The Hydrogen Transition: This Time, for Real?

Everyone loves a good comeback story. Could hydrogen fuel cell vehicles be one?

Are hydrogen powered fuel cell vehicles (FCVs) ready for the big stage?

We seem to be tantalizingly close to the beginning of a hydrogen transition. Of course, energy decision-makers have heard this before. What’s different this time around?

In our latest white paper, “The Hydrogen Transition,” my ITS-Davis colleagues Christopher YangMichael Nicholas, Lew Fulton and I analyze challenges surrounding transitioning to mainstream adoption of hydrogen. We identify important factors that are bringing hydrogen and fuel cell technologies back to the verge of commercialization. These include:

  • Rapid progress toward technical and cost goals
  • Sophisticated new infrastructure strategies coupled with public-private partnerships for FCV rollout
  • Upward trends in public support for hydrogen and fuel cells
  • Policies that support FCVs and hydrogen in response to climate change concerns
  • Hydrogen’s potential for storing renewable electricity

Vehicle technology and cost: Fuel cell vehicle technology is ready for a public rollout. In many respects, hydrogen fuel cell cars offer consumer value similar or superior to today’s gasoline cars. The technology readily enables large vehicle size, a driving range of 300-400 miles, and a fast refueling time of three to five minutes. Hydrogen fuel cell vehicles could be a key part of the portfolio of technologies that help us achieve a low carbon future–and do it without compromising consumer expectations.  Along with plug-in electric and efficient internal combustion engine vehicles, hydrogen is an important part of a portfolio approach to sustainable transportation. Moreover, major automakers are showing a continuing commitment to FCVs. Sustained automaker development of FCVs is not only producing better performing and more durable cars, it’s resulting in lower component and vehicle costs. Six major automakers have announced that they will introduce fuel cell cars in the 2014-2019 timeframe.

What is a Hydrogen Fuel Cell Vehicle?

Hydrogen cars are quiet, energy efficient, zero-emission vehicles that function thanks to a device called a fuel cell. This device takes a certain fuel – in this case, high-pressure hydrogen gas – and feeds it into a fuel cell “stack,” where it is combined with oxygen to produce electricity. Hydrogen FCVs are considered true zero-emission vehicles, as the only emission from the car’s exhaust is clean water vapor.

According to the latest U.S. Department of Energy analysis, fuel cell system cost is on track to meet the $40/kW goal in 2020. Moreover, there appears to be a path for FCVs to meet the ultimate target of $30/kW so they can be cost competitive with incumbent gasoline vehicles.

New thinking on how to build a hydrogen infrastructure:  Having sufficient hydrogen fueling locations has been a major challenge. It’s a “chicken or egg” dilemma where automakers are reluctant to market cars without infrastructure, and station providers are reluctant to build stations without cars. Recently, however, regional public-private partnerships are developing smart, focused, build-out strategies in different locations around the globe. The current preferred approach is to cluster stations in defined regions that stakeholders have identified as early FCV markets. This “cluster strategy” enables more efficient fueling networks, saves millions of dollars compared to earlier designs, and holds the promise of providing hydrogen conveniently and affordably.

The perennial stalling point is funding. The investment required to launch hydrogen infrastructure is more than the usual amount for research and development projects, although vastly less than for current expenditures on the energy system. Still, given the so-called “valley of death”—the market entry cost barrier facing new technologies that must scale up production in order to compete economically—it’s been tougher to get private investment.

The good news is that it might not take that much investment to build up infrastructure to the point where new investments are profitable and less risky for infrastructure providers. In our study, we calculated that a targeted regional investment of $100-$200 million in support of 100 stations for about 50,000 FCVs could be enough to make hydrogen cost-competitive with gasoline on a cost-per-mile basis. This level of investment is poised to happen in at least three places in the world: California, Germany and Japan.

For example, in California, the state recently awarded $46 million to build 28 hydrogen fuel stations and has committed to a $20 million annual investment in stations over the next seven years. Hyundai is leasing its Tucson FCVs to select consumers, while several other car makers—Honda, Toyota, BMW, Nissan, and Daimler—are expecting to have production vehicles on the road in the next few years. Toyota, whose fuel cell vehicles are set to hit the market next year, is also investing in hydrogen fueling infrastructure in the state.

Upward trend in global public support for hydrogen and fuel cells: Global public funding for hydrogen and fuel cells is currently about $1 billion per year, supporting research, development, and deployment of power and transportation applications.  This public investment leverages many times that amount of private investment. (According to the U.S. Department of Energy, its public investments have spurred 6-9 times more in private investment. And automakers have spent more than $9 billion on fuel cell development.)

Low-cost natural gas: The near term availability of plentiful, low-cost hydrogen is good. The boom in low cost shale gas has improved the prospects for natural gas-derived hydrogen, especially in the United States, where it is a major force in the resurgence of federal interest in hydrogen energy. And while natural gas-derived hydrogen does produce greenhouse gas emissions, these emissions are less than half compared to a conventional gasoline vehicle due to the greater efficiency of the fuel cell.

Policies support hydrogen and FCVs around the world: These policies target different stakeholders and include direct subsidies for purchasing vehicles and fuel infrastructure, tax exemptions, zero emission vehicle regulations, and low carbon and renewable fuel standards. “Perks” for hydrogen vehicle owners such as HOV lane access, free parking and free fueling exist in a few places.

Hydrogen is seen as key technology to address climate change: Hydrogen policies are driven by deepening concern about climate change and the growing realization that hydrogen FCVs could be a critical technology enabler to a low carbon transportation future.  Recent studies of low carbon futures suggest that a variety of electric drive vehicles will play a major role in the future light-duty vehicle/passenger car fleet. In the International Energy Agency’s “2 degree scenarios” (corresponding to 80 percent greenhouse gas emissions cuts by 2050), hydrogen FCVs and plug-in electric vehicles account for more than half of on-road passenger cars by 2050, with each representing approximately equal shares.

A recent study by the National Research Council suggests that the long-term environmental, economic and societal benefits of hydrogen FCVs are significant. Fuel cost savings for customers and the reduced costs of air pollution, oil dependence and climate change outweigh transition costs by 10-1.

Hydrogen for storing renewable electricity: Increasing numbers of fuel cell power plants are being installed for secure and reliable distributed power and central power plant applications around the world. Residential fuel cell combined heat and power systems are thriving in Japan and Europe, with tens of thousands of units installed in Japan and thousands planned in Europe.

Taken together, these positive trends suggest that we may be seeing the beginning of a hydrogen transition. But this is still uncertain. Hydrogen faces a range of challenges, from economic to societal, before it can be implemented as a large scale transportation fuel. The question isn’t whether fuel cell vehicles are technically ready: They are. But how do you build confidence in hydrogen’s future for investors, fuel suppliers, automakers—and, of course, for consumers? Early and durable public policies are key to help launch hydrogen infrastructure and provide consumer incentives for purchasing hydrogen fuel cell vehicles.

Still, the trends are encouraging and the hydrogen enterprise has never been more serious and focused. The next three to four years will be critical for determining whether hydrogen vehicles are just a few years behind electric vehicles, rather than decades.

“The Hydrogen Transition” links:

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