Legislature(2003 - 2004)
04/14/2004 01:55 PM House FIN
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* first hearing in first committee of referral
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HOUSE BILL NO. 512
An Act establishing the Hydrogen Energy Partnership in
the Department of Community and Economic Development;
requiring the commissioner of community and economic
development to seek public and private funding for the
partnership; providing for the contingent repeal of an
effective date; and providing for an effective date.
JAY HARDENBROOK, STAFF TO REPRESENTATIVE CRAWFORD, testified
in support of HB 512. He observed that hydrogen does not
occur naturally on earth in its pure form, and it is a means
of containing energy rather than an energy source. The
potential sources for hydrogen are water, oil, natural gas,
coal, geothermal and wind, all of which occur in Alaska.
Mr. Hardenbrook noted that the bill provides a structure to
allow the State to accept grants from both private and
public sources. He referred to the fiscal note reflecting
$71,000 for the Department of Community & Economic
Development.
Representative Stoltze asked if the local energy task force
discussed fuel cells. Mr. Hardenbrook observed that the
State of Alaska has one of the largest operational fuel
cells in the United States, located at the Anchorage
Airport. He noted that it is relatively cost effective given
the high costs for fuel oil, natural gas and electricity.
Alaska is unique in the hydrogen market because its power
costs are high and it has a great supply of potential energy
for hydrogen. He concluded that by establishing this
partnership, Alaska could be a test project for the rest of
the U.S.
In response to a question by Representative Hawker, Mr.
Hardenbrook explained that if there are not sufficient funds
through grants the partnership provision would be removed.
Representative Hawker asked the time that is needed to
secure funding. Mr. Hardenbrook replied that the partnership
would be dissolved in 2009. He felt that there would be
sufficient grants to continue beyond next year.
CARYL MCCONKIE, TOURISM DEVELOPMENT, DIVISION OF TRADE AND
DEVELOPMENT, DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT,
explained that the fiscal note would only support the first
year while the funding is being secured. The Department
would work with the University of Alaska, which has
completed some research, and with the Energy Task Force and
the Energy Authority.
Representative Hawker noted the repealer clause of 2009 to
secure stand-alone funding, and he asked if the State would
be required to continue support if the funding is
insufficient. Ms. McConkie explained the Department's
assumption that if funding were not available, the project
would be discontinued.
Representative Fate questioned if the viability of the
partnerships had been researched. Mr. Hardenbrook noted that
California has been successful with fewer resources and
lower energy costs than Alaska. The conclusion was reached
that the State of Alaska would be successful.
Representative Fate questioned if "the cart is before the
horse" since the gas pipeline is not yet a reality.
Hardenbrook responded that hydrogen could be made from other
technologies, including hydrogen from coal. Alaska has more
coal reserves than the rest of the United States combined.
Representative Fate acknowledged that the technology exists
but pointed out that it is currently expensive.
Representative Hawker questioned what would happen if
outside revenue sources fail. Mr. Hardenbrook noted that the
sunsets are the repealers in Section 6 that would allow
reevaluation by the Legislature in 2009.
Representative Hawker suggested that additional language be
used to clarify what would happen to the agency if outside
funding is not secured or ceases to be available. Mr.
Hardenbrook deferred to the bill drafter.
Representative Croft referred to Section 5, which would
prevent the provisions to take effect without funding. He
pointed out that if the funding never takes place, the
provisions would be repealed in 2009.
In response to a question by Representative Croft, Mr.
Hardenbrook noted that hydrogen is more stable than gasoline
and can be transported by pipeline or tanker, or liquefied.
Alaska has an abundance of zeolites [secondary minerals]
with a honeycomb structure used to trap hydrogen.
In response to a question by Representative Hawker, Ms.
McConkie stated that the Department has not taken a position
on the bill.
ERIC YOULD, EXECUTIVE DIRECTOR, ALASKA POWER ASSOCIATION
(APA), stated that he represents the electric utility
industry in Alaska. He spoke in support of the legislation
and stressed that new energy resources are needed. Hydrogen
can be produced through fossil fuels or water.
TAPE HFC 04 - 83, Side A
Mr. Yould noted that there has not been sufficient economic
incentive to further the technology. The State of Alaska
possesses a number of renewable resources in large
quantities that represent an indigenous resource that could
be developed. While hydrogen would not be developed in the
near future, the fuel cell industry is an emergent
technology. He noted that hydrogen could also be burned in
internal combustion engines. He concluded that the APA
supports the bill. If the partnership were not put in
place, it would fall to the individual interests to back the
technology.
Mr. Yould recommended minor changes to the bill. On page 2,
lines 2-3, after "including sufficient geothermal energy" he
suggested adding "hydropower, tidal power, wind and other."
Around line 21, page 2, he would include "the electric
utility industry," which would have vested interest in
seeing the technology move forward. He noted that the Alaska
Energy Task Force has also taken a strong stand in support
of hydrogen technology.
Representative Fate asked if Mr. Yould had projected when
the hydrogen industry would benefit the electrical
companies. Mr. Yould replied that hydrogen technology is not
on the immediate horizon and it has been emerging for 30
years. Fuel cells are the technology of the future and
hydrogen will fuel the world technology in the distant
future. He provided statistics, and discussed Cook Inlet
reserves.
Representative Hawker questioned if the industry could fund
a fellowship grant to the University to provide the needed
leadership. Mr. Yould thought the various groups, including
the task force, could do it in partnership.
Representative Hawker commented that he would like to change
Fiscal Note #2 to reflect indeterminate numbers. He asked if
the Department would consider changing the source from the
General Fund to Receipt supported services.
Representative Hawker proposed a conceptual amendment to
change Fiscal Note #2, DCED dated 2/24/04 to reflect
indeterminate numbers for FY06, FY07, FY08 and FY09. He
also proposed that the funding source for FY 05 be under
receipt-supported services, with funding contingent on
finding third-party funding.
Vice-Chair Meyer OBJECTED for purposes of discussion.
Ms. McKonkie agreed that she would work with the Department
to revise the fiscal note as proposed by Representative
Hawker. She stated that it would require finding outside
funding for the first year. An additional staff position to
secure that funding would be needed.
Representative Hawker commented that the fiscal note lacks
clarity regarding future needs. He doubted that soliciting
industry would require a lot of effort on the Department's
part. Ms. McKonkie replied that it wasn't likely the
program could be up and running in a year's time, with the
current staff "maxed out" in the existing grant programs.
She expressed that the Department would need guaranteed
first year funding in the current fiscal note.
Vice-Chair Meyer asked what would happen to the staff if the
program were discontinued after the first year. Ms. McKonkie
said that some programs are only funded for a year at a
time. The proposed program would require an expertise not
currently in the Department, and it must at least estimate a
portion of the staff time. In response to a question by
Vice-Chair Meyer, Ms. McKonkie explained that recruitment
would be tied to a person's experience in industry.
Regarding extended year funding, Ms. McKonkie stated that if
the funding were there, the activities would continue. The
Department did not estimate beyond the first year.
Representative Hawker reiterated doubt that the current
Department staff in various programs would not have time to
solicit public funding. Ms. McKonkie explained that there is
expertise in those areas, but this fiscal note reflects the
DCED implementing the bill. Representative Hawker expressed
hesitation in creating additional staffing when the
Legislature is on verge of stabilizing fiscal policies.
Vice-Chair Meyer removed his objection to the conceptual
amendment.
Representative Hawker explained that FY06, FY07, FY08 and
FY09 are really indeterminate numbers rather than zero,
because of potential federal receipts. Rather than pure
General Fund in 2005, he proposed to set it up as receipt-
supported services so that it is not a General Fund
appropriation.
Representative Fate asked Representative Hawker if his first
conceptual amendment also included third party funding.
Representative Hawker affirmed.
Representative Chenault suggested allowing the DCED to
provide a revised fiscal note and a response to the
Committee's concerns.
Representative Hawker withdrew his amendment.
HB 512 was heard and HELD in Committee for further
consideration.
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