Economy Topic Team Report California 2010 Hydrogen Highway Network
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Economy Topic Team Report California 2010 Hydrogen Highway Network January 5, 2005 Acknowledgements The Economy Topic Team Co-chairs Walter W. (Chip) Schroeder, President, Distributed Energy Systems Corp. Michael L. Eaves, President, California Natural Gas Vehicle Coalition Co-Managers Fereidun Feizollahi, Manger Economic Studies Section, California Air Resources Board Corey Bock, Economic Studies Section, California Air Resources Board Member Affiliation Peter Arias Reed Global Advisors Elias Azrak Hydrogen Ventures LLC Nina Babiarz Director Energy Technology Training Center, California College of the Desert Naveen Berry Technology Advancement Office, South Coast AQMD Raj Choudhury Manger, Government Relations, General Motors Dr. Woodrow W. Clark Managing Director, Clark Communications, LLC Gustavo Collantes Institute of Transportation Studies, University of California, Davis Paul H. Eichenberger, P.E. Western States Power, LLC Karl Figenschuh Freedom Car, Ford Research and Advanced Engineering Scott Fischler Netozoic Inc. Paul Gopala Ion America Robert Harrer Policy, Government, and Public Affairs, Chevron Texaco Corp. Kyo Hattori Sr. Executive, Vice President Engineering Fuel Cell Dora Hsu ZTEK Stephen Irvin University of California, Santa Barbara Loren Kaye Kahl/Powall Advocates Ed Kiczek Sr. Business Development Manger, Air Products and Chemicals Grant Kimura Chevron Texaco Copr. Tina King Energy Advisor Suzanne Klein NASA, JPL Patrick McCory Associate Mechanical Engineer, California State Architect's Office Rupert Merer Stuart Energy Systems Brad Mondschein Updike, Kelly and Spellacy William J. Pietrucha Hawaiian Wiliki Limited Tom Plenys Coalition for Clean Air Josh Richman Ion America Catherine Rips Rips Consulting John Sakioka Director Freedom Car, For Motor Co. Paul Scott CSO, ISE Corp. Stephen Torres Vice President Western Region, Fuel Cell Energy Jonathan Weinert Institute of Transportation Studies, University of California, Davis Chris Yang Institute of Transportation Studies, University of California, Davis Hank Wedda President, California Hydrogen Business Council iii Table of Contents Acknowledgements .........................................................................................................iii Executive Summary ........................................................................................................xi 1. California Hydrogen Highway Network Costs.................................................... 1-1 1.1 Introduction ............................................................................................. 1-1 1.2 California Hydrogen Highway Network Station Costs ............................. 1-2 1.2.1 Summary of Cost Estimates......................................................... 1-2 1.2.2 Hydrogen Fueling Station Cost Model.......................................... 1-5 1.2.3 Methodology ................................................................................ 1-7 1.2.4 Data and Assumptions ............................................................... 1-11 1.2.5 Supply and Demand Scenarios.................................................. 1-14 1.2.6 Bounding Scenarios ................................................................... 1-15 1.2.7 Hydrogen Highway Network Cost Estimates.............................. 1-16 1.2.8 Individual Station Type Costs..................................................... 1-19 1.2.9 Sensitivity Analysis..................................................................... 1-21 1.2.10 Conclusions on Cost Estimates.................................................. 1-23 2. Financing Tools and Policies............................................................................. 2-1 2.1 Introduction ............................................................................................. 2-1 2.2 Background............................................................................................. 2-2 2.2.1 Energy Stations and the CA H2 Net............................................. 2-3 2.3 Market-Based Mechanisms .................................................................... 2-3 2.3.1 Franchise Concepts ..................................................................... 2-4 2.3.2 DG/Energy Stations via Energy Market Reforms ......................... 2-5 2.3.3 Managing Strategic Business Relationships ................................ 2-6 2.4 Mandates-Private Resources.................................................................. 2-7 2.4.1 Incumbent Supplier Mandates ..................................................... 2-7 2.4.2 Private Fleet Operators ................................................................ 2-7 2.4.3 Private R&D Resources ............................................................... 2-8 2.5 Mandates: Public Resources .................................................................. 2-8 2.5.1 State and/or Local Agency Mandates .......................................... 2-8 2.6 New Subsidies ........................................................................................ 2-9 v 2.6.1 State of CA General Obligation Bonds......................................... 2-9 2.6.2 State of California Revenue Bonds ............................................ 2-10 2.6.3 Carbon Tax ................................................................................ 2-11 2.6.4 Increase State Fuel Excise Tax, (or Impose a “Fee”)................. 2-12 2.6.5 Increase Vehicle Registration Fees............................................ 2-12 2.6.6 Establish Hydrogen-Centric State Grant Program/Fund ............ 2-13 2.6.7 Increase in State Sales Tax ....................................................... 2-13 2.6.8 State Tax Credits ....................................................................... 2-14 2.7 Cross Subsidies.................................................................................... 2-15 2.7.1 Redirect a Share of State Fuel Excise Tax Revenues ............... 2-15 2.7.2 Redirect a Share of CPUC “Public-Purpose” Surcharge ............ 2-15 2.7.3 Modify CPUC DG Rulemaking ................................................... 2-16 2.7.4 AB 2766 Funds .......................................................................... 2-16 2.7.5 Federal Funding Sources........................................................... 2-17 2.7.6 Air Quality Penalties/Fees.......................................................... 2-18 2.8 Non-Profit.............................................................................................. 2-19 2.8.1 CSAC Finance Corp. – CaLease Private Placement Finance Program ..................................................................................... 2-19 2.8.2 CSAC Finance Corporation Small Issue Public Benefit Program ..................................................................................... 2-19 2.8.3 Public-Private Partnerships........................................................ 2-20 2.9 Reinforcing Mechanisms....................................................................... 2-20 2.9.1 Vehicle Development Program with OEMs ................................ 2-21 3. Potential Hydrogen Fuel Benefits ...................................................................... 3-1 3.1 Air Pollution Impacts and Costs on Human Health ................................. 3-1 3.2 Health Cost Studies ................................................................................ 3-2 3.3 Limitations and Variability of Cost Estimates .......................................... 3-2 3.4 Societal Cost of Gasoline........................................................................ 3-4 3.5 Recommendations and Next Steps ........................................................ 3-6 3.6 Conclusion on Benefits of Hydrogen....................................................... 3-6 References ........................................................................................................... R-1 Appendix A. Summary of Costs for 10 Station Types .................................................A-1 Appendix B. Line Item Station Costs...........................................................................B-1 Appendix C. Assumptions .......................................................................................... C-1 vi Appendix D. Station Cost Summary: Equipment, Installation, and Operation ........... D-1 Appendix E. Production Volume and Scaling Adjustments .........................................E-6 Appendix F. Sources of Industry Cost Data ................................................................F-1 Appendix G. Market-Based Incentives for Distributed (Including Hydrogen- Based) Power Generation...................................................................... G-1 Appendix H. Franchise Concepts............................................................................... H-1 vii List of Tables Table 1. Station Type, Rated Capacity, and Station Mix Scenarios........................1-3 Table 2. Input Data for Hydrogen Station Cost Estimates.......................................1-4 Table 3. Station Types and Capacities Analyzed by the Hydrogen Station Cost Model................................................................................................1-5 Table 4. Station Equipment.....................................................................................1-5 Table 5. Production Volume and Progress Ratios ..................................................1-8 Table 6. Production Volume for Hydrogen Station Equipment................................1-9