Hydrogen – Conquering the transportation market

GittingsLegal – NE73290

If the news of financial commitments to climate goals and decarbonisation technologies is anything to go by, hydrogen will be one of the buzzwords of this decade, writes Victoria Judd, counsel at Pillsbury Winthrop Shaw Pittman LLP

This is certainly the case in the transportation sector where there is much exciting development: there are moves away from traditional oil and gas across the sector and reliable and financially viable alternatives are being developed with a view to decarbonising transport.

Initially, hydrogen was used in combustion engines, but increasingly, most vehicles utilize hydrogen through fuel cell (‘FC’) technology. A fuel cell combines hydrogen and oxygen to produce electricity, with water and heat as biproducts.

Hydrogen is a good option for decarbonisation of road transport, though it does need to be produced by way of renewable electricity (i.e. ‘green hydrogen’) or be associated with a form of carbon capture (i.e. ‘blue hydrogen’) to contribute to lowering global carbon dioxide emissions.

Hydrogen use is developing quickly in road transportation, both in buses and cars.

City buses are a practical use of hydrogen as hydrogen FCs extend the range of electric buses and buses can easily refuel at a central depot with an installed hydrogen pump.

This is the most tested application of hydrogen vehicles and since the early 1990s, several hundreds of hydrogen buses have been in operation, in the US, Europe and now also in Asia. The production cost of 12-metre buses continues to drop and is expected to fall to EUR 350,000 by 2030 (on the purchase of 100 buses), which will bring the cost of hydrogen buses in line with diesel hybrid buses, making them a viable alternative, from a financial perspective.

Hydrogen FC cars are increasingly being manufactured and being made available to customers, with Korea and Japan leading the way in terms of manufacturing (cf. Toyota Mirai or the Hyundai Nexo SUV).

They are gaining popularity given they have zero emissions from their tailpipes, like electric cars, and are even being used as part of some green taxi fleets in the UK. With the recent change to the US administration, President Biden has directed a Federal Clean Electricity and Vehicle Procurement Strategy which calls for a plan to purchase clean and zero-emission vehicles for federal fleets, including the US Postal Service. This will certainly provide more encouragement for the market of clean and zero-emission vehicles in the US.

Hydrogen FC cars can be re-fueled in a few minutes, far less time than it takes to recharge an electric vehicle. They also have a range of 480km prior to needing refuelling compared to 275km for an electric vehicle. However, these benefits are somewhat hampered by the development and growth of fuel infrastructure, principally in the form of hydrogen pumps. In the UK, there are currently only 12 hydrogen fueling stations (5 of which are in or around London).

In the US, there are 512 hydrogen pumps, but these are mostly located in California in and around LA and San Francisco. However, there is clearly growth in this area. For example, at the end of January, PowerTap Hydrogen Fuelling and the Andretti Group agreed to install 100 new hydrogen pumps in the US, starting in California3.

In addition to the longer range and faster fuelling of hydrogen vehicles compared to electric alternatives, hydrogen FCs are also lighter than batteries, meaning that more cargo can be carried as a result of improved efficiency. These advantages make hydrogen an interesting alternative for trucks, mass transit applications or air travel.

In the trucking space, competition for use of hydrogen technology in trucks is heating up. Companies like Toyota, Hyundai, Daimler and Nikola are all in the space.

The key is giving the trucks a long enough range that they can be competitive while the infrastructure for refuelling improves. By way of example, one company has developed a FC semi with a range of 1000 kilometres per fuelling, though it will not be ready for customer purchase until 2023.

When compared to hydrogen FC cars, hydrogen trucks benefit from being used on fixed shipping routes. This means that hydrogen fuel stations can be installed at regular intervals for the purpose of serving such routes.

In relation to trains, there are technical and economic reasons (among others) why not every railway line can be electrified. These lines run on diesel and could be replaced by alternatives that do not emit air pollutants. In Europe, for instance, there are 5,000 diesel trains which could be replaced by hydrogen-powered trains. In fact, hydrogen trains are already in commercial operation in Germany and are being tested in the Netherlands and the UK. This remains a niche market however given that hydrogen trains cannot be used on high-speed lines and that the most utilised train routes are already electrified.

Research is also ongoing into hydrogen aircraft, though there are still some significant hurdles. Hydrogen takes more space to store than diesel fuel and costs need to come down to make hydrogen aeroplanes economic.

Infrastructure and availability of large amounts of green or blue hydrogen at airports is another challenge. Safety concerns also remains a central issue and the air travel industry will need to show that any hydrogen plane would need to be as safe or safer than current diesel alternatives. Notwithstanding these concerns, this industry will likely gain from developments in passenger cars and knowledge from hydrogen’s use in rocket engines. It seems likely that planes primarily powered by hydrogen could enter commercial service by 2035.

Other areas are also being explored for further applications of hydrogen.

Material handling vehicles, like forklifts and towing trucks, are ideal for a hydrogen FC, particularly when the vehicles are used for indoor operation. These appear to be economically advantageous where there are larger fleets with high-capacity utilization, for instance in relation to large supermarkets. Commercial uptake in this area is slowly growing.

Hydrogen could also disrupt the shipping industry. At the current time, use of FCs for ship propulsion is still mostly at early design or trial phase. No FCs have been scaled yet for use on large merchant vessels. However, there are already applications for smaller passenger ships and recreational crafts. In addition, hydrogen ferries are expected to be launched later in 2021 in northern Europe and the first liquid hydrogen cruise ship is expected to be ready by 2023.

Taxation and incentives may further help hydrogen propulsion in this area. For example, Cyprus has announced a 30% tax reduction for energy efficient vessels (including hydrogen), which may well prove to be a further enticement to consider alternative applications.

In conclusion, hydrogen is already a proven technology but development at scale remains the challenge, owing to several hurdles, particularly infrastructure constraints and economic factors. It is generally accepted that price of green hydrogen needs to be driven down to $1-1.5/kg for hydrogen vehicles to really gain commercial traction.

Of course, using hydrogen is only half the battle: the focus also needs to be on ensuring that the hydrogen used is sourced from renewable fuels or alternatively manufactured in a sustainable way, without release of carbon dioxide into the atmosphere. Finally, government regulations pertaining to safety evaluations will need to be developed in a performance-oriented way to protect consumers without slowing down innovative applications.

Photo Credit – Pixabay

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