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TYSON'S CORNER, Va.--In an effort to break the U.S. addiction to oil, research dollars are flowing to both hydrogen and biofuels, but ethanol is the short-term favorite, according to a panel of energy experts.

The panel members, who gathered here Monday at the U.S. Department of Energy's Opportunity Forum, said that the automobile and energy industries have a long way to go to meet government targets to reduce dependence on foreign sources of fuel and to lower polluting emissions.

The FreedomCar & Vehicle Technologies Program, funded by the Department of Energy, calls for "leap-frog" technologies in a range of areas, including batteries, material technologies and fuels. It has a series of specific targets, such as developing new materials to reduce the weight of vehicles by 50 percent while improving recycling of parts.

Fuel cells today are essentially manufactured by hand in the shop by technicians.
--David Flanaghan
manager, UTC Power

Fuel cells, which use hydrogen as a fuel and emit water vapor, present perhaps the best long-term opportunity in creating vehicles that emit no particle pollutants and consume no petroleum, said panel member Ed Wall, the Department of Energy program manager for FreedomCar. With a rise in gasoline prices last year and growing environmental concerns, that's a compelling vision for car buyers.

"We hope that consumer demand, particularly with what we think is a long-term, upward trend in petroleum prices, will drive demand for advanced technologies," Wall said. "It has certainly driven demand for hybrids."

Hydrogen storage issues
Fuel cell vehicles are being tested in very small numbers for demonstration purposes. Wider adoption of fuel cell vehicles depends on several connected technologies that need a great deal of improvement in price and performance, panelists said.

Specifically, there has to be substantial technological progress in the areas of on-board storage, fuel creation and distribution, and power electronics, said panel member David Flanaghan, automotive business manager at UTC Power, a fuel cell manufacturer.

In addition, the fuel cell motors, or stacks, which convert hydrogen to electricity, decline in power the longer they operate, particularly in cold weather, he noted.

To illustrate how hydrogen storage lags behind gasoline, Flanaghan said that a tractor-trailer full of compressed hydrogen can fill up only five or six cars.

Flanaghan said that UTC Power has made significant progress in meeting the Department of Energy's performance goals, but noted that the price of systems is a significant barrier as well.

"Fuel cells are expensive today, and a lot of work needs to be (done) in this area," he said. "Fuel cells today are essentially manufactured by hand in the shop by technicians."

Ethanol's promise
Ethanol, meanwhile, is more widely used in vehicles today, such as fleets of trucks. Total production of ethanol--expected to top 5 billion gallons in the U.S. this year--represents about 5 percent of total fuel consumption in the U.S., said panel member James Peeples, vice president of marketing for PMC Marketing Group, an ethanol and biodiesel distributor.

Peeples said that the ethanol industry will easily meet the Department of Energy's goal of 7.5 billion gallons produced per year by 2012. Dramatic growth, which would bring the total to between 25 billion and 30 billion gallons per year in 20 years, is also achievable, he said.

"Ethanol is probably the best way to begin making the transition to alternative fuels in the U.S.," Peeples said.

Certain "flex fuel" vehicles can run both ethanol and gasoline. And, Peeples noted, there has been a "new wave of capital" from investors, such as Vinod Khosla and Bill Gates.

Although corn is used to make ethanol today, research is being conducted on making ethanol from other feedstocks, such as switchgrass, he added.

However, ethanol faces some of the same challenges of hydrogen, such as distribution. There are about 1,000 ethanol filling stations in the U.S., mainly in the Midwest, and the energy content of ethanol is about 25 percent lower than gasoline, panelists said.

Still, manufacturer General Motors is investing in ethanol as well as in longer-term fuels and technologies, said William Peirce, director of technology collaboration at GM. GM is investing in hybrid-related technologies, such as motors and batteries, which will apply to fuel cell vehicles.

"Ethanol is a good short-term solution. It will fill 25 percent of fuel requirements by 2025," he said. "But longer term, if you want to take the vehicle out of the environmental equation, you have to think about hydrogen."

Fickle consumers?
The Department of Energy is financing research for many types of fuels and providing financial incentives for ethanol, which are about 51 cents a gallon, according to Peeples.

"There are advantages to having a diversity of fuels," said the Department of Energy's Wall.

Apart from all the technical challenges is the question of consumer acceptance and demand, panelists said. Gasoline prices have gone up over the past two years, but consumer interest in energy-efficient vehicles could be short-lived, they said.

"The uncertainty of the market--will there be continued demand for energy efficiency--spurs compromises on the part of manufacturers," Wall said, adding that Department of Energy surveys indicate that consumers expect gas prices to eventually drop down to historic levels.

Given a choice at the pump between gasoline and ethanol, for example, price appears to win the day, Peeples said.

"We are not convinced that the general public is willing to continue purchasing biofuels," he said, "unless they are price competitive with petroleum fuels."

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