Only in the last few years has hydrogen begun to be taken seriously as a transportation fuel. Much recent activity in the field has focused on fuel cell applications in buses.¹⁴ In 1993, Ballard Power Systems, based in Vancouver, Canada produced the world's first fuel cell bus. Chicago and Vancouver have each purchased three second generation fuel cell buses from Ballard for delivery in 1997. In the early 1990s, DOE sponsored a program to build three fuel cell buses, now undergoing tests in the District of Columbia, Illinois, and California. In 1996, the U.S. Department of Transportation assumed leadership over the second phase of this project. Two more fuel cell buses will be built over the next few years. Fuel cell bus projects are also underway in Italy, Belgium, and Germany.

The first modern-day fuel cell concept automobile, the Green Car, was unveiled by Energy Partners, Inc., in Florida in 1991. Most major automotive manufacturers worldwide now have fuel cell development projects and a few have unveiled prototype vehicles. In May 1996, Mercedes showcased its second fuel cell vehicle, a six-passenger van called the NECAR II, at a widely publicized press event in Berlin. (The NECAR I was tested in 1994.) Company officials have publicly stated Mercedes' belief that fuel cells will be the technology most likely to supplant internal combustion engines in automobiles. In October 1996, Toyota unveiled its first fuel cell demonstration vehicle at a conference in Osaka, Japan. In January 1997, Chrysler exhibited a fuel cell vehicle design at a Detroit auto show.

Hydrogen is being used as a combustion fuel to power vehicles with conventional engines, as well as fuel cell vehicles. Several major automotive manufacturers that use hydrogen to power conventional combustion engine-equipped automobiles include Daimler Benz and BMW in Germany, and Mazda in Japan. Each has built a number of hydrogen-burning prototype vehicles as part of hydrogen programs initiated in the early 1980s. Several hydrogen burning pick-up trucks also operate as part of the two solar hydrogen vehicle test programs in southern California mentioned earlier. Moreover, a hydrogen-powered electric hybrid bus began operating in Augusta, Georgia in September 1996. Two buses in Montreal burn a mixture of natural gas and hydrogen called Hythane.® Hydrogen buses are being tested in demonstration projects in Germany and Belgium, and a hydrogen-powered delivery truck operates in Japan.

According to an International Energy Agency study, significant hydrogen energy programs are underway in at least eleven countries.¹⁵ Throughout the 1980s, Germany conducted the world's largest government-sponsored hydrogen program, involving more than $300 million in total investment. In 1993, Japan eclipsed Germany with an $2.8 billion World Energy Network (WE-NET) program to develop and commercialize a global hydrogen production, distribution and use system. In the United States, the National Hydrogen Program is one of the few programs in DOE's Office of Renewable Energy and Energy Efficiency whose budget grows steadily. As shown in Table 1, annual expenditures for this program have increased from $1.8 in fiscal year 1992 to $15 million in fiscal year 1997.

The Hydrogen Future Act became law in October 1996. The Act mandates that government-sponsored hydrogen research, development, and demonstration project expenditures totaling over $100 million will be conducted over the next five years. Beyond the National Hydrogen Program, annual expenditures on hydrogen of over $20 million are part of the National Fuel Cells in Transportation Program. Hydrogen fuel cells are also being studied as part of the Partnership for a New Generation of Vehicles, initiated by President Clinton in 1993 as a collaboration between the federal government and the major U.S. automotive manufacturers.

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