Could you say a few words about hydrogen fuel cells, and how this technology works?
The hydrogen fuel cell is an emerging new technology which presents interesting challenges and opportunities. First, it is a tool to convert a fuel – namely hydrogen – into electricity without combustion, without any emissions, and with a very very high transformation efficiency, much much higher in the ideal case than a conventional transformation or electricity production engine. We are now in the early stage of the fuel cell age, like the time of the introduction of the integrated circuits and electronics technology which brought about a very broad revolution – not only a technical revolution, but one which transformed companies and part of an industry. I expect that fuel cell will have at least as much impact on society and on industry.
Hydrogen fuel cells will first be fed using conventional fuels because in the beginning hydrogen will not be as cheap to produce as it will be later on. They can be fed with a relatively cheap conventional source such as natural gas, which has then to be reformulated to separate the hydrogen out. But in the middle to long term, the hydrogen will be produced from renewable sources. In the case of stationary fuel cells (as opposed to vehicle applications), you can imagine that instead of having a boiler which heats the water and provide central heat for the home, each house will have a small fuel cell which produces both electricity and heat. In the roof of the house are photovoltaic collectors which produce electricity from the sun. Maybe close nearby is a small wind turbine which also produces electricity for the houses. But once the demand is too low to use all the electricity these other electrical sources can produce hydrogen which is stored in the home or someplace very close by. Then at times of non-peak electrical demand, this hydrogen can be converted back into electricity.
Hydrogen can also be used to fuel cars, so it offers a broad range for decentralised electricity generation, which makes it possible to change the utility sector rapidly and sustainably, by bringing in renewables, diversification and decentralisation of the total energy system.
This technology makes it possible to get rid of the large power stations which have the advantage of low production costs but also the risks associated with the production of huge amounts of electricity from a centralised point, and the serious problems in case of accident. In a decentralised system with many small decentralised generators you can reduce this risk to a minimum. So it's a challenging future ahead!
Many people wonder how advanced is this technology. Is it going to take another 10 or 20 years before it works, or is it basically ready now?
Small fuel cells are already in the demonstration stage. Companies began testing them one or two years ago. They have been doing field experiments and re-designed the whole system. It is assumed they will be brought to market around 2005, with mass production between 2005 and 2010.
Are all the major car companies already involved?
More or less, yes. Fuel cells have huge potential for an emissions- and pollution-free transport sector, to make the cars on our roads clean, so we can forget about CO2 emissions from cars and local pollutants. Most of big car companies are investing hundreds of millions of dollars into this sector. They have already begun the first prototype cars and are starting to build demonstration projects with hydrogen fuelling stations.
In Europe we have a project called CUTE, involving ten cities where hydrogen fuelling stations are being built and about three fuel cell busses are being tested . The construction side of this project will be finished by the end of 2003 and will run for about two years to gain some experience about public acceptance of the new technology. The market introduction and penetration will follow in the second half of this decade, first with busses and then with passenger cars, because it is a little more tricky to fit this technology into the smaller cars and to get a range which will be acceptable to the public and to bring the cost down so that it can compete with existing technology.
I have the impression that although fuel-cell technology can be made more efficient, it is pretty much already here, and that the main obstacle is the infrastructure for the hydrogen – that the car companies will start mass production as soon as hydrogen becomes widely available at fuelling stations. Is that right?
Roughly. Of course there are still a some small technical problems. On one hand, fuel cell technology is now in the demonstration phase. But it's a little too early to leave the customer alone with the car; a little time is needed to gain more experience, to improve the technology, and to make it an everyday thing. On the other hand, the customer will not buy a fuel cell car today because he cannot easily buy the hydrogen. So it's a chicken-and-egg problem. Fuel cell cars will only become cheap when they are mass-produced, when the car companies can sell hundreds of thousands of them a year. And the consumers will only buy them when the fuelling stations are already there and they can use the cars without major restrictions. None of this can be achieved just by one company or even by the concerted action of all car companies. A broader acceptance is needed from the fuel suppliers as well as from the governments which support its introduction. The industry assumption is that the public will accept fuel cell cars once roughly 10% of the fuelling stations are converted to offer hydrogen. Some time is required to build this infrastructure. Of course it is costly and there is no return on investment in the start-up phase. Therefore they need some funding, some support. But when they start they will have to do it very fast, within five or ten years, to get an acceptable number of stations. We believe the market will be ready for the introduction of mass-produced cars before the end of this decade.
Let's talk about the distribution side of things. Many observers for a long time now have favoured a decentralised re-structuring of society, with local economies, local food production and so on. This makes a lot of sense, but obviously it's a very different from the transnational corporate globalisation scenario. You talked about hydrogen being produced locally, but at present the distribution and the petrol stations are in the hands of big oil. How do you see this unfolding in the years ahead?
Fuel cells and hydrogen in general provide an opportunity that can fit into both scenarios. It might be in a global huge one, or it might be in a decentralised local one – because the technology in principle is modular: you can build small ones or you can build large ones. The cost does not depend strongly on the size of the system. This is in striking difference to the existing oil supply system, where the entrance costs for a new player are immense: he needs access to the downstream / upstream sector, to the whole oil production chain, he needs to build the fuelling stations, he needs to be accepted by the global players. Not so in a decentralised system with hydrogen! Any independent power producer with a few million euro or dollars can build a hydrogen fuelling station and provide green fuel.
In 20 or 30 years, do you think most people in Europe or North America will buy their hydrogen from small independent producers or from the big oil companies who will by then be selling hydrogen?
I cannot foresee the future, but I have some imagination. Of course today's huge players today will try to survive, that's for sure, and will try to enter and maybe dominate this market. But it's not that easy to dominate it as it was in the past, and they cannot hinder new players from entering the game. I cannot predict how this will develop and I think it's open. It certainly offers a great opportunity.
What do you think about the security implications? If we are no longer dependent on highly polluting oil that causes climate change as well as political turmoil in the Middle East and elsewhere, won't hydrogen will make the world a much safer place?
I'm afraid it is a little bit of an illusion to think that hydrogen or solar energy or renewables alone can make the world more safe, more peaceful. But it's a huge opportunity. I would say the most important argument for resource wars will disappear. It all depends what our generation and the next one make of this opportunity.
What global issues do you think people most need to understand and be conscious of?
From the hydrogen side of course the energy topic is the major point, and there are several problems ahead. Or let me say that the other way around: if there were no problems with fossil fuel, nobody would care about the new technology and people would be satisfied with the existing system. The appearance of problems creates pressure to convert. One end-of-the-pipe problem is greenhouse warming, which is a very severe, although its drawback is the difficulty for people to understand and accept the time-lag between action and re-action. The second problem is that the oil supply is in serious crisis because we are very close to peak production [see our interview with Colin Campbell for more on this subject]. Existing oil production is now declining more and more rapidly. Year by year new fields have to be brought on-stream, and the larger ones have already been brought on-stream because they were the most economic. Therefore the system is steadily changing into a completely different and very expensive one. What we see in the Middle East is part of that game as resources get more scarce.
But that's not the whole story. The second most important energy carrier, natural gas – which was expected to be one the best and our most important fuel in the future – is also starting to have severe problems. This first showed up in the winter of 2000 in the United States. Some of the old large fields – which have been producing steadily for over 60 years in Oklahoma, in Texas and California and so on – started to decline. They had a very flat production for decades, but now the gas pressure dropped below a certain threshold, and the decline is very strong with up to 50- 60% less production every year. Many new fields have to be brought on-stream to compensate for this decline of the huge gas fields, but these are small and it's getting much more difficult to compensate.
Also, natural gas is different to oil. Oil is a very easily transportable commodity – gas is not. So it's a really complicated problem. It is hitting the United States first, since they cannot easily import gas from foreign countries over the ocean – only from within North America from Canada and Mexico, so it's still in some sense a closed system. And I'm afraid that with the short time left – a few years – this might arise also in Europe as well. I think this is one of the major energy problems that society is faced with.
We have already discussed climate change. Another problem which we really do not realise, I think, is population growth. And here I want to point out China for example, where the population is still increasing. Their government wants to stop it and has had some success. But only some success, because as China industrialises, people from the countryside – farmers – move to the cities. Year by year the country loses about 1% of productivity in the agricultural sector, and gradually turns from an exporter of food and farm products to an importer. Around I think the year 1996 or 1997 it switched from an exporter to an importer. Together with their annual population growth, climate change and the emerging industrial cities' water consumption which is depleting the availability of water in the countryside, this will become a very severe problem and I don't know how it will be tackled.
China's potential future automobile market will be so massive that it may not even be thinkable to do it with the combustion engine, not only because the resulting greenhouse gas emissions would be catastrophic but also simply because there may just not be enough oil left. Do you think that China will leapfrog over the fossil-fuel combustion engine and go straight for fuel-cell cars?
That's for sure! This is one of the main drivers for the activities of the car companies. They can easily calculate the size of the market for cars in China. They want to participate in this market. They can figure out how much oil is left and how much the remaining supply would pollute the Earth if it were used. I think there is general agreement this cannot be done with conventional energy. And therefore it may well be that China will be one of the drivers for the hydrogen transition in the next 10 to 20 years.
So will the automotive industry be the major driver because this is a great business opportunity?
I think so.
Then where does that leave the big oil and gas companies? Their much publicised current investments in wind and hydrogen are only a drop in the bucket of what they continue to invest in conventional fuels. Are these companies part of the problem, and could they be part of the solution? Or do you think it's not relevant, that we need to decentralise completely?
It's a little too simple just to give the oil companies the black card and say "you are the problem and we have to get rid of you". They are part of the society as we live and think as a whole, so we have to think about how we live ourselves. But of course the big oil companies know they are in a bad and very constrained condition because of the oil depletion. Year by year they must invest more money to extract less oil, so they have to change their business, although this is a little tricky. If they do it too soon, or announce it too soon because of the pressure of resource depletion, they could run into more problems. But the oil companies are certainly looking for alternatives. What is their position going to be in the post-oil era? One part might be energy generation from renewables. Here I think Shell is one of the largest private forest owners in the world, so they are preparing for that [i.e. to be able to produce renewable bio-fuels from trees]. Shell is also interested in geothermal energy exploration which makes a lot of sense because they have great experience in drilling holes. They are interested in offshore wind farms, which again makes sense because they also have lot of experience in offshore platforms. And Shell is one of the big photovoltaics producers. So for the time being although the oil companies are not the drivers of the renewable energy sector, they are at the forefront and how they behave depends on several factors. It depends how fast the oil business contracts and on how quickly the environment for the new business grows, which also requires political support. In Germany for example we have a feed-in law for electricity generated from wind and from photovoltaics [thus empowering any small energy producer to sell its electricity on the national grid]. And by the way, this feed-in law was supported by the oil companies: it was one reason why the German government had a joint acceptance through all parties. It wouldn't have happened if the oil companies had opposed it.
So why did the oil companies see it as a good thing?
What else can they do? They should invest their money in completely different sources. They also invest in gas of course, because they look for possibilities in the long run. I think they analyse the situation very very well. That's why they did not get into the nuclear business: they believe in the future!
What about the oil-producing countries, in the Middle East for example? Do you think they will do whatever they can to resist the transition or will they start becoming producers of hydrogen themselves from gas, and from desalination? How do you think that will play out?
All of them have gas. All of them know that the resources they are living on today are finite. And I think all of them are aware of the new age. They may not be aware how fast it will come – nobody knows this for sure – but they have started to look into it, to figure out how much it would, to investigate the opportunities in their country. And it's a nice idea for them to produce hydrogen in large quantities and to transport it instead of oil! I think we also should also differentiate our picture a little from the Middle East countries. If we go back thirty years or so, most of these countries were relatively unpopulated and had high revenues through rising oil prices, especially in the 1970s. Most of this income was used to stabilise the local regimes by providing high welfare for their citizens. But all this has now changed dramatically. Their populations are growing rapidly while their incomes are falling because of lower oil prices and also because of the very high expenses of the Gulf War in the nineties, with a lot of foreign debt. So they are in trouble, and this entails a lot of risks. And on the other hand, I think these countries will now have to democratise if they want a sustainable energy future, an find ways of generating more employment. Today they have very high unemployment rates which is the basis for fanaticism. They have to get rid of that, they have to handle these problems in a sustainable way. And this might also require a little more energy local energy consumption, leaving less for export. This is the kind of scenario that we cannot foresee in detail.
To what extent are the insurance and re-insurance industries a driver for greenhouse gas reduction and the development of the hydrogen economy?
They are at the forefront. For sure, they have been there for a long time in the lead-up to Kyoto and the other climate change conferences, and they are pushing the issue from the industrial side. They welcomed and joined the Kyoto agreement and have contributed significantly to progress in that field because they know that they are running into serious levels of risk. In theory one could argue that their business will boom if climate change damage grows, but the point is they have no way of predicting how fast the damage will grow say in five years from today, so they cannot calculate the risk and this really disrupts their whole business. They can't live with that. They may end up refusing insurance because of this.
In the lead up and follow-up to Kyoto as well as at the World Summit on Sustainable Development in Johannesburg, the world-wide effort to set real targets for greenhouse gas reduction was primarily blocked by the big oil and coal lobbies and the governments they represent like Australia and the USA. You were saying before that Shell and some of the other big oil companies are seriously interested in renewables, but it seems to me this industry is where most of the resistance is coming from.
Sure. In times when the environment and the business and the assets are changing, you naturally find a variety of different interests within the same company. You have the old dying business and the new emerging business, with a struggle between them. In an ideal world, they would have time to figure what to do and when to do it, and how much money to invest in which part of that game. But we do not have an ideal world, we have a real world where all these things are out of balance. Therefore it's quite natural that different voices should emerge within any given company. This becomes quite obvious if you look carefully and interpret not only what they say, but also what they are doing. At the moment of course they want to keep the old business running as well and as long as possible, and it's not their job to tell the world what's going on, they have to make business, that's for sure.
Do you feel the European Commission and its member state governments will make the hydrogen transition a major policy anytime soon?
I think they will. I would be a little cautious regarding the extent to which they are already doing, it's just in the early stage now. What is said before about the different factions within the oil companies is also true for the automotive industry. On one hand, they have their traditional business based on the combustion engine, which their engineers believe still may have potential for improvement, and some of them see no need to change that. On the other hand, another part of the company sees the need for change to fuel cell vehicles and they have to figure out the right time to make the transition
At the government level, I think that governments – especially within the European Community – are getting signals from the car industry, but I'm not sure if these are strong enough or only in the hydrogen direction. I feel they are. Just a few weeks ago the EC made a commitment to set up a hydrogen task force, so I hope they will make this a major issue. From what I see in the Sixth Framework Programme, it looks like it is going to be.
So at the end of the day, how do you feel about the prospects for Humankind's transition to a sustainable way of living ? Will we succeed before it is too late? How urgent is the need for change? And what are our chances of success?
It's hard to say. Of course I see the need, and the time is very short. We have two time scales. The rising problems on one hand, and the fact that it also takes time to develop the opportunities so they can be implemented. I don't really know how rapidly the problems are growing, nor can I say if our response is fast enough. If you ask me if I'm optimistic or pessimistic, it depends how I wake up or which part of the game I look at. I see many good things evolving in the third world countries in the renewables business, but of course I see also the old things which are continuing to make the problems worse. So I can't answer that. I think the positive side of the future is that we do not know it, and that nobody knows it, that it's open from principle. If you ask me about sustainability, I have to say I do not know. Even nature does not know. It only knows what is not sustainable after the fact, but it can't see what will be sustainable in the future.
A final question: what is your message to the global teenagers?
Be aware that it's your future that's at stake, and that you are a part of the world. Behave in a way that also gives others a chance to live. Don't worry too much about the past, but look for the opportunities.
Do you have a favourite slogan that you would like the world to know?
Yes. In the 1920's, the artist Francis Picabia said "our head is round so that our thoughts can move in all directions."