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Cablegate: Gm Europe Working On Fuel Cell, Other New Transport

DE RUEHFT #7767/01 3171550
R 131550Z NOV 06





E.O. 12958: N/A
SUBJECT: GM Europe Working on Fuel Cell, Other New Transport
Technologies; Notes Need for Common Standards

Sensitive but Unclassified / Contains Business-Proprietary

1. (SBU) SUMMARY: General Motors Europe representatives, meeting
with visiting Council on Environmental Quality (CEQ) Chairman James
Connaughton, described the work being done in the facility to
develop passenger vehicles powered by hydrogen fuel cells as well as
work on intermediate technologies. Points made in the presentations
included the need for work with research institutions to develop
answers to specific problems/aspects of the technology's development
(rather than broad, conceptual research) and the necessity for
governments, including the U.S. and the EU / EU member states, to
create the regulatory environment essential to the development and
marketing of such new vehicles. Participants also noted that
differences over regulations between the U.S. and the EU could
hamper the development/sales of such new technologies in markets
such as India and China where they could have a great positive
environmental impact. END SUMMARY.

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Full-Scale Commercialization Still Ten Years Out
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2. (U) In an October 23 visit to the GM/Opel GM Fuel Cell
Activities Center in Mainz-Kastel (near Frankfurt), White House
Council on Environmental Quality Chairman James Connaughton was
briefed on fuel cell vehicle development and biofuel developments by
GM Europe (Opel) representatives. Staff from CEQ, ConGen Frankfurt,
and Embassy Berlin also participated in the meeting. The Center
integrates and tests GM's fuel cell vehicles (many of whose
components are developed and produced in the United States). NOTE:
other GM fuel cell centers include Warren, MI (headquarters),
Rochester, NY (fuel cells) and Torrance, CA (electric motors).

3. (SBU) Gherardo Corsini (GM Europe Director of Environmental
Strategy and Regulation) described the company's progress towards
environmentally sustainable vehicles -- ultimately hydrogen fuel
cell cars, but only after first better gasoline/diesel internal
combustion engines, then bio-fueled, and then hybrid engines.
Corsini and Dr. Lars Peter Thiesen (Manager, Fuel Cell Development)
said that full-scale commercialization is not likely before 2015
despite aggressive efforts by GM -- its latest rollout this year is
"Project Driveway" in whichone hundred Chevrlet Equinox SUVs,
converted torun on hydrogen fuel cells, will be deployed in various
cities (comprising the world's largest fuel cell fleet). Fuel cells
still face hurdles in terms of durability, safety, and
affordability. A related issue is the need for the infrastructure
to support hydrogen-powered vehicles, e.g., fuel and repair
stations. Connaughton commented that he had recently inaugurated
hydrogen fuel stations in the U.S., a promising development.

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Need to Consider Overall Impact and Commercial Viability
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4. (SBU) Opel reps commented that for the next ten to fifteen
years, conventional and hybrid engines will be the key developments
and therefore should be the focus of today's concerns. Principles
the company is observing in developing the new transport

-- customer preferences;

-- technology that can sell at a price customers are willing to
pay; and

-- do not focus on just one improvement, but rather on an overall
positive impact.

Expanding on this last point, regulators should not target fuel
efficiency in a vacuum, the company officials argued. Instead, they
should consider consumer preferences and the commercial/technical
limitations of new technology.

5. (SBU) As a result of this approach, GM prefers to focus new
environmental technology in larger-sized vehicles - e.g.,
introducing hybrid technology in larger SUV's and other truck-based
vehicles with "more bang for the buck" in terms of fuel savings.
This approach is sometimes controversial among environmental
activists who want to see only smaller vehicles on the road. In
fact, GM's "Urea" clean diesel technology requires a supplemental
catalyst tank -- impractical for a small vehicle. Putting it in a
small vehicle would necessitate specialized refilling every few
months. The thinking in GM Europe is that the urea tank should only
be refilled every 25,000 - 35,000 km.

6. (U) Connaughton agreed that whether diesel, bio-fuels, or

FRANKFURT 00007767 002 OF 002

hybrids, governments should pursue integrated policies on
transportation/ emissions rather than targeting only vehicle
technology. For instance, the U.S. and Europe have a symbiotic
relationship on gasoline/diesel -- greater European diesel
penetration complements the gasoline-centric U.S. market -- so a
move towards more diesel vehicles in the U.S., while very
advantageous for fuel efficiency, could put pressure on diesel fuel
supplies worldwide.

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Promoting Fuel Cell Cars: The Way Ahead
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7. (SBU) The GM Europe and CEQ reps compared notes on the USG's
$1.2 billion/five-year fuel cell program versus the European Union's
upcoming EUR 6.7 billion/ten-year program (of which half would come
from private sources). In Germany, development is focused on the
Transport Energy Strategy (TES), a consortium including
DaimlerChrysler, BMW, Volkswagen, MAN, Shell, ARAL, and RWE. Funds
come in roughly equal portions from industry and government, while
research is carried out through private firms and public/private
universities. This differs from the U.S. approach in which national
labs play a leading role.

8. (SBU) CEQ Chairman Connaughton asked whether current funding in
Europe is "too much or too little" in terms of efficient
utilization. GM reps replied that, while there's always more
research one might wish to do, in fact coordinating spending is the
first priority. General Motors and other large automakers are well
placed to integrate fuel cell technology; basic research should
focus instead on fundamental issues rather than rush towards
integration or commercialization.

9. (SBU) GM reps commented that it is too early to regulate fuel
cell cars -- the technology is too young -- but the U.S. and Europe
ought to work now towards a regulatory regime that is integrated and
not bifurcated (Connaughton agreed). Standards should focus on
performance/outcomes rather than on specific technologies which are
subject to change. Without a harmonization in standards, the
technology's development and marketization will be stymied --
including in its sales to key third markets such as China and India.
Thus it is important that the U.S. and the EU find a way to accept
or harmonize standards to reap the energy savings, energy security,
and environmental/climate benefits of these new transportation

10. (U) This cable was cleared by CEQ subsequent to Chairman
Connaughton's departure.


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