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4 Ways Government Can Support the Transition to Alternative Fuel Vehicles

Electric and hydrogen fuel cell fuel vehicles are coming. How can the government help speed them along?

Gasoline-fueled cars put smog in the air that takes a toll on public health. They contribute to global warming, which the U.S. government and many states have begun battling against in earnest since striking a historic climate deal in Paris in December. The cars are fuel inefficient and loud.

They touch on all sorts of issues the government deals with every day. And so the government is pushing, bit by bit, to help speed up the deployment of alternative fuel vehicles — chiefly, electric and hydrogen fuel cell cars.

There are big hurdles facing both hydrogen fuel cell and battery-powered vehicles, but they’re different for each. In simple terms, the biggest problem with fuel cell cars is how rare hydrogen stations are. For electric cars, it’s how long it takes to charge the battery and the comparatively short distance one is able to drive on a single charge.

For now, electric cars have a clear edge in the market. According to the U.S. Energy Information Administration, there were 527 hydrogen-powered cars on the roads in 2011. The same year, there were more than 67,000 electric cars in use.

But which vehicle wins out in the long run is anybody’s guess. In fact, some government leaders in the field think the two could end up living side by side.

“In my dream world, hydrogen and electricity are both thriving for their own reasons,” said Tyson Eckerle, deputy director of zero emission vehicle infrastructure for the California Governor’s Office of Business and Economic Development.

Because electric cars work better for short drives, they might be more appealing to a person living in a city, whereas hydrogen cars, with their longer range, might work better for people who drive longer distances.

Faced with uncertainty about how the two technologies will develop, a growing network of government entities, research institutions and private-sector interests are using a variety of approaches to help clear the hurdles standing in the way of both vehicles reaching mass-adoption status. Here are five ways government can help support the transition to alternative fuel vehicles.

1. Boosting Research and Development

One of the biggest obstacles typically standing in the way of any emerging technology is cost. But as the technology improves and manufacturers grow to the point where they can achieve economies of scale, those prices tend to drop.

That’s where the U.S. Department of Energy comes in. For decades now, the agency has poured money into research grants and put its people to work building partnerships with the organizations that can use that funding to improve technology so the whole industry can benefit from it. That’s led to more efficient, less costly technology that is chipping away at the price of alternative fuel vehicles.

“Batteries that are on the market today, most of them have some type of connection with work we’ve done,” said David Howell, hybrid electric systems program manager for the U.S. Vehicle Technologies Office.

The work has paid off. The Department of Energy estimates that its research has helped the cost of battery packs drop from $500 per kilowatt-hour in 2012 to $264 per kwh today.

The research is poised to take a big step forward too. Howell said that with work the Vehicle Technologies Office (VTO) is monitoring now, he thinks the energy density of batteries could double within six years. That means electric cars could, at extreme ends of the engineering spectrum, either double their driving range while maintaining battery size or cut the weight of their batteries in half and offer the same driving range.

That would strike at the core of the problems electric cars are facing now. According to a paper from University of Michigan Transportation Research Institute scholar Brandon Schoettle, electric vehicles have the edge on both gasoline-powered cars and hydrogen fuel cell vehicles when it comes to efficiency and cost per mile. But when faced with taking longer trips, they require a lot more stopping than their competitors.

For example, according to Schoettle’s research, during a 100-mile trip, an electric car wouldn’t have to stop to charge, and it would cost its driver $4 in fuel. A fuel cell car wouldn’t have to stop either, but it would consume $9 in fuel during the same trip.

But increase the length of the trip to 1,000 miles, and suddenly the electric car would need to stop 11 times, during which it would sit motionless for five and a half hours. Recharging would cost $40 to the driver. During that trip, the fuel cell car would only need to stop to fuel up three times for 53 minutes. The fuel cost would be $90.

The Fuel Cell Technologies Office, a sister office to the VTO, has helped hydrogen fuel cell cars out as well. While the lack of fueling infrastructure may be the single largest obstacle facing those vehicles’ entry to market, Howell said there are ways the cars’ energy-generating systems could be improved too. The cars currently convert the hydrogen into energy using expensive platinum as a catalyst. Research into catalyst systems that use less platinum could help drive down the costs of the car.

The office is also looking into different ways to store hydrogen in the cars. That process is a challenge now because hydrogen needs so much compression to store.

“Hydrogen is the smallest element on the periodic table, so it likes to seep out of storage containers,” he said.

Rather than storing it as a compressed gas, he said it might be possible to store hydrogen within other materials and then pull it out.

2. Building an Infrastructure Network — Carefully

For all the work the VTO is doing to improve fuel cell vehicles’ internal systems, the cars face a much bigger hurdle when it comes to the prospect of market entry: Their fueling network is practically nonexistent. According to Schoettle’s white paper, there are more than 114,000 gasoline stations in the U.S. and more than 11,000 publicly located recharging stations for electric vehicles. On top of that, car owners can plug in at home or even sign up for a new service that brings mobile recharging units to electric vehicles wherever they’re parked.

But there are 14 public hydrogen fuel cell stations in the nation, and almost all of them are in Southern California.

“For all the pros and cons of fuel cell, there’s no infrastructure for it right now,” Schoettle said. “So as much as it might be a great thing, it’s just not feasible because unless you live in L.A., there’s just no place to get hydrogen.”

So before customers will feel confident buying those vehicles, Schoettle concluded that somebody will have to bite the bullet and sink money into building fueling infrastructure. It will be a risky venture, since hydrogen stations cost about three times as much to build as gas stations and they require special storage capabilities that involve compressing the gas and keeping it cold. And it will all have to be done on the assumption that people will one day buy fuel cell vehicles en masse.

In California, Eckerle’s job is to help make that prospect a little less scary. Eckerle works to support building the hard infrastructure needed to support alternative fuel vehicles, and he actually sees a bright future for hydrogen fuel cell cars in the state. There may only be a handful of stations now, but the California Fuel Cell Partnership — a collective of government entities, auto makers, fuel cell technology companies and energy providers — projects that by the end of 2016, there will be 50 total. They anticipate that number will double by 2020.

“One hundred well-placed stations should be able to launch the market and tip the scale beyond just the early adopters,” Eckerle said.

Much of the money driving the hydrogen fueling station network expansion comes from Assembly Bill 8, which passed the state legislature in 2013. The bill allows the state to spend up to $220 million per year to build hydrogen stations.

Infrastructure is also an issue for electric cars, though it might take a back seat to questions about battery life. While electric car drivers can charge their vehicles at home, that’s not always an option. Eckerle said the cars will be more appealing to prospective buyers if they know that they can also charge in public places like grocery stores and parking garages.

“If the station is not on the way to or from work, it’s going to be hard to make that value proposition,” Eckerle said.

But finding the best places to put a recharging station is not always easy — take state parks for example. They won’t get much use on weekdays, but during weekends they could be packed with visitors. Because of the intermittent usage, it might be difficult to justify spending the money to build a charging station in the parking lot, even though having one there would attract electric car drivers to the site.

Eckerle’s office is looking to fund the construction of those types of stations, each one adding another activity that the drivers of alternative fuel vehicles know they could access.

3. Forming Partnerships and Pooling Knowledge

The placement of hydrogen fuel stations is even more difficult to figure out. With electric cars, one can look at existing driving patterns to find the places drivers most need recharging stations.

But how does one figure out where to build a hydrogen station for a person who doesn’t have a hydrogen car yet?

In California, the answer is the Fuel Cell Partnership. Through the state’s Air Resources Board, auto makers have been able to come together and share information that amounts to their best guesses of what types of people would buy fuel cell vehicles.

“A lot of it is based on where the automakers anticipate their customers will be,” he said.

That kind of collaboration has also proven very useful at the national level, according to Howell. Much of the VTO’s work on improving the materials that go into alternative fuel vehicles has involved private companies, as well as research institutions and national laboratories. The network is growing, actually: On Feb. 24, the Department of Energy announced a new program called the Energy Materials Network. Through the program, the department is putting $40 million toward research conducted between three national laboratories and industrial partners to work on improving clean transportation technology. The department is asking for another $120 million in funding to add three more partnerships to the network.

4. Offering Incentives

Another way to encourage the market adoption of alternative fuel vehicles is simply to finance them through consumer incentives. Often manifesting in the form of tax breaks, government incentives can effectively bring the price of alternative fuel vehicles down to price ranges where more people can afford them.

Nowhere in the nation has the power of those incentives been made more clear than Georgia. Up until 2015, the state had one of the most aggressive and successful incentive programs in the country for electric vehicles: a $5,000 tax credit for people who purchased electric vehicles. It wasn’t quite the highest in the country, according to Clean Cities-Georgia Coordinator Don Francis. But it was one of the highest. 

And it worked like a charm, according to registration data Francis provided. Beginning in 2010, the number of electric vehicles registered annually with the state rose from two to 246, then 958, then 4,635. In 2014 drivers registered 9,988 battery-powered cars in Georgia. According to the International Council on Clean Transportation, battery electric vehicles made up a little more than 2 percent of cars in Georgia — more than any other state, and far ahead of the national average.

Then, in 2015, the legislature flipped the state’s model on its head. Lawmakers passed legislation that ended the incentives and added on an extra $200 registration fee for electric cars. Basically, Francis said, they turned an incentive into a disincentive.

The impact was immediate. Even with the incentives available for the first half of 2015, registrations of battery electric vehicles dropped from 9,988 in 2014 to 6,389 in 2015 — a 36 percent drop. 

“Sales went from 900 or so cars a month to 100 cars a month or less,” Francis said.

The loss to the state doesn’t just come in the form of fewer electric car sales, he said. Because electric vehicle purchases drew federal tax breaks into Georgians’ bank accounts, the reduction in sales means less money flowing into the state. Because electric vehicles use electricity produced in-state while gas-powered cars rely on oil imported from out of state, the drop in purchasing means the continued shipping of dollars outside of Georgia. And because EVs reduce the amount of money their drivers spend on transportation — by about $1,000 per year, Francis estimates — it means less spending money for Georgians.

“Unless [a driver] sticks that extra $1,000 in his mattress, he goes out in his community and he spends it on goods and services,” Francis said.

While Francis is still fighting to gain back some ground for electric cars in the state — first by pushing a bill to ask the legislature to study the full economic effect of ending the incentives — he said he actually expects the state to continue building out its charging infrastructure. That’s because he puts the market saturation ratio for vehicles per charging station at 10 to 1. Georgia is currently at about 20 to 1.

And as long as there are electric car drivers on the roads, a charging station acts as a kind of magnet for business owners to draw in customers.

While Francis said he is confident the state will continue to transition away from gasoline-powered cars and toward alternative fuel vehicles, he noted that the movement will be sluggish until the state reconsiders its policies.

“Will we get there? Eventually, yes,” he said. “But what are we willing to give up in the interim in lost revenue and other environmental … impacts on the economy?”

Ben Miller is the associate editor of data and business for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.