Dow Plans to Use GM Fuel Cells in World's Largest Fuel Cell Transaction

WASHINGTON, May 7, 2003 -- The Dow Chemical Company, the world's largest chemical manufacturer, and General Motors Corp., the world's largest automobile manufacturer, have reached initial understanding on the world's largest fuel cell transaction to date.

The intent of this is for GM to commercialize its hydrogen fuel cell technology to generate electricity from hydrogen created as a co-product at Dow's operations in Freeport, Texas. The 30-square-mile complex in Freeport, 65 miles east of Houston, is Dow's largest manufacturing facility.

If tests proceed according to plan, Dow could eventually use up to 35 megawatts of power generated by 500 GM fuel cell units on an ongoing basis. This is enough electricity to power 25,000 homes for a year and is more than 15 times bigger than any other known fuel cell transaction. The test is expected to begin during the fourth quarter of 2003 and to run through 2005, with plans to commercialize starting in 2006. Dow and GM teams are currently working to remove the final hurdles for placing the fuel cells in Dow's chemical manufacturing facility. A final agreement between the two industrial giants is expected to be signed in the next few months.

"This is a significant milestone -- not only from a technology and business perspective, but from an environmental one as well," says Bill Jewell, Dow's business vice president of energy. If the tests are successful, Dow could become the largest user of fuel cell generated electricity in the world. "Technology moves forward in steps. This step can prove the feasibility of manufacturing and using fuel cells in significant quantities."

Larry Burns, GM vice president of research and development and planning, and Peter Molinaro, global leader of climate change for Dow, jointly announced the arrangement in the U.S. capital.

"While this is a milestone event," Burns said, "and it points to a growing interest among businesses in using fuel cells to power factories and buildings, the most compelling reason for GM to collaborate with Dow is ultimately to reduce the cost of fuel cells and improve their durability so that we may put them in cars by the end of the decade."

Though Texas is the first place where Dow and GM will test this technology, the two companies are already discussing the use of fuel cells to convert hydrogen to electricity in other Dow locations in the U.S. and Europe.

"Using hydrogen to generate electricity is no longer reserved for spacecraft," said Dow's Molinaro. "This collaboration can place us at the threshold of common use of fuel cells to power significant portions of our economy. We are very excited about this collaboration with General Motors and about what it could mean in the pursuit of greater energy diversity, ultimately leading to a hydrogen economy."

"This is a small but significant step on the path to a more sustainable energy future," Molinaro stated. "We applaud this move by Dow to be a fuel cell pioneer and to explore new technologies that lead to a more sustainable energy profile," Burns added.

The Dow-GM opportunity typifies the type of creative deals that will arise in the new Hydrogen Economy.

"This is an excellent example of environmental stewardship making good business sense," Burns said. "By efficiently recycling co-product hydrogen with a fuel cell, Dow would be able to reduce its emissions and create electricity competitive with its other energy supplies. This kind of creativity will generate a stream of entrepreneurial thinking that will ultimately accelerate the arrival of the Hydrogen Economy. This deal is just a start."

"As we reduce costs and improve durability, new applications will emerge that serve industrial, commercial and, finally, consumer power and transportation needs," Burns said. "GM will continue to lead the development of these applications."

Both Dow and GM are members of the Green Power Market Development Group, a unique partnership between the World Resources Institute (www.wri.org ) and twelve major U.S. corporations, dedicated to building corporate markets for green power. WRI praises the Dow-GM fuel cell plan.

"With a fuel cell transaction this size, Dow and GM continue to show that they are serious about alternative energy," said Jonathan Lash, president of WRI. "This collaboration between Dow and General Motors, two partners in WRI's Green Power Market Development Group, demonstrates the type of innovation and leadership that will be required to build sustainable energy markets."

General Motors , the world's largest vehicle manufacturer, designs, builds and markets cars and trucks worldwide, and has been the global automotive sales leader since 1931. GM employs about 350,000 people around the world. More information on GM can be found at www.gm.com .

Dow is a leading science and technology company that provides innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $28 billion, Dow serves customers in more than 170 countries and a wide range of markets that are vital to human progress, including food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of Sustainable Development, Dow and its approximately 50,000 employees seek to balance economic, environmental and social responsibilities.

  

  With the announcement of fuel cells for chemical manufacturing power ...

            Dow Working With GM For Possible New Energy Source

Dow and General Motors have announced that they will begin testing GM's fuel cell technology to convert hydrogen, a co-product of chemical manufacturing, to electricity. This is a milestone that could have wide ranging affects and benefits for industry and motorists in the years to come.

Energy Cost Savings For Dow

Dow manufacturing is energy intensive and the cost of power is an important determinant of the company's profitability. The arrangement will give Dow an additional supply of electricity. The 35 megawatts of power Dow will ultimately receive from this is about 2% of the total used at Dow's Texas Operations.

For Dow, finding renewable energy sources provides a triple advantage. Dow produces energy, relies on it for manufacturing, and uses it as a raw material in many of its products. Cogeneration based on natural gas is used to efficiently produce 95 percent of the power and steam Dow consumes in the U.S. The global competitiveness of Dow's US operations has been negatively impacted by volatile natural gas prices as growing U.S. demand has continued to outstrip supply. Wind, fuel cells, solar and other alternative sources, combined with conservation and increased traditional energy supplies from coal, nuclear and more natural gas production, will all be needed to ensure continued economic growth.

More Firsts

This is the first time a carmaker has sold fuel cells to produce electricity and heat for buildings and manufacturing. Because of its manufacturing processes, Dow is able to supply the hydrogen "fuel" needed for the conversion. But this is very unique. The hydrogen for most other fuel cells comes from natural gas, a commodity in short supply at this time. That Dow is in a position to supply its own hydrogen is an interesting position for the company. Using this source of fuel also means that less fossil fuel is used, decreasing nitrogen oxide, sulfur dioxide and carbon dioxide emissions.

Technological Landmark

The project will drive technological progress for fuel cell technology. To compete with the internal combustion engine, fuel cells will have to cost about $3,000.00 to $4,000.00 for 75 kilowatts of power or about $50.00 per kilowatt. The arrangement between GM and Dow will help GM drive fuel cell systems to the automotive price point by 2010 and to a competitive price point for stationary power systems by 2005. The initial field test will also greatly improve the durability and life of the fuel cell systems.

GM expects each fuel cell unit to exceed 8,000 hours of operation by 2010, which equates to more than 175,000 miles in an automobile.

The Dow-GM transaction typifies the type of creative arrangements that will arise from the new hydrogen economy.

"This is an excellent example of environmental stewardship making good business sense," said Larry Burns, GM vice president of research and development and planning. "By recycling hydrogen with a fuel cell, Dow is able to reduce emissions at a site from traditional power sources and create electricity. This type of creativity will generate a stream of entrepreneurial thinking that will ultimately accelerate the arrival of the hydrogen economy."

As costs fall and durability improves, new applications will emerge, meeting industrial, commercial, and finally consumer power and transportation needs. Fuel cell suppliers will also benefit from this deal because the volumes go from prototypes to a limited production run of more than 1,000 units.

General Motors, the world's largest vehicle manufacturer, designs, builds and markets cars and trucks worldwide, and has been the global automotive sales leader since 1931. GM employs about 350,000 people around the world. More information on GM can be found at www.gm.com .