This vivid artistic creation is called Carhenge. Cars that run on gasoline may well be going the way of Stonehenge. Image courtesy of TLC's The Print Shop. Do not copy.Fuel Cells are the Future

by Kevin Marek

GM put me through college. For four summers while I got my Classics degree from the University of Toronto, I worked 12-hour shifts at General Motors in Flint Michigan, building big, fat gas-guzzling V-8 engines. But times have changed, and we can't count on a steady supply of oil. We need to reduce hydrocarbon emissions -- this means car exhaust -- the largest single cause of air pollution on the planet.

There is an alternative: cars that run on fuel cells and not on gasoline. The technology for fuel cells exists and it works. There are problems to be overcome, but they will be overcome, as both government and industry begin to cooperate to make it happen. Legislation has been passed in New Jersey, New York, California, and Massachusetts to make cars emissions-free in the near future. Some sort of line was crossed when our current president, who has been an oilman for decades, proposed $1.2 billion be dedicated to fuel cell development.

What is a Fuel Cell?

Let's define our terms. The cars out there now don't run on fuel cells. The new, more gas-efficient Toyota Prius and Honda Insight use nickel-metal batteries that gain power from the friction of the car's brakes. The new fuel cells are not like this.

Fuel cells can run on many different types of fuel. Phosphoric Acid Fuel Cells have been around for a couple of decades. (A visit to Fuelcells.org will give you a brief description of the different types of cells.) The current generation of fuel cells run on hydrogen, and this appears to be the likely "fuel of choice" for the future. Hydrogen is the most common element in the universe. It is literally everywhere, but isn't available in its pure form. In order to create hydrogen that can be used by the fuel cell, many fuel cells need a "fuel reformer." A fuel reformer converts the fuel source into hydrogen that is pure enough to combine with oxygen and create energy. Fuel cell technology is the process of developing the method where the hydrogen can combine with the oxygen.

One type of fuel cell, a Direct Fuel Cell, does not require a fuel reformer. This type of cell can use a fossil fuel as a direct energy source. A direct fuel cell is the most efficient method of extracting energy from fossil fuels, meaning more of the fuel is converted into energy rather than thrown into the air as pollution. More about this later.

This is the GM Autonomy. Don't worry, there are more subtle models.The Proton Exchange Membrane (PEM)

At present, the most common type of fuel cell incorporates a Proton Exchange Membrane (PEM). This technology is so prevalent that someone beginning their research may be led to believe that all current fuel cells use a PEM. For example, the article on fuel cells in the April 29 issue of US News & World Report discusses the PEM without mentioning alternatives.

The PEM is a thin polymer membrane that is coated with metal alloys which act as catalysts. One of the metals is usually platinum. Hydrogen and oxygen are introduced on either side of the PEM; an electrolyte in the anode causes the hydrogen to release electrons, thereby creating positively charged hydrogen ions. The electrons form a current that is drawn off to charge the battery, while the protons pass through the PEM to the cathode where the hydrogen mixes with the oxygen to produce water -- the environmentally friendly waste product of the fuel cell.

PEM cells operate at fairly low temperatures (approximately 175 F), the power output can be quickly varied, and they perform well when quick start-up is required. All of these characteristics make them ideal for automobile engines. One drawback is that the PEM is sensitive to fuel impurities; the other is the price. The platinum coating on the PEM makes this type of cell expensive compared to the cost of building an internal combustion engine. Despite this, the Department of Energy considers PEM cells to be the leading candidates for light-duty automobiles.

Companies Developing Fuel Cells

Ballard Power (NASDAQ: BLDP)

If you read anything about fuel cells, you will encounter many references to Ballard Power as the recognized leader in fuel cell technology, making it the “800 pound gorilla” of the industry. Based in Vancouver, British Columbia, Ballard Power is easily the largest company that is solely dedicated to fuel cell technology. Ballard developed the PEM-type cell. Ballard is working on two separate types of fuel cell deployment simultaneously as they attempt to create cells that will operate cars and other cells that will generate electricity in stationary power plants.

This is a GM Precept, a sporty little thing. Looks a lot like a 1972 Datsun to me.While Ballard has been in business nearly 25 years, they still have yet to show a profit. That may change soon. One analyst from Goldman-Sachs has predicted that Ballard will actually make money in 2004. In the meantime, Ballard has joint ventures with a number of companies to create commercially viable products. Ford and DaimlerChrysler invested $1.1 in Ballard, creating a subsidiary called Xcellsis Fuel Cell Engines. DaimlerChrysler owns 51% of Xcellsis; Ballard owns 27% and Ford owns 22%. Xcellsis has already created and shipped prototype fuel cell engines for Ford’s P2000 and Chrysler’s NECAR (New Electric Car). Other automotive customers of Ballard include GM, Honda, Toyota, and Nissan. Pictured above is the GM Precept, a car model resulting from Ballard's collaboration with GM.

Ballard started in the automobile business by making buses that ran on fuel cells. Something the size of a bus was needed to carry all of the hardware -- the fuel source and the huge batteries -- that the early versions of fuel cell engines required. As time has passed, Ballard has been successful in reducing the size of the power plant to the point that it can fit into a standard sized car. As of this writing, California, New York, and Massachusetts have all passed laws requiring zero-emissions vehicles and legislation is being considered in other states and a number of Canadian provinces. Ballard claims that only fuel cell vehicles have the engine performance, acceleration, speed, and range similar to that provided by an internal combustion engine while producing zero harmful emissions. Buses that run on Ballard fuel cells have been in commercial operation since 1995. Commercial trials of a newer generation are now underway, and the trials for the next generation are slated to begin later this year.

This is the Honda FCX-V4. I would love one of these.At the same time, Ballard is also working on stationary power cells. These are designed to generate electricity for homes. Stationary power cells offer a wide range of advantages. Clean, self-contained, and producing no noxious emissions, they can be placed almost anywhere. Stationary cell generators can also be easily expanded. Most stationary cells can be carried on a flatbed truck, but individual cells can be “stacked” by, literally, stacking them next to each other to double, triple quadruple, etc. the power output of the power plant. Or, a single cell can be used individually. Theoretically, individual buildings, including a private homes, could have their own fuel cells. Another use is on a construction site to generate power for tools, etc. An immediate and very practical application would be for use as a back-up power source in a hospital. Ballard has formed Ballard Generation Systems (BGS) and partnerships with Japanese and European companies to pursue stationary power. However, this does not seem to be the main focus of the company.

For more information, visit Ballard Power’s website at www.ballard.com.

FuelCell Energy (NASDAQ: FCEL)

FuelCell Energy, of Stanford, CT, has a much narrower focus. This company is concentrating on stationary power generation. Moreover, they have focused on direct fuel cells, the ones that use hydrocarbon (fossil) fuel without the need to create hydrogen in a separate fuel processor. This eliminates one of the components of a fuel cell system. FuelCell Energy has created proprietary technology, which they call “Direct FuelCells®.” Generally, direct cells run on natural gas, but in general they offer a great deal of flexibility for a fuel source. For example, a fuel cell recently installed in King County, Washington (Seattle) is powered by the exhaust gas of the Seattle municipal wastewater plant’s digester. This is a remarkably efficient way to create clean power from something that otherwise would have been a potential pollutant.

Several things should be noted about direct fuel cells because they are designed to operate from fossil fuel. First, they draw more power from less fuel, because they operate at a higher level of efficiency than do standard generating plants that run on coal or natural gas. In producing this power, they do not create the pollution commonly associated with the combustion of fossil fuels since the fuel is not burned. However, there are some carbon dioxide emissions; this is the “greenhouse” gas, but the level of carbon dioxide emissions is significantly lower than what is produced by burning the fossil fuel.

The other obvious inference is that a direct fuel cell offers a more immediate solution to power generation than do fuel cells that operate on purer forms of hydrogen. A direct fuel cell does not require a fuel reformer, saving money and space. Secondly, the technology exists right now. These two factors presumably provide an immediate competitive edge to other types of fuel cells that have not quite solved the issue of how to get hydrogen from their source material.

For more information about FuelCell Energy, please visit their website at www.ercc.com.


Yes, for those of you who need to drive around in your living rooms, there will be minivans.Millennium Cell (NASDAQ: MCEL)

Millennium Cell has developed a fuel cell that eliminates the PEM. The Daimler Chrysler Natrium, pictured to the left, uses Millennium Cell's “Hydrogen on Demand” process. Millennium Cell’s fuel cells do not operate on the PEM-cell principle. Rather, Millennium Cell uses chemical compounds known as boron hydrides, which combine the element boron with hydrogen. The advantage of boron hydrides is that they contain a much larger concentration of hydrogen than other compounds. The hydrogen can also be created at room temperature, and in a low pressure environment, which eliminates the need for pressurized hydrogen tanks or engines that burn hot.

Without being a chemist, the description of this process as provided on the website sounds very elegant. It seems to solve the problem of the fuel source. Boron hydrides are common, they can be easily transported without the problems associated with hydrogen gas, they are stable in air, not too heavy, and not too big. Millennium Cell is also working with Ballard Power, DaimlerChrysler, and Rohm & Haas, currently the world's largest producer of sodium borohydride. While their research has predominantly focused on automotive applications, the technology could be adapted to stationary uses. In fact, Millennium Cell’s technology may even be better suited for stationary generation.

For more information about Millennium Cell, visit their website at www.millenniumcell.com.

Methanex (NASDAQ: MEOH)

Methanex doesn’t make fuel cells. Rather, Methanex is the largest producer of methanol in the world. Methanol is a form of natural gas that takes on certain properties of alcohol. As such, it can be used to power a modified internal combustion engine. Or, it can be used as a source of hydrogen for direct fuel cells. If the first generation of commercially available fuel cell cars use direct fuel cells, there is a strong possibility that they will run on methanol.

Methanol offers several advantages for use as a mobile fuel source. It is a liquid under standard atmospheric conditions, and has a higher ratio of hydrogen-to-carbon than gasoline. Methanol can also be converted to hydrogen at a lower temperature than gas, and produces 42% less carbon dioxide emissions than a standard internal combustion engine. Suggestions have been made that methanol could be shipped in liquid form to refueling stations, where it is converted to hydrogen before loading into a car’s hydrogen supply tank. This type of transportation would actually be safer than transporting gasoline in tanker trucks, as is done today.

Methanex has been working with both DaimlerChrysler and Ballard Power for several years now. Methanex is also working with Mitsubishi, and recently signed a deal with Honda to work on direct fuel cell cars.

For more information on Methanex, visit their website at www.methanex.com.


Yes, there will be manly fuel cell trucks, too.Fuel Cells as an Investment Opportunity

As was stated in the opening, fuel cells exist. They work. This is not science fiction speculation, the way cold fusion is. So what’s the problem?

There are two. The first is cost. Right now, both a fuel cell propulsion system for a car, and fuel cell power generators, are significantly more expensive than internal combustion counterparts. Remember, the PEM relies on platinum, which is much more expensive than iron or aluminum or other standard materials. Right now, it costs more to build the fuel cell car, and more to run it, than it does to run a car on gas, because gas and oil are still very cheap in the United States, and the manufacturing plants already exist to build gas-running cars. Once large-scale production of fuel cell cars begins, the per-unit cost will come down as the automakers realize economies of scale. This has happened with all major consumer products, from VCRs to PCs.

The cost is also indirectly tied in to the second problem: an entire infrastructure to distribute hydrogen must be created, and this poses a chicken-and-egg problem: why would anyone buy a hydrogen-powered car if there aren’t any stations to fill the hydrogen tank? Conversely, why would anyone build a hydrogen-refueling station if there aren’t any cars to come fill up? Which will come first?

In short, some sort of external catalyst will be necessary. The states that have passed zero-emissions laws will provide an impetus for automakers to expand production of fuel cell cars. Hydrogen now costs about $3 per gallon; gas costs a lot less. However, hydrogen is twice as efficient as gas, which suddenly makes the price of hydrogen competitive. Then if you remember that the price of gasoline spiked above $2 per gallon in much of the Midwest a year or so ago, hydrogen doesn’t look like such a bad bargain.

And, of course, there will be lots of SUV's. This is Toyota's FCHV-5.There has been a steady stream of consolidation of major oil companies. As this pattern of consolidation continues, the price of oil may continue to rise. This sort of sustained price increase may act as a spur to alternative energy research, as business and industry search for ways to undercut oil prices.

At the moment, the Middle East is in crisis. Oil supplies could be disrupted very easily. Saudi Arabia is the largest supplier to the US in the region, accounting for 13% of our oil supply. This amount could be made up by a country like Russia that is eager to increase its market share. However, neither Europe nor Japan has any domestic oil production. As such, they are much more vulnerable to a disruption of supply. Jürgen Schremmp, the CEO of DaimlerChrysler, has been the automotive CEO most dedicated to fuel cell technology. There are several Daimler prototypes of fuel cell vehicles, as well as Mercedes buses. The Mercedez-Benz plant in Tuscaloosa, AL has incorporated fuel cells into its power plant. Honda and Mitsubishi have full-blown research departments devoted to fuel cell vehicles. All of these automakers have signed deals with all of the companies above.

There is also the environmental impact. Let’s say that drilling begins in the Alaska National Wildlife Refuge. Let’s say something awful happens, and a massive oil spill occurs. What would that do to public opinion?

Still, it’s important to realize that the fuel cells are in the future. They won’t be common next week, next month, or next year. But they are coming. The intent of this article has been to give you a very brief insight into this exciting new technology, and give you some leads on how to pursue your research into companies that are actively seeking to make this technology commercially viable. At this point, it seems a safe enough prediction to say that the first commercial use of fuel cells will be in stationary applications, if only because there are less stringent size limitations. The first generation of auto fuel cells will be probably be direct cells that runs on natural gas, or methanol, if only because a distribution infrastructure already exists with current gas stations. This last prediction has already been made, and Methanex’s stock jumped in response last December.

But that’s the short term. As to which company will eventually come out on top in the long run, well, that’s the big question, isn’t it?

Additional companies, websites, and information:

Copyright © 2002 Kevin Marek. All rights reserved.

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