On September 28, 2013, the state of California approved a bill that will spend $20 million per year on hydrogen fuel stations until 2024. The measure, labeled Assembly Bill 8 (AB8), will commence until 100 fuel stations are constructed. Only 227 hydrogen-fueled vehicles are currently in the state, and the bill funding will come from California residents through “smog abatement” fees and vehicle registration.
Currently, only nine such hydrogen stations exist among California’s “hydrogen highway,” an initiative designed to line the coast with high-tech, energy efficient cars. Roughly $15 billion has been spent on state-backed hydrogen projects in the past decade. The money is issued to the California Energy Commission, the Public Utilities Commission and the Air Resources Board, who then distribute the proceeds to various research programs.
The disbursements in 2012 included $317 million for renewable-energy projects; about $250 million for advanced transportation projects; and $44 million for research grants, according to a report by the Legislative Analyst’s Office.
The investment in renewable energy hasn’t met the standards of certain government officials. Other deficiencies, such as price discrepancies and projects falling short of expectations, have soured the public.
Democratic Senator Rod Wright, a member of the Energy, Utilities and Communications Committee, said, “Suddenly, you look up and there are literally hundreds of millions of dollars going into investments that produce marginal benefits… We’ve got people who figured out they can steal a small amount of money from a large amount of [electricity] meters and spend it on things they find interesting. Where it winds up going is just goofy.”
James L. Sweeney, a Stanford University engineering professor and staunch advocate for renewable energy, agrees. “The expenditures on moving toward a hydrogen highway will turn out to be a waste of money, other than the experimental value it provides,” he said. California is estimated to be more than $800 billion in debt.
The state enforced a fracing regulation law on September 11, 2013. The bill will officially begin on January 1, 2015, and requires extensive disclosure from oil and gas companies regarding permits and the fracing process. Politicians opposing the bill said it will only limit California’s economic development, and the regulations are the most comprehensive in any state. OAG360 went more in-depth on the bill in a September 13, 2013 feature article.
Another issue with hydrogen stations is the reluctance of automakers to build hydrogen-based vehicles. The chairman of California’s Energy Commission said major automakers have told him they will not introduce hydrogen-powered vehicles until at least 68 fueling stations exist in the state. The state and automakers have been involved in a standoff, with each asking the other to make the first move. Honda and Mercedes-Benz have launched pilot projects, but hydrogen fueled cars are a rarity.
The rise of cheap natural gas has spurred a decline in clean energy that extends overseas to Europe. According to Bloomberg New Energy Finance (BNEF), clean energy investment fell 14% worldwide in Q3’13. The $45.9 billion invested in 2013 makes it “almost certain” that annual spending in renewables and energy-smart technologies will fall for the second consecutive year. A total of $281 billion was invested in 2012. The United States declined 41%, with $5.5 billion aimed at such projects. Michael Liebreich, chief executive officer of BNEF said the “loss of momentum since 2011 is worrying.”
Meanwhile, several transportation companies are embracing benefits of natural gas. The railroad industry is exploring locomotives powered by liquefied natural gas (LNG), and General Electric (ticker: GE) unveiled a LNG train on September 30, 2013. GE said the unit could save railways more than $1.5 billion in operating costs and cut emissions by more than 70%.
The United Parcel Service (ticker: UPS) also stepped up its LNG reliance, pledging $68 million towards stations and vehicles in 2013 alone. According to UPS’ fact sheet, LNG’s prices are 30% to 40% lower than imported petroleum, carry 25% less CO2 emissions, and would eliminate the use of 24 million gallons of diesel per year.
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