“Action – alignment – adaptability” Meeting our goals for Hydrogen

By 2020 mass commercialisation of fuel cell vehicles has been heavily tipped, which will help to revolutionise the use of clean transportation in the future. But there are many challenges to overcome, not least the most effective route for accelerating a hydrogen economy. In this speech Duncan Macleod, Vice President Shell Hydrogen considers the role hydrogen could play in the energy mix, helping society to meet its growing energy needs as they increase, and as conventional supplies of energy struggle to keep up with demand. Duncan focuses on Shell Hydrogen’s vision to move to green or fully renewable hydrogen as fast as possible and to help accelerate the mass roll out of FCVs, as well as the challenges for energy companies like Shell to develop a supporting fuelling infrastructure in launch markets that could see the first commercial introduction of FCVs. In short, the way industry and government works together will ultimately influence the way the hydrogen vision ends. California is leading the way right now, and the first hydrogen markets will undoubtedly be in those areas, which share its vision, pioneering transport legislation and Government support for zero emission vehicles.

Ladies and Gentlemen, Good Morning!
Thank you for coming. It’s hard to believe it’s been just a year since I was last standing here at NHA. They say a week is a long time in politics…what’s it like for the Hydrogen industry? Not so dramatic, perhaps. Yet its landmark dates like this that bring our progress into sharp focus – just how far have we travelled  since last year? And are we moving fast enough to ensure Hydrogen achieves its rightful place in the energy mix – at the time and on the scale we need it to? No one can predict the future. Yet we all know the different pieces of the jigsaw and that they could come together in different ways, to create different pictures. At Shell,  we call these global energy scenarios. And our latest are particularly interesting – not just because of the dramatic developments they describe; but because, for the  very first time, Shell has expressed a preference for one over the other. Yet both see Hydrogen with a key role to play…

Shell Global Energy Scenarios: which road will we take?

One thing is certain: by 2100, the world’s energy system will be radically different from today’s. Renewables will make up a large part of it and humans will have found ways to deal with air pollution and GHG emissions. Energy efficiency will also have improved significantly. That’s the good news – but much depends on how we get there. And there are two possible scenarios. Both, however, are based on two hard truths, to which Shell subscribes:

1) Energy demand will increase dramatically over the coming decades due to population growth and economic development; and
2) After 2015, easily accessible supplies of oil and gas will simply not be able to keep up with it.

So together we will have no choice but to add other sources of energy –  Renewables, yes, but also unconventional fossil fuels, such as oil sands. Yet using more energy inevitably means emitting more CO2. In the first scenario – which we call Scramble – nations rush to secure energy resources, fearing that energy security is a zero-sum game, with clear winners and losers. The use of local coal and home-grown biofuels increases fast. Regulation is geographically fragmented and major developing countries remain outside climate change agreements. This is a reactive world. The result? A high carbon intensity path – well above 550 ppmv.

The alternative scenario? We call this Blueprints and it is less painful, even if the start is more disorderly. It shows numerous coalitions meeting the challenges of energy security and pollution through cross-border cooperation. This is a proactive world. The result? A market-based emissions pricing and trading system that is geographically dispersed…but which succeeds in stabilising  CO2 emissions at 450-550 ppmv. So you won’t be surprised to hear that Shell favours Blueprints over Scramble. It is also the most effective route for accelerating a hydrogen economy. Both, however, describe a world in which a portfolio of solutions is needed to combat climate change – no single solution being capable of reducing CO2 emissions on the massive scale required. Indeed, they are often inextricably linked – for example, the production of Hydrogen from biomass or using Carbon Capture and Storage. That’s why Shell is active in developing such  a broad range of energy sources and technology solutions.

Our commitment to Hydrogen is strong. We have already restructured our organisation to prepare for its transition into the mainstream, bringing it into our Downstream Fuels portfolio, alongside gasoline, diesel, LPG, CNG – as well as biofuels and Gas To Liquids. Our aim is now two-fold: to move to green (or “fully renewable”) Hydrogen as fast as possible; and to help accelerate the mass rollout of FCVs. Our credo? To “learn by doing” – which is exactly what we’ve tried to do over the last 9 years, building Hydrogen stations on three continents. But if we are to achieve the goal of mass commercialisation by 2020- then we need to ramp up activity; move from low-use, standalone demonstrations, to building the foundation for higher-use longer-term mininetworks.

Building the foundation for urban mini-networks
The question is – how are we going to do this? It’s a question that’s been asked many times before and I don’t pretend to have all the answers. But the starting point is clear: build stations in high density population areas, where 100,000 FCVs still represent a mere fraction of the number of potential users. Cities like Tokyo, New York, Shanghai and LA, where we’re working closely with OEMs from the US, Europe and Asia to build retail facilities where we see FCVs being introduced. Hence Shell’s recently dedicated Hydrogen fueling facility at White Plains in New York, which opened last November. Part of a US Department of Energy programme, it is already delivering 700 bar Hydrogen to GM Equinox FCVs in the New York City metro area.

In the same month, Shell also helped launch the first Hydrogen refueling facility at Anting, in Shanghai’s International Automotive City. Operated by Tongji University, under the auspices of the Chinese Ministry of Science & Technology, it serves a fleet of FCVs and buses in the region. As well as providing financial support, Shell has also sponsored the station’s learning centre, and given safety advice and training. Then, in the coming months, we will be opening LA’s first combined Hydrogen and gasoline station on Santa Monica Boulevard in West Los Angeles, manufacturing Hydrogen on site via an electrolyser. This will serve FCVs being introduced by various OEM’s into the area. So, we are starting to lay the groundwork. But how do we speed up the process? Who should take the initiative – OEMs or energy companies. I think we’ve all heard the arguments before. What I will say is that progress is being made: I spent some time last year in talks with many of you here, actively working to align priorities and timescales in order to ensure maximum impact – and this dialogue is continuing, at new levels, RIGHT NOW. These are conducted in the spirit of honesty and openness, and I am convinced this is the way forward – across all parts of the value chain. It is this willingness to share information on numbers, dates and locations where FCVs will be introduced that will not only trigger investment in infrastructure – but on the scale we are all looking for.

Shell: investing significantly in clean/green Hydrogen
As to using more renewable sources of Hydrogen, it will obviously be some time
before Shell can manufacture green Hydrogen in large enough quantities. But we’re working on it…forging partnerships with groundbreaking businesses such as Virent Energy Systems. Almost a year ago, we began a fiveyear joint development agreement to further commercialise its BioFormingTM technology, which enables Hydrogen to be produced economically from renewable glycerol and sugar-based feedstocks. We’re also committed to advancing the next generation of biofuels, which won’t compete with food crops. We’ve already started building a pilot facility in Hawaii to grow marine algae and produce vegetable oil which can be converted into biofuel. In the meantime, its vital industry pushes ahead with solutions for clean Hydrogen –especially Carbon Capture and Storage or CCS. Indeed, the Intergovernmental Panel on Change Climate has identified CCS as the most promising technology for the rapid reduction of global emissions – by up to 55% by 2100.

Shell is therefore spearheading efforts to facilitate its development and wide-scale deployment – on both a political and technical level. Again, it is a concerted effort, working with research institutions, national geological services, other energy companies and policy advocacy efforts worldwide. We’re also developing our own large-scale CCS demonstration projects in Australia, and the Netherlands. As with Hydrogen, we believe it essential to ‘learn by doing’ in order to reduce costs, accelerate technology development and ultimately make CCS commercially viable on the back of emissions trading schemes alone. There’s no doubt Industry is prepared to make significant investments to get demonstration projects off the ground – but they won’t happen without economic incentives to help bridge the cost gap. These are now required as a matter of urgency. But while CCS remains a key solution for the production of large-scale, clean Hydrogen, there are also other things we can do to reduce CO2 emissions in the manufacturing process.

Just two examples: since last Spring, Shell has been operating a forecourt reformer from H2Gen at our Westhollow R&D facility, where feedstock options such as Natural Gas and bio-feedstock are being evaluated. We’ve also undertaken a techno-economic evaluation of converting syngas from coal or biomass into clean/green Hydrogen in local settings, such as India or here in California. California: leading the world in its vision for Hydrogen. Certainly, there is no more appropriate venue for this conference than Sacramento and Shell is proud to be an active member of the California Fuel Cell Partnership Steering Team. Indeed, the first Hydrogen markets will undoubtedly be in those areas, which share California’s Vision, its pioneering transport legislation and Government support for zero emission vehicles. There may be no hard and fast rules here, nor a single winner. We must be ready to adapt in the light of technology development and experience. Certainly, a revolution in electric mobility now seems certain. After all, hybrids already exist; battery electric vehicles are out there; and plug-in hybrids can be made today. Battery costs have also come down, and the range and cost will continue to improve. The only uncertainties are timing and the end game.

As for Shell, our view is that there is room for everything – electric, hybrid electric, plugin hybrid and Hydrogen ICE – at least in the near-term until we’re ready for the mass rollout of FCVs. After all, we are all on the same side here and a revolution does not happen overnight.

Conclusion
So, to go back to my original question – how far has the Hydrogen industry come since last year? One benchmark is the Shell Ecomarathon, which stimulates the creativity and imagination of young people, challenging them to drive as far as possible, using the least amount of energy. And you only need to look at the changing profile of entrants to see how far Hydrogen has come. For example, at the 2007 European Ecomarathon, 68 vehicles used alternative energy sources – 36% more than the previous year. Of these, 28 teams used biofuels, 9 solar
energy – and 27 Hydrogen fuel cells. In other words, the most significant increase was in the use of Hydrogen – by a massive 50%. So it will be interesting to see what happens in the US Shell Eco-marathon, which takes place next week in Fontana, near LA at the California Speedway! Indeed, we all have every reason to be positive. But, as Shell’s global energy scenarios clearly demonstrate, the dice could go either way. Without coalition and consensus, the road will be rocky, the outcome uncertain, with potentially disastrous consequences for climate change. And transparency is the key… So while I do not doubt the sincere intentions of everyone in the industry to advance our cause, we all need to step up our game. We need to learn by doing; align our goals and adapt in the light of experience. It must be a joint effort across all sectors, underpinned by sustained investment and facilitated by enabling policies and incentives. The mobility revolution has undoubtedly begun. Let’s make sure we’re all clear on how we would like it to end.