Order Code RL32196
CRS Report for Congress
Received through the CRS Web
A Hydrogen Economy and Fuel Cells:
An Overview
January 14, 2004
Brent D. Yacobucci
Analyst in Energy Policy
Resources, Science, and Industry Division
Aimee E. Curtright
Visiting Scholar
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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A Hydrogen Economy and Fuel Cells: An Overview
Summary
There is growing interest in the use of hydrogen as the main fuel for stationary,
mobile, and transportation applications, especially using fuel cells.
This is
particularly true in light of the Bush Administration’s efforts to increase research and
development for these technologies. In his January 2003 State of the Union Address,
President Bush announced a new, five-year research initiative on hydrogen fuel and
fuel cells. This effort is a key component of the Administration’s proposed energy
policy.
Policymakers are interested in hydrogen and fuel cells because they could
potentially lead to significant societal benefits. Depending on how the fuel is
produced and distributed, hydrogen fuel and fuel cells could help significantly reduce
pollution and greenhouse gas emissions. Further, if hydrogen were produced using
domestic energy supplies, it could help reduce dependence on imported petroleum.
Also, fuel cells could be used to improve the efficiency and reliability of electricity
generation.
However, there are some key barriers to the development of a “hydrogen
economy.” Most importantly, the current cost of both fuel cells and hydrogen fuel
makes them uncompetitive for most applications. Reducing these barriers is one of
the driving factors in the government’s involvement in hydrogen and fuel cell
research and development. But this involvement raises concerns, including the cost
of such research and the possibility of the government “picking winners” among
competing technologies.
This report discusses six key questions related to the hydrogen economy and
fuel cells: 1) what is hydrogen fuel; 2) what is a fuel cell; 3) how will hydrogen fuel
be used; 4) where will hydrogen fuel come from; 5) what would it mean to move to
a hydrogen economy; and 6) what role can Congress play. This report will be
updated annually, or as events warrant.

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Contents
What is hydrogen fuel? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What is a fuel cell? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
How will hydrogen fuel be used? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Where will hydrogen fuel come from? . . . . . . . . . . . . . . . . . . . . . . . . . 4
What would it mean to move to a hydrogen economy? . . . . . . . . . . . . . 7
What role can Congress play? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
List of Figures
Figure 1. A Basic Fuel Cell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2. Hydrogen Pathways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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A Hydrogen Economy and Fuel Cells:
An Overview
Hydrogen is a chemical that can be produced using any primary energy source.
Its use as a fuel could lead to lower emissions of pollutants and greenhouse gases.
Further, depending on which primary energy supply is used, hydrogen fuel could help
reduce energy imports, especially for transportation. A major use of hydrogen would
be in fuel cells. A fuel cell is a device that produces electricity through a chemical
process, as opposed to combustion.
Fuel cells have the potential to achieve
significantly higher efficiencies (i.e. produce more power for a given energy input)
than combustion engines1 and conventional power plants.
The prospect of hydrogen becoming the main fuel for all energy-related
applications, a “hydrogen economy,” and the continuing development of fuel cells
to utilize hydrogen fuel has generated growing interest within the policy realm. This
is especially true after two key initiatives by the Bush Administration:2 the
FreedomCAR initiative to promote cooperative research and development between
the federal government and the major American automakers on fuel cell vehicles; and
the President’s Hydrogen Fuel Initiative to promote federal research and development
on hydrogen fuel and non-automotive fuel cell technology.
This push for research on hydrogen and fuel cells has led to some basic
questions about the function and use of the new technologies. Six key questions
related to a hydrogen economy and fuel cells are:
! What is hydrogen fuel?
! What is a fuel cell?
! How will hydrogen fuel be used?
! Where will hydrogen fuel come from?
! What would it mean to move to a hydrogen economy?
! What role can Congress play?
What is hydrogen fuel? A fuel is any high energy substance that can be
consumed to produce useful work. Examples include gasoline used to propel an
automobile and coal used to generate electricity at a power plant. Hydrogen can also
be used as a fuel, and is the most abundant element in the universe. However,
hydrogen is not a primary fuel. That is, it does not occur naturally but instead is
found most often as part of a larger molecule, such as water or petroleum. Today,
1For more information on transportation fuel cell applications, see CRS Report RL30484,
Advanced Vehicle Technologies: Energy, Environment, and Development Issues.
2For more information on these initiatives, see CRS Report RS21442, Hydrogen and Fuel
Cell Vehicle R&D: FreedomCAR and the President’s Hydrogen Fuel Initiative.

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most hydrogen is extracted by processing (reforming) methane (natural gas) at oil
refineries and chemical plants.3 However, in the future hydrogen could potentially
find widespread use as a fuel, either burned in combustion engines or combined with
oxygen in fuel cells.4 Both methods produce useful energy, either as motion or
electricity, and both generate waste.5
To produce hydrogen fuel, two key components are necessary: energy and
hydrogen atoms. In some cases, for example using natural gas, both components are
supplied simultaneously as hydrogen atoms are separated from the methane
molecule. In other cases, the two components are supplied separately. For example,
electricity can be used to separate hydrogen from water to generate hydrogen fuel.6
What is a fuel cell? A fuel cell is an electrochemical device that uses
hydrogen (or a hydrogen-rich fuel) and oxygen to produce electricity.7 It is physically
and chemically similar to a battery, but as the name implies, fuel cells make use of
an input fuel. They can be refueled at any time, and do not run down or need to be
recharged, making them similar to combustion engines in their use. However, fuel
cells utilize chemical processes that are inherently more efficient than combustion.
For example, a typical combustion-based fossil fuel power plant operates at about
35% efficiency,8 while a fuel cell electricity generator can operate at 40 to 60%
efficiency.9 As such, fuel cells could potentially provide energy more cleanly and
efficiently than combustion engines.
There are many varieties of fuel cells, but they are all related by a single
common chemistry. One type of fuel cell, a polymer electrolyte membrane (PEM)
cell, is shown in Figure 1.10 All fuel cells have three basic components: (1) an
3The majority of this hydrogen is used by the refiner or chemical company onsite in the
production of other chemicals. For example, hydrogen is used at refineries to remove sulfur
from gasoline and diesel fuel.
4 For more on hydrogen fuel, see
[http://www.eere.energy.gov/hydrogenandfuelcells/hydrogen/]. Accessed November 13,
2003.
5U.S. Department of Energy (DOE), Fuel Cell Report to Congress. February 2003.
6These processes are explained further in the section “Where will hydrogen fuel come
from?”
7DOE, How Fuel Cells Work.
http://www.eere.energy.gov/hydrogenandfuelcells/fuelcells/how.html. Accessed November
13, 2003.
8Approximately 35% of the chemical energy contained in the fuel is converted into electrical
energy. The remainder is lost as waste heat.
9If electricity and useful heat are generated simultaneously (cogeneration), efficiencies can
reach 85%. U.S. Department of Energy, “Why Are Hydrogen and Fuel Cells Important?”
[http://www.eere.energy.gov/hydrogenandfuelcells/fuelcells/why.html]
10Downloaded on November 13 from the Department of Energy, Energy Efficiency and
Renewable Energy website.
(continued...)

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anode, (2) a cathode, and (3) an electrolyte that
Figure 1. A Basic
separates them. The hydrogen fuel flows to the anode,
Fuel Cell
where the electrons are removed and shuttled to the
cathode through an external circuit to produce
electricity. Oxygen (or another oxidant) is used at the
cathode. When the oxygen, the positively charged
hydrogen, and the electrons combine, water and heat
are generated as waste, and the process is complete.
The location of this chemical combination within the
fuel cell, and the exact details of the chemical process
vary with the type of fuel cell. However, all types
generate electricity by first isolating the hydrogen from
the oxygen, and then requiring electrons to flow
through an external circuit before these three
components combine.11
The power output from a single cell is relatively
low. However, fuel cells are usually arranged in “stacks” to provide the necessary
voltage to power a building or a car. Because of this, fuel cells can be sized to power
any application, from a small cell phone to a large power plant.
While most fuel cells operate on pure hydrogen, some cells can operate on
hydrogen-rich (hydrocarbon) fuels. One example is a direct methanol fuel cell
(DMFC), which feeds methanol directly into the cell. In this case, the cell emits
carbon dioxide and potentially other compounds, as well as water and heat.
Hydrogen fuel cells can also be operated on other hydrocarbon fuels (including
gasoline and natural gas) if a reformer is used along with the fuel cell. A reformer
acts as a mini-refinery to separate the hydrogen from the other elements in the fuel.
The use of a reformer or a direct methanol fuel cell could eliminate concerns over
hydrogen production and storage, but would result in higher in-use emissions,
compared to a hydrogen fuel cell.12
How will hydrogen fuel be used?
Fuel cells and hydrogen could
potentially meet any energy requirement.
While some fuel cell systems are
commercially available today, most applications are still under development. For
example, fuel cell electrical power generation is presently in use in commercially
available backup power applications, but the most advanced automotive fuel cells are
still in the prototype stage. Fuel cell automobiles, trucks, and buses are being
demonstrated worldwide, but at present are very expensive. Further, fuel cells are
being studied for smaller, mobile applications such as notebook computers and cell
phones. In addition to fuel cell applications, hydrogen fuel can be combusted in
10(...continued)
http://www.eere.energy.gov/hydrogenandfuelcells/fuelcells/types.html
11
For more information on fuel cells, see [http://fuelcells.si.edu/index.htm] and
[http://www.fuelcells.org/whatis.htm].
12 Depending on the efficiency of the reformer and fuel cell, as well as the characteristics
of the fuel used, even using a reformer (as opposed to pure hydrogen) a fuel cell system can
achieve lower overall emissions than conventional systems.

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specially designed automobile engines or power generation systems, although
currently the advantages of fuel cells appear to outweigh those of hydrogen
combustion.
There are several fuel cell technologies currently in various stages of
development. The demands of a particular application generally determine the choice
of technology to be applied.13
For example, phosphoric acid fuel cells are
commercially available today, mainly in larger stationary power generation
applications. However, these fuel cells operate at relatively high temperatures (from
300 to 400 degrees F) , so they are not practical in many applications. Proton
exchange membrane (PEM) fuel cells operate at relatively low temperatures (around
175 degrees F) and can vary their output quickly. PEM technology is seen as the
most likely fuel cell for automotive applications. Other types include molten
carbonate, solid oxide, and alkaline fuel cells.
Each of the various types faces
technical barriers that include cost,14 fuel supply,15 and durability.
Where will hydrogen fuel come from? Several factors will affect future
supplies of hydrogen. As stated above, hydrogen itself is not a primary energy
source, and must be generated using energy and a supply of hydrogen atoms.16 In
addition to production issues, there are concerns over supplying hydrogen to end-
users, as there is little current infrastructure for hydrogen fuel storage and
distribution.
Sources of hydrogen. One key advantage of using hydrogen as a fuel is that
virtually any primary energy source can be used to generate it. (See Figure 2.17) A
major motivation for the hydrogen economy is the potential to use environmentally
benign, domestic, and/or sustainable energy sources. Hydrogen can be produced
either by reforming hydrocarbon fuels or by splitting water.
Hydrocarbon fuels include fossil fuels (crude oil, coal, and natural gas) and
biomass such as alcohol (e.g. methanol produced from landfill methane or ethanol
produced from corn). Hydrocarbons must be reformed to produce hydrogen. This
is significantly more expensive than using gasoline directly. According to one
producer’s analysis, in automotive applications, hydrogen reformed from natural gas
is projected to cost roughly twice as much as gasoline at the pump.18 Further, this
13For more information on the many applications currently being tested, see
[http://www.fuelcells.org/charts.htm]. For more information on the types of fuel cells, see
[http://www.fuelcells.org/fctypes.htm].
14 One major contributor to cost is raw materials such as precious metals (e.g. platinum)
which are used as catalysts.
15 Some cells require extremely pure fuel.
16 In certain applications, hydrogen may not be the most suitable fuel. Instead, a hydrogen-
rich primary fuel may be appropriate for direct use in the fuel cell.
17 Reproduced with permission from General Motors Corporation.
18 Hydrogen produced from natural gas is projected to cost roughly 8 cents per mile, as
opposed to 4 cents per mile for gasoline. Cost per mile estimates from “Long-Term Energy
(continued...)

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does estimate does not include the cost of converting infrastructure to deliver the
fuel.
Figure 2. Hydrogen Pathways
Hydrogen can also be produced using electricity to split water (electrolysis) in
an electrolyzer. If electricity is generated with nuclear, hydroelectric, wind or solar
energy rather than fossil fuels, this could present a lower-emission and/or more
sustainable option. However, there are environmental concerns associated with these
electricity sources, especially nuclear energy. Electrolysis is also significantly more
expensive than hydrocarbon reformation.19 Chemical or thermochemical hydrolysis
can also be used to produce hydrogen by splitting water, but these techniques are also
more expensive than reformation.20 However, future technological advances could
potentially make these production techniques more economically attractive.
Infrastructure. If an economically viable and environmentally benign method
of hydrogen production were identified, the transport, storage, and delivery of
18(...continued)
Outlook,”Walter Buchholtz, Exxon-Mobil. Feb. 26, 2003.
19Exxon-Mobil projects that hydrogen from electrolysis could be more than twice as
expensive as hydrogen from natural gas (and more than four times as expensive as gasoline).
Exxon-Mobil, op. cit.
20DOE, op. cit.

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hydrogen could still make a true “hydrogen economy” prohibitively expensive and
difficult to implement. Even if fuel cells were advanced significantly beyond today’s
technology, the United States currently lacks both the physical and regulatory
infrastructure necessary to rely on hydrogen gas as a major energy carrier.
Issues for hydrogen infrastructure include: safety codes and standards, such as
fire and building codes; public awareness about hydrogen fueling systems, which
would be significantly different from conventional fueling systems; and training for
fuel distribution and safety personnel in the physical and chemical properties of
hydrogen, which differ vastly from fossil fuels. For example, hydrogen is an
extremely flammable gas, but it is less dense than any other fuel, and tends to
dissipate quickly in open spaces.
The required infrastructure will depend on the method and location of hydrogen
production. Generation of hydrogen gas at centralized facilities would require
transportation, storage and delivery of a gas or super-cooled liquid. In contrast,
distributed hydrogen production, such as small-scale natural gas reformation at
service stations, homes, and offices, would require a significant supply of energy
(likely electricity or natural gas), as well as on-site storage facilities.
The
convenience and safety of the delivery would need to match that experienced by
consumers today with natural gas and gasoline. Creating an extensive hydrogen
infrastructure could allow for multiple feedstocks and could diversify the system in
the event of changing or evolving fuel sources. Nevertheless, it is doubtful that a
widespread system of hydrogen distribution will emerge quickly. More likely,
transition fuels, such as natural gas and ethanol, and niche applications, such as
backup power, will pave the way.
Applications: Stationary vs. Mobile. Stationary and distributed applications
present the fewest challenges in infrastructure. These applications can include
backup power for office buildings and power supplies for remote locations. Relative
to mobile applications (e.g. transportation), storage requirements will be technically
less difficult to meet and distribution will be less widespread, especially if on-site
reformation is used.21 Indeed, stationary systems are the only commercially available
fuel cells today. In the future, transition niche applications including delivery trucks,
taxis, and other fleet vehicles could help demonstrate the viability of hydrogen and
fuel cells for mobile applications.22
Depending on the application, it may be more cost-effective or more compatible
with existing infrastructure and codes to use conventional fuels rather than hydrogen
in fuel cells. This is particularly likely in the near-term. Electricity deregulation, grid
reliability issues, and the attractiveness of heat/electricity co-generation may motivate
a general move to distributed power, and fuel cell technology may help satisfy the
requirements of this change. In the near-term, natural gas will likely be the fuel for
stationary applications, with propane a potential fuel for remote applications.
21DOE, op. cit.
22[http://www.hydrogenus.org/implementationplan.asp]

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Longer-term markets, such as transportation, may make use of hydrogen gas
directly in the fuel cell device, but a choice may still be required between on-board
hydrogen gas generation from gasoline or alcohol fuels carried on the vehicle vs. off-
board hydrogen production distributed through hydrogen fueling stations. Off-board
hydrogen generation requires on-board storage of gaseous or liquid hydrogen,
necessitating a unique and more demanding vehicle infrastructure and possibly
limiting driving range. But the advantages of increased efficiency and simplicity
could ultimately make hydrogen the more attractive choice, assuming the problems
associated with infrastructure and regulation are not insurmountable.23
What would it mean to move to a hydrogen economy? A hydrogen
economy would rely on hydrogen as the primary fuel for transportation, power,
heating, and other applications. Hydrogen fuel could be used in fuel cells to generate
electricity and heat in cogeneration plants. Fuel cells could replace petroleum-fueled
internal combustion engines in transportation, and those same fuel cells could be
used to power electrical appliances when the vehicle is not in use. Depending on
how it is produced, hydrogen fuel could help improve fuel supply stability, while
lowering or eliminating emissions of pollutants (e.g. nitrogen oxides, carbon
monoxide, sulfur dioxide, mercury) and greenhouse gases (e.g. carbon dioxide,
methane).
Major air quality benefits could be derived from the expanded use of hydrogen.
For example, using hydrogen fuel generally produces only water vapor and heat as
byproducts. Therefore, if the supply-related emissions from hydrogen fuel are
relatively clean, overall “fuel cycle” pollutant emissions, as well as greenhouse gas
emissions, could be significantly reduced. Compared to other fuels, a key advantage
of hydrogen is that emissions of pollutants and greenhouse gases may be easier to
control when produced from fewer centralized sources, as opposed to many mobile
sources. However, there may also be the potential for higher overall emissions,
depending on the primary energy source. For example, hydrogen produced from coal
could lead to higher overall emissions, if the hydrogen replaced gasoline in
combustion engines.
In addition to air quality improvements, there are several other potential
benefits. First, because hydrogen can be produced from any primary energy source,
a focus on the use of domestic resources could provide energy security gains. In a
hydrogen economy, consumers could potentially purchase hydrogen like they
purchase other fuels today. Suppliers would be free to select the most economical
primary energy source and processing methods. However, as discussed above, there
are key technical concerns with making this supply seamless to the customer,
especially in delivering and storing hydrogen fuel.
Another potential benefit comes from the ability to improve the reliability of the
electricity production. Because hydrogen can be produced from electrolysis, there
is the potential to use existing electrical generation capacity during low-load times
(such as late at night). Further, stationary and mobile fuel cells that would otherwise
be idle (e.g. a fuel vehicle parked in a garage) could be used to produce electricity
23DOE, op. cit.

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CRS-8
that could be used on-site or returned to the grid. However, these sorts of changes
would require significant investments in electrical infrastructure.
A transition to a hydrogen economy would be expensive, requiring major
investments in production facilities, supply networks, and distribution systems. In
addition, consumers would need to finance the purchase of new equipment, possibly
including stationary generation systems and fuel cell vehicles.
However, the
potential benefits in terms of air quality improvements, energy security, and
greenhouse gas mitigation could be significant, especially if some key technological,
economic, and policy barriers–including supply and storage issues, as well as safety
concerns–are overcome.
What role can Congress play?
Determining the proper role of the
government in the development of a hydrogen economy has raised some key issues.
Some of these issues are common to all technical and scientific research and
development. Examples of these issues include whether the government should be
“picking winners,” and whether the government should involve itself in research that
will ultimately profit corporations. On the other hand, the potential benefits to
society of hydrogen and fuel cells are seen as key reasons for promoting research and
development, as these benefits could lead to significant gains, such as improved air
quality and greater energy security. Other key issues include whether there are other
technologies such as renewable energy or hybrid vehicles that could promote the
same goals more economically or with fewer technical, economic, and policy
barriers.
Oversight of the Administration’s Proposal.
A s p a r t o f t h e B u s h
Administration’s National Energy Policy, the Department of Energy (DOE) has
worked to identify key barriers to the development of a hydrogen economy and
opportunities for increased research. Out of that effort, DOE produced two key
documents, a National Hydrogen Roadmap (November 2002) and a Fuel Cell Report
to Congress (February 2003) outlining necessary next steps. In January 2003, the
Administration announced a major hydrogen research and development push–the
President’s Hydrogen Fuel Initiative. The Administration is seeking to increase
funding for hydrogen and fuel cell research and development, mainly through the
Department of Energy.24 The Administration has requested a total of $1.8 billion for
FY2004 through FY2008, including $720 million in new money. This initiative
would transfer some funds from research on other topics, such as hybrid electric
vehicles (while maintaining that research at reduced levels). The research initiative
has three key components: hydrogen fuel development; fuel cell development
(especially for stationary applications); and development of hydrogen-fueled
automobiles.
Through the annual appropriations process, Congress will address the
Administration’s request for increased funding.
Further, through funding
24The President's Hydrogen Fuel Initiative is meant to complement the FreedomCAR
initiative, which coordinates research and development on fuel cell vehicles. This initiative
is a cooperative research partnership between the federal government and the "Big Three"
American auto manufacturers (DaimlerChrysler, Ford, and General Motors).

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authorizations in comprehensive energy legislation (H.R. 6), Congress has the
opportunity to support or reject the Administration’s research and development plans
for the next several years.
Other Congressional Actions.
There are other opportunities for
Congressional action to encourage or support hydrogen and fuel cell development as
well. For example Congress could develop statutes and regulatory systems to
simplify codes and standards for the transportation and use of hydrogen, as well as
the siting of hydrogen supply facilities. Further, Congress could establish tax credits
and other incentives to promote the expanded use of hydrogen fuel and fuel cell
technologies. In addition, Congress could require the federal government to set an
example as an “early adopter” of hydrogen fuel and fuel cell technologies.
Conclusion. There are several key barriers to the development of hydrogen
fuel, fuel cells, and a hydrogen economy. These barriers include technical feasibility,
economic cost, consumer acceptance, and safety. These issues will be addressed over
a long-term time frame, and will evolve as research and technology expands options
for hydrogen and fuel cell use. Basic understanding of the long-term potentials and
limitations surrounding a hydrogen economy is critical to assessing such changes.

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