Report says $200B investment required to make a transition from oil to hydrogen fuel

Jeff Berman -- Modern Materials Handling, 7/23/2008

WASHINGTON—Hydrogen-powered vehicles have the potential to help cut down on the United States oil dependence and carbon dioxide emissions, but the act of taking it from a concept to fruition is far from a reality, according to a recent report by the National Academies of Science.

The report, entitled “Transitions to Alternative Transportation Technologies: A Focus on Hydrogen,” states that in order to eventually make a complete transition from oil to hydrogen fuel a $200 billion investment would be required for R&D, vehicle deployment, and needed infrastructure. And the cost to the government is pegged in the report at roughly $55 billion between 2008 and 2023, with private industry expected to invest $145 billion in the same timeframe.

Even though strides in the development of fuel cell and hydrogen production technology have been made in recent years, the report explains that challenges—like high vehicle costs and the lack of infrastructure needed to produce and widely distribute hydrogen to consumers—remain. But these challenges could be overcome with support for R&D and backing from the automotive industry and federal government, according to the report.

What’s more, hydrogen-powered vehicles have strong potential to make a positive change both inside the walls of warehouses and distribution centers for lift trucks, forklifts, and turret trucks, among other vehicles, and also on the open road for the trucking industry. But despite this potential, more work needs to be done, according to various industry experts.

What needs to happen first in order for hydrogen-powered vehicles to be viable is for truck manufacturers, trucking companies, and lift-truck manufacturers to support the use of hydrogen as long as the technology is proven and cost-effective, according to Brittain Ladd, director of logistics and project management for PPMG, a Dallas-based private equity firm, and former manager of logistics and transportation strategy for Dell Inc.

In an interview with LM, Ladd recalled how while attending the Great American Trucking Show in Dallas last year, he spoke with various leading truck manufacturers in the world, as well as truck drivers regarding the push towards alternative fuels such as hydrogen, and he said he didn't meet one person who was against alternative fuels such as hydrogen.

But he noted that what concerns the trucking industry and drivers is the following: Will hydrogen powered equipment be able to pull as much freight as diesel powered equipment?; How available hydrogen will be? (“It won't make sense to purchase hydrogen powered tractors if readily available supplies of hydrogen aren't available,” said Ladd); and how much will it cost to purchase a tractor powered by hydrogen?

Another concern cited by Ladd was how much will hydrogen cost.

“If hydrogen costs more than other available fuel sources, why would anyone buy a truck powered by hydrogen if they can purchase a truck powered by ethanol or some other alternative fuel?” Ladd asked.

He also commented how electric and natural gas powered lift-trucks have a large customer base so hydrogen would have to really be able to be effective performance-wise, as well as be cost-effective in order to break into the market.

Even though—as Ladd points out—there are several questions regarding how hydrogen-powered vehicles may ultimately perform, there stand to be a few notable benefits of it for warehouse and distribution center operations, according to Don Derewecki, vice president at TranSystems-Gross & Associates. 

“One of the big advantages of hydrogen-powered vehicles for distribution centers is going to be the elimination of battery charging and battery changing,” said Derewecki. “That is going to be replaced by the hydrogen cell refueling and the requirement to have the onsite infrastructure for the delivery and storage of the fuel or for the onsite generation.”

And a significant advantage that hydrogen power provides, he said, is that it will provide full power—for a lift truck or fork lift—throughout a full shift with one refueling as opposed to an electric battery, where over the course of the shift a battery is discharged and getting weaker as shift goes on. This is especially true when heavy products are being moved long distances and getting a high utilization rate out of a vehicle, added Derewecki.

One sector where hydrogen-powered vehicles may be particularly beneficial, noted Derewicki, is for food distribution. He said that dry grocery distribution centers tend to be very large—in the 400,000-to-600,000 square-foot range—with very heavy products being moved around.

“If you start hauling [multiple] pallets of sugar, flour, or canned liquid products, that is a heavy load and ideally you are receiving it close to where you are putting it away, and all that is optimized and sometimes you end up running long distances,” said Derewecki. “And in addition to horizontal travel you have the lifting, so if you are lifting a heavy product into racks—in addition to the travel—that is additional wear that grinds batteries down but this is not an issue as much with hydrogen.”

Jeff Berman is Group News Editor for Logistics Management and the RBI Supply Chain Group