EXECUTIVE INTERVIEW

Interview with General Motors’ Tim Vail

by John McCormick

In a wide-ranging discussion during the Michelin Challenge Bibendum in Shanghai, Tim Vail, GM’s director of fuel cell commercialization, talked exclusively with Hydrogen Forecast editors on China; its energy supply problems and its path towards fuel cell vehicles.

Question: What sources will China use for hydrogen?

Answer: “Here in Shanghai for heating and cooking for years they have been using hydrogen in the form of town gas, or coal gas, which is a by-product of coking in the steel blast furnaces. Boston used to be plumbed for town gas before most of the world switched to natural gas.

“Now Shanghai is phasing out the cokers - they're old and inefficient – and they are building a natural gas pipeline from the western provinces. So beginning late this year and early next year, Shanghai converts from hydrogen to natural gas.“That said, the fact is the Chinese have a great deal of expertise and knowledge on coal gasification. So the future of hydrogen in China is mostly based on coal, because they have so much of it here. They've been producing high grade hydrogen from coal gasification for many years and they know how to do it and they do it very efficiently.”

Question: What other problems do they face with using coal to produce hydrogen?

Answer: “One of the challenges is that they have a lot of coal but it is located in central regions. They have a huge transportation problem in getting that coal from the mine mouth to the market. That is a big problem because if you're going to make hydrogen from coal you're going to have to move a lot of coal.”

Question: China’s is planning an aggressive nuclear power program with pebble bed reactors. How will this factor into the hydrogen generation issue?

Answer: “Direct water to hydrogen conversion from nuclear fission reaction is the most efficient way to make hydrogen, bar none. If there is a future for nuclear power, China is the place. With the centralized government and planning, they have ability to make it happen. So if they are very serious about being energy independent, it's going to be a mix of nuclear and coal that makes that happen in China.”

Question: Shanghai is the center of growth in China. What is the energy situation in the city?

Answer: “Shanghai right now is 12 gigawatts short of power, that's about 10 nuclear plants. So they are tremendously short of power and doing rolling black outs of non-essential industries.

“There are several problems; they don’t have sufficient generating capacity, they don’t have fuel for power generators, and nuclear power is not developed yet.

“For China as a whole, power distribution - getting power from where it is made to where it needs to be - is a big concern. It’s one of the big questions; is shortage of electricity going to slow down growth in China – all indicators say yes. But the Chinese are very resourceful; they will figure it out.”

Question: How important is energy security to the Chinese?

Answer: “If you talk to anybody who understands energy policy in China, their biggest issue is energy security. It’s really driven by the US navy. China has to rely on imported crude from the Middle East, which has to come through the straits near Singapore. The US, with the power of its navy, could shut that off supply in a heartbeat. That ability was demonstrated with Japan in World War II. The Chinese look at that and their biggest worry is what the US would do if relations fell apart.

“The Chinese have an oil pipeline coming in from the west and they are negotiating with Russia for pipelines, but that’s a drop in the bucket. Most of the oil comes in by tanker.”

Question: Talking about fuel cell vehicles in general, do you see any show-stopping problems?

Answer: “We see nothing that is a show stopper or we wouldn’t have invested a billion dollars and bet so much of the company’s future on it.
“There is a lot of work to be done, but it’s good, solid engineering and science, we’re not waiting for that eureka moment.

“That’s why when companies make claims that they have solved the membrane problem or something like that, we have a pretty jaundiced eye, because it’s not going to be a silver bullet that will fix current issues; it’s solid engineering, one step after another.

“That’s why the programs that matter in the world are GM’s, Toyota’s and Honda’s. These are the guys who are spending the big bucks and have their best and brightest working on it and are really pushing the science forward.”

Question: How do you see the pace of fuel cell vehicle commercial development from now?

Answer: “It’s not 15 or 20 years out, it’s more like five or six on the technical side. But then you have to look at it from the adoption view, how quickly do technologies adopt. And that I think is a 15-year proposition, unless there is a catalyst, an event that causes massive change.”

“At GM we will go wherever this happens because we sell vehicles in every potential market.

“On the question of adoption, you look at some of the highest and fastest technology adoptions we have had, like DVDs or cellphones; it’s still a 10-year proposition to get sufficient market penetration.

“So for fuel cells it will take longer for adoption, unless there is a major event or a government steps up. It could easily be Japan, China or the US. There are three areas in the world that are most likely to move to adopt fuel cells - southern California; Tokyo, Japan and Shanghai, China. If one of these places steps up and says it is going to put the incentives in place to drive adoption of this new technology, then fuel cells are five years off.”

Question: What about interest in Europe?

Answer: “There’s a lot of interest in Europe but it’s a lot tougher to crack the nut because they are primarily diesel oriented and the diesel engine is a very efficient powerplant. So the benefits of going to a fuel cell are not as great and so we believe it will take longer there.

“We are very active in Europe – we have 250 people working in Germany on fuel cells - and we’re playing it as hard as we can.”

Question: What is the status of hydrogen availability in Europe?

Answer: “There’s a tremendous amount of by-product hydrogen available in Europe, primarily in Germany. Through our transaction with Dow Chemical we’ve learned a lot about the by-product hydrogen market. Dow’s plant alone up in northern Germany is a huge hydrogen producer; they produce almost as much there as do in their Freeport, Texas plant where we operate.

“The statistic I heard is that current industrial hydrogen production in Europe could power 10 percent of the vehicle fleet. There’s a lot of hydrogen being made, although it’s all being used. But the technology is there to make it.”

Question: What about the energy companies’ role in the hydrogen business?

Answer: “They are working hard and living the reality of building hydrogen fueling fuel centers with no established codes and standards. You can’t believe the hurdles those guys have had to go through to get stations permitted.

“That’s why we keep stressing we must have a uniform set of codes and standards on a global basis. If you talk to Shell and BP that’s what those guys are sweating right now, because they are building stations.”

Question: Are fuel cell vehicles a good solution for China?

Answer: “When I talk to Chinese authorities they say they recognize that fuel cells could be the answer, but they ask if the technology is real, will it really be there when they want it and can China really afford to be the leader.

“It’s likely China will sit on the fence awhile and see which way it goes. That’s why we’re so adamant about making some fuel cell waves here in China; we want to show the government that this thing is for real, it’s not a pipedream. I think the next couple of years is really going to be dramatic for China because they are going to have to make their decision. If they don’t see real improvement and real viability around fuel cells they are going to choose another path.”

Question: Why is Shanghai so pivotal in this process?

Answer: “Look at the infrastructure. The city has 20 million people, two million cars and just 400 gas stations. They have already demonstrated what they can do. In 1994 they had a huge pollution problem. The only cars running around were 1970s-era VWs, with no catalysts. Most of the vehicles at that time were taxis, people didn’t have their own cars. The city government decided to convert the taxi fleet to LPG. They sent a team around the world to establish best practices in LPG codes and standards. Shanghai built 100 LPG stations and converted 98 percent of their 42,000 taxis in just four years.

“They had to design engine modifications, they had to put in place low cost conversion kits, they had to build tanks. Everything we talk about in terms of hydogren and fuel cells they had to do and they did it in four-year time period.

“So the model is there from the LPG world. When you talk to the administrators in Shanghai they will tell you that story – it’s not lost on them.”