NCPA - National Center for Policy Analysis

Should Hydrogen Power be Subsidized?

February 7, 2003

President Bush has called on Congress to approve $1.2 billion in research funding for hydrogen-fueled cars. Bush says he is going to work with Congress to move the nation forward on hydrogen fuel cell technologies because it is in our national interest to do so. All told, he wants to spend $1.7 billion on research over the next five years.

While hydrogen promises a clean, renewable energy source that would end the need for foreign oil, it has many drawbacks:

  • Private industry has already made the first hydrogen cars, but the cost remains huge and absent a major breakthrough or government mandate, Americans will not be driving them for a long time.
  • Using the cheapest process, it costs $3,000 to make enough hydrogen to generate one kilowatt -- or four times what it costs a gas-powered generator to make the same amount of power.
  • There's no efficient way yet to make hydrogen fuel cells widely available -- exactly how it would be done is a mystery even to the experts.
  • Oil companies are already looking into refitting their filling stations to provide hydrogen, but the infrastructure would have to be completely rebuilt -- only four stations exist now.

Despite these problems, hydrogen has replaced wind and solar as the preferred alternative to oil, and with the President's new initiative, many companies would love a federal boost.

According to Sterling Burnett, a senior fellow with the National Center for Policy Analysis, it would be better to let the companies do the research independently.

"Eventually the markets will demand this technology, if it is the best technology," he said. "I don't think it is necessary for the government to subsidize it."

Source: Sean Higgins, "Will Clean Hydrogen Power End U.S. Dependence On Oil?" Investor's Business Daily, February 7, 2003.


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