DETROIT (Reuters) - Hydrogen fuel-cell vehicles are still 15 years away from becoming a viable business for automakers even if they overcome remaining technical hurdles and the U.S. government provides massive subsidies, a government-funded report said on Thursday.
Under a best-case scenario, automakers will only be able to sell about 2 million electric vehicles powered by fuel cells by 2020, according to the study by the National Research Council. That would mean that less than 1 percent of the vehicles on U.S. roads by that date would be powered by fuel cells.
In 2003, President George W. Bush had proposed spending $1.2 billion to develop fuel cells and infrastructure. At that time, Bush said the first cars driven by American children born in that year and reaching driving age by 2020 could be fuel cell vehicles.
In 2005, Congress asked the National Research Council to study how much federal spending and other support would be needed to shift a “significant percentage” of new cars to fuel-cell technology by 2020.
General Motors Corp, Honda Motor Co and other automakers are in the process of testing limited fleets of hydrogen-powered fuel-cell cars.
Advocates see the still-emerging technology as a way to cut oil use and carbon dioxide emissions since fuel cells combine stored hydrogen with oxygen to produce electricity. As a result, fuel-cell vehicles emit only water vapor.
But many environmental advocates argue that hybrids and fully battery-powered electric vehicles, such as the upcoming Chevrolet Volt from GM, are the most reliable and cheapest ways to reduce oil consumption in the short term.
Success for fuel-cell technology hinges on building facilities to generate, transport and store hydrogen at filling stations. It will also require automakers to build cheap and durable hydrogen vehicles that consumers want to buy.
Another challenge is that the key ingredient in fuel cell stacks is platinum, an expensive metal that represents almost 60 percent of the cost of producing a fuel cell.
The study found that future platinum supply was a critical issue in forward projections of fuel cell costs.
The study concluded that the best way to reduce oil consumption and greenhouse gas emissions over the next 20 years would be a range of alternatives, including hybrids and improvements in the efficiency of gas-powered combustion engines.
“We shouldn’t be picking winners and losers in these technologies because they will probably all be important in the future,” said Michael Ramage, a retired Exxon Mobil researcher who chaired the fuel-cell study committee.
To jump-start the fuel-cell market, the U.S. government needs to provide $55 billion in subsidies to the technology over the next decade and a half, according to the study.
That could be accomplished if the government opts for fuel-cell technology in half of the vehicles it uses in its fleets, effectively buying thousands of cars as a subsidy to the industry, Ramage said.
“There needs to be substantial and sustainable government help to just to make this happen, just as there is for ethanol,” he said.
Paul Scott, a co-founder of Plug In America, a California-based nonprofit organization that advocates rechargeable cars, said the study showed federal policy needed to shift toward support for electric vehicles.
“It’s obviously ridiculous to put all the emphasis on a technology that’s decades away when our needs are imminent,” Scott said.
GM now has a test group of about 100 fuel-cell-powered Chevy Equinox SUVs on the road that the automaker calls the largest experimental fleet of its kind. The company is now on the fourth generation of this technology.
Honda has begun leasing up to 200 of its FCX Clarity fuel-cell vehicles in Southern California. The automaker is charging $600 monthly for the car, which represents a fraction of its cost for the company.
Cars and light trucks, including SUVs, account for about 44 percent of the oil used in the U.S. economy and more than 20 percent of the carbon dioxide emitted.
Reporting by Kevin Krolicki; Editing by Lisa Von Ahn, Toni Reinhold