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South Carolina Has Work to Do in Hydrogen Fuel Field

Posted on: Monday, 8 August 2005, 18:01 CDT

Aug. 8--Despite its substantial research assets, South Carolina faces significant hurdles to achieve its ambition as a leader in commercial hydrogen fuel production, two new reports warn.

To succeed, the reports say, South Carolina must:

--Attract hydrogen-related businesses with tax cuts and other incentives

--Nail down a federal commitment to subsidize a new commercial nuclear reactor at the Savannah River Site

--Designate lead laboratories in specific areas of hydrogen fuel research

In a report, "Capitalizing on the State's R&D Assets," Concurrent Technologies Corp. seeks to create a sense of urgency about the assets South Carolina lacks.

No. 1 among its concerns was the lack of hydrogen-related businesses necessary to make the leap from laboratory to job-creating machine.

Concurrent Technologies is a major national defense contractor, headquartered in Pennsylvania, with offices in Columbia, Greenville and Aiken. The study was commissioned by the S.C. Hydrogen Coalition and the S.C. Energy Office.

Meanwhile, an analysis of South Carolina by ICF Consulting reached similar conclusions.

"South Carolina has not yet created the base of dedicated Next Energy companies -- or the policy environment to support them -- that other states have," the consultants said.

ICF of Fairfax, Va., was hired by the S.C. Next Energy Initiative, a private, academic and government collaboration to develop a 20-year plan for development of the hydrogen and fuel cell industry economy in the state.

Next Energy is chaired by Harris Pastides, vice president for research at USC, and Larry Wilson, a Columbia entrepreneur and venture capitalist.

Pastides agreed attracting hydrogen businesses should be a top priority. California and some other states are ahead of South Carolina today in their hydrogen business creation, he said.

While South Carolina's hydrogen research is Top 10, the state's hydrogen business culture is not, Pastides said.

"We need incentives to help businesses move here," he said.

Clare Morris, director of marketing and communications for the state Department of Commerce, said the state's economic development arm has not yet addressed the issue of incentives for hydrogen businesses.

But Morris said she is working to incorporate promotion of hydrogen business in next year's state marketing plan. And she said a staff member of the Savannah River National Laboratory is on loan to the Department of Commerce for a year to help develop a hydrogen strategy.

Joel Sawyer, spokesman for Gov. Mark Sanford, said the governor supports the efforts of the Department of Commerce, the universities and Savannah River National Laboratory to create jobs through hydrogen fuel research.

Next Energy began as a Columbia-focused effort launched by Mayor Bob Coble but quickly shifted to statewide emphasis.

The Next Energy plan is to roll out in early October.

While Next Energy is looking long term, five to 10 years, the Concurrent Technologies report looks short term to offer a set of initiatives that can be undertaken in the next 24-36 months.

ICF Consultants and Concurrent Technologies agree on several key points, chief among them that the state does not yet have the entrepreneurial class to turn pure research into job-creating businesses.

"Without access to this management talent, much of the intellectual property generated by South Carolina's hydrogen-related R&D activities will migrate to other regions," Concurrent Technologies Corp. said in its report.

South Carolina cannot wait to begin building hydrogen economy-related programs, the report states. Unless the state gains a foothold during today's research and development phase, other more aggressive states will gain a competitive edge as the hydrogen economy begins to grow. The ICF analysis points out that South Carolina has been especially lax in developing state policies to support Next Energy development.

South Carolina's investment is small when compared with the money allocated by other states that are implementing hydrogen economy initiatives.

No state money has been specifically earmarked for hydrogen research. However, $90 million has been set aside for endowed university chairs and up to $220 million for research facilities. Some of that money will go to hydrogen research.

Ohio plans to spend $103 million over three years on fuel cell initiatives, and Michigan has committed $56 million to promote hydrogen industries.

To accomplish the state's goals, the reports say South Carolina should designate lead laboratories on specific areas of hydrogen research involving Clemson University, the University of South Carolina, South Carolina State University and the Savannah River National Laboratory. Naming a lead agency could embroil the state's political leadership in traditional institutional rivalries.

But Pastides said those points of potential friction already have been worked out among the players. USC will focus on fuel cell development, Clemson on applying research to transportation, and Savannah River National Laboratory on challenges associated with hydrogen storage, he said.

The state also should set as its No. 1 priority securing the billion-dollar-plus federal investment to ensure the next nuclear reactor is located at SRS. That will require the united support of the state's congressional delegation, the report states. In the next two decades, the commercial-scale reactor probably will be the single largest hydrogen economy investment in the United States. SRS would be an ideal location for a commercial, as well as a prototype reactor, the Concurrent Technologies report said.

U.S. Rep. Gresham Barrett, R-S.C., who represents the Aiken area, recently said he is confident South Carolina will be a finalist to be the site for the next nuclear reactor being planned by NuStart, a consortium that includes Duke Energy, Progress Energy and Southern Co.

Barrett said he thinks it is extremely likely the reactor ultimately will be built at SRS.

Concurrent Technologies said S.C. leaders should seek proposals for a nuclear energy park at the Savannah River Site to host commercial nuclear power plants capable of producing electricity, as well as hydrogen for the new hydrogen economy. And South Carolina should get behind a group of 17 Southeastern universities, including USC and Clemson, to win Department of Energy funding for a high-temperature research reactor at SRS, the report states.

Hydrogen is the most common element on earth, but isolating it for use as fuel requires significant energy resources.

Most hydrogen industry is near natural gas and coal generating facilities, which South Carolina lacks.

By James T. Hammond and C. Grant Jackson

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Copyright (c) 2005, The State, Columbia, S.C.

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Source: The State (Columbia, S.C.)

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