Hydrogen vehicles: Are these the sustainable vehicles everyone has been waiting for?

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  Quantumrun Foresight
• October 27, 2023

Insight summary

Hydrogen-powered vehicles are gaining traction amid efforts to curb greenhouse gas emissions, with their fuel cells converting hydrogen into electricity for propulsion. Although hydrogen production costs are currently high, major automakers like Toyota, Honda, and Hyundai are advancing fuel cell vehicle (FCV) production. Ongoing investments in hydrogen infrastructure, alongside governmental incentives and automotive industry involvement, are essential for overcoming current barriers like high production costs and refueling station scarcity, aiming for a broader hydrogen vehicle adoption that could cater to both commercial and eventual consumer use.

Hydrogen vehicle context

Hydrogen, the simplest molecule, while having the least energy content by volume, boasts the highest energy content by weight. It is found as a gas in the atmosphere and as a liquid in water. Owing to its high energy content, hydrogen finds use as a fuel in demanding applications like rocket propulsion. Its non-emissive nature places it at an advantage over fossil fuels. Additionally, hydrogen's heating value triples that of petroleum. Nonetheless, its production cost, being about three times that of petroleum refining due to its manufactured nature, presents a hurdle. Extensive research is underway to discover efficient, sustainable methods for hydrogen production and its integration into transportation engines. Major automakers like Honda, Toyota, and Hyundai have made strides by initiating the production of fuel cell vehicles (FCVs).

In Europe, the trend of hydrogen-powered taxis is on the rise as a means to cut down on fossil fuel dependency. Nations like the UK, Denmark, and France have embraced fleets of hydrogen taxis, which, compared to their petrol or diesel counterparts, produce lower carbon emissions and no harmful tailpipe pollutants. These vehicles also outperform electric vehicles in terms of range, making them a favorable choice for longer journeys. A notable roadblock to broader acceptance, however, is the insufficient hydrogen infrastructure in Europe. To foster widespread usage of hydrogen-powered vehicles, a significant investment in expanding fueling stations is imperative.

Disruptive impact

In a notable move in April 2022, Toyota unveiled a plan to supply eight New Zealand-based firms, including prominent names like The Warehouse and Air New Zealand, with a small fleet of hydrogen-powered vehicles. This initiative, marked as the country's inaugural commercial endeavor in hydrogen fuel cell technology, involves the Toyota Mirai, a vehicle employing fuel cells to blend hydrogen and oxygen, producing electricity. The sole byproduct of this process is water. With a range of about 500 kilometers, solely powered by hydrogen and energy recouped from regenerative braking, the Mirai's performance parallels that of hybrid vehicles. Situated at Auckland stations equipped for hydrogen storage, these vehicles will be accessible to staff from partner firms via the carsharing service CityHop. Should this pilot test fare well, the fleet size may see an increase.

Leading the way in embracing hydrogen vehicle technology are countries like Japan and New Zealand. Numerous enterprises are contributing to developing the essential infrastructure, encompassing refueling stations and production facilities. The versatility of these eco-friendly vehicles extends across personal transportation, freight transport, and carsharing services. Key players like Air New Zealand and The Warehouse Group have outlined plans to transition their light fleet to hydrogen power by 2025, indicating a positive shift towards a low-carbon economy.

Yet, the journey towards mainstream adoption of hydrogen vehicles is not without challenges. The high production cost of hydrogen fuel, as compared to traditional petroleum refining, remains a significant barrier (2023). Further, the inadequacy of hydrogen refueling infrastructure, particularly in regions like Europe, could impede the growth trajectory of hydrogen-powered transportation. Moreover, the current (2023) production methods of hydrogen are often reliant on natural gas, which, although cleaner than other fossil fuels, still contributes to carbon emissions. A more holistic approach, integrating advancements in hydrogen production, infrastructure expansion, and vehicle technology, is crucial to overcome these limitations and propel hydrogen-powered transportation to a sustainable and economically viable future.

Wider implications of hydrogen vehicles

Possible implications of growing hydrogen vehicle adoption may include: 

• Continued public and private investments in hydrogen fuel infrastructure (especially refueling stations) to accommodate the use of hydrogen for long-haul trucking and as the market matures, for consumer use.
• Governments incentivizing companies and organizations that operate vehicle fleets (especially in the logistics sector) to switch to hydrogen vehicles through partnerships and subsidies.
• More vehicle manufacturers exploring investments in hydrogen fuel technology to transition a percentage of manufacturing toward this technology, alongside larger investments into electric vehicle models.
• The public transportation agencies in countries with affordable hydrogen production facilities being pressured to shift a percentage of their fleets into electric and hydrogen-powered vehicles. 
• Hydrogen-powered vehicles eventually becoming affordable enough to be purchased by regular customers.

Questions to comment on

• Would you be interested in owning a hydrogen-powered vehicle?
• What are the other potential benefits of this type of vehicle?