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Fuel cells are clean and efficient. They can be used to conserve fossil fuels and, in conjunction with renewable energy, provide carbon-free energy for buildings, industry or transport. They come in all shapes and sizes and are just what is needed to help secure future energy supplies and combat climate change, but why are so few being used and how can we bring about their wide scale implementation? Several recent reports call for the implementation of energy saving and renewable technologies and the Government has launched a consultation on its draft Climate Change Bill. If the market conditions are right, the UK could become a world leader in the development and commercialisation of low carbon technologies, hydrogen and fuel cells.
STERN REVIEW
The most comprehensive study of market conditions for innovative energy technologies is the Stern Review, which outlines present obstacles and recommends major global programmes to expedite the introduction of new energy technologies. Why is it that some new technologies, like mobile phones, were able to enter an established market and attract massive investment around the world? A major factor was that mobile phones found early niche markets where they attracted the initial high price needed to cover development costs.
Barriers in power generation sector
The Stern Review points out that in the absence of Government policy, niche markets are very limited in the electricity generation sector because of the homogenous nature of the end-product. Only a very small number of consumers have proved willing to pay extra for carbon-free electricity and this leaves a significant financing gap which capital markets are unable to fill. Furthermore, energy related technologies take a long time to come to market and then companies have to sell their product at a loss in the hope that as they scale up, costs will reduce and they can make a profit. If this loss-making period lasts too long, the firm will not survive.
Expenditure on research and development in the UK power generation sector is very low, despite the increased prominence of energy security and climate change. The decline in energy R & D was exacerbated by the liberalisation of the energy markets, which shifted the focus from long-term R & D towards the utilisation of existing plant and the deployment of well developed technologies and resources, particularly natural gas. Compounding this, the power generation sector operates in a highly regulated environment and tends to be risk averse and wary of taking on new technologies. Together, these factors mean that new energy generation technologies, despite being shown to work and have long-term profit potential, may fail to find a market.
The infrastructure also poses problems. Most grids are designed to distribute electricity from large generators and are not suited to receive electricity from many small sources. Larger-scale renewables may need additional infrastructure and if ‘carbon capture and storage’ is employed, major new pipelines will be required.
Bias towards polluting fuels
The power generating market is dominated by a small number of firms and the fact that electricity is a ‘natural monopoly’ leads to low levels of competition and reduces innovation. The generating sector usually favours more traditional (high-carbon) energy systems and is resistant to the technical change that will be necessary in a shift to a low-carbon economy. Government policies also distort the market in favour of existing fossil fuel technologies. If the external costs, such as climate change damage, are not borne by the producers and users of fuels in a liberalised energy market, it is difficult for clean, efficient technologies to compete.
The energy markets are distorted because many countries have a long history of subsidising coal, oil, nuclear power, electricity for rural areas and more recently renewable energy. Although subsidies are being reduced, the International Energy Agency reported that world energy subsidies in 2005 were $250 billion. Unless these subsidies are applied as incentives for innovation they cause economic inefficiency, stimulate unnecessary consumption and waste and discourage investment in low carbon alternatives.
The cost of doing nothing
The Stern Review expects the monetary cost of climate change to be higher than many earlier studies which did not include some of the uncertain but potentially most damaging impacts. Assuming a 2ºC to 3 ºC temperature rise, the cost of climate change would be up to a 3% loss in global GDP. However, if we carry on ‘Business As Usual’ it may lead to a wider range of impacts than previously considered, such as abrupt and large-scale climate change, which includes the risk of 5 -10% loss in global GDP. If other impacts, such as those on the environment and human health, are taken into account this increases the costs. Also recent scientific evidence of climate change feedbacks indicates that costs could rise still higher. Finally, a stronger relative weighting for the disproportionate burden of climate change which falls on poor regions of the world could increase the cost by more than a quarter. Putting these additional factors together, could increase the total cost of ‘Business as Usual’ climate change to the equivalent of around 20% reduction in current per-capita consumption, now and into the foreseeable future.
The cost of the damage caused by global warming gases will continue to increase so long as action to reduce emissions is delayed. The Stern Review considers greenhouse gases in terms of the tonnes of carbon dioxide that would have a similar impact, that is their carbon dioxide equivalent (C02e). If immediate action is taken the cost could be as low as $25/ tonne carbon dioxide (tC02e) now but if we continue with ‘Business As Usual’ then the cost would be up to $85/tC02e. We are only beginning to experience the early impacts of climate change and these costs are likely to increase over time, in line with growing environmental and economic damage.
Discounting the future
It is difficult to justify investment in future energy technologies if economists ascribe very little value to the benefits which will accrue to the next generation. The Stern Review is criticised by some economists because it values the impacts on our children and grandchildren as strongly as the impacts on ourselves. These economists discount the future, just because it is the future – in economic terms this is called ‘pure time preference’. This procedure is properly used for instance to discount the value of a new railway in 50 years’ time, because it may be closed down or replaced by another system. The Stern Review does accept a small discount rate on the basis that world GDP is likely to continue to grow, but points out that it is illogical to apply ‘pure time preference’ to the future of the entire planet.
The costs will be less the sooner we act
An average estimate for the annual cost of cutting greenhouse gas emissions to about three quarters of current levels by 2050, which would be consistent with stabilisation at 550 parts per million C02 equivalent (ppm C02e), would be approximately 1% of global GDP. This assumes early, well planned action. While this is not insignificant it is at least manageable and it is consistent with the ambitions of both developed and developing countries for economic growth.
Some critics of the Stern Review argue that expenditure on low carbon technologies is not justified because it is not 100% certain that human activities are major contributors to global warming. However, the consensus of the world’s climate scientists is that it is over 90% certain that human activities are contributing to global warming and firm action is needed to reduce emissions of greenhouse gases. There are also other important reasons for implementing new efficient energy technologies. Future energy security will enable our children to maintain the lifestyle we enjoy and reduced pollution will ensure a better quality of life.
IMPLEMENTING ENERGY TECHNOLOGIES
Energy efficiency should be considered as a resource, contributing massively to projected future energy demand. The International Energy Agency estimates that, with adequate technical development, energy efficiency could be the single largest opportunity for emissions reduction, accounting for between 30% and 50% of C02 emissions reductions by 2050. The Stern Review outlines the action which can be taken to introduce micro-generation technologies, including small scale wind, solar, hydro or combined heat and power units (CHP). Greater uptake could be driven by the implementation of private wire networks and setting up the appropriate regulatory frameworks to achieve a level playing field. Energy service companies, such as those established in Woking and London, can employ economies of scale and specialisation to overcome barriers to the introduction of low carbon technologies.
American manufacturers are selling small numbers of fuel cells for standby operations and some high temperature fuel cells are used to produce electricity and heat from waste. In Europe there is initial interest in the possibility of obtaining electricity and heat from small fuel cells powered by natural gas, but there is little progress in building up electricity generating capacity with fuel cells powered from renewable energy. Every town and village could be a niche market for low carbon fuels with a centre producing energy from local waste, providing assistance with energy saving measures and distributing renewable technologies. Once fuel cells are established in niche markets, people will be able to generate their own electricity and heat cleanly and efficiently.
Several first class fuel cells have been developed in the UK. Intelligent Energy’s unit provides electricity for use in buildings or to power vehicles; Cenergie’s system produces energy from waste; and Ceres Power’s lightweight system conserves natural gas. Voller Energy has a portable fuel cell and Bac2 has developed materials which will bring down the cost of fuel cells. ITM Power aims to provide all the technologies which will enable us to replace hydrocarbon fuels with hydrogen. The implementation of hydrogen and fuel cell technologies would contribute to making millions of UK buildings, not just new ones, carbon neutral by 2015.
Hydrogen powered vehicles
Government sponsored programmes with hydrogen powered vehicles utilise expensive prototypes provided by global industries, not the ‘market solutions’ being developed by innovative companies. This explains why the Stern Review’s projections for hydrogen fuel cell vehicles indicate that they will not be cost effective for a long time. Prof Tony Marmont at West Beacon Farm envisages that billions of cars around the world could be converted to run on hydrogen from renewable energy. Roy McAllister has been running a hydrogen powered car for over twenty years and finds that there is reduced engine wear, no acid in the oil, and emissions are cleaner than those from the ambient air. The McAllister Hydrogen Injection Spark Plug enables internal combustion engines to use hydrogen fuel and the changeover, including manifold and hydrogen tank, takes only a few hours. West Beacon Farm has its own hydrogen supply on site, but if local organisations start to build hydrogen centres, in due course a complete infrastructure will emerge. This will enable the storage of intermittent supplies of renewable energy and will prepare the ground for motor manufacturers to change from internal combustion engines to fuel cell powered cars.
The hydrogen fuel cell powered Hypercar was originally developed at the Rocky Mountain Institute. The lightweight composite carbon bodywork reduces vehicle weight to less than half that of a conventional car and the resultant efficiency gains enable the fuel cell powered version to achieve a range of over 500 kms with existing hydrogen storage. The same design principles could be applied to vans, buses and trains.
Hydrogen pipelines for transporting renewables
The US based Leighty Foundation has proposed that pipelines capable of carrying large volumes of hydrogen from renewable sources should be developed in time to meet the expected huge fuel demand from growing car use in Asia. There are tremendous resources of wind, solar, geothermal and hydro power in northeast Asia, which could be transported by a proposed Northeast Asian Hydrogen Highway. This could be planned and expanded gradually to cover the whole of Eurasia.
Pipeline transmitting hydrogen from a wind farm
 Peak loads from a wind farm can be smoothed out in hydrogen pipelines which provide some storage. The fluctuations in input are much greater than in output. Electricity transmission does not provide energy storage so it is not well suited for dedicated wind generation, where the capacity factor is up to 40%
The capital, overhead and maintenance costs of large-scale electricity and hydrogen pipelines are comparable. The estimated cost for a 1,000 MW wind plant is $1,624 million, broken down to wind power plant $800 million, power electronics $30million, electrolyser $330million and 800 kms of hydrogen pipelines $464million. High pressure output electrolysers would obviate the need for expensive compressors. The pipeline system will be able to collect hydrogen generated from coal or biomass gasification plants en route. Solutions to the problem of embrittlement in hydrogen pipelines have been proposed and subject to satisfactory evaluation, hydrogen pipelines could displace natural gas pipelines in due course. Wind based hydrogen production is expected to be more economical than producing hydrogen from steam reforming of natural gas after 2020. Higher prices can be obtained for guaranteed, or ‘firmed’ hydrogen supplies, which could be achieved by storing hydrogen from intermittent renewables for use when required.
An underground hydrogen storage facility and a 30 km hydrogen distribution system have been in use for many years in Tees Valley, UK. Renew Tees Valley Ltd has plans to expand the existing hydrogen production and storage facilities with a new carbon capture and storage (CCS) project as well as obtaining hydrogen from wind and biomass sources. They are particularly attracted by the very high efficiency of fuel cells and the variety of applications for which they are suited. Hydrogen may also be stored and transmitted as ammonia or Fischer-Tropsch liquids, the latter being obtained from hydrogen and carbon monoxide.
ENVIRONMENTAL AUDIT COMMITTEE
The UK Environmental Audit Committee (House of Commons) is concerned that the Government’s 2050 target for reducing global warming gases to 550 ppm C02 does not take into account recent scientific data and could lead to dangerous climate change. The Committee recommends that the Treasury should act on the scale and urgency required by the Stern Review. New announcements on energy policy are only small steps in the right direction and much swifter and bolder action is required. The Committee has also issued a report recommending stronger Government action in the light of the Millennium Ecosystem Assessment. Increases in GDP do not necessarily lead to improvements in human well-being and, due in part to the potential negative environmental impacts, may actually lead to a decline in well-being. In its evidence to the Committee, The Royal Society also recommended that the Millennium Assessment needs to be implemented outside the environmental sector, for example in the international development, trade and financial sectors.
WORLD’S SCIENTISTS CALL FOR ACTION
The majority of the world’s scientists believe that strong action is needed now to reduce global warming gases. The first part of the Fourth Assessment Report by the Inter-Governmental Panel on Climate Change (IPCC) now says that there is over 90% probability that human activities are contributing to global warming. Three further instalments will be published this year.
The President of the American Association for the Advancement of Science, John P Holdren, received a standing ovation when he called upon scientists and engineers to ‘tithe’ 10% of their time to working to increase the benefits of science and technology for the human condition. The world is poised at an unprecedented moment of decision and many of the most difficult and dangerous environmental problems at every level of economic development are caused by the harvesting, transport, processing and conversion of energy.
A selection of viewpoints from its members is also given by the UK’s Royal Society. Dr Simon L Lewis of Leeds University points out that every year we currently burn about one million years worth of long-past plant growth in the form of fossil fuels. We only have one Earth within which to run this ‘mega-experiment’ to see what happens when we increase the amount of carbon dioxide in the atmosphere. Prof Carl Wunsch from Massachusetts Institute of Technology explains that there is a great deal of natural variability in the climate but we cannot wait for certainties which may not be available for a long time to come, if ever. Political decisions must be made on the basis of probabilities not proof.
Prof F Sherwood from the University of California, a joint Nobel Prize winner for atmospheric chemistry, refers back to twenty years ago when scientists were decrying the folly of waiting until it was too late to prevent irreversible damage caused by global warming. Preventive action is now needed even more urgently, starting with a strong emphasis on conservation and shifting away from coal, gas and oil to renewables and nuclear power. This will not be an easy path but the alternative of abrupt climate change could represent a catastrophic future.
UK CLIMATE BILL CONSULTATION
The Stern Review estimates that a range of investment, averaging 1% of global GDP will be needed to avoid dangerous climate change. This is the sort of funding which is needed in the UK to make buildings self-sufficient in energy, make our manufacturing base more sustainable and start the change to renewable transport fuels. Using the Stern Review’s estimated costs of the damage which will be caused by greenhouse gases, ranging from a low of $25/t C02e to 85/tC02e the UK’s present annual greenhouse gas emissions of 732mt C02e would cost $18,300million (£9,630 million). This will rise to $62,220m (£32,750 million) per annum if action is deferred.
The so-called ‘disruptive’ energy technologies could provide cost effective low carbon alternatives. New Government policies are needed to stimulate competition, and to enhance the benefits of clean, efficient technologies. This will bring added benefits when the UK exports low carbon technologies to developing countries, which would help them to avoid the projected world-wide growth of carbon emissions.
One of the recommendations of the draft Climate Change Bill is for a Climate Change Committee. Fuel Cell Power proposes that this could be chaired by Sir Nicholas Stern, an economist with great knowledge of the subject, but there should be more input from scientists and engineers who could help to rebuild the UK’s engineering capacity. Experts are needed in all forms of micro-generation, renewable energy sources, energy storage systems, electric motors and control systems, energy management, transport technologies, hydrogen and fuel cells, and innovative methods of carbon storage.
Accurate information essential
The consultation also asks whether there should be an independent monitor of the UK’s greenhouse gas emissions. The Government has made considerable efforts to reduce the basket of greenhouse gases other than C02, but the latter is starting to rise again. The Government’s statistical data is misleading because it does not include the global warming impact of the 38 million tonnes of C02 emissions related to air travel. If the greater global warming impact at higher altitudes is taken into account, the future damage from air travel is likely to become greater than all the UK’s road transport emissions. The UK’s C02 emissions declined in the 1990s because it was cheaper to use natural gas, which contains approximately half the carbon content per unit of energy as coal. International agreements also allocate emissions from the manufacturing industry to the producer country, so the UK has been able to make substantial C02 reductions by importing manufactured goods from Asian countries which are not subject to the Kyoto Protocol.
A report by Christian Aid recommends that companies should use the international standards for recording C02 emissions laid down by the Greenhouse Gas Protocol (GhGP). This covers:
Scope 1 - direct emissions by the company
Scope 2 - indirect emissions, largely incurred through the purchase of electricity from the grid.
Scope 3 - divides the responsibility for all other emissions between an organization, its investors and customers. So far Scope 3 is not widely utilised, but it would help companies and investors, who at present have no information about C02 emissions in other countries.
Clear statements about greenhouse gas emissions are also needed to inform the public and the media. If people are led to believe that Government policies are working well then they will see no reason to make the major changes to low carbon fuels recommended in the Stern Review.
RECOMMENDATIONS
The following changes will be needed to create viable market conditions for low carbon technologies:
- The price paid for fossil fuels should cover their full external costs, particularly the projected damage ascribed to climate change.
- Economists and investors should value the benefits of low carbon investments to future generations as highly as they do for the present.
- Investment in energy saving measures and sustainable energy technologies to be carried out on the scale recommended in the Stern Review.
- There should be a level playing field for innovative energy companies with more support for prototype development and demonstration, bridging the gap between university R & D and commercialisation.
- To help rebuild the UK’s engineering capacity, local niche markets should be established to evaluate and bring forward the finest technologies.
- The public is confused by conflicting promotional lobbies. Transparency is needed about the impacts of climate change, measures to reduce global warming gases and what is actually being achieved internationally.
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