in saving the farm.*

(Note: The term ‘energy efficiency’ could benefit from a visit with “Extreme Makeover.” It could use a new name, better brand image and improved positioning across the country – with an emphasis on non-energy benefits as well as bill-savings. “This season, expect more emotion, tears and joy as life long dreams and fairy tale fantasies come true.”)

Until that time, California has set the bar high for coordinating and organizing statewide education and outreach efforts – building a partnership of California’s utilities, residents, businesses, institutions, government agencies and nonprofit organizations working to save energy.

“Saving Energy. It’s a Way of Life.”

Initiated in 2001, Flex Your Power (“California’s Energy Efficiency Resource”) says it uses “a broad range of marketing and outreach strategies, including television, radio and newspaper ads, printed educational materials, events, a comprehensive website resource serving all parties statewide, a biweekly electronic newsletter, forums and workshops, and partnerships with businesses, local governments, water agencies, non-profits and others, including the state and federal government agencies responsible for energy and water efficiency.”

“The Flex Your Power statewide campaign [with approximately $20.5M in funding] will closely coordinate with the utilities, third-party implementers and other program providers to develop materials, events, the website and other outreach strategies that provide program information using consistent and compelling messages. Specific targeted campaigns for rural areas and to reach California’s Hispanic population are also funded under this program.”

The Flex Your Power electronic newsletter (sign up here) covers news, progress, case studies, design and building, technology and products, incentive programs, policy news and ideas. Anyone confused about the California Public Utility Commission’s judicial/regulatory decisions authorizing the 2006-2008 energy efficiency portfolio plans and funding levels ($2.7 billion!) for the state’s largest utilities might best start with Flex Your Power before trawling individual utility websites.

Not to be left behind in bleeding-edge communications technology, Flex Your Power provides an e-newswire audio and podcast (a “free online subscription-based radio shows for your computer or portable mp3 player. When you subscribe to a podcast your podcatching software will download shows as they become available. You can expect a new e-Newswire show every two weeks.”)

Unlike SmartPower, Flex Your Power does not explain its market research or strategy, nor provide examples of advertising on its website – all of which is insight for those of us living outside California who market energy efficiency and don’t get to see the fruits of California’s labor first hand.

* NREL layoffs. A week to the day that President Bush announced his so-called “Advanced Energy Initiative,” the National Renewable Energy Laboratory laid off Carol Tombari and a slew of other employees at the laboratory in Golden, Colorado. Tombari’s job was to promote energy-efficient cleantech through state and local initiatives…to create demand for cleantech coming out of R&D, an essential element in the push-me, pull-you of market transformation.