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Energy prizes re-energized

As President Bush prepares a renewed "State of the Union" push to break America's addiction to oil, lawmakers and industry types are redoubling efforts to create multimillion-dollar prizes for automotive energy alternatives.

Like Bush's own Advanced Energy Initiative, which was announced during last year's State of the Union address, the prize initiatives made some progress last year but didn't quite hit the lofty goals that were originally set:

  • The Automotive X Prize, established by the same folks who awarded $10 million for the first private-sector spaceflights back in 2004, would reward innovations in auto energy efficiency. Organizers had hoped to unveil the program and start signing up competitors last year, but they're still in talks with a potential title sponsor. "I don't want to predict when we'll be done talking," said Lane Soelberg, vice president of marketing and partners for the X Prize Foundation.
  • The H-Prize would be a federally backed competition to encourage breakthroughs in hydrogen fuel systems, ranging from fuel-cell-powered cars to the infrastructure required to keep them on the road. Legislation to authorize prizes of up to $10 million sailed through the House on a 416-6 vote last year, but fizzled out in the Senate. Today the sponsors of the bill - Reps. Bob Inglis, R-S.C., and Dan Lipinski, D-Ill. - announced that the bill would be refiled on Tuesday.

Some folks might say one of the world's largest industries shouldn't need a multimillion-dollar prize, whether privately or federally funded, to pursue technologies that could lead to multibillion-dollar profits. But Soelberg said prizes can provide an extra push, particularly for innovators who may be flying under the big automakers' radar.

"If you're going to make a major difference in the industry, sooner or later the industry leaders are going to be involved. ... If [a technology] has teeth and can actually get picked up, why not be the people who make it possible to bring it to market?" he told me today.

The X Prize Foundation was able to kick-start new approaches to spaceflight with a $10 million prize, backed by a down payment from the Ansari family. That $10 million figure also surfaced when the foundation announced a genetics prize last year. However, Soelberg said $10 million wouldn't be enough of an enticement for the automotive competition.

"It's fair to say that the prize would most likely need to be larger than prizes we've launched in the past," he said.

Soelberg promised that the contest would not be "biased toward one particular fuel or technology" - be it hydrogen or ethanol, biodiesel or plug-in hybrid, or even a more efficient gasoline-burner. The winning car would have to put in a performance equivalent of 100 miles per gallon of gasoline, but it would also have to be "something that is marketable and has demand," he said.

"It needs to be more than a stripped-down commuter car with a couple of fuel cells," he said. That's not to say the contest will force all the competitors into a one-size-fits-all standard, however. Soelberg said different competition classes would likely be established for alternative concept cars as well as standard four-passenger vehicles.

Although the rules still have to be set, competitors would be required to pass through "very specific benchmark goals and gates," culminating in an actual road rally, Soelberg said. The plan is to unveil the prize program this year, although the precise timing depends on how quickly the sponsorship talks wind up, he said.

The same fuzzy schedule applies to the H-Prize program: Last year, the enabling legislation was fast-tracked through the House but died when the clock ran out in the Senate. This session, the bill's backers are starting earlier, with the enthusiasm over alternative energy driving them forward like a jolt of wind-generated electricity.

"Moving to a hydrogen economy is the ultimate triple play with perfect alignment between the local and national interest," Inglis said in today's news release. "We can create jobs, clean up the air and make America more secure by breaking dependence on Middle Eastern oil."

The 10-year program would set aside up to $70 million in federal funds, with the hope that another $40 million would come from private capital. Here's how the figures break down:

  • Technological advancements: Four prizes of up to $1 million would be awarded every other year in the categories of hydrogen production, storage, distribution and utilization.
  • Prototypes: One prize of up to $4 million would be awarded every other year for prototype hydrogen-powered vehicles that meet performance goals.
  • Transformational technologies: One grand prize of up to $10 million in federal funds, supplemented by up to $40 million in private funds, would be awarded for "development of wells-to-wheels breakthrough technologies."

Another $2 million would be budgeted annually for administrative and advertising costs. Following the X Prize formula, the H-Prize program would be administered on the Energy Department's behalf by a private, nonprofit organization.

"The goal of the prize is to develop the most nongovernmental way to break through to a hydrogen economy," Inglis said. "We want to harness the power of the American 'can do' spirit and innate human competitive drive."

Of course, hydrogen is considered an energy carrier rather than an energy source. (Seen any hydrogen mines lately?) But some researchers have concluded that a wind-hydrogen energy economy makes the most sense in the long haul - and such a system is being put to the test right now in Norway.

The problem usually comes in converting from the old way of doing things to something new - and if a prize can somehow change the short-term economic equation and give a push to that process, so much the better. But it has to be the right kind of prize.

How would you structure a prize to encourage energy independence and efficiency while saving the world? Feel free to add your ideas below.