How the "Hydrogen Highway" Survived DOE's Budget Axe
Energy Secretary Steven Chu has an on-off relationship to hydrogen. Under his watch, the Department of Energy has clearly favored electric battery cars, providing billions in loans and grants to ensure that the U.S. will not cede the market to Asia. And he tried to dramatically defund hydrogen programs, only to retreat after a major outcry. But when a private entrepreneur opened the first station in a projected hydrogen highway on the east coast, the DOE was there for the press conference.
Tom Sullivan, founder and current chairman of the mega-successful Lumber Liquidators chain (at right in photo), bought Connecticut's Proton Energy Systems (which makes hydrogen electrolyzers) in an auction sale for $10.2 million in 2008.
Sullivan, who cannot hope to make a profit on hydrogen anytime soon, is inspired by the vision of a clean transportation system in the U.S. He saw that publicly funded grids (such as the hydrogen highway proposed by Gov. Arnold Schwarzenegger of California) were not making progress for financial reasons. "So I said, 'What the hell,'" said Sullivan at the launch of the first station, at Proton's headquarters in Wallingford, Connecticut on Friday.
Sullivan is funding the Maine to Florida network of 10 to 12 stations ($1 to $3 million each) entirely on his own. He can do that because Lumber Liquidators is a very successful company. Its net sales were up $25 million in the second quarter this year to $168.7 million (compared to the same period in 2009). Net income was up 33.5 percent to $16.1 million in the period.
The ceremony was well-attended, including an appearance by Connecticut Congresswoman Rosa DeLauro (at left in photo), who said, "This is a milestone -- the first stop on the east coast hydrogen highway." She called the opening of the station "a Kitty Hawk moment," and said she'd helped secure $17 million in federal funding for Proton, which is in her district.
Appearing for the DOE was Gilbert Sperling (in middle of photo), a senior advisor for policy and programs in the office of energy efficiency and renewable energy. He said the DOE has set a series of cost-reduction targets for hydrogen and fuel cells. He praised Sullivan's initiative and said, "More private investment is needed to leverage public funds."
That's all well and good, but the DOE's default position was thumbs down on hydrogen. Back in May, Chu said he wanted to zero out $100 million in hydrogen funding. "We asked ourselves," Chu said, "Is it likely, in the next 10 or 15 or 20 years that we will convert to a hydrogen car economy? The answer, we felt, was 'no.'"
But Congress had other ideas. In July, the House voted 320-97 to approve $153 million for hydrogen and fuel cells, and $40 million for hydrogen from coal. The Senate went along and the result, pending final resolution, is likely to be a larger amount for hydrogen than the $168 million earmarked in 2009.
In Connecticut, I asked Sperling about this, and he told me that the DOE had "the best scientific minds" working on solutions that "have the greatest impact." He said, "We have limited funds, and we want to support programs that can move the market forward." With its huge research budget and long timelines, hydrogen was obviously a tempting target.
And Sperling had more good words for Sullivan's private plan, which uses not one thin dime from the public coffers. "There is not enough taxpayer capital to accomplish everything we need to do," he said.
Sullivan went from one TV interview to the next, telling them all the same thing: It was a chicken and egg problem -- nobody was going to build hydrogen cars without the infrastructure, and the infrastructure wasn't going in without the cars. So he said "what the hell," put his own money into the pot, and now several manufacturers, including Toyota (which will base a fleet of 10 test cars at Proton's station, one of which I'll be testing), Honda and GM, are targeting 2015 as the year that fuel-cell vehicles will finally reach the market.
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Photo: Jim Motavalli