How Congress Saved Fuel Cells, Ethanol And the Pickens Plan

With the first wave of mass-marketed plug-in hybrids just two years away, lithium ion batteries and electric drivetrains are looking more and more like the short-term winners of the technology race to replace gasoline in the United States. But proponents of hydrogen fuel cells, ethanol, and compressed natural gas aren’t yet ready to give up—and their influence in Washington doesn’t appear to be shrinking. In the past few weeks, Congress defended the three technologies from detractors in the Environmental Protection Agency, the Department of Energy, and the environmental lobby, ensuring their continued survival in the national budget.

Competing industries and technologies are fighting over new federal dollars aimed at energy independence and reduced emissions. Since 2007, the alternative energy sector has incurred more than $50 million in lobbying expenses, including at least $2 million in direct contributions to candidates. With billions of dollars in subsidies and tax exemptions hanging in the balance, the industry’s presence on Capitol Hill is likely to persist and grow.

Four Miracles and a Reprieve

In May, shortly after the Department of Energy decided to cut federal funding for hydrogen fuel cell research, Energy Secretary Steven Chu told The MIT Technology Review that fuel cells were still too far off to be an immediate priority for funding.

“Right now, the way we get hydrogen primarily is from reforming gas. That’s not an ideal source of hydrogen…The other problem is, if it’s for transportation, we don’t have a good storage mechanism yet. What else? The fuel cells aren’t there yet, and the distribution infrastructure isn’t there yet. In order to get significant deployment, you need four significant technological breakthroughs. If you need four miracles, that’s unlikely. Saints only need three miracles.”

Secretary of Energy Steven Chu

Sen. Byron Dorgan Promotes Fuel Cells

Sen. Byron Dorgan is a longtime promoter of hydrogen fuel cell technology.

Nevertheless, the House Appropriations Committee voted last week to restore $40 million in fuel cell funding that the Department of Energy had stripped from its budget proposal. The Senate Water and Energy Appropriations Committee has also recommended increasing spending on the technology increase to $190 million for 2010.

Committee Chairman Byron Dorgan has long been one of the technology’s biggest cheerleaders, so it’s no wonder that four of the senator’s top 20 campaign contributors are involved in some way in fuel cell research. Joining Dorgan were New York Senators Kirsten Gillibrand and Chuck Schumer, whose state is an apparent beneficiary of the research. “Companies in New York are at the cutting edge of fuel cell research,” said Gillibrand. “It is a significant contributor to our local employment, and I am committed to fighting for jobs throughout New York.” Senator Schumer called the fledgling industry “a critical component of our economic recovery.”

“Get Over it”

With sales of E85 ethanol-blended gasoline down this year and the EPA holding the alternative fuel to increased scrutiny, hundreds of millions of dollars in subsidies have become threatened. Ethanol opponents, ranging from the environmental lobby to the oil industry, were glad to see the change of fate for ethanol. The EPA proposed a more holistic method for calculating the relative emissions of gasoline and ethanol—one that takes emissions from ethanol production and land use into account. The change could be the first nail in the coffin of corn-based ethanol.

E85 Pump height="253" />

But House Agriculture Committee Chairman Collin Peterson led a group of lawmakers from agriculture states who threatened to kill the climate bill if more protections for ethanol producers and farmers weren’t added. They apparently got their wish. The EPA’s proposed rule change has been pushed back by at least five years so that land use issues can receive “further study” from the Agriculture and Energy departments.

Ethanol’s influence extends far beyond politicians whose districts contain more acres of corn than people. Three major lobbying coalitions employing several prominent former politicians exist to defend ethanol interests in Washington. Throw in the more than $1.1 billion that agriculture corporations like Archer Daniels Midland and Monsanto have spent on lobbying activities over the course of the last decade, and it’s easy to see why there are so many sympathetic ears on Capitol Hill.

“The EPA’s got to get over their absolute rejection of ethanol. They’ve just got to get over it,” Senator Tom Harkin told The New York Times. “And we’re going to force them to get over it.”

The Pickens Plan Shows Renewed Signs of Life

One year ago, energy industry legend T. Boone Pickens launched an ambitious $60 million campaign to reinvent America’s energy infrastructure. Central to the Pickens Plan were compressed natural gas (CNG) vehicles, which Pickens believes are capable of drastically reducing carbon emissions, transportation costs and America’s dependence on foreign oil.

In theory, Pickens may very well be correct on all three counts. But questions over the cost and wisdom of rebuilding the US’s entire fuel infrastructure to replace one non-renewable energy source with another—and controversies surrounding Pickens’s extensive investment in the technologies he was promoting—led to costly early defeats.

Most notably, California voters roundly rejected Proposition 10 in November. The legislation would have provided $5 billion dollars in state funds for alternative energy technologies. More than half of this money would have gone towards helping California citizens and businesses purchase alternative fuel vehicles. With the language of the legislation clearly favoring CNG vehicles—and no guarantee that these CNG vehicle owners would have sufficient access to the fuel—Californians sent Pickens a firm rebuke.

But despite this and a litany of other setbacks including the collapse of the capital markets and billions of dollars in loses for Pickens and his investment firm, the 80-year-old billionaire remains optimistic about his plan—and some members of congress seem to agree.
First introduced in the House of Representatives in April, the NAT GAS Act may find its way into the final version of the Senate climate bill, which would greatly increase its chances of becoming law. Backed by Senate Majority Leader Harry Reid and key Senate Republican Orrin Hatch, the legislation would create a long list of tax credits for natural gas vehicle purchases and conversions. Among the highlights:

    
  
  • All dedicated natural gas vehicles would receive at least an 80 percent reimbursement of their incremental cost over conventional gasoline equivalents. This is crucial to Pickens’ vision of a trucking industry—and just about every other business with a fleet of vehicles—powered by compressed natural gas.
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  • Bi-fuel and converted CNG vehicles would be eligible for tax credits for the first time.
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  • Refueling stations would receive a $100,000 annual property tax credit for ten years, essentially creating a $1 million dollar incentive toward the construction of each natural gas station.

AT&T appears confident in the bill’s chances. The company recently pledged to spend $350 million on 8,000 CNG vehicles and build 40 refueling stations. How much of that money comes from corporate coffers and how much of it comes from Washington remains to be seen.


  • Samie

    Pork!!!!

    Doesn’t matter if you are a Democrat or Republican this kind of lobbying & added costs to taxpayers is wasteful! Let’s see those who claim to know what government waste is call out the CNG, Hydrogen, ethanol, E85, & biofuel crowds out!

    Lots say lets have a mix solution to our petroleum problems & let the cards fall w/ the best alternatives overall coming out as winners.

    Deeply flawed philosophy & those who doubt that read the article again! Also consider where things like CNG or Hydrogen come from…

    There is only so many resources that can be invested into different transportation alternatives & that means less government incentives will be invested long-term into improving alt. energies dependent or independent of the electrical grid, battery/production of EV’s & to consumers who buy hybrids or EV’s.

    The mixed approach has been meant as a scam of sorts meaning distracting people & thinning out investments so no alt. can get us off using/reducing petroleum or any other fuel, w/c I seen the mixed approach used a lot in the 90′s to mid 2000′s & this kind of scamming only allows cashing in on wasteful government spending
    while keeping use dependent on a fuel source.

    When investments are reduced by spreading out funding to different special interests, some of the public does not understand why the rate of change is slow to EV’s & starts considering any funding or incentives towards electrification of our transportation system as wasteful & creates backlash against environmentalists.

  • Michael Halpin

    Steven. We do not need miracles, what we need is self belief and good governance. America can not afford to lag behind the rest of the world in Hydrogen Fuel Cell Technology.
    I f you want another source of hydrogen let us all start peeing in the same pot as the latest research shows that urine is a great source of ‘The Friendly Element”

  • Samie

    Michael Halpin

    Developing Hydrogen technology is great but I hope you see how hydrogen is currently extracted. The fuel source for extracting hydrogen right now is kind of like what you said peeing but peeing at the American Public. Find a way to extract it & store it first before suckering people into a new way for oil companies to make a buck.

    Most understand this but for those who live under rocks let me fill you in. There is a thing called a market, in the market supplies of say CNG or current ways of extracting hydrogen exist. (Lets rule out the question of producing enough domestically) If other parts of the world can produce the fuel cheaper than the U.S., there will be foreign supply consumed by the average consumer when he/she fills up their vehicle. This can mean that we could see ourselves dependent on other countries to supply large chunks of energy for us. Eg CNG & Russia w/c lets hope does not fall under a dictatorship or back to communism. We may again be reliant on new OPEC types of foreign governments & the volatility of a CNG or hydrogen market may hurt our economy or give us large spikes in price of supply to consumers including shipping industries that deliver most of us our food & other consumption products. We would continue spending money needing to protect new alternative fuels getting us nowhere as we fall yet again into shady businesses that lobbyist like the ones in this article want, so to keep consumers addicted to another fuel source.

  • Michael Halpin

    Samie and all the other ostriches out there, “pull you head out of the sand” our future transport and energy problems are not going to go away.
    You have had your rant but done nothing to address the issue. If you all just sit on your hands and do nothing then you will have to be happy with bicycles, rickshaws and the Pony Express to deliver your mail.
    On your bikes!

    Mike H.

  • Matthew Crook

    Pork?

    I love a tasty pulled pork sandwich. Mmmmmmm, I think I’ll go get one right now…

  • Kenz

    We need to convert gasoline stations into refueling stations.
    They need to have gasoline, ethanol, diesel, biodiesel, electric charging stations, a CNG pump, and hydrogen pumps. A choice at the pump.

    The future is in having a choice. Vehicles need to be built to be hybrid using 2 different fuels. IF all vehicles used 2 different fuels then consumers could pull up to a refueling station and choose the fuel that makes the most economic sense. No one fuel is the sole answer. We need to develop a prototype for the fueling station of the future and develop tax credits for it’s implementation.

    Some people will use E85. Others will use biodiesel. Some will need to plug in their vehicles while they get something to eat. If we have truck on the road that use CNG we need stations that they can go to. We need to expand our choice at the pump.

  • Samie

    Michael Halpin

    Do you really have anything to say or are you just making silly comments. If you don’t like what I say why not actually try to say something smart that means like aaaaaaaa actually reading my comments & taking a position. Or better yet get some talking points together from the radio or cable television & copy word for word what they say….

    How silly cuz u really don’t have anything to say….

    But if u do Here I can help
    1) Federal Funding
    2) Foreign Supply/Stability/Market Problems
    3) Short-term thinking & lobbying
    4) Incentives Producers/Consumers & the energy grid
    5) Or your fav Pork Sandwiches, (Pulled?) Horses, Bikes, & maybe crayons also???

  • Samie

    Maybe I was too mean… Sorry
    So here.

    “Samie and all the other ostriches out there, “pull you head out of the sand” our future transport and energy problems are not going to go away.”

    Ok energy problems yes but how do you help reduce them?

    How is it that you get average consumers a good alternative that they don’t have to rely on going to a fuel station for?

    Do you ignore not trying to diversify our grid system so that we don’t just use mostly coal?

    Is creating another alt. fuel good say @ 20% consumption if it means taking up valuable land resources, water, & aid development of authoritarian governments eg maybe Russia in the future?

    How do you fund Hydrogen or a mix of other things when funding is limited & long-term funding is need in the case of all interests. (Think of inflation & State/Federal Budgets Problems that are happening & will continue for a few more years.)

    These are real questions, questions u should ask yourself not a rant so actually think of something to say it doesn’t matter what just actually have a real opinion on something….

  • DC

    The more I read things like this, the more I am certain the US either does not realize exactly what the problem is, or they simply dont care.

    Ethanol, flex-fuel etc, is nothing but a scam -and a dangerous one at that. America, the world for that mattter simply does not have the land, water or energy to spare on this ill-advised scheme. Don’t for one second think that small-town bible-thump’n pastoral farmers are growing crops for ethanol, there not. Agri-corp.’s love the subsides. 5 years from now, ethanol will still be as stupid an idea as it is today.

    Fuel Cells, For the space program sure, niche applications, certain stationary power applications, fine. Your current science advisor is not an idiot, it would take him maybe 30-60 mins to explain to everyone concerned Hydrogen is well…another scam, albiet one that appears more ‘high-tech’, thus its glamor seems to out-shine the basic fact that it is 3-4 times more efficent to use the electricty it would take to make H2, to power (whatever) then waste it converting it to compressed or liquid H2. Why he has not advised in the strongest terms- H2 is probably one of the worst soultions you could possiblly imagine, I cant say. I understand why Bush and GM flogged this on the US public, they knew it was a bullshit idea right from minute one!

    CNG, seeks to replace one non-renewable resource with a slightly cleaner non-renewable resource. What a great idea, throw money at too while ignoring the absurdities of the other reckless schemes were pursueing. I will tell you a story about another great Alt. fuel, Propane. The fuel was very inexpensive vs gasoline(at one time) where I lived and a large market for conversions developed. I was a fuel-retailer at the time and sold a very good volume of the gas. So what happened? Eventually the oil companies decided propane was getting ‘too popular’ and in a very short period of time, raised the retail price to parity with gas(they did the same to diesal around the same time as well). The end result, once it was no longer price-competitive, people ripped out there conversions whole-sale and Propane-as-motor-fuel became a shell of its former self. The lesson? There is absolutely nothing to prevent an oil company from takeing a cheap low cost gas, and setting the price to whatever they want, when they want. They basically sunk the market for PFV’s, i saw it first hand. Did propane suddenly cost more to refine than gas?-nope, a massive supply bottleneck?-Nope. Its riseing populariity and low cost vs gas was an irritant to them so they “fixed” the problem.

    One can only conclude, that America loves the status quo, but does not seem to mind wasteing as much money as they can on ‘soultions’ that are really not soultions. I guess the illusion of appearing to be trying to address the problem is what is really matters to the US.

  • D. Martin

    Electricity is how we need to power our systems. Install the infrastructure to distribute the power for transportation. We can produce power with coal, oil, natural gas, wind, solar and better yet nuclear. Once we have the electric infrastructure to deliver the power, we can gradually move away from coal, oil, natural gas towards wind, solar and nuclear.

    One area that needs further development is how to store energy from peak production of wind and solar to times when it is not windy or sunny.

    Hybrid transportation is a logical first step towards electric vehicles. Battery and drive line technologies can be developed further using onboard engines to recharge until the infrastructure for electric cars is available.

    Israel is taking the lead on establishing infrastructure for electric vehicles. The US should learn something from their lead, it takes a leader who makes a very good educated decision on where the future needs to go.

    If you have not seen any discussion on this, go to: http://news.cnet.com/8301-11128_3-9854591-54.html

  • Jorge R

    Why do we insist on centralizing production.

    A Honda FCX fuel Cell in our cars with a baterry back up, Photo-voltaic (PV) power generated on major parking lots (for that battery back-up), Hidrogen made at home (PV/wind-and no big propellers either) and we store the gas on a solid state block; the entreprenour makes a buck (parking lots and home systems), the electric companies get the surplus juice they want to power indsutry and the consumer gets a credit for dumping excess electricity on to the grid, hidrogen to fill his (solid state) tank and maintain the charge on the back up battery. The common denominator? No dollars to industry to create any distribution networks. Maybe even the state gets my pennies from the parking meter next to an actual (electric power) recharging station.
    (Of course we think centralized, if it does not meet our greed and thirst for power, who would we point to and blame). I can only hope I put this stuff out there first.

  • Anonymous

    Where do you think electricity comes from?

    Nat Gas, Coal, & Nuke.

    To produce electricity the fuel must be trasported to a power plant burned/converted into electricity and then transported to the vehicle.

    or you could just burn Nat Gas in your vehicle.

    It’s so clean that many people cook with it in their homes, without any health hazards.

  • Average Joe

    Another Oil Shill, thank you. You’re argument has no base unless you cry out we should all be the same. You have a choice. If you want to use petroluem, its your choice. If you are saying that everyone should use petroleum, you’re most incorrect. I use Biodiesel and Ethanol all the time without reservation. Its produced right here in the United States and get this, each dollar spent goes back into our economy without causing any form of trade imbalance where we off load our cash to some place else. I feel much better knowing that my dollars are spent locally and that an american farmer actually made a difference in their efforts. No, not Archer Daniels Midland, Cargill or IBP but someone just like everyone else trying to scratch out a living. Do you know that you could skip all of these middle men all together if you bought grain from an actual farmer or a local grain elevator and produced your own fuel? In addtion, you could also use what’s left over. You can’t do this with any other thing and they want it that way. “They” are those that work like hell to make it hard for to have a choice. There are 3 big oil companies, 3. They work together and yes they fix their prices. Not the same with alternative energy because barrier to entry is not that hard.

  • Corporate Terrorist

    No one even knows that there is engine created from the ground up that uses Ethanol. Its real, I have seen it and it will change your views about beleiveing petroleum is better to use. Ethanol regardless of containing less BTU’s thas petro has something that petro can’t do and that is burn at a constant and known predictable rate. Sorry, gasoline can’t do this but Ethanol can. Ricardo built an engine referred to as Ethanol Boosted Direct Injection and it scares the hell out of the Oil Industry and its Lobby. Of course, hardley anyone even knows about them outside of the manufacturing circle and even they are taking handouts from the Oil companies.

    It cracks me up to see people get so angry talking about ethanol and alternative fuels who are against them. If you listen closely to them, usually you’ll also find they are bigoted, raciest and some of the most obtuse John Bircher’s you could ever meet.

  • Blue Swan

    The bottom line is its great Congress “saved” these technologies, but quite frankly, they don’t need Congress to survive because they are being developed commercially for profit.

    Only costly battery technology like plugins need Government life support because they are folly and money wasting.

  • Doctor Phadre

    Kenz – totally agree! The oil companies need to be forced to spend large portions of their multi-billion-dollar profits on converting petrol stations into multi-fuel stations, offering a choice of fuels. This means tough international government action, tax incentives and legislation.

    Then the road is clear for serious scale mass production of competing alternative-fuel vehicles, preferably each with at least 2 possible fuel intakes.

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