Transportation & Logistics Analysis

The race for hydrogen: different strategies for different purposes

September 15 2020

Investment in green hydrogen is being strongly encouraged by the European Union and a number of member states. The movement towards greater use of hydrogen is going to transform the daily lives of the different players in the road freight sector.

The conversion of hydrogen gas into electricity generates only water and heat as by-products. In other words, vehicles equipped with hydrogen fuel cells give off no polluting exhaust fumes. The prospect of an energy source which is clean and respects the environment cannot leave the road freight sector indifferent. The sector accounts for 25% of all EU road transport CO² emissions, which is to say 6% of all emission on the European continent. Let us look here at the strategies adopted by the different players in the road freight market as they strive to make hydrogen functional as a fuel, affordable and accessible in terms of distribution.

Why hydrogen?

Vehicles with hydrogen fuel cells use hydrogen gas to power an electric motor. Unlike conventional vehicles using diesel fuel, lorries with fuel cells combine hydrogen and oxygen to produce electricity to drive the engine. Since they are driven solely by electricity, vehicles with fuel cells are considered to be electric vehicles. Unlike other electric vehicles, however, their autonomy and refueling procedures are comparable to traditional lorries. Vehicles using hydrogen fuel cells, therefore, offer the autonomy and refueling ease of traditional vehicles with the environmental advantages offered by electricity-driven driving.

Hydrogen can be produced more and more economically by electrolysis, which involves separating the hydrogen and oxygen atoms which constitute in water. The hydrogen gas is then compressed so that it can be stored in sufficient quantity in a car or lorry's fuel tank. The electrolysis process generates two useful gases and, when it is powered by green energy, it produces hydrogen via a carbon neutral process. Currently, however, only 2% of the 600 billion cubic metres of hydrogen produced annually worldwide is generated by water electrolysis, enabling it to be referred to as green hydrogen. The other 98% is produced from natural gas and gives off carbon dioxide as a by-product. This hydrogen is referred to as blue hydrogen.

The development of a green hydrogen economy depends, at least initially, on public investment in production and distribution infrastructure and, at the same time, in renewable energy projects capable of providing carbon-neutral energy to drive the production process.

Strong political will

The European Commission has made hydrogen an investment priority for the recovery fund set up in response to the coronavirus crisis, along with 5G, batteries and artificial intelligence. On July 8, it presented a global hydrogen strategy for the creation of a climate-neutral Europe.

This strategy involves:

  • An investment programme;
  • A 30-year timetable split into three stages (decarbonisation of hydrogen production 2020-2024; integration of H2 into the energy system 2024-2030; large-scale deployment of renewable hydrogen 2030-2050;
  • The ambition to become world leader;
  • Financing instruments and a call for funds to European countries and private companies.

To support investment and facilitate the creation of a complete hydrogen ecosystem, the commission has set up a "European Alliance for Clean Hydrogen", in line with the announcement it made as part of the new industrial strategy it unveiled last March. The alliance, which involves companies, member states and civil society representatives, aims to "reindustrialise Europe while, at the same time, respecting climate requirements", according to Thierry Breton, the EU internal market commission. It includes three kinds of private sector operators: those involved in hydrogen production, those active in storage and transport and those likely to be hydrogen users in the long term.

Some member states are already at work in this area. In June, Germany became a precursor by adopting a €9 billion plan to develop research, infrastructure and accompanying measures to increase electrolysis capacity to 5% by 2030. Poland, too, does not want to be left behind. In July, the climate minister signed a letter of intent with the leading players on the Polish energy market with the aim of building a hydrogen economy and making hydrogen a transport fuel. France is also preparing a plan to develop the hydrogen sector.

There is a natural alliance between the politicians at European and national level and private companies on the need to change the energy model. The three industry leaders, Air Products of the US, Germany's Linde and France's Air Liquide are already in competition as they announce multi-billion-dollar investment projects worldwide.

The freight transport sector and road transport particularly are particularly concerned by the decarbonisation of transport and need to follow developments closely. We can see, moreover, that initiatives are starting to emerge in the transport industry, among them the European Clean Trucking Alliance (ECTA), which aims to promote transport systems which do not use fossil fuels. The hydrogen specialists are already on the case. In Europe, Air Liquide and the Port of Rotterdam authority are working together to enable 1,000 zero-emission, hydrogen-powered lorries to be deployed on roads between the Netherlands, Belgium and West Germany by 2025. In France, as part of the HyaMMED project, Air Liquide is taking part in a pilot project to provide fuel for 20 or so hydrogen-powered lorries at Fos-sur-Mer by January 2022.

Curtains for diesel?

Because new regulations are pushing vehicle manufacturers to drastically reduce CO² emissions and some pundits say that fuel cells could be a cheaper option than diesel by 2030, some in the industry predict that diesel could quickly go out of use. One of these is Trevor Milton, founder of Nikola, a lorry builder which has not yet sold a single vehicle but which is already worth more than $20 billion. Never forgetting the #dieselisdead# hashtag, he communicates a great deal about his obsessive wish to improve energy efficiency. “We’ve spent more time on reducing the cost of hydrogen than we’ve spent on anything else, including building the trucks," he said recently. "The trucks are just a product to consume energy, and also a product to clean up the world.”

In its quest for clean energy, Nikola formed a partnership with Italian lorry builder IVECO in 2019 and is thought to be looking to work with Hyundai, a precursor in the field. The South Korean group already has some realizations to its credit and has set itself precise objectives to be achieved over a short timescale. At the end of July, won the commercial vehicle section of the Future Mobility of the Year Awards for its hydrogen-powered HDC-6 Neptune heavy goods vehicle. Hyundai Motors and Swiss grouping H2 Energy have announced, moreover, that they are setting up a joint venture to produce 1,600 18-tonne hydrogen-powered lorries for the Swiss, Austrian and German markets by 2025. H2 Energy is campaigning for the right to use hydrogen extracted from Switzerland's mountain stream to drive the lorries.

In the race for hydrogen, traditional vehicle builders are also joining forces. Daimler AG and Volvo Trucks have decided to work together to speed up the development, introduction and acceptance of vehicles driven by fuel cells, while other lorry manufacturers are betting on vehicles using battery-produced electricity. The aim is to develop, produce and market fuel cell systems for heavy goods vehicles and other applications.

Equipment suppliers are also showing confidence in the future of hydrogen. "We think that hydrogen will be one of the main solutions for clean mobility," said Laurent Favre, chief executive of Plastic Omnium. The company plans to invest €200 million over three years on fuel cells and tanks able to withstand several hundred pressure bars. German hydrogen fuel cell manufacturer Proton expects growth in its sector to increase by 15% per year until 2027, which will create a market worth $33 billion, compared to $10.5 billion in 2019. It has designed a multi-cell system to meet demand for more than 100 kw of power from very big lorries. The system will be ready in early 2021.

Faurecia and Michelin, like Daimler and Volvo, have set up Symbio, a €140 million joint venture which will take charge of all their hydrogen fuel cell activities with the objective of becoming world leader for hydrogen-driven mobility with a turnover of €1.5 billion by 2030.

Handicaps to overcome

As we have seen, there is a manifest enthusiasm for hydrogen and the race towards this kind of propulsion is well under way. Clearly, there remain a number of obstacles but these are in the process of being overcome.

1.The cost of renewing the existing diesel fleet

The long-term strategy adopted by the European Union should make it possible to spread the renewal process over more than 10 years, thus avoiding having to make existing vehicles obsolete too quickly.

2. The development of recharging stations

This is a crucial factor in the process of deployment of hydrogen systems throughout the world. China has intensified its fuel cell research and production effort. It plans to have 1,000 H2 stations and one million H2 lorries on the road by 2030, according to Nikola plans to set up 700 stations in the United States and a complete European network in 10 years.

3. The cost of green hydrogen

The cost of green hydrogen in relation to diesel, natural gas and blue hydrogen seems to be a simple question of scale and mass production. "“When we started this," said Nikola's founder Trevor Milton, "hydrogen was $16 a kilogram. We’re now down way below $4. We’re pushing $2.50 almost. That’s our goal, $2.50 now. So, we’re way below $4 and now we’re cheaper than diesel to operate."

4. The energy efficiency and cost of hydrogen fuel cells

In its 2019 report Advanced Truck Technologies, the American energy department estimated that electricity had a drive cycle efficiency of 95%, compared to 59% for fuel cells and 46% for diesel. The fuel cell already offers greater efficiency than diesel, therefore. Its tonne-kilometre recharge ratio is about the same as for diesel but 10 times better than that of electric batteries, which, unfortunately, are just too heavy.

Hydrogen seems to be the best solution for long journeys and heavy loads, which is to say inter-urban traffic, while battery-driven vehicles will be better for urban distribution, involving short journeys with light loads. Whichever way, the future is inevitably going to be decarbonised!

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With more than 20 years of experience in the international supply chain, William works as a road transportation expert for Upply. Entrepreneur by nature, he has successively worked in operational and functional management among various industries, such as chemistry, automotive and building materials; alternately shipper and service provider.
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