BOARD MEETING DATE: November 5, 1999 AGENDA NO. 3

The AQMP identifies the use of alternative clean fuels in mobile sources as a key attainment strategy. The ARB has also passed LEV regulations that require vehicles to comply with increasingly stringent emission standards, including zero emission vehicle (ZEV) standards. Major auto manufacturers are developing proton exchange membrane fuel cell (PEM-FC) vehicles as an important means of enhancing their technological options to comply with the ARB’s ZEV standards. The ARB has recently adopted an emission credit protocol which will allow manufacturers the option of obtaining partial ZEV credits for fuel cell vehicles, including those which utilize methanol reforming. DaimlerChrysler, Ford, Honda, GM and other auto manufacturers have indicated that the initial passenger car applications of PEM-FC vehicles will likely utilize methanol reformers in vehicles to be offered in high volume production starting in 2004. The leading PEM-FC was developed initially by Ballard Power Systems. Through a joint venture of DaimlerChrysler, Ford and Ballard, dbb Fuel Cell Engine Corp. (dbb FCEC) has been formed; it is internationally recognized as a technology leader in the development of PEM-FC systems for automotive application.

The FC technology chosen by DaimlerChrysler and dbb FCEC is based on the reforming of methanol to supply hydrogen to the fuel cell stack. Primary challenges in expediting the technology are to provide fuel which has the proper specifications for reformers, and to utilize reformer catalysts which are most suitable for the fuel quality expected and desired at retail refueling stations. The development of such a specification requires a balancing of the needs of the vehicle and the logistical and quality control realities of retail fuel distribution.

At its May 14, 1999 meeting, the Board authorized the execution of a contract with dbb Fuel Cell Engine Corporation to conduct an evaluation of fuel quality parameters and their effect on fuel cell reformer performance. Due to difficulties encountered in finalizing the contract terms, it was not possible to initiate this project before the end of the last fiscal year, which ended June 30, 1999. Now that issues related to intellectual property and confidentiality have been resolved in principle, re-authorization for this project is requested.

As described in the May 14, 1999 letter to the Board, the objective of the proposed project is to determine the best case combination of methanol grade, additive requirement and composition, and fuel supply chain procedures to yield an affordable, widely available supply of methanol.

The scope of this project covers only the first phase of a possible multi-phase fuel specification program. The proposed Phase I scope of work will comprise five main tasks: 1) a comprehensive evaluation of what the most likely fuel contamination mechanisms are; 2) chemical analysis of a variety of methanol grades to identify probable grade restrictions for fuel cell use; 3) an analysis of the supply infrastructure to determine the most probable sources of contamination; 4) an evaluation of automotive guidelines to determine the requirement for additives in an automotive methanol fuel; and 5) a physical evaluation of additive and contaminant impact on reformer conversion through steady state empirical testing.

A thorough literature search will be conducted to determine which fuel compounds are most damaging to methanol conversion over copper zinc oxide reformer catalysts. This search will provide a summarizing of these compounds and their probable impact.

The literature search of Task 1 will be supplemented by a thorough chemical analysis of methanol samples from a number of supply sites, spanning all grades likely to be applied to automotive service. By defining the boundaries of "fuel cell grade" methanol and determining which existing grades fit this mold, the remainder of the study can be restricted to a more focused evaluation.

The fuel supply chain will be analyzed to determine if the contaminants found in Task 2 are avoidable through more strict controls, or indicative of a more pervasive problem.

Once the implications of the existing supply infrastructure are fully understood, the requirement for additives in automotive applications will be determined. Certain additives currently thought necessary may not be required in fuel cell applications. Task 4 will determine which additive families are in fact required and will determine a variety of possible compounds for each. A full chemical analysis will be carried out on each of the proposed alternatives. This analysis, combined with the previous work, will define the most probable array of methanol grades, additives, and supply chain contaminants for fuel cell applications.

The array of fuels, fuel additives and fuel contaminants determined in Task 4 will be tested using dbb FCEC’s small-scale reformer evaluation hardware. This hardware allows for long-term automated testing of a small quantity of reformer catalyst. Changes in conversion can be easily determined, logged and characterized. Against a baseline of pure reagent grade methanol, the impact of variation in grade, fuel additives and fuel contaminants can be fully evaluated. The evaluation will determine the best combination of fuel grade, fuel additives and supply chain procedures to ensure availability of a practical "PEM fuel cell grade" methanol infrastructure.

The results of this study will help expedite the design optimization and implementation of fuel cell reformer technology and appropriate fuel quality safeguards essential for the commercial launch of thousands of PEM-FC vehicles planned for 2004. The study will provide key data needed for the adoption of a fuel quality specification, as well as identify fueling components and supply procedures which will be necessary to accommodate PEM-FC vehicles. A standardized fuel specification will also help ensure the durability of fuel reformers once they are placed in widespread commercial and private use.

The early commercialization of PEM-FC vehicles will result in significant emission reductions relative to their gasoline counterparts. By helping establish the baseline data for a standardized fuel cell grade fuel, the study will also help reduce the uncertainty and cost in the design and implementation of a retail fuel distribution network The low-temperature reforming utilized in the PEM-FC system planned by DaimlerChrysler does not emit CO or NOx, and has HC emissions of 50 percent less than the Super Ultra Low Emission Vehicle (SULEV) standards adopted by the ARB. For the estimated 40,000 PEM-FC vehicles planned for early commercialization by DaimlerChrysler alone, NOx emissions would be reduced by over 130 tons per year, with over 10 tons of HC emission reductions per year.

Upon assessment of the results of this study, a follow-on effort may be considered to facilitate a consensus among fuel suppliers, automotive manufacturers and regulatory agencies for the establishment of an appropriate fuel specification. Such a study would include an assessment of specific fuel supply storage methods, materials compatibility, and the potential for on-board vehicle fuel filtering and/or cleanup.

The proposed project is included in the November 1998 update of the Technology Advancement Plan under Project 98M3-1, "Development of Fuel Cell Balance of Plant Technologies Related to Fuels, Fuel Storage and Handling, and Fuel Processing."

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under provision B.2.d.(1) other circumstances, including projects involving cost-sharing by multiple sponsors. It is in the best interest of the AQMD to cosponsor the proposed project because of the combined technical strength and expertise of the project team. Participants and direct sponsors in the project include dbb Fuel Cell Engine Corporation, the American Methanol Institute and Methanex Corporation. Indirect support is also being provided by DaimlerChrysler and Ford Motor Company for this project.

dbb Fuel Cell Engine Corp. is the principal proponent of this project. They were founded in 1997 through a joint venture with DaimlerChrysler, Ford Motor Company and Ballard Power Systems to develop automotive fuel cell systems. The company has locations in Canada, Germany and the U.S. Their Poway, California office is the center for their North American and Asian efforts related to automotive fuel cell applications engineering. This work has already resulted in the development of the world’s largest methanol based PEM fuel cell engine, a 100 kW engine built for Georgetown University. The dbb FCEC team will support the proposed project through their demonstrated expertise in proprietary PEM-FC methanol reforming systems and long-term reformer testing hardware.

DaimlerChrysler is a leader in the research, development, production and commercialization of PEM-FC vehicles, and is a highly capitalized major automotive manufacturer. As the parent and founding member of dbb FCEC, they can provide technical expertise for assessing all key facets of reformer sensitivity to fuel quality effects. Their input to dbb FCEC will provide helpful technical perspectives on the data obtained from this study.

Ford Motor Company has been an active member of the alliance which formed dbb FCEC. Ford also aims to commercialize automotive PEM-FC systems; they have extensive experience in fuel system design, methanol additive requirements, and on-board material compatibility requirements. Ford also brings over twenty years of experience in methanol vehicle technology, as well as being a highly capitalized major automotive manufacturer. Ford will support the program through their contribution to the fuel quality analysis of both additives and contaminants, as well as materials compatibility issues as they relate to on-board fuel storage and distribution.

Methanex Corp. is the world’s largest producer of methanol. They have established a formal cooperative agreement with Ballard Power Systems to support the commercialization of PEM-FC vehicles. Methanex has production plants on four continents which convert natural gas to methanol, and accounts for over 25% of the global methanol market of 11.4 billion gallons (34 million tons).

The American Methanol Institute (AMI) is the national trade association for the North American methanol industry. Its affiliated research support organization, the American Methanol Foundation (AMF), will provide direct funding support for the project.

The total amount of AQMD funding for the proposed project will not exceed $205,000. The table below describes the proposed funding to complete the project:

Organization	Direct	Indirect	Total
DaimlerChrysler		$7,000	7,000
Ford		7,000	7,000
AMF	10,000		10,000
Methanex	5,000		5,000
SCAQMD	205,000		205,000
Total:	$ 220,000	$14,000	$ 234,000

Sufficient funds are available from the Clean Fuels Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Section 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.