Whatever Happened to the Hydrogen Economy?

April 11, 2016

Investigative Reports

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By RON AIKEN

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Thousands of jobs promised, millions spent on research

Remember how, back in 2009, Columbia leaders from City Hall to the Horseshoe bought in on the promise of hydrogen fuels as a way to develop an identity for Columbia?

You’ll remember that the university recruited top hydrogen fuel cell researchers as a big component of its Innovista dream; the City of Columbia likewise went all-in to build a hydrogen fueling station and the S.C. Research Authority, a state agency; and EngenuitySC, a nonprofit that has received millions in public funding, spent hundreds of thousands of dollars touting the potential benefits and jobs the new hydrogen economy would bring.

With the fueling station shuttered behind rusty locks and weeds growing up through its fences; a half-filled USC research building, Horizon I, still looking for promised private-sector partners (the only recent news it has made was in 2014 when a possible gas leak evacuated the building); and the movement’s biggest champion, EngenuitySC, now largely avoiding the word “hydrogen” anymore on its website, it’s clear that little, if anything, has come of the sales pitch that sold so many on an idea that is, literally, hot air.

RED FLAGS

All this investment in the hydrogen economy – $58 million from the General Assembly for two USC research buildings (with Horizon II only now going up because of a controversial deal with IBM) – came despite multiple independent studies that suggested enormous challenges to the development of a viable hydrogen economy in South Carolina.

Rust covers the locked gates at the hydrogen fueling station in Columbia.

Rust covers the locked gates at the hydrogen fueling station in Columbia.

In 2005, a study by ICF Consulting said the state at that time did not have the entrepreneurial class to turn research into private-sector jobs and that the state has been slow to develop next-generation energy infrastructure. A second study by Concurrent Technologies Corporation said the only way forward for hydrogen in South Carolina was if state government offered attractive incentives, chiefly in the form of tax breaks.

Still, university leadership both at the University of South Carolina and Clemson persuaded the General Assembly to set aside $90 million for the state’s endowed chairs program and up to $220 million for research facilities at both schools to support hydrogen research.

So, who made money? The schools themselves, as both USC and Clemson continue to fund research into hydrogen fuel cell technology and improvements in the efficiencies of hydrogen batteries.

Who didn’t? The general public, whose tax dollars paid for new office buildings with empty floors where private-sector businesses were supposed to flock, research that has not been meaningfully commercialized, and a fueling station that has more weeds than it ever had customers.

As part of its Innovista projections, USC claimed the ongoing economic and fiscal benefits by 2020 would be 14,362 jobs and $387.5 million in retail sales annually, with an estimated $25.6 million in property tax revenue to be generated annually for the local government. Thanks to a recession and a shift away from hydrogen funding by the federal government, in hindsight those figures were optimistic at best.

And as for those tax breaks both studies said were key, well, those cries fell on deaf ears.

“I didn’t see the need to get involved in (promoting a hydrogen economy),” said then-Secretary of Commerce Joe Taylor, who is now in private business. “There was, what, one bus that cost about a million bucks and a fueling station that cost about two million? No, I steered clear of that.

“Meanwhile, Proterra moved its headquarters back West. And Trulite, that was another company they talked about, I don’t think they’re still at Midlands Tech anymore.”

Back in 2008, Trulite was announced as the first tenant of Midlands Technical College’s Business Accelerator. The site served as Trulite’s North American manufacturing site for its fuel cell cartridges, and the company was hailed as South Carolina’s first fuel cell manufacturer. At the end of December the business finally left MTC after failing to find the funding it needed and is currently in the process of being acquired.

“I steered clear of all that talk,” Taylor said. “We were focused on other projects, like Boeing.”

Reach Aiken at (803) 254-4411. Email him at ron@thenerve.org. Follow him on Twitter @RonAiken and @TheNerveSC.