STATEMENT
OF
JUDITH
ANN BAYER
DIRECTOR,
ENVIRONMENTAL GOVERNMENT AFFAIRS
UNITED
TECHNOLOGIES CORPORATION
SENATE
ENVIRONMENT AND PUBLIC WORKS COMMITTEE FIELD HEARING
DURHAM, NEW
HAMPSHIRE
MAY 30, 2001
Good
afternoon. My name is Judith Bayer. I’m the Director of Environmental
Government Affairs for United Technologies Corporation (UTC). UTC is based in
Hartford, Connecticut and provides a broad range of high-technology products
and support services to the building systems and aerospace industries. Our products
include Carrier air conditioners, Otis elevators and escalators, Pratt &
Whitney jet engines, Sikorsky helicopters, Hamilton Sundstrand aerospace
systems and fuel cells by International Fuel Cells.
UTC
spends an average of $1 billion per year on research and development. Our corporate environment, health and safety
policy includes commitments to: conserve natural resources in the design,
manufacture, use and disposal of products and the delivery of services and
develop technologies and methods to assure safe workplaces and to protect the
environment worldwide. UTC has invested heavily in bringing clean, energy
efficient technology to the global marketplace, and we need to continue to work
closely with government policy makers to maximize the benefits of these
innovative technologies.
While
UTC’s diverse portfolio offers a number of examples of clean, energy efficient
technologies, I will focus today on technologies and products from our
International Fuel Cell (IFC) and Carrier units. I will describe some of our
fuel cell and air conditioning products and activities, their applications and
benefits. In addition, my testimony
will provide some suggestions regarding government actions that will help to
maximize these benefits and improve air quality, protect the ozone layer, avoid
man-made greenhouse gas emissions, reduce dependence on foreign oil, provide
reliable power as well as reduce electric utility peak load demand.
Fuel cells are the cleanest fossil-fuel generating technology available today. They use an electro chemical process to convert chemical energy directly from natural gas or other hydrogen rich fuel sources, into electricity and hot water at a very high level of efficiency.
REALITY
OF FUEL CELLS
Fuel
cells are not a futuristic dream. More than 250 US astronauts have depended on
UTC’s fuel cell products to provide all the electrical power and drinking water
used in every manned U. S. space mission. Each space shuttle mission carries
three IFC 12 kW fuel cell units and we have accumulated more than 81,000 hours
of fuel cell operating experience in the most demanding environment of all –
outer space.
Closer
to home, IFC has produced and sold more than 220 fuel cell systems in 15
countries on four continents. We’re the only company in the world with a
commercial fuel cell product available today. It’s known as the PC25ä
and it produces 200 kWs of power and 900,000 BTUs of heat. Each unit provides enough power for roughly
150 homes. The worldwide fleet of PC25s
has accumulated more than four million hours of operating experience with
proven reliability. The PC25 system
requires only routine maintenance and has a life of 40,000 hours or five years.
Since
fuel cells operate without combustion, they are virtually pollution free. In
addition they produce significantly lower levels of carbon dioxide emissions –
the primary man-made greenhouse gas contributing to climate change. For
example, while the average fossil fuel generating station produces as much as
25 pounds of pollutants to generate 1,000 kilowatt-hours of electricity, the
PC25 power plant produces less than an ounce.
The
existing fleet of PC25s has already prevented nearly 800 million pounds of CO2
emissions and more than 14.5 million pounds of NOx and SOx
compared with typical US combustion-based power plants. The U.S. Environmental Protection Agency
recognized IFC last year with a Climate Protection Award in recognition of
these accomplishments.
Fuel
cells are inherently more efficient than combustion-based systems. In the “electricity-only” mode of operation,
IFC’s PC25 unit achieves approximately 40% efficiency. When the waste heat from the fuel cell is
utilized, an efficiency of 87% can be achieved. In addition, fuel cells can be
installed at the point of use thus eliminating transmission line losses that
can run as high as 15%.
Fuel
cells can provide power at the point of use, thereby alleviating the load on
the existing transmission and distribution infrastructure, and eliminating or
minimizing the need for additional investment in the current transmission and
distribution network.
The
use of fuel cells helps to diversify the energy market and reduce reliance on
imported oil. Fuel cells can operate with a variety of fuel sources, but most
commonly use natural gas.
Unlike
other environmentally favorable solutions, fuel cells can be used as a
continuous source of base power – independent of time-of-day or weather - for
critical facilities and power requirements.
Its
compact size, quiet operation and near-zero emissions allow a fuel cell system
such as the PC25 to be sited easily in communities and neighborhoods. Unlike many other forms of power generation,
fuel cell power plants are good neighbors. For example, two PC25s are located inside the Conde Nast skyscraper at
Four Times Square in New York City.
Fuel
cell power plants offer a solution when power is needed on-site, or when
distribution line upgrades become cost-prohibitive and/or environmentally
unattractive. For example, a PC25
installed at the Central Park Police Station in New York City provides all the
power for the facility in an onsite installation. In this case, it would have been too expensive to dig up Central
Park and install an additional power line, so the fuel cell became the ideal
solution for an operation that required a dedicated, reliable power supply and
flexible siting.
Several
hospitals in the US, including Department of Defense facilities, rely on PC25
systems to provide on-line emergency power.
R002303 FC42565-PPT
In
Rhode Island, for example, a PC25 system provides power for the South County
Hospital. The installation supplies base load electrical and thermal energy to
the hospital where it helps ensure clean, reliable power for sensitive medical
equipment and systems such as CAT scanners, monitors, analyzers, and laboratory
test equipment. If there is a grid outage, the PC25 automatically operates as
an independent system, continuing to power critical loads at the hospital. Heat
from the installation provides energy for space heating, increasing the fuel
cell’s overall efficiency.
The largest commercial
fuel cell system in the world is currently operating at a U.S. Postal Service
facility in Anchorage, Alaska. The
system provides one megawatt of clean, reliable fuel cell power by joining five
PC25 units. In this installation, the
units operate in parallel to the grid and are owned and operated by the local
utility. The system is seen as a single one-megawatt generation asset and is
dispatched by the utility through its standard dispatch system. The system is designed so the fuel cells can either provide
power to the U.S. Postal Service mail-processing center or provide power back
to the grid. In case the grid fails, a
near instantaneous switching system automatically disconnects the grid and
allows the fuel cells to provide uninterrupted power.
As
our society increases its reliance on sophisticated computer systems, very
short power interruptions can have profound economic consequences. In 1996 the
Electric Power Research Institute reported that US businesses lose $29 billion
annually from computer failures due to power outages and lost productivity.
PC25
power plants are currently delivering assured power at critical power sites
such as military installations, hospitals, data processing centers, a US Postal
Service mail processing center and sites where sensitive manufacturing
processes take place. One of IFC’s
installations at the First National Bank of Omaha where four fuel cells are the
major component of an integrated assured power system, is meeting customer
requirements for 99.9999% reliability. This translates into a power interruption of
one minute every six years.
The
Conde Nast Building at Four Times Square in New York City is a “green building”
with two PC25 power plants installed inside to provide five percent of the
building’s electrical needs. If there
is a blackout, the systems are capable of operating independent of the utility
grid to maintain power to critical mechanical components and external landmark
signage on the façade of the building. The waste heat from the unit is used to
run the air conditioning and the power plants provide critical backup power in
case the grid fails.
RENEWABLE ENERGY
When
fueled by anaerobic digester gases or biogas from wastewater treatment
facilities, fuel cells are a source of renewable power. IFC and the US Environmental Protection Agency (EPA) collaborated in the
early 1990s on a greenhouse gas mitigation program that continues to bear fruit
today. Initial efforts targeted landfills and the development of gas cleanup
systems that enable fuel cells to use waste methane to generate electricity and
resulted in the issuance of several patents jointly held by EPA and IFC. These systems prevent methane– a potent
greenhouse gas – from being released into the environment and avert the use of
fossil fuels as the fuel source.
Follow-on work has focused on anaerobic digester off-gases (ADGs)
from wastewater treatment facilities. This technology has been implemented
successfully at PC25 installations in Yonkers, New York, Calabasas, California,
Boston, Massachusetts, and Portland, Oregon as well as Cologne, Germany and
Tokyo, Japan.
The examples noted above demonstrate the flexibility of fuel cell
technology and its appeal to many different customers with a wide range of
requirements. But it gets better. Fuel
cell technology and its associated benefits, which have broad application in
the commercial/industrial sector, is also being developed for homes, small
businesses, cars, trucks and buses.
IFC
is currently pursuing residential and light commercial fuel cell applications
for homes and businesses. These units will use next-generation proton exchange
membrane (PEM) fuel cell technology. We are drawing on our experience in both
commercial and mobile fuel cell programs to develop a five-kilowatt PEM fuel
cell system suitable for homes and small commercial buildings. IFC is teaming up with its sister UTC unit
Carrier Corporation the world’s largest maker of air conditioners, as well as
Toshiba Corporation and Buderus Heiztechnik on this effort.
We
are currently testing our residential power plants and plan to have residential
fuel cells units commercially available in 2003. We have a residential fuel cell model with us today in the
exhibit area.
In
the transportation arena, IFC is aggressively developing quiet, highly
efficient ambient-pressure PEM fuel cells and gasoline reformation technology
for automobiles, heavy-duty trucks and bus applications. Fuel reforming
technology allows fuel cells to operate on pump gasoline.
IFC
is currently working with major automobile manufacturers, including BMW and
Hyundai and with the U.S. Department of Energy on development and demonstration
programs for automobiles.
Last
year, for example, IFC replaced the internal combustion engine in a Hyundai
Santa Fe Sport Utility Vehicle with its zero emission Series 300 75-kilowatt
hydrogen powered fuel cell. This vehicle was featured at the grand opening
ceremony of the California Fuel Cell Partnership on November 1, 2000. Pure water vapor is the only by-product of
this fuel cell power system. Hyundai
and IFC has put two fuel cell powered Santa Fe’s into driving service in
California and expect to provide another four in 2002-2003.
The IFC vehicle power
plant is quiet and efficient. It’s unique because it uses a near ambient
pressure system, which substantially increases its efficiency. By eliminating
the high-pressure requirements of other fuel cells, IFC has created a system
with fewer parts, which translates into lower costs for the consumer. To date, we have demonstrated the following
capabilities with the IFC/Hyundai
Santa Fe fuel cell vehicle:
u
Starts in less than 30 seconds;
u
Performs with undetectable noise levels;
u
Operates without any operator intervention;
u
Achieves maximum power output of 75 kW and a
top speed of 72 mph;
u
Fills the vehicle’s fuel tank with hydrogen
to a pressure of roughly 3,000 psi in less than 3 minutes; and
u
Avoids any loss of passenger or cargo space.
In
addition, we’ve also developed fuel cell auxiliary power units (APUs) that can
power all the electronic components of a car thus removing this heavy power
demand from the engine. In 1999,BMW demonstrated at the Frankfurt Auto Show a
Series-7 vehicle featuring a 5-kilowatt hydrogen IFC fuel cell that powered the
onboard electrical systems and air conditioning. During the two-week exhibition,
we used the APU to run the car’s lights and radio continuously without the
engine running.
For
buses, IFC has teamed with Thor Industries, the largest mid-size bus builder in
North America and Irisbus, one of the largest European bus manufacturers, to build
fuel cell powered zero emission transit buses.
These prototype vehicles will take to the road this year.
The
cost of fuel cells has been reduced dramatically in the past decade. The space
shuttle application had a price tag of $600,000 per kW. Commercial stationary
units being installed today cost $4,500 per kW, but fuel cells are still not
competitive with existing technology which costs about $1,500 per kW. Fuel cell
production volumes are low, which increases their costs. Increased volume is needed to bring the
purchase cost down and accelerate commercialization of this clean, reliable,
efficient source of power so its benefits can be more widely enjoyed.
There
are a number of things the federal government can do to help accelerate the
commercialization of fuel cell technology.
These include providing financial incentives, eliminating regulatory
barriers, and funding government purchases and demonstration programs.
UTC/IFC
is leading an industry effort to secure a five-year, $1,000 per kW tax credit
for homeowners and business property owners who purchase stationary fuel
cells. This initiative has gained
support from major fuel cell manufacturers, suppliers and related organizations
as explained in Attachment A.
In
addition, these same organizations have endorsed continuation and expansion of
the existing DOD/DOE buydown grant program for public sector and non-profit
organization investment in fuel cell technology. An $18 million FY 2002 DOD
appropriation is being sought for this initiative as indicated in Attachment B.
These
efforts will make the units more affordable and increase volume. With higher production volume, costs can be
reduced, thus accelerating market acceptance and deployment.
We
also support tax credits and financial incentives for fuel cell vehicles.
We
believe the federal government must address several regulatory barriers to fuel
cell distributed generation technology. UTC recommends that the federal
government:
Adopt a common technical standard for
interconnection of small power generation devices to the USD utility system
based on the Institute for Electrical and Electronic Engineers’ (IEEE) 1547
recommendation.
Minimize the competitive impact of exit fees and
stand-by charges.
Standardize user fees for Independent Power
Producers (IPPS) in the same geographic region.
Require states to ensure that the “buy” and “sell”
rates of power are the same for any given time of day or year.
The
U.S. government is the single largest energy consumer in the world. Its vast
purchasing power can be put to use in the procurement and deployment of clean,
efficient, reliable fuel cell systems.
We suggest a three-year federal program to install one hundred 200 kW
size units or 20 megawatts of fuel cell power at key federal facilities.
Priority
should be given to facilities in non-attainment areas as defined by the Clean
Air Act of 1990 as well as those that have sophisticated and sensitive computer
or electronic operations; where high-quality, reliable, assured power supply is
required; where remote locations makes off-grid power generation essential;
where security concerns require reliable, assured power; and at critical
manufacturing facilities that support DOD or DOE missions.
In
making purchasing decisions, the federal government uses a life cycle cost
benefit analysis. Unfortunately, this
calculation does not consider the environmental benefits of technologies such
as fuel cells, nor does it place a cost on lost productivity due to unreliable
power supplies. We recommend that the
government’s economic analytical tools be revised to include these important
factors in the decision making process.
The
federal government already has played a significant role as a user of fuel cell
technology in NASA’s space program as well as at DOD where 29 fuel cells were
purchased in the early 1990's to demonstrate the performance characteristics of
the technology. Since the government
will undoubtedly also be a key future customer for the technology, it is
important for it to continue to support and participate in fuel cell
demonstration programs.
A
fuel cell bus demonstration program would be particularly beneficial. Diesel
emissions from transit and shuttle buses are particularly significant since
they affect large concentrations of people in urban and suburban areas,
military bases and airports. Diesel
school buses are of particular concern because of the potential impact on the health
of vulnerable children.
Transit,
shuttle and military buses return to a central location each night. Early deployment of hydrogen powered fuel
cell buses offers a strategic path to establishing a hydrogen infrastructure
that later can be utilized by personal vehicles and light trucks for
significant environmental benefit.
While
prototype fuel cell buses have been developed, a program to demonstrate this
technology in real operating conditions, improve the durability and performance
characteristics and create opportunities for replication across the country is
needed. We support a 3-year $40 million
comprehensive program including a minimum of $10 million in FY 2002 funding for
a zero emission ambient pressure fuel cell bus demonstration program.
Fuel
cell systems such as the PC25 require a fuel-processing step to derive hydrogen
from hydrocarbon feedstocks such as natural gas. If hydrogen were available directly, this step could be
eliminated and a zero emission power generating system made possible. We need
to continue to support the development of hydrogen production, distribution and
storage infrastructure to support the deployment of zero emission stationary
and mobile fuel cell applications.
UTC/IFC therefore supports the reauthorization of the Hydrogen Future
Act and a minimum of $26.8 million for FY 2002 funding for DOE hydrogen
research, development and demonstration and an additional $15 million for
integration of fuel cells and hydrogen production systems into federal and
state facilities for stationary and transportation applications.
Carrier
is the world’s largest manufacturer of air conditioning, heating and
refrigeration systems. The company
believes that with market leadership comes the responsibility for environmental
leadership. Carrier led the global air
conditioning and refrigeration industry in the phaseout of ozone depleting
refrigerants well ahead of international and domestic mandates. And while pioneering the technologies to
enable this transition to non-ozone depleting products, Carrier has also
increased energy efficiency, minimized materials and product weight, introduced
new air quality management features and developed the tools to evaluate a
holistic building systems approach to indoor comfort cooling.
The
heating, air conditioning and refrigeration industry has made significant
improvements over the past two decades in technologies that benefit the
environment. And while these
technologies are readily available for consumers today, barriers to full
deployment do exist, preventing the realization of maximum environmental
benefit.
In
the commercial air conditioning market, major advancements have been achieved
in large building chiller technology.
Not only does Carrier manufacture non-ozone- depleting chillers
throughout the world; these same products are, on average, 20% more efficient
than their counterparts of 20 years ago, with 10-15% less weight for the same
capacity. This has reduced raw materials like steel and the intensive energy
required to produce it. In fact, we
believe the industry is saving 16 million pounds of steel each year, or enough
to build 7,000 cars.
Despite
these breakthroughs, more than 44,000 old, inefficient, CFC-based ozone-
depleting chillers remain in operation in the United States. If these chillers were replaced with today’s
products, roughly seven billion-kilowatt hours per year would be saved, enough
to power 740,000 homes on an annual basis, saving four million tons of carbon
emissions at power plants. We believe
these old CFC chillers would be replaced more rapidly if it weren’t for the
U.S. tax code, which allows building owners to depreciate chillers over a
staggering 39-year period! If this term
were reduced to 15 or 20 years, the advanced chiller technologies would become
more prevalent in the marketplace to the benefit of the environment.
Equal
advancements have been made in residential systems within the last decade. Carrier introduced the nation’s first
non-ozone depleting residential central air conditioning system, called Puron,
in 1996 -- a full 14 years prior to the deadline mandated by the Clean Air
Act. And while we’re proud to have been
the first, we congratulate the three other major manufacturers that have
followed suit so far.
Carrier
also leads the residential market with the highest rated efficiencies and
supports a full 20% increase in the federal minimum energy efficiency
standard. But Carrier also believes
that federal and state governments can do more to deploy high efficiency
products rapidly through tax incentives and we congratulate Senator Smith for
introducing S.207 which we view as a good framework for tax incentives,
especially if the levels start at 13 SEER.
But
as federal and state governments examine tax credits, we would like to point
out that opportunities exist to maximize these incentives for additional
environmental benefit, like ozone protection, along with energy
efficiency. Not too long ago, there was
a trade-off between efficiency and ozone protection. Most residential systems sold today operate with an ozone-depleting
refrigerant scheduled for phaseout in new products in 2010. The amount of this refrigerant required for
higher efficiency systems, like 13 SEER, is 40% greater than standard 10 SEER
systems. Fortunately, Carrier pioneered
the technology that other manufacturers have followed to avoid this “Hobson’s
choice” of efficiency or ozone protection.
Clearly and thankfully we can have both, and we urge any tax incentive
plan to maximize the environmental benefits of efficiency combined with ozone
protection.
To
address electric utility demand-management initiatives, Carrier was the first
in its industry to develop a web-enabled smart thermostat that will interface
between a homeowner’s air conditioning system and the local utility. This technology can reduce residential peak
load demand by 30%, frequently without the consumer’s awareness.
In
essence, the thermostat allows the utility to “purchase” peak load demand from
the homeowner by offering electrical rate discounts for setting-back the
thermostat a few degrees. Carrier’s
smart thermostats, called ComfortChoice, have already been deployed by
utilities in New York, Connecticut and Washington. For every 100,000 homes installed with this technology, 150
megawatts of peak power can be saved, which is enough to power 100,000
additional homes for one year. At an average of $375 per installation (labor
and material) plus utility software costs and monthly communication fees, the
cost of deploying these smart thermostats has been the principal barrier to
more widespread use, which utilities and state policy makers are starting to
address through rebates and other incentives.
Another
safeguard that ensures maximum environmental benefit is the proper installation
of products. Manufacturers can design
and sell the most energy efficient systems, but if third party contractors do
not install the system properly, the environmental benefit will be lost. Fortunately, thousands of these systems are
installed properly each day by qualified technicians, but no one doubts that
additional training will yield greater environmental benefit. According to the Consortium for Energy
Efficiency, proper residential system installations could reduce energy
consumption by as much as 35%. With
over 300,000 installation technicians in the country, the opportunity for
additional training is great.
That
is why the air conditioning manufacturers and contractors have teamed up to
form a national technician training and certification program called NATE –
North American Technician Excellence.
This program has trained a total of 10,000 technicians since its
creation. The federal government can support NATE in two meaningful ways: (1)
provide resources to raise public awareness of the program, and (2) encourage
federal facilities to ensure that they purchase service only from NATE
technicians. Support of NATE will help
ensure that the best environmental technologies that exist today are properly
deployed so that they yield their intended benefits.
Finally,
the federal government can help develop the next generation of environmental
technologies for air conditioning and refrigeration systems by continuing to
fund the “Research for the Twenty-first Century” program also known as “21-CR.” This collaborative program pools the
financial resources of the federal government, state governments and private
enterprise to conduct pre-competitive research on energy efficiency, indoor
environmental quality, refrigerants and others. We urge the Congress continue supporting this valuable program
with a $4 million appropriation for FY 2002.
UTC
products have useful lives that can be measured in decades. That’s one of the reasons our corporate
environment, health and safety policy statement requires conservation of
natural resources in the design, manufacture, use and disposal of products and
delivery of services. It also mandates
that we make safety and environmental considerations priorities in new product
development and investment decisions.
UTC
products offer the potential for significant energy savings as well as improved
environmental quality. Working with government and end users of our equipment
we can ensure that these benefits are optimized and accelerated. We look forward to working with Congress,
the Administration and other stakeholders to achieve these goals.
I
would be happy to answer any questions you might have.
ATTACHMENT 1 Why Should Congress Support a Stationary Fuel Cell Tax Credit? / Key Elements of a Fuel Cell Tax Credit for Stationary Applications
ATTACHMENT 2 STATIONARY FUEL CELL INCENTIVE PROGRAM