Image VIMS

"Look, one in six kids in the Central Valley, we now know, walks around with one of these in their pocket -- and so do I.
So this is personal.
We are going to get the tons.
We are going to get the pollution.
And hydrogen is going to be
a key way of doing that."
Terry Tamminen
Secretary
California Environmental Protection Agency
Address to the California Hydrogen Business Council
South Coast Air Quality Management District    January 23, 2004

Transcript

Thanks to all of you for being here.  Obviously, everything that we do rides on your shoulders.  And we’ll talk about that in a minute.  And it was nice of you, in that introduction, to credit me with cleaning up Santa Monica Bay, although maybe that’s a bit of an overstatement.   I certainly contributed and was glad to do that.

It’s been an interesting few months.  Mark Twain probably captured it best when he said, “When you hold a cat by the tail, you learn things you can learn in no other way.”

The day after the election, I said to our now governor, I said “Congratulations.  And I hope you know what you’ve put yourself in for with your very bold environmental action plan.   You now have to implement that.  And he looked at me and he said, ‘No I don’t.  You do.’”  And he said, “I’ll help you.  But you have to do it.”

It was the first moment that I realized he actually wanted me in Sacramento, and that I seriously thought about going up there.  But I would not have done it…  In part, one of the criteria was that he, in fact, would be a strong supporter of the hydrogen highway effort – which, as you know, he did during the campaign, so that was a no-brainer.  That he’d do more than pay lip service to it, as Hank said.  That has happened in the past, perhaps with other governors who understand the value of it but perhaps either felt it wasn’t ready for prime time or were not willing to really get behind it and make it part of our energy future for all the obvious reasons and benefits.  We’ll get into that in a second.

I want to first thank Hank for his visionary leadership and thank AQMD for hosting this today.  And thanks for inviting me.  I probably know half the people in this room already, so its like being in front of a bunch of friends.   And I’m sure I’ll get to know the rest of you very quickly. 

I also want to identify Daniel Emmet who is in here somewhere.  Daniel, would you stand up and raise your hand?  Daniel is Executive Director of Energy Independence Now, one of the architects of the hydrogen highway who is going to be working very closely with us – it’s a non-profit organization, of course – but working very closely with us and pulling together the other segments we need in addition to business and nonprofit and government. 

And of course, you were earlier introduced to Shannon Baxter, who is right here. Shannon could you raise your hand?  I want to make sure that everybody knows who the two of you are.  Shannon…  We’re still trying to figure out her exact title.  But she’s my senior advisor on hydrogen and alternative energy issues.  She’s still with the Air Board but I kind of stole her and, I think “Energy Czar” would be appropriate.  Is that all right? Yeah.  Yeah.   “Alternative Energy Czar.”  We’ll work on that part of it.

I want you all to know the two of them because obviously with all my other duties I’m not always available for the key phone calls or meetings or to get all the briefings.  And between the two of them – one in Northern California, one in Southern California – they’re going to be really helping us put together the Hydrogen Highway initiative and take advantage of all of the help and the offers that come from this room and from outside this room.   So please get to know them.  If you have your business cards handy, make sure that they know who you are and which piece of this you’re involved in.

Let me just describe briefly the Hydrogen Highway concept and not assume that everybody understands what the Governor means when he talks about hydrogen highways.  The concept is that…  Look, we’ve all heard, over and over again about the chicken or the egg situation.  The difficulty of getting energy providers to build stations and to provide a significant quantity of hydrogen fuels if there are not sufficient vehicles to take advantage of that.  Ant the other side of that equation, of course, is that car companies will not mass-produce vehicles if they don’t believe there’s a network of stations for consumers.

So the goal here is to aggregate…  Not to sort of cut this from whole cloth, but to aggregate resources and initiatives that are already ongoing – perhaps jumpstart a few new ones – but to take all these puzzle pieces that are already laying on the table, as is evidenced by the great attendance here today, and put them together into a common vision for how we’re going to ultimately break that chicken or the egg cycle and how we are going to get to the commercialization of these vehicles and other hydrogen technologies.  Not just the mobile vehicles, but obviously the stationary applications are just as important and the two are very closely related – as I’m often citing the example of Gene Johnson here and the Bakeman Water District and their project.  If you don’t know, we’ll talk about that later. 

So in any event, the idea of Hydrogen Highways” is to say, look, if the State provides some leadership and helps to facilitate the creation, within a certain time frame, of a baseline network of stations – and I emphasize that concept of just “baseline” network because we all know that there’s over 10,000 retail gasoline outlets in the state of California, we’re only talking in the Hydrogen Highway system of about two hundred so clearly that’s not going to fuel thousands and thousands of vehicles.  But if you get the baseline network evenly distributed throughout the state, you can give confidence to consumers that if they drive around the state, they will find the fuel.  And then send that signal and work with our partners in the automotive industry to start delivering the vehicles for different applications.  And then, after that, we assume that the marketplace will take off.  And hopefully we’ll see whatever else is needed for government to provide some additional incentives or leadership – but at least put that baseline stake in the ground.

So why Hydrogen Highways?  The idea is to take the interstate highway system throughout California – and we assume that that’s a useful organizing principle because obviously interstate highways were designed to transport goods and services and people throughout the state and if you take a look at those major arteries, that’s exactly what they are, major transportation arteries that 90% of Californians have access to.  So if you just focus on those interstate highways and those main highways throughout the state, and if you were to position a station every 20 miles – I’ll be honest that that’s a fairly arbitrary construction – but the notion that if it was roughly every 20 miles, people would feel confident that they were going to come up upon a station pretty close. 

If you spread the stations every 20 miles along California’s interstates, that only pencils out to 200 stations.  I mean, people, in their minds, tend to think, “Ooh, the interstates, the 5, the 405, the 80.  I mean, all these big interstate freeways and every 20 miles!  That must be hundreds and hundreds and even thousands of stations!”  It’s not.  And unfortunately, I didn’t bring the map with me today.  I suspect that most of you have seen it.  If not, you can look at it and actually download it from the energyindependence.org website.  That’ll be up on our Cal EPA website soon.  Daniel…   I think he said that there are some handouts, as well. 

So you can see how that pencils out.  And obviously, in the urban areas, there’s already a number of stations going on, as Cynthia mentioned, for various fleets and demonstration projects and bus projects and so forth.  There’s already quite a few of these built that we hope to recruit to be part of the Hydrogen Highway, and identify as such, and then over time expand those to be open to the public or at least to other commercial users, and slowly grow the utility of those stations in areas where we might not yet have those types of projects.  We want to put the emphasis on stationary hydrogen and fuel cell applications such as the one I mentioned with Bakman Water District, where you have a stationary purpose first, and then the fueling for mobile sources is ancillary.  Needless to say, the last thing any of us want is a network of stations with cobwebs growing on them – and that picture on the front page of the Sacramento Bee.  

So obviously as we aggregate these projects and these resources into this vision of a Hydrogen Highway by 2010, we want to make sure that all the stations have utility from the first day that the ribbon is cut, and they become part of this vision.

When people say “How are you going to pay for this and what is it going to cost?” – again, by using our good offices and all of the work that you have done to try to bring partners together, we can see that first of all, a lot of the work has already been started, there’s already sites, there’s projects that are funded and underway for various purposes.  Secondly, we look to pull in CalTrans, for example, to provide maintenance yards, maybe even rest stops along the highways as potential sites.  We look forward to working with…

Some of the oil companies have stepped forward and offered truck plazas and so forth.  The natural gas organizations are extremely important.  There’s something like 250 natural gas fueling stations within California already.   We want to be talking to them about co-locating hydrogen.  That’s a logical evolution.  You’re already providing a gaseous fuel under pressure at those stations.  You already have a lot of the infrastructure developed and have overcome codes and standards issues and whatnot.  So its logical to look to them to co-locate.

We’re talking to some of the “big box” retailers about the possibility of putting large arrays of solar panels on their big, flat roofs, electrolyzing water and having stations in the parking lots.  As you’ve already seen, Costco’s business is now getting into the fuel business for their consumers so this is not a big jump for some of the big box retailers to participate.  And many of those are located along freeways and whatnot. 

So if we can go along over the next 8 to 12 months and identify locations for each of these roughly 200 stations to get them evenly spaced, and find the partners who will help us provide the land…  Well right off the bat, if you’re building fueling stations, land is your first biggest cost.   So if you already have the land, if you already have some of the infrastructure built in, you can avoid incurring those first costs.  And then secondly, there are again, as I mentioned, a number of energy providers and some others.   I think that some of our partners in the auto companies have even mentioned that they’re interested in building some stations.   So we identify where those funds might be so we can coordinate that piece of it, and then finally, yes, there does need to be some government funding.

In these tough economic times, certainly in this coming year – I’ll be honest, it’s not going to be coming from the State of California with the exception of staff time and intellectual capital and some other ancillary support – and the Governor’s support, which is significant.  But not a great deal of new funding, just because of the tough economic times.  But that said, in this planning phase we are not looking to roll out a lot of hardware over the next twelve months, but to do a lot of the planning.  And hopefully, as the State’s economy recovers, we will then be able to dedicate budget resources.

We are also talking to the federal government about making sure California gets its fair share.  Given the success of the hydrogen business world in California, I would say its not an exaggeration, by any means, that California is the most ready state to demonstrate the commercialization of all types of hydrogen technologies.  And that includes fuel cells and ICE mobile applications and all the stationary applications.

We are the most ready.  In my mind there’s absolutely no question.  And as a result, if you look at the 1.2 billion in total that’s proposed under the Freedom Car and Freedom Fuel proposals, let alone other Department of Energy and other federal government proposals, California certainly should be entitled to a significant share of those.  And if we do, in fact, pull together some of these resources, as I mentioned, for land and for some of the other components of the Hydrogen Highway network – and we’re just talking about some of the hardware and some of the actual costs of adding a hydrogen component to some of these stations.  It’s not that much on a per-station basis, and as a result, even 10, 20, 30 million dollars from the federal government will go a long way.  And that’s a fraction of the amount they have available. 

And in that regard, I should tell you – just to emphasize the point about how serious Governor Schwarzenegger is on this – during the transition, he had only been elected a week or ten days and he went back for his first trip as governor-elect to Washington, and as you can imagine, had a long list of issues that he wanted to take up back there with federal officials and a particularly long shopping list of funding where we feel that the State of California has been discriminated against and other places where we should be getting more of our fair share of federal dollars.  But on that list was hydrogen, and he had a long conversation with Secretary Abraham.  Undersecretary Garman, who I think many of you know, has been tasked with helping us find our fair share of those federal dollars and getting them in a meaningful and timely fashion into California and keeping that stream of money flowing.  So we’re going to hold him to that promise.

But I just want to show you that, again, the Governor, with all the demands on his time, made that a very high priority and actually the first thing that he talked about with Secretary Abraham.  So we will indeed be pulling funding in from the federal government to help us with this, especially until our own finances recover and the State can become a bigger player.

So how do we actually do this?  The Governor plans to sign an executive order at some point in the next couple of months.  I will leave it as vague as that because, as you know, right now, and between now and the first week of March, he’s very single-mindedly focused on helping us get out the message about the need to pass the propositions that deal with our debt restructuring and our finances.  And it’s very important that that message gets out and those bonds be passed.  That’s crucial to our state’s economic health – but also to being able to have funds in the future for projects like this. 

And so it will probably be after that point that we will have a signing of the executive order.  Obviously, we’ll want to do it where all of you are present, and making sure that the press knows about the incredible amount of work that’s already gone in to hydrogen technology here in California, and particularly, in that instance, how the mobile applications are going to be rolled out in the State. 

And so those of you that are developing the vehicles, we’re going to want you there with your vehicles to showcase those.  Have the Governor get in and drive them around.  I mean, all the different things that we might do to demonstrate these technologies.  And so, again, if you’ll be in touch with Shannon and with Daniel we’ll be sure that you’re plugged in to… Uh, I don’t want to use that phrase.  (Laughter.)  We’ll make sure that you are connected to that effort and are able to participate in those festivities which are more than just token festivities.  I think when he signs this executive order creating the Hydrogen Highway, and identifying those resources that the State can put into it at this time, and laying out the timetable for creating the actual blueprint of how the stations will come together and so forth, it’s very important that we all be there and take advantage of that to showcase to the world that California is the center of the hydrogen technology universe.

And I really think that has got to be the key of how we help people see this.  Just as Silicon Valley started out in a garage of Hewlett or Packard – I always forget who owned the garage – not that many years ago, look what we have since learned and developed in California.  And Silicon Valley is now synonymous with that entire industry.  And look what that has done for jobs and so many other aspects of our life.  Well, the same thing is true here.  Maybe it’s Gene’s garage that will go down in lore as maybe having been the center of this.  I don’t know.   Or David Freeman’s garage, probably – at least for the ICEs.  But in any event, where ever it is, maybe the Silicon Valley analogy will be more of a virtual reality for California because obviously there are many places throughout the State were hydrogen technology is going to be developed and jobs will be created, so it may not be as concentrated.  But we all live in the virtual reality world now, so I think we all get that concept too.

California will be the Silicon Valley for hydrogen.  And that’s really what this governor wants to do.  Not only for the environmental benefits, but for the jobs benefits.  And with that in mind, I also want to mention…  He was also very proud, by the way – just a little sidebar which Gene can appreciate because he was there…  In September, we rolled out his agenda and chief among it was the hydrogen highway.  We had a couple of vehicles there and on the stage was the Proton home fueller.  Now, of course, we have to figure out how to get Proton to start manufacturing in California – but that’s another story.  They were kind enough to bring out their home fueller, which, if you haven’t seen it, was the size of a dishwasher and it’s designed to work with a solar panel and a source of water – and make hydrogen and fuel yourself at home.

And it was on the stage and the Governor looked at it and I mentioned it in my remarks.  And that was a Sunday.  The next day the stock of Proton went up 35-percent!  And they issued a press release attributing it to the interest and the promise of then-candidate Schwarzenegger getting behind the hydrogen movement and particularly calling for the creation of the Hydrogen Highway.  So Arnold was very proud of that and he often points to that as even as a candidate, he was good for business.  (Laughter.)  But that is certainly a reason for doing this is to create these good high-tech jobs and to help energize a whole new industry in the state.  But there’s lots of other reasons for doing this. 

I appreciate what Cynthia had to say.  She teed up, really, the need for this very nicely.  And I didn’t bring slides but she mentioned AB2076, our Energy Commission and the recently issued or completed integrated energy policy report.  And its absolutely crucial to understand the need to diversify our fuels portfolio.  And I think well before the 2020 deadline and the 15% because, clearly, if you believe any portion of that – and I don’t know many people who disagree – they may disagree with some of the extrapolations and the timelines, but everyone understands that this is not an issue for our energy supply of how much crude is laying underneath the sand in Iraq.  It is completely about our refining capacity and our ability to do something with that - which we have run out of!  And in three to five years, when gasoline is four bucks a gallon and there are lines out the retail gasoline outlets, I think people will be very quickly looking for these alternatives if they haven’t already.  So it’s very urgent from an economic perspective as well as an environmental one. 

Another sidebar.  Somebody told me the other day that in 1979 – so shortly after the Oil Embargo and the lines out the gasoline stations in California – we had 24,000 gasoline outlets in the state.  Today there are only 10,000.  And although many of those are larger footprints with more fueling islands – you’ve all seen them, with all the snack bars and that sort of thing – nonetheless, there’s only a couple of driveways in and a couple of driveways out.  And if we have severe shortages of petroleum fuels in the near future, it’s going to dwarf what happened back in the ‘70s. 

So we’ve got to take that seriously.  And certainly, good minds and honest minds can disagree on some of the conclusions and how we get our way out of this – but we’ve got to get everybody to the table.  And frankly, I’m stunned that the 2076 report was not on the front page of  this country, if not the world, because of the importance of California as the fifth largest economy on the planet, and what this will mean to our economy as well as to our environment if we don’t take this report seriously.  So I know that this governor and I and the Energy Commission and the 13 other energy agencies that the Governor mentioned in his State of the State speech, we are all going to be working very hard to understand the implications of that report and act on it. 

But hydrogen is an extremely important component of that.   Certainly…  Look, we’re realistic, it’s not going to displace any fuel in the next 3 to five years in any significant quantity, but if we don’t build this highway now, if we don’t make investments in this industry now, it will not be helping us even by 2010 or even 2015, which are some of the farther out projections of some of the more conservative proponents.  The other reason, obviously is…  Look (Tamminen pulls out an oral asthma dispenser) – one in six kids in the Central Valley, we now know, walks around with one of these in their pocket.  And so do I.  So this is personal.  We are going to get the tons.  We are going to get the pollution.  And hydrogen is going to be a key way of doing that. 

And everyone is going to have to pay their fair share.  Last week, I was fortunate to spend a little time at the SIP Summit (http://www.arb.ca.gov/newsrel/nr011504.htm) in my building at Cal EPA – my building! – and listen to the many stakeholders from across the usual perspectives come forward and offer their ideas and offer to be helpful.  And in a genuine spirit of cooperation.  But I think the urgency we’re seeing because of the health crisis that we face and because of the energy crisis we face and because of this governor, it’s a spirit I don’t think I have seen before, at least not in such a genuine and all-encompassing manner.  So I’m very encouraged that we will reverse these trends that Cynthia pointed out to us here – but not without everyone’s help, and not without hydrogen being a key part of that.

And we need the Hydrogen Business Council because you provide the way all of this comes together.  You provide the entry point.  You provide the way for us to see the way out.  And with that in mind, I would like to encourage and invite you to have your next meeting in the Cal EPA building in Sacramento, if you don’t mind.  We’ve got good facilities.  We can webcast.   And the reason I’d like you to do that is that there is a guy named David Crane.  He is a venture capitalist who has recently retired and is volunteering his services to the State.  The Governor has tapped him to essentially be the “Jobs Czar.”  The Governor, in the State of the State, of course said he himself will be the Jobs Czar but his right-hand person in this is David Crane.  David is tasked with identifying business opportunities in the State that he can facilitate, streamline the process.  Whatever it takes to put wind in the sails of these new businesses.  Either to bring them into the state or to help home-grown industries such as many of you represent.  And make sure that we create jobs and bring back the business economy here in the state in a quantifiable, meaningful way with high-paying, good jobs – as those provided by this industry.

So I would ask you if you could hold your next meeting or some other kind of a big briefing session at Cal EPA.  I’ll get David there and his team there, and I would appreciate it if you would help me describe to him the array of business opportunities and job creating opportunities with some realistic timelines and some specific “asks” – what is it you need of him and the Governor, specifically, to help jumpstart some of your efforts?  So that he goes away with a shopping list or laundry list so that he can help you to help the State.   And I think that if we can get him to see this in an aggregate fashion, which is something only the California Hydrogen Business Council can do, he will know that he’s got to go to a place to make this Silicon Valley analogy work for hydrogen.

I want to close and we’ll take a little bit of time for Q&A.  I want to close by recalling something that happened almost 43 years ago to this day.  And some of you in this room are old enough to remember this, having heard it at the time.  I see a few smiles.   You recognize what I’m going to say.   Many of you are too young, perhaps, to remember it.  But 43 years ago, almost to the day, a man stood on the Capitol in Washington and said, “Ask not what your country can do for you.  Ask what you can do for your country.”  And that is what I need you and me and the Governor and the Hydrogen Business Council and all of the other players to get together and say, “What is it we are going to do for this state?  How are we going to get ourselves out of our health crisis, together?  How are we going to get ourselves out of our economic crisis, together?”

Government has a role to play.  We can provide some leadership.  We can try to pave the way.  We can try to help you.  But it is ultimately going to be you that will improve the quality of life in this state by everything you are doing.  So never give up hope.  Never give up your dream.  And push harder and harder and faster.  Because we have both a public health crisis that’s already happening, and getting worse by the day.  We have an energy crisis that, as I mentioned – articulated in the AB2076 report and many other reports and studies – that we know is coming.  And that is going to harm our business and therefore our ability to provide services to everyone.  

We absolutely need your help.  This is your campaign – as much as the Governor’s, as much as mine, as much as anyone else’s.  You own the Hydrogen Highways.  Your vision is what I am trying to build on.  And so I will be looking to you to help us shape that vision.  The executive order is not going to lay out all the details by any means.  It’s simply going to lay out the ability for all of us to work together to put the actual blueprint in place and then execute it.  So this is only the first bite of the apple.  There will be many more.