On July 14, 2005, the Department of Energy announced a new hydrogen cost goal and methodology for pricing

Shell fuelling station in Washington, DC where hydrogen sells for about the cost of premium unleaded gasoiline. Photo by Niels Maumenee

. The previous hydrogen cost goal of $1.50/gasoline gallon equivalent (gge, delivered, untaxed, 2001$, by 2010) was developed in 2002. This goal was based on hydrogen produced from distributed natural gas reforming, which is the most common method of producing hydrogen today. The strategy was that hydrogen should cost no more than gasoline on an equivalent energy basis. Since one kilogram of hydrogen contains approximately the same energy as one gallon of gasoline, the hydrogen cost goal was set at $1.50/kg (or $1.50/gge) to be equivalent to the untaxed cost of gasoline¹.

The new hydrogen cost goal of $2.00-3.00/gge (delivered, untaxed, 2005$, by 2015) is independent of the pathway used to produce and deliver hydrogen. Perhaps due to the falling cost producing electricity via renewable resources such as wind. Cheap and abundant electricity makes the production of hydrogen via electrolysis economically feasible. In addition, the new methodology accounts for the increased energy efficiency of gasoline hybrid vehicles and fuel cell vehicles on a cost-per-mile basis.

It is likely that the U.S. economy is more vulnerable to limited oil supplies from foreign sources due to the increasing world and U.S. oil demand, which may result in higher oil prices.

This case is more representative of the economic and energy security environment in which hydrogen must compete than the scenario used in setting the cost of hydrogen as a fuel in 2002.

The new hydrogen target is in alignment with the Hydrogen Fuel Initiative goal of enabling an industry commercialization decision by 2015, and will be used to guide the Department of Energy's hydrogen and fuel cell research and development activities.