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                                                       Calendar No. 151
105th Congress                                                   Report
                                 SENATE

 1st Session                                                     105-69
_______________________________________________________________________


 
                      HYDROGEN FUTURE ACT OF 1996

                                _______
                                

               September 2, 1997.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 965]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 965) to amend title II of the Hydrogen 
Future Act of 1996 to extend an authorization contained 
therein, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                         Purpose of the Measure

    Title II of the Hydrogen Future Act of 1996 (Public Law 
104-271) authorized a $50 million competitive, cost-shared fuel 
cell demonstration project for fiscal years 1997 and 1998, with 
funds to remain available through September 1999. S. 965 would 
amend the Hydrogen Future Act to allow the $50 million 
authorization to span fiscal years 1998, 1999, 2000, and 2001, 
with funds to remain available through September 2002.

                          Background and Need

    Hydrogen fuel cells combine hydrogen and atmospheric oxygen 
to produce electricity in a process in which water is the only 
emission. As a consequence, they are highly regarded as an 
environmentally friendly energy production system.
    More broadly, hydrogen is widely regarded as an energy 
carrier with the potential to join electricity as a key 
component of a future sustainable energy system. Unlike coal, 
oil, or natural gas, hydrogen cannot be directly mined or 
produced--it must be extracted from hydrogen-rich materials 
such as natural gas, biomass, or even water. While there are 
significant technical and economic barriers that prevent the 
near-term, widespread use of hydrogen as an energy carrier, the 
eventual promise of hydrogen is compelling. Over the near-term, 
however, the high costs of hydrogen extraction and the high 
unit cost of hydrogen fuel cells make their widespread use 
uneconomic.
    Proponents of hydrogen energy contend that the unit costs 
of fuel cells would decline from current levels of roughly 
$3000/kilowatt to $1500/kilowatt if a demonstration program of 
sufficient size was undertaken to result in a substantial order 
of 600 or more fuel cells. As a consequence, Congress adopted 
title II of the Hydrogen Future Act of 1996 which authorized a 
$50 million competitive, cost-shared fuel cell demonstration 
program. To date, no funding has been appropriated for this 
purpose.
    S. 965 would not increase the total authorization but would 
extend the period in which funds could be appropriated and 
spent. Existing law authorizes such a program for fiscal years 
1997 and 1998, with funds to remain available through September 
1999. S. 965 would allow the $50 million authorization to span 
fiscal years 1998, 1999, 2000, and 2001, with funds to remain 
available through September 2002.

                          Legislative History

    In the 104th Congress, the Hydrogen Future Act, H.R. 655, 
was introduced by Congressman Walker on January 24, 1995. A 
companion version, S. 1077, was introduced in the Senate by 
Senator Harkin on July 26, 1995. In addition, S. 1153, a 
related measure to provide for a hydrogen fuel cell 
demonstration project, was introduced by Senator Burns on 
August 10, 1995.
    H.R. 655 passed the House on May 2, 1995. Hearings were 
held on S. 1077, S. 1153 and H.R 655 before the Senate Energy 
and Natural Resources Subcommittee on Energy Research and 
Development on March 20, 1996. On September 13, 1996, the 
Committee favorably reported H.R. 655 to the Senate with an 
amendment in the nature of a substitute. The substitute 
incorporated much of the language of H.R. 655 and S. 1077 as 
title I, and included elements of S. 1153 related to the fuel 
cell demonstration project as title II.
    H.R. 4138, a measure identical to the Committee-reported 
substitute, was introduced in the House of Representatives by 
Representative Robert Walker on September 24, 1996. The House 
passed H.R. 4138 on September 26, 1996. The Senate passed it 
without amendment by unanimous consent on September 28, 1996; 
and it was signed by the President on October 9, 1996 as Public 
Law 104-271.
    In the 105th Congress, S. 965 was introduced by Senator 
Murkowski on June 26, 1997. At the business meeting on July 30, 
1997 the Committee on Energy and Natural Resources ordered S. 
965 favorably reported without amendment.

            Committee Recommendation and Tabulation of Votes

    The Committee on Energy and Natural Resources, in open 
business session on July 30, 1997, by unanimous vote of a 
quorum present, recommends that the Senate pass S. 965, without 
amendment.
    The rollcall vote on reporting the measure was 20 yeas, 0 
nays as follows:
        YEAS                          NAYS
Mr. Murkowski
Mr. Domenici
Mr. Nickles
Mr. Craig
Mr. Campbell \1\
Mr. Thomas
Mr. Kyl
Mr. Grams
Mr. Smith
Mr. Gorton
Mr. Burns \1\
Mr. Bumpers
Mr. Ford
Mr. Bingaman \1\
Mr. Akaka
Mr. Dorgan
Mr. Graham
Mr. Wyden
Mr. Johnson
Mrs. Landrieu \1\

    \1\ Indicates vote by proxy.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 31, 1997.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 965, a bill to amend 
Title II of the Hydrogen Future Act of 1996 to extend an 
authorization contained therein, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp (for federal costs) and Pepper Santalucia (for the state 
and local impact).
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

S. 965--A bill to extend title II of the Hydrogen Future Act of 1996 to 
        extend an authorization contained therein, and for other 
        purposes

    S. 965 would extend the time period for which funds are 
authorized to be appropriated for demonstration projects 
related to the integration of fuel cells with hydrogen 
production systems. Current law authorizes the appropriation of 
a total of $50 million through 1998 for these activities. This 
bill would extend that authorization through 2001, subject to 
the terms and conditions specified in current law.
    S. 965 would not change the amount of funding authorized 
for fuel cells demonstration projects with hydrogen production 
systems--but by extending the period of authorization, the bill 
may make it more likely that the authorized amount of $50 
million will be appropriated. To date, no such funds have been 
appropriated, and none are included in appropriation bills for 
1998 that are currently pending in the Congress. The 
legislation would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act of 
1995, and would not impose any costs on state, local, or tribal 
governments. State and local governments, including public 
universities, would be eligible to apply for the authorized 
funds. Recipients of the funding would be required to pay at 
least 50 percent of the cost of the development or 
demonstration portion of the projects.
    The CBO staff contacts for this estimate are Kathleen Gramp 
(federal costs) and Pepper Santalucia (for the state and local 
impact). This estimate was approved by Robert A. Sunshine, 
Deputy Assistant Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 965.
    This bill is not a regulatory measure in the sense of 
imposing Government established standards of significant 
economic responsibilities on private individuals and 
businesses. No personal information would be collected in 
administering the program. Therefore, there would be no impact 
on personal privacy. Little if any additional paperwork would 
result from the enactment of S. 965.

                        Executive Communications

    There have been no executive communications with respect to 
S. 965.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 965, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                      Hydrogen Future Act of 1996

          * * * * * * *

                          Title II--Fuel Cells

          * * * * * * *
    Sec. 202. Authorization of Appropriations.--There are 
authorized to be appropriated, for activities under this 
section, a total of $50,000,000 for fiscal years [1997 and 
1998, to remain available until September 30, 1999] 1998, 1999, 
2001, and 2001, to remain available until September 30, 2002.
          * * * * * * *