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Hydrogen and the Realities of Technology Diffusion
Arnulf Grubler
YALE FESSeptember 19, 2003
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A. Grubler, 2003
Why Hydrogen?
• Need zero-emission fuels at point of consumption (energy density)
• Climate Change: best transitional strategy for carbon management of fossil fuels (steamreforming+sequestration)
• Logical evolution of energy system
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2000
Source: IIASA
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2070
Source: IIASA
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A. Grubler, 2003
When Will Hydrogen Come?• C. Marchetti 1982: Non-fossil hydrogen
via transition through „methane economy“
• Post 2000 scenario literature:
2020: zero in BAU, small market niche (<2EJ) in „technology push“ scenarios.
2050: Best guess 20+ EJ, much larger in climate stabilization and/or „technology push“ scenarios
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A. Grubler, 2003
World – H to C Ratio
-2.00
-1.00
0.00
1.00
2.00
1800 1850 1900 1950 2000 2050 2100
Rat
io o
f Hyd
roge
n to
Car
bon
102
101
100
10-1
10-2
wood
coals
oilgas
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A. Grubler, 2003
World – H to C Ratio
-2.00
-1.00
0.00
1.00
2.00
1800 1850 1900 1950 2000 2050 2100
Rat
io o
f Hyd
roge
n to
Car
bon
102
101
100
10-1
10-2
wood
coals
oilgas
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A. Grubler, 2003
World – H to C Ratio
-2.00
-1.00
0.00
1.00
2.00
1800 1850 1900 1950 2000 2050 2100
Rat
io o
f Hyd
roge
n to
Car
bon
102
101
100
10-1
10-2
wood
coals
oilgas
H2 economy
methane economy
non-fossilH2
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A. Grubler, 2003
World – H to C Ratio
-2.00
-1.00
0.00
1.00
2.00
1800 1850 1900 1950 2000 2050 2100
Rat
io o
f Hyd
roge
n to
Car
bon
102
101
100
10-1
10-2
wood
coals
oilgas
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A. Grubler, 2003
How Does Hydrogen Come?
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A. Grubler, 2003Source: Shell, 2001
Source: SHELL 2001
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A. Grubler, 2003
“I think you should be more explicit here in step two”
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A. Grubler, 2003
Technology is...
H - Hardware (artifacts, “machines”)+S - Software (know-how, know-why)+O - “Orgware” (institutions, regulation,
“rules of the game”)
FCcogen
H2
PEM
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A. Grubler, 2003
Hierarchies of Change
• Incremental (H): 3-litre car• Radical (Hn+S): Fuel Cell• Systems change (Hn+Sn+O): FC
cogeneration units using CH4 and H2“towngas” (hythane) strategy
• Clusters, families, “paradigms”(Hn+Sn+On): e.g. H2 economy: H2 + FC = all energy services; consumers = utilities
Increasing Impactbut alsoIncreasing Time for Change
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A. Grubler, 2003
Hierarchies of Change
With increasing hierarchy of change:
• More interdependence, spill-oversand clustering
• Larger market size and social/environmental impact
• But:Slower diffusion
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A. Grubler, 2003
USA - USSR: Infrastructure Substitution
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A. Grubler, 2003
Pace of Diffusion 2 (Hierarchies)
USA USSR t0 Δt t0 Δt
Total length of transportinfrastructure 1950 80 1980 80
Growth of railways 1830-1930 1930-1987
1858 Decline
54Decline
1890 1949
3744
Treated ties (USA) 1923 26Track electrification(USSR)
1965 27
Replacement of steamlocomotives 1950 12 1960 13
to = diffusion midpoint (50% completion rate)Δt = diffusion rate (years to grow from 10% to 90%)
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A. Grubler, 2003
Economics 101
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A. Grubler, 2003
Basic Economics of PV Supply and Demand
Source: BP, 2003
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A. Grubler, 2003
Fuel Cell Marketing Strategy: Successive Market Niches via Cost Reductions
Source: P. B. Bos, Commercializing Fuel Cells – Managing Risks,Fourth Grove Fuel Cell Symposium, Commonwealth Institute London, September 19-22, 1995
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A. Grubler, 2003
Theory vs Practice
10
100
1000
10000
100000
1 100 10000 1000000
Cumulative Production
Spec
ific
Cos
ts $
/kW
?PC25s
Investment in niche and interim markets: 1.2 billion $
Bose's Theory UTC Reality
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A. Grubler, 2003
Innovation Challenges
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A. Grubler, 2003
Innovation & Diffusion Uncertainty• “Heavier-than-air flying machines are
impossible.” Lord Kelvin, 1895.
• “I think there is a world market for maybe five computers.” Tom Watson, IBM chair, 1943.
• “But what ... is it good for?” IBM engineer commenting on the microchip in 1968.
• “There is no need for any individual to have a computer in their home.” Ken Olson, President, Digital Equipment, 1977.
• More fun: http://my.athenet.net/~jlindsay/SkepticQuotes.html
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A. Grubler, 2003
Technological Uncertainties
• Invention → innovation (feasibility) +• Standardized design
AFC, MCFC, PAFC, PEMFC, SOFC,…. ?• Increasing returns
(if and how much cost reductions) ?• Innovation “impatience”
(the valley of death) ?• Infrastructure needs --• Diffusion environment
(economic, institutional, social) ?• Environment +/?
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Technological Uncertainty: Patented but non-functional smoke-spark arrestors
Source: J. White, American Locomotives, 1968.
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Stages of Technology Development and the Resource Gap for Innovation
Stages of Technology Development
Research Prototype Pilot Production
Sum
Government
Industry
Relative Resources Available
The “Valley of Death”
Source: M. Chertow, 2003
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A. Grubler, 2003
0
50
100
150
200
0 10 20 30
Cumulative production 10 6 bbl
Producer price
Regression
Oil price
1978 1985 1988 1990 1995Data: Goldenberg, 1996
Cumulativesubsidy1billion $
0.6 billion $0.3 billion $ ?
30 % cost reductionfor each doublingof cum. production
Pro
duce
r pric
e $(
1996
)/bbl
Brazil - Ethanol Learning Curve:“Hold your breath!”
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Infrastructure: Let 1000 Flowers Bloom?
Water ElectrolyzedHydrogen
Home Refueling
Photo VolatilePower Generation
Nuclear PowerGeneration
Wind PowerGeneration
Water ElectrolyzedHydrogen
Refueling Station
Natural GasPower Generation
Natural GasInfrastructure Area
Natural GasInfrastructure Area
CNGV
Natural GasCompressor
Gas Heat Pump
Natural GasCo-Generation
Natural Gas ReformedFC Co-Generation
Natural Gas ReformedHome Hydrogen Refueling
FCEV
Electric Grid
Natural Gas ReformedHydrogen Refueling Station
H2Statio
nFCEVFCEV
Gas Hot Water Heater
FCEV
Source: N. Uesuqi, 2003.
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A. Grubler, 2003
CH4 vs H2 – From Competition to Synergy
• Maximize use of existing and incremental infrastructure: gas pipelines, LNG terminals
• 21st century learns from 19th
towngas (hythane) = CH4+ H2(10-30%)• Separation at point of final use• Critical technology: Membrane
separation
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A. Grubler, 2003
Social & Environmental Uncertainties
• Public acceptance: Perceived relative advantage is key:-- safety/reliability-- autonomy-- cleanliness-- economics
• Regulators : Running after the fact, or „precautionary principle“
• Leakage: Continuous risk assessment, but beware of early doomsdayers (that‘s how you get into Science)
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A. Grubler, 2003
Conclusion• Look at systems (and competitors) and don‘t
dream of 1 technology „fits all“• Supplyer-user interaction and systems
integration critical for learning (avoid white elephants)
• Hierachies of change: expect long diffusion time (risk of innovation „impatience“)
• Biggest obstacles: uncertainty, and regulatory environment (e.g. lack of)
• Where to start: Find customers and develop H2 „orgware“ (get ear of regulator)