Amory B. Lovins: building the hydrogen economy. (Conversations).

Amory B. Lovins co-founded the Colorado-based Rocky Mountain Institute (RMI) in 1982, and it has grown from a small energy-related think tank into a major global research institution with more than 45 full-time staff. The peripatetic and multiple-award-winning Lovins travels the world spreading his visions of a sustainable future, and is a principal proponent of the hydrogen energy economy. With Paul Hawken and RMI co-founder L. Hunter Lovins, he is the author most recently of Natural Capitalism (Back Bay Books).

E: How much of what is happening now represents the vision you had when you published your "Reinventing the Wheels" piece in Atlantic Monthly in 1995?

Amory B. Lovins: A great deal. In 1999, Brett Williams and I presented a paper at the National Hydrogen Association called "Strategy for the Hydrogen Transition" in which we showed how to get there step by step. And the reaction was, "Oh! That's how these pieces fit together!" Since then, as many as five automakers and suppliers have set up businesses implementing that approach and so have a number of major energy companies.

It's noteworthy that at least eight major automakers will be introducing early low-volume fuel-cell cars from this year through 2005. I am also encouraged by the Department of Energy's (DOE) leadership on hydrogen; for a variety of reasons, Energy Secretary Spencer Abraham has become enthusiastic about it. The DOE's FreedomCAR program with the Big Three automakers is still a blank slate, so it could go either way. It could be a flop if they simply drop fuel cells into inefficient cars. It could be a triumphant leapfrog for national competitiveness if they build on the best of what has already been worked out. Third parties like Hypercar[R] designed in 2000 the vehicle that FreedomCAR wants to spend the next 10 or 20 years designing.

Do you have a timetable attached for automotive fuel cells?

The cars have to be ready for the hydrogen, meaning that they're made so efficient that they need only a third the normal amount of power. Therefore, the fuel cell is small enough to be affordable even at early prices and the compressed hydrogen tanks are small enough to fit conveniently. That's what Hypercar[R] vehicles do. And those kinds of cars are making steady progress toward the markets, but I would like it to happen faster. They have been somewhat delayed by a combination of the collapsing private equity market in the last two years and the usual cultural problems in very large automaking organizations.

Aren't most fuel-cell cars on the road today using pre-existing chassis and platforms with fuel cells stuffed into them?

It's a bad design because it makes the fuel cell too big to afford and the tanks too big to package. If you stuff them in, you compromise interior space or performance, and you pay extra cost. Or you're driven to converting fossil fuels through an expensive, bulky on-board chemical reformer.

I do have the sense that the auto Industry has finally abandoned the idea of the, reformer, or they're getting to that point.

Most oil and car companies have noticeably cooled on their initial enthusiasm for onboard reformers. It turns out to be a very hard thing to do. And it gives up most of the reasons for wanting the fuel cell in the first place. By the time you're done, your gasoline-to-wheels efficiency is comparable to that of a good combustion engine.

Do you think the hydrogen economy is becoming even more inevitable?

In fact there are several new important discoveries. One, from work by C. E. "Sandy" Thomas, president of Virginia-based H2Gen, is that the capital costs of a national hydrogen fueling infrastructure based on miniature natural gas reformers will be less than that of sustaining the existing gasoline fueling structure. That was quite a revelation to many people who assumed hydrogen would be too expensive. Secondly, General Motors believes that such a strategy would actually reduce national consumption of natural gas. That's because the extra gas that you turn into hydrogen to run vehicles can be offset, or more, by the gas you save in power plants, furnaces and boilers by integrating deployment of fuel cells in vehicles and buildings.

It's starting to seem--and this is counter to what a lot of people have been told over the years--that we will see the cars before we see the residential fuel cells or the battery replacements.

I think that we'll see commercial and industrial fuel cells first. There are many applications where these cells make sense right now. We now understand better the hidden economic benefits of decentralized electric production. My colleague Joel Swisher, published a paper called Cleaner Energy Greener Profits applying some of the most important distributed benefits to fuel cells and showing that they're now cost effective if applied properly.

Jeremy Rifkin is of the opinion that the end game is locally generated networks producing hydrogen from renewables.

I think that's a plausible scenario. In brief, the hydrogen transition strategy we set out starts by making hydrogen mainly from natural gas in buildings. Then we sell surplus hydrogen from buildings to cars parked nearby. We then put the miniature gas reformers and electrolizers, as they get cheaper with volume, out into filling stations and elsewhere. That helps create a large hydrogen market, which would make practical and possibly cheaper the centralized production of hydrogen from either planet-safe electricity or reformed natural gas with carbon sequestration or possibly other methods.

What is the oil company strategy for hydrogen energy?

They're realizing that they can actually be better off in the hydrogen business than in the oil business. This is very interesting for them, and it changes the politics. All the major oil companies I work with have put substantial efforts in this direction. It's been obvious for a long time that hydrogen is a good play for the natural gas industry. But it wasn't widely accepted until recently that it can also be very good for the oil industry.

Another revolution has not yet happened, but it shows promise. That's the work at the Princeton Climate Mitigation Center making a plausible prima-facie case that it may be cheaper in the long run to make hydrogen out of coal than out of natural gas, with carbon sequestration in both cases. There's less hydrogen in coal than in natural gas, and it's harder to get at, but the coal is so much cheaper that it may compensate. So, if the carbon se questration works as well as hoped, this could provide an even larger fossil fuel option for making climate-safe hydrogen.

Another potential revolutionary notion is that hydrogen can greatly improve the economics of renewable electricity. A fuel cell is several times as efficient as a gasoline engine in converting fuel energy into traction in a vehicle. So instead of selling electrons as a raw commodity, you make it into a value-added product by attaching a proton to each electron at the wind farm or hydro-dam or solar cell. The extra price it fetches more than pays for that conversion and you end up making more money than you did selling electricity.

The Bush administration's hydrogen plans include using it to jump-start the moribund nuclear industry.

That's to be expected from an administration that's enthusiastic about nuclear power. But it doesn't change the economic unattractiveness of building any more nuclear plants. You may have noticed that no investors showed up at the American Nuclear Society's "Sustaining the Nuclear Revival" conference this year, and there are very good reasons for that. There are at least three technologies abundantly available that beat nuclear plants by a factor of at least three to five in cost, and more are on the way. So this is the future technology that time has passed. CONTACT: Rocky Mountain Institute, [phone], www.rmi.org.