The state of California has for many years been at the vanguard of environmental and energy policies, creating strict standards that have afterwards been adopted by other states. Today is no different. Despite a severe budget crunch, California Governor Arnold Schwarzenegger has recommitted the state to a variety of clean energy goals, including deregulation and liberalization of electricity markets, increased energy efficiency in new and retrofit state buildings, and reductions in greenhouse gas emissions. The state has also outlined a major solar-power initiative and a Renewable Portfolio Standard that sets goals for producing electricity from renewable sources. And in pursuit of the elusive zero-emission vehicle—the ZEV—the governor has called for California to take a leading role in advancing the commercialization of hydrogen-powered vehicles with the "California Hydrogen Highway Network."

Neighborhood electric vehicles (NEVs) are small, very efficient EVs that are designed to be used for urban trips at relatively low speeds. They provide the potential for greatly reduced air pollution, energy use, petroleum imports, greenhouse gas emissions, and roadspace. Because they are very energy efficient, they are better suited to the limitations of today's batteries than are full-sized EVs designed for highway travel. As supplements to a household's group of vehicles, NEVs could be used for the vast majority of short trips. Because these trips account for the disproportionate share of emissions, NEVs provide even greater per-kilometer emmision reductions than full-sized EVs.

Several electric vehicle (EV) cost studies have been prepared in recent years. These studies employ a broad range of assumptions and methodologies, and the disparate results that they report are a testament to the uncertainties surrounding the potential manufacturing costs of EVs. This report section summarizes the results of several cost studies, and briefly critiques their approaches and assumptions. A concluding section summarizes key sources of uncertainty in EV cost estimation, and reasons for the variations observed in the studies reviewed.

Zero and near-zero emission vehicles based on electric-drive technology have the potential to play a long-term role in alleviating the air pollution, greenhouse gas, and energy use concerns associated with conventional vehicles. Most attention has focused on electric-drive technologies for light-duty vehicles (LDVs), but some electric-drive technologies are also suitable for heavy-duty vehicle (HDV) applications.

HDVs are in fact particularly attractive targets for zero-emission technology because they produce a disproportionate share of motor vehicle pollution in California and the U.S. HDVs are largely based on diesel engine technology, and these diesel engines produce high emission levels of oxides of nitrogen (NOx) and fine particulates (PM10). PM10 emissions in particular are increasingly seen as having the most serious health effects of all vehicle pollutants. Furthermore, the vast majority of HDV travel is by heavy-duty trucks (HDTs), but these vehicles are at present less-stringently regulated than urban transit buses (particularly given the recent CARB regulation to reduce urban transit bus emissions beginning in 2002).

In order to investigate the potential of stimulating the development of zero-emission HDTs, and their introduction into California-based HDT fleets, this report anlayzes the potential for broadening the ZEV mandate to allow manufacturers of zero-emission HDTs to be awarded ZEV credits. The report analyzes the average relative emission levels of carbon monoxide (CO), hydrocarbons (HCs), NOx, and PM10 from LDVs and HDTs in California, as estimated in the latest version of the CARB mobile source emission inventory model, EMFAC2000. Using these estimates of the relative emission reduction potential of zero-emission LDVs and medium and heavy HDTs, along with estimates of the average annual mileage for these vehicle classes, potential ZEV credit award levels for zero-emission HDTs are estimated.

The findings are that from 42 to 226 ZEV credits could in principle be justified to be awarded to manufacturers of zero-emission HDTs, depending on the model year of their introduction (from 2001 to 2010) and the HDT weight class, if the four pollutants are weighted according to their approximate relative damage values. These damage values reflect the impact on each pollutant to human health in major California urban areas. Using a simpler scheme that does not consider the relative damages from the pollutants, and that weights each pollutant equally, potential ZEV credit award levels range from 24 to 100 credits for zero-emission HDTs.

Motor vehicles generate large benefits for society but also cause large adverse impacts. Many of those impacts can be mitigated with a variety of new and improved technologies. In this report, we focus on electric-drive vehicle technology; we assess their desirability in Sweden, and explore the role of government in guiding investments.

The "hydrogen energy station" is one method of hydrogen production at small and medium scales. Unlike more conventional hydrogen station designs where hydrogen is simply delivered or produced on-site with a fuel "reformer" or water electrolyzer and then compressed and dispensed, energy stations would provide multiple functions in the same facility. They would integrate systems for production of electricity for 1) local uses and/or the utility grid, 2) re-use of thermal energy "waste heat" for building heating/cooling needs, and 3) purified hydrogen for refueling vehicles.

Hydrogen energy stations can be of various types and configurations. Most designs to date are based around some type of fuel cell power plant for electricity production, with coproduction of hydrogen either by splitting the stream of hydrogen from a fuel reformer or electrolyzer (to power the fuel cell and provide electricity with one stream and to refuel vehicles with the other) or by using excess hydrogen from the fuel side of the fuel cell system to provide vehicle fuel.

A few hydrogen energy station demonstration projects have been conducted in the past few years, and additional projects are anticipated as part of the California Hydrogen Highway Network initiative and other regional distributed power and hydrogen fuel efforts. We suggest that the interest in hydrogen as a transportation fuel offers opportunities for the development of additional hydrogen energy station projects, as we are beginning to see in California. Promoting new projects such as these will allow for the more complete exploration of the varying potential of different designs, configurations, and locations/settings for the energy station concept.

Clean Energy Group (CEG) commissioned this report in order to support the Public Fuel Cell Alliance project (PFCA) and to more fully explore the potential for hydrogen energy stations to play an important role in advancing the development of clean and efficient technologies for both stationary and transportation applications.

The following are several recommendations for consideration by key stakeholders that have an interest in developing strategies for promoting these new technologies and projects. These recommendations are intended initially for consideration by state clean energy funds. While it is clear that there is no simple, one-size-fits-all program for state action, these are intended to serve as a starting point for in-depth discussions that can lead to state-specific action plans and stakeholder engagement processes.

Specific recommendations include:

* Integrate Energy Stations Into State Hydrogen Plans: Many states have completed or are undertaking to develop hydrogen "roadmaps." These state-specific plans, which have been completed in California, Ohio, New York and Florida, provide recommendations to capture new economic development opportunities related to hydrogen and fuel cell technologies. Other states, such as Massachusetts and Connecticut, are embarking on similar planning exercises. The energy station concept should be integrated into these existing and emerging hydrogen plans. California, for example, is emphasizing the inclusion of energy station projects in early hydrogen stations for its Hydrogen Highway effort. We believe this is a strategy that can be replicated in other states. * Explore Fleet-Based Opportunities to Deploy Energy Stations: In many settings, there likely exist opportunities for states to deploy energy stations in conjunction with a specific, clustered vehicle fleet. Fleet-based opportunities reduce the need to develop regional networks of refueling stations as envisioned in many "hydrogen highway" proposals and could be implemented in partnership with military, industrial and delivery organizations. In these settings, a single energy station could support the refueling demands of a significant vehicle fleet. Initially, in order to advance these opportunities, state clean energy funds and economic development offices could support and conduct opportunity assessment studies that identify specific fleets, partners and electricity demands. * Foster Public-Private Partnership Development: Energy stations, in order to be successful, require significant partnerships with technology providers and host facilities. These partnerships can be fostered through public support from state clean energy funds, economic development offices and other key players. In particular, funding and support of coalition-building processes can have cross-cutting benefits for other hydrogen-related priorities in specific states. * Proactively Address Regulatory Incentives: Advanced energy technologies require advanced regulatory policies. Many states have implemented regulatory preferences and incentives (such as standby charge exemptions and net metering policies) that recognize and accommodate the public preference for and benefits from fuel cell, hydrogen and clean energy technologies. The regulatory strategies used by these early leaders can be replicated in other states. This kind of support is especially important for energy stations where a key component of the project is providing distributed electricity for the electric grid. Currently, many regulatory barriers prevent the wide-scale adoption of clean distributed generation and limit the ability to quickly site energy stations. State clean energy funds and others can assist by facilitating information-sharing about the best model regulations that can overcome barriers to distributed generation facilities. * Develop Compelling Communications Strategies: The concept of using hydrogen in consumer settings has been plagued with public misperceptions and lack of awareness of the significant potential benefits and remaining challenges. In recent years, many states have conducted sophisticated consumer and stakeholder research that has resulted in new communications campaigns to increase public understanding and support for clean energy technologies. Many states, for example, recently joined together to develop and fund a "Clean Energy: It's Real, It's Here, It's Working. Let's Make More" branding campaign. This kind of proactive communications strategy would yield tremendous results for the hydrogen sector, helping to organize currently disparate enthusiasm for hydrogen with a single, compelling message while also helping to manage expectations regarding the types and timing of hydrogen technologies that are likely to be introduced.

During the last ten to fifteen years advances in fuel cell technology have spurred an enormous wave of interest in hydrogen. This report first examines various methods for producing hydrogen, including discussion of the production potential for the United States. It then discusses and summarizes hydrogen distribution and delivery options, including a study of the environmental pollutant emissions implications and land and water use impacts of different production options. In addition, potential regional hydrogen production strategies around the U.S., and the potential for regional hydrogen production from renewable sources are discussed. The report concludes with a look at policy implications, particularly in light of the hydrogen production option costs and benefits that are reviewed and described in the report.

Regulators, policy analysts, automobile manufacturers, environmental groups, and others are debating the merits of policies regarding the development and use of battery-powered electric vehicles (BPEVs). At the crux of this debate is lifecycle cost: the annualized initial vehicle cost, plus annual operating and maintenance costs, plus battery replacement costs. To address this issue of cost, we have developed a detailed model of the performance, energy use, manufacturing costs, retail costs, and lifecycle cost of electric vehicles and comparable gasoline internal-combustion engine vehicles (ICEVs). This effort is an improvement over most previous studies of electric vehicle costs because instead of assuming important parameter values for such variables as vehicle efficiency and battery costs, we model these values in detail. We find that in order for electric vehicles to be cost-competitive with gasoline ICEVs, batteries must have a lower manufacturing cost, and a longer life, than the best lithium-ion and nickel-metal hydride batteries we modeled. We believe that it is most important to reduce the battery manufacturing cost to $100/kWh or less, attain a cycle life of 1200 or more and a calendar life of 12 years or more, and aim for a specific energy of around 100 Wh/kg.