Risk of betting all our transportation solutions for energy independence and climate change on a narrow

suite of technologies that are yet to be demonstrated in any relevant environment.

Fuel-Vehicle Configuration
Gasoline Gasoline Biofuel Hydrogen Hydrogen Hydrogen
Key issues in comparing biofueled, internal-combustion, plug-in hybrid electric vehicles to hydrogen-fueled, fuel cell vehicles. ICE-HEV ICE-PHEV ICE-PHEV FC-EV FC-HEV FC-PHEV
There is enough information to determine that this vehicle-fuel strategy will be successful in the market place. √
There is demonstrated experience with market-ready versions of this vehicle from automotive OEMs. √ √ √
The fuel can come from wind, solar, geothermal, ocean thermal, nuclear, wave, tidal, home production or river/sea currents . √ √ √
The fuel has been demonstrated in the production, distribution and dispensing environment (excludes-corn-EtOH). √ √ √ √ √
Fuel source can be uneffected by agricultural diesease or blight. √ √ √ √ √
Fuel can come from fossil sources like oil, coal and shale. √ √ √ √ √
Fuel can come from renewable biomass, municipal solid waste or land fill gas. √ √ √ √
National climate change goals are not delayed if consumer does not plug in as often as national needs require. * √** √** √**
National energy security goals are not delayed if consumer does not plug in as often as national needs require. √ √ √
There are no significant behavior changes required of consumer to achieve climate change and energy security goals. √ √ √
No significant changes are required in the US power grid to enable a successful market for the vehicle. √ √ √
Has a decade of automotive marketing and sales history in U.S. √
Has garnered less than 2% market share after a decade of US automotive sales. √ Not in commercial production

Technology approach selected in Technologies eliminated in FY

Key: FY 2010 DOE Budget request 2010 DOE Budget Request
ICE-HEV = Traditional hybrid electric vehicles with ~300 mile fuel range and less than a mile battery range, like the Toyoya Prius.
ICE-PHEV = Plug-in hybrid electric vehicles with internal combustion engines with ~300 mile fuel range and 20 to 40 mile battery range.
FC-EV = Electric vehicles with fuel cell power plants with ~300 mile fuel range and no, or very little battery range.
FC-HEV = Hybrid electric vehicles with fuel cell power plants that with ~300 mile fuel range and less than a mile battery range.
FC-PHEV = Plug-in hybrid electric vehicles with fuel cell power plants with ~300 mile fuel range and 20 - 40 mile battery range.

* With renewable bio fuel, and a fossil energy mix for electricity, not plugging in a PHEV would result in lowest
GHC emission for that fuel-vehicle configuration.
** The higher likelyhood of engineered renewable sources for hydrogen production results in higher likelihood that
hydrogen cars will be less sensative to consumer habits in meeting climate and energy security goals.

GDR 5/28/09

Page 1
 Administration FY10 DOE Budget Request Overview
(in millions of dollars) FY08 Actual FY09 Est FY10 Est
DOE Defense Programs
1 Admin 397 450 431
2 Naval reactors 776 833 1,003
3 Weapons activities 6,354 6,427 6,384
4 Defense Nuclear Nonproliferation 1,743 1,503 2,137
5 Defense Cleanup 5,491 9,790 6,521
6 Other Defense Activities 27 27 29
7 Defense Nuclear Waste Disposal 199 143 98
8 DOE Defense Total 14,987 19,173 16,603
9 % of DOE total 61% 47% 60%

Key Energy & Environment Programs

DOE Energy Programs FY08 Actual FY09 Est FY10 Est
10 Science 4,083 6,373 4,942 Energy-related science 2,037 2,571 2,705
11 Energy Transformation Acceleration Fund 10 ARPA-E 0 0 10
12 Energy Transformation Acceleration Fund, Recovery Act 399 ARPA-E 0 0 399
13 Energy Supply and Conservation 0 0 0
14 Nuclear Energy 961 792 762 961 792 762
15 Electricity Delivery and Energy Reliability 137 4,637 208
16 Energy Efficiency & Renewable Energy (excludes Transportation H2, Fuel Cell) 1,563 2,893 2,319 1,563 2,893 2,319
17* EERE Transportation H2, Fuel Cell components* 141 117 0 141 117 0
18 Non-Defense Cleanup 182 745 238
19 Fossil Energy R&D 727 4,276 618 727 4,276 618
20 Naval Petroleum and Oil Shale Reserves 24 19 24 24 19 24
21 Strategic Petroleum Reserve 187 227 229
22 Energy Information Agency 95 111 133 95 111 133
23 FERC 248 273 298
24 Deep Water, Unconv NG, Other Petroleum Research 7 40 30 7 40 30
25 Northeast Home Heating Oil Reserve 12 10 11
26 Nuclear Waste Disposal 187 145 98
27 Uranium Enrichment Decontamination/Decommissioning 622 926 559
28 Uranium sales -32 -36 -16
29 Southeast power Authority 61 18
30 Southwest power Authority 30 28 13
31 Western Area Power Administration 229 228 109
32 Department Administration 194 155 182
33 Office of Inspector General 46 67 51
34 DOE Energy Total 9,704 22,044 11,217 5,555 10,819 7,000
35 % of DOE total 39% 53% 40% % of DOE total 22% 26% 25%
36 DOE Total est 24,691 41,217 27,820

GDR 5/28/09 Page 2

* Line 17, EERE Transportation H2, Fuel Cell components includes: Change
FY09 -
(in millions of dollars)
FY08 FY09 FY10 FY10 Program loss
Hydrogen production and delivery R&D 38.61 10.00 0.00 -100% (10.00)
Hydrogen storage R&D 42.32 59.20 0.00 -100% (59.20)
Technology validation 29.61 15.00 0.00 -100% (15.00)
Transportation fuel cell systems 6.22 6.60 0.00 -100% (6.60)
Safety codes & standards 15.44 12.50 0.00 -100% (12.50)
Education 3.87 4.20 0.00 -100% (4.20)
Market transformation 4.75 0.00 -100% (4.75)
Manufacturing R&D 4.83 5.00 0.00 -100% (5.00)
Total 140.887 117.247 0.000 -100% (117.25)

GDR 5/28/09

Page 3
On the decision to zero out the Department of Energy Programs in hydrogen production, storage,
analysis and fuel cell vehicles, as reflected in the FY2010 Department of Energy Budget Request.
From Glenn Rambach:

Policy:
If the rationale for cutting the hydrogen and fuel cells for transportation budget in the U.S.
Department of Energy is simply based on a sense that a significant impact would not happen for
two decades, then that rationale is imperfect. An obvious contradiction in the same Energy
budget is the 5% increase in the Fusion Energy Budget, making it 6 times larger than the
hydrogen/fuel cell budget; even though it’s extremely unlikely that fusion energy will accrue
benefits to the United States in several decades. Note: I came from the IC Fusion Program prior
to doing R&D in hydrogen, fuel cells and renewables, and still support fusion’s long term
potential.

The DOE rationale is based on the eventual use of plug-in hybrid electric vehicles with internal
combustion engines (ICE-PHEV) ultimately fueled by biofuels.

Competing plug-in hybrid, hydrocarbon-fueled vehicle concepts against plug-in hybrid hydrogen
fuel cell vehicle concepts, and then choosing one over the other diminishes our chances of
achieving the solutions to our problems of energy security, climate change and economy. Such a
decision presupposes that the required, long socioeconomic experiment is already complete, and
its data concludes that consumers will charge their cars almost every night and not waver in that
activity over the years. It also assumes the growth of the charging power distribution
infrastructure can be adequate, timely and cost-effective.

For the fuel cell plug-in hybrid electric vehicle (FC-PHEV), the energy stored in the battery and
in the fuel can be made renewably from a large number of current and future sources. For the
ICE-PHEV, the chemically stored fuel energy cannot be easily or economically made from wind,
solar, hydro, nuclear, geothermal, MSW, wet biomass, OTEC or home generation. Renewable
chemical fuel for the ICE-PHEV would rely on yet another untested socioeconomic, biological
experiment of energy farming.

If the plug-in aspect for fuel cell hybrid cars is not adopted for some reason, the FC-HEV (HEV
= conventional hybrid) can still meet our goals for energy independence and climate change
reduction, where the use of conventional ICE-HEVs would have a significantly lower impact
than the hoped-for ICE-PHEV. Contrasting FC-PHEVs to ICE-PHEVs, offers a key difference
in the opportunity for recharging the battery, where the ICE-PHEV is at a disadvantage. This
difference benefits the fuel cell version in both range and convenience of use.

One of the biggest problems our national energy program has experienced for the last 28 years
has been insufficient budget support, inconsistent with the degree of national need for solving
our energy dilemma. The energy components of Secretary Chu’s budget are commendable in
their scope and much of their direction, and represent one of the most aggressive energy
programs ever. Such action is critical for the United State in solving energy; something that was
stalled in this country 28 years ago. See chart of energy budget history.

We have seen a tremendous loss of American treasure from our dependence on the Persian Gulf,
the multi-trillion dollar legacy cost for defending 8% of our energy in the Gulf, the several
$Trillion imbalance of trade, and the more than $2Trillion consumer cost for two geopolitically-
driven oil price bubbles. Yet, after all the economic and strategic signals illuminate the
importance of returning to the urgency we had in the late 1970s for solving national energy
problems, a key program with a realistic potential for removing the automobile from the
environmental and energy security equation is reduced to zero. It is discouraging to think that
the Department of Energy must continue to play a zero-sum game at the expense of slowing our
progress towards solving our 35-year-old energy dilemma.

Therefore:
Risks from what we still don’t know:
Energy veterans involved in advanced technology, policy, economics and strategy understand
that any energy technology yet to be deployed cannot be considered a slam-dunk solution to our
extremely complex energy situation, no matter how simple it seems. Picking one technology like
plug-in hybrid electric vehicles, and/or biofuels over any other before it is market-validated does
not increase our likelihood of achieving energy security and climate change mitigation. Rather
such an action puts both energy and environment solutions at increased risk. The long-term
assurance of sustainable and clean energy for the United States is the basis of our economy and a
key assurance of national security.

We all too often make important decisions based on a clear understanding of relatively basic
facts, not completely considering the unexpected or unintended consequences of that decision.
Occam’s Razor is often the theory by which such critical decisions are made. In energy security
and climate change small variations of unintended consequences have extremely large
implications on our society, economy, security and well-being. While biofuels and plug-in
hybrid electric vehicles are technically attractive; society has yet to test the new behavior needed
for the vehicles, the new infrastructure and behavior required for recharging and the dramatic
penetration of energy farming needed for them to be successful.

One experimental data set that is complete shows us the less than 3% market penetration of
conventional hybrids in a decade. PHEVs are more costly and require more consumer
compromise; so extrapolating the demonstrated less-than 3% per decade to 10% to 30% for 2
decades is a challenge. Yet the decision to eliminate the transportation hydrogen and fuel cell
programs are based on the perception that it will not have a significant market share in 10 to 20
years? (It seems like it would take a miracle for a 3% per decade market growth to expand to
5% to 15% per decade simply by offering a costlier product that requires additional effort by the
consumer in order to achieve benefits from the product.)

For plug-in hybrid electric vehicles to be successful the consumer has to operate it the way it was
intended by the scientist and engineer who developed it, and by the policy makers who are
leveraging our future on it. If the consumer, who may be happy with the 300+ mile range and
vastly improved fuel economy on just gasoline and regenerative braking, does not choose to plug
in the vehicle almost every time it is parked at home or work, then he improvements in energy
security and climate change are proportionately diminished.

In comparing biofuels to other forms of renewable energy for transportation, there can be
significant differences in cost and availability in the feedstock. One example is in land-use. For
every acre of the best hoped for algae bio-diesel used in a conventional diesel vehicle, 30% more
vehicles can be served from the same acre with below average solar photovoltaics combined with
average electrolysis and below average fuel cell vehicles. In addition, since solar, wind and
hydroelectric resources have no variable costs, the determined price of the hydrogen at the time
of installation is the same price 20 years down the road. Thanks to DOE-funded programs, solar
PV, wind and electrolysis are quickly approaching costs that allow renewable hydrogen in fuel
cell cars to compete with fossil-based gasoline.

For energy farmed fuels, there can be unexpected variability in price based on weather and
climate variations as well as the health of the feedstock crop or algae. Risking the basis of our
economy, energy on these variations increases the risk to the security of future generations.
What energy source will the consumer ask to propel the average
piston-engine, plug-in hybrid electric vehicles (ICE-PHEV)?
It is unknown how reliably the average consumer will plug in their PHEV. Since a PHEV carries
on board two different energy stores uploaded from the infrastructure; liquid fuel in a tank and
stored electricity in a battery. The on-board batteries will be capable of storing between 10 and
40 miles of driving range, much more than current, hybrid electric vehicles. The more battery
storage, the more battery weight and associated structure weight.

For about a century, automobile owners became very familiar with the benefits and convenience
of their vehicles. One thing ingrained in the culture is the way in which we interact with the
infrastructure to be able to drive our vehicles. On average, about once a week the car owner
would drive to a refueling station and connect to the infrastructure for about two minutes,
thereby gaining the ability to drive around for about another week.

Since the degree of consumer willingness to make a purchase is the basis for a new technology
becoming successful in the marketplace; and the behavior of the consumer once they've acquired
that product is the basis for how that product impacts society, it's very important to understand
how a consumer will purchase and use a future vehicle. Changes in required behavior, and
inconvenience are deterrents for consumers in making a purchase decision in an automobile
showroom, so today it is uncertain how well ICE-PHEVs will fare in the marketplace.
Additionally, variations in how a consumer chooses to recharge the battery of an ICE-PHEV will
strongly affect the social benefit of the vehicle.

Plug-in hybrid electric vehicles will alter the required behavior of the consumer for the first time
in almost a century, requiring them to plug it into electrical power for several hours as often as
possible, but also reducing the need to visit a refueling station as often as in the past. If that
becomes the key trade-off for the consumer, then the opportunity to visit a refueling station less
often may not be a strong enough motivation to plug-in as often as possible in order to satisfy our
environmental and energy security national needs.

On the other hand, hydrogen fuel cell vehicles, including plug-in hybrid, hydrogen, fuel cell
vehicles (FC-PHEV) are more likely to aid in energy security and climate change mitigation
regardless of consumers’ behavior. Since there are far more opportunities to produce the
electricity for the battery and the fuel for the fuel cell from renewable sources, there is a lower
risk to energy security and environment if the consumer chooses a normal fuel cell car, or a plug-
in hybrid fuel cell car over an ICE-PHEV even if they do not plug it in at all.
Oil independence:
That highly elusive goal has for 35 years been unachieved. While it was recognized in 1974 as a
goal critical to our economy and national security, it has long been under supported and
underfunded. Every day during that time, the need to solve this was greater than the day before,
yet here we are in 2009 with the budget request that eliminates key programs at a savings of
about $140 million a year. Analysis shows America spending well over $5 billion a year in
DOD, during peacetime to secure 7 to 8% of our energy in the Persian Gulf. Some studies show
Gulf oil dependence costs over $50B/year.

Based on the cost of securing foreign oil, the Federal savings in eliminating hydrogen and
transportation fuel cell programs would be realized only if time to get to Gulf-oil independence
is shortened by more than 97.2%. Conversely, if the continued support of the hydrogen and fuel
cell option contributes to that energy independence only 4% sooner, then it would have paid for
itself and saved taxpayers significantly.

If instead fuel cell vehicles ultimately become the technology validated in the marketplace in the
absence of DOE support, it will result in a much longer wait for independence at an annual
defense cost of multiples of entire DOE budgets.
For the evolution from today’s ICE cars to Fuel Cell cars, an industry-
government partnership, akin to the PNGV program will optimize technology
and infrastructure development while allowing industry to generate revenue
while moving up market basic ICE hybrids to fully performing fuel cell cars.

It has long been expected that ICE hybrids, then plug-in ICE hybrids will be
intermediate products that generate industry revenue without requiring either a
disruptive leap to fuel cell cars or creating discontinuous steps for industry or
the consumer along the way.

See following 4 slides:

Solar hydrogen in fuel cell cars will require far less production area than algae biodiesel.

3.23 acres 3.23 acres

Sunlight
15% efficient solar PV cells 12,000 gal/ac-yr
20% capacity factor algae biodiesel
50% land-use packing
Note: Solar PV cells are now as high
as 40% (Boeing Spectralab/NREL), Electrolyzer Biodiesel
with CPV system efficiency as high as 75% efficient conversion
25%, and capacity factors up to 25%;
so output per acre can double.

40% efficient fuel cell systems

Hydrogen Biodiesel
25% efficient diesel systems
100 H2 fuel cell vehicle fleet 74 diesel vehicle fleet

Renewable hydrogen technologies already have costs similar to today’s gasoline.