Which Comes First?

7 January 2003

Supply or demand? The chicken or the egg?

It seems that something as simple as who’ll be first to take the risk underpins our reluctance to invest in the rapid development of fuel cell technology for vehicles and the hydrogen distribution system required to fuel those new vehicles.

Honda has floated a trial ballon with the FCX.

However, there is no distribution system for hydrogen. Back on December 27, 2002, NPR’s John Ydstie did a piece covering fuel cells as part of his series on Foreign Oil Dependency.

In that report he mentions H2GEN. This company would like to be the one that puts a hydrogen-generator at every conventional gas station and convenience store across the country. Estimates for the cost of each installation range from $100,000 to $500,000.

Pick 100 major cities with stops along the way and a conservative threshold for coverage is probably a minimum of 10,000 locations. Using back-of-the-envelope math, that calls for an investment range of $1 billion to $5 billion to start the declaration of independence from foreign oil.

This country’s private telecom carriers raised and spent on the order of $50 to $150 billion to build out fiber optic networks that had far less compelling demand numbers. Assume the math above is off by a factor of 2x or 3x. It’s still viable to think of a $15 billion investment that paves the way for fuel cell vehicles and largely eliminates our purchases of oil around the globe.

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