Thomas D. Elias: Hydrogen grant policy pulled
Less than two weeks after this column exposed a situation where tens of millions of state tax dollars were given to billion-dollar corporations — but only with approval from other billion-dollar corporations — the California Energy Commission suddenly ended that practice.
In a message sent late May 25, the commission said it "is canceling its grant solicitation for hydrogen fueling stations in order to revise solicitation protocols. The commission will issue a new solicitation at a future date."
The grants, funded by vehicle license fees under a 2007 law authored by former Democratic Assembly Speaker Fabian Nunez and signed by Republican Gov. Arnold Schwarzenegger, amounted to $15 million in 2010, with another $12 million winning tentative approval in April. Those grants have now been canceled.
The grants were designed to encourage construction of refueling stations for hydrogen fuel cell cars that are due to hit showrooms by 2017. These will be built by eight automakers including Nissan, Toyota, Honda, GM, Chrysler, Volkswagen, Daimler Benz and Hyundai.
The Energy Commission's Schwarzenegger-era policy was to require that at least one automaker approve any refueling location before a grant application could even be considered.
All the $16 million in grants going to private companies in 2010 were awarded to two large corporations, the German-based Linde Group and Pennsylvania-based Air Products & Chemicals Inc. Both are members of the semi-private California Fuel Cell Partnership, along with the eight carmakers and the Energy Commission. The partnership promotes fuel cell cars.
Suspicions of collusion in the grant approvals arose because Linde and Air Products executives interact at many meetings and because the carmakers approved only one refueling location not belonging to either of those companies.
Gov. Jerry Brown refused comment on the Energy Commission's flawed grant policy, but its cancellation came only days after Brown became aware of problems with it. Commission Chairman Robert Weisenmiller also refused comment before his agency sent an official message to this column announcing the grant cancellations.
This makes it hard to trace the decision-making process of the Brown administration on the grants.
"It was a ridiculous boondoggle," said Jamie Court, president of the Consumer Watchdog advocacy group. "The cancellation of the protocols and the latest grants under them is a start to rolling back the kind of back-door deals Schwarzenegger frequently made with big donors to his political causes. It's a big victory for taxpayers."
The bizarre scene of the Energy Commission giving private companies the power to authorize giveaways of tax dollars was unprecedented in the memories of many experts. "I have never heard of such an arrangement anytime, anywhere," said Court, who added that the cancelled arrangement essentially "opened the state treasury to big corporations."
The Energy Commission said it will not end its program of funding hydrogen refueling stations because "a robust hydrogen fuel station infrastructure is necessary to support automakers' rollout of fuel cell vehicles to comply with the state Air Resources Board's Zero Emission Vehicle program. Carmakers will meet that mandate with a combination of electric cars and fuel cell vehicles."
Even under the promised new protocols, private companies and not the state will own stations built with taxpayer dollars.
Both the Energy Commission and Ed Heydorn, business development manager for Air Products' hydrogen energy systems, deny any collusion ever occurred. But both outfits concede they attend Fuel Cell Partnership meetings and have other encounters with automaker executives regularly, conversing freely with them. Most of those meetings are not open to companies that cannot pay the Fuel Cell Partnership's annual dues of at least $87,800.
The main justification for continuing the grants at all is that hydrogen fuel cell cars will run on "green" energy. But much of the fuel Linde and Air Products will sell is to come from natural gas, not a renewable energy source. Because the state will require at least one-third of its power to come from renewable sources like wind or solar by 2020, Air Products executive Heydorn says one-third of gas to be sold in company stations funded by grants it received in 2010 will be biogas taken from landfills, considered a renewable resource.
Meanwhile, no state money went, for example, to 15 prime-location stations where the much smaller California-based HyGen Industries proposes pumps that would sell hydrogen made from on-site electrolysis of water, considered a purely renewable source.
So the cancelled the Energy Commission policy thwarted both small companies and greener energy, while providing tens of millions to billion-dollar corporations at a time when the state is pinching pennies on almost everything else.
Politically, the cancellation is as wise a move as Brown could make. For it's hard to see how his November tax increase initiative could pass during these tough times if voters saw grants continuing to big corporations approved by other, even bigger corporations.