Conn. Lawmakers Push For Fuel Cell Incentives

HARTFORD, Conn. (AP) -- Two Connecticut lawmakers are pushing for new tax incentives to boost development of fuel cells, an alternative energy that has deep roots in the state and is beginning to find more commercial applications nationwide.

In proposing the legislation this week in Washington, U.S. Rep. John Larson and U.S. Sen. Richard Blumenthal, both Democrats, said the tax credits would help protect the U.S. position as an industry world leader.

"American ingenuity and hard work has put us on the cutting edge of fuel cell and hydrogen energy technology and we should be doing everything possible to keep us there because it will help our economy, create good jobs and reduce our dependence on foreign oil," said Larson, a longtime booster of fuel cells.

While the legislation might face long odds for passage in an election year, industry backers say the call for stronger incentives will help raise awareness as policymakers in Washington discuss how and where to support alternative energy.

"I think there is going to be a broad conversation about energy policy and tax incentives for different forms of energy in coming months," said James Warner, director of policy at the Fuel Cell and Hydrogen Energy Association in Washington. "I think they are saying clearly this is technology the United States needs to invest in."

Fuel cells make electricity from chemicals reactions involving hydrogen and oxygen, producing only water vapor as a product. Stationary units the size of trailers are used for heating and cooling systems for buildings and backup power. Smaller units are used for buses and recreational vehicles, and sporting goods stores have begun selling portable fuel cells that can be used to power electronics.

Total global shipments of fuel cell systems increased from 7,000 units to 22,000 units between 2008 and 2011, according to a recent report by the U.S. Department of Energy.

Connecticut is home to two of the largest makers of fuel cells, Fuel Cell Energy Inc. in Danbury and UTC Power in South Windsor, a division of United Technologies Corp., which has said it is looking to sell the fuel cell company. The technology has been used broadly around the state for buses and government buildings, scoring a boost last year when school buildings with fuel cells kept the power on during widespread storm-related outages.

Along with California and New York, Connecticut is a fuel cell leader inside the U.S., partly because of support from government in those states, said Lisa Jerram, a Washington, D.C.-based senior research analyst with Pike Research, which studies markets for clean and renewable energy.

Nationwide, she said the industry has evolved enough in recent years that it would likely survive without any government support, but it is still working to bring down prices.

"It's still in the early stages, but companies are producing products and those products are being deployed outside the U.S.," she said.

Identical versions of the proposed Fuel Cell and Hydrogen Infrastructure for America Act of 2012 were introduced in the Senate by Blumenthal and the House by Larson. It calls for a tiered incentive system, with the most efficient fuel cells using combined heat and power systems receiving the largest tax credits.

The global fuel cell market is expected to reach roughly $785 million this year, according to Pike Research. Jerram said Japan is developing a strong domestic fuel cell industry, partly as a result of last year's earthquake and nuclear disaster. Other countries investing in the industry include South Korea, Germany and China.