NRC Study: Supporting a Transition to Hydrogen Fuel Cell Vehicles in the US Will Require About $200B Over Next 16 Years

17 July 2008

Total annual expenditures for vehicles and hydrogen supply for transition to the breakeven year for the Hydrogen Success case, excluding RD&D costs. Cumulative public-private cost totals $184 billion, of which 91% is the cost of fuel cell vehicles and 9% is the cost of hydrogen supply. An additional $16 billion in RD&D costs over the period brings the overall to $200 billion. Click to enlarge.

While hydrogen fuel cell vehicles (HFCVs) could alleviate US dependence on oil in transportation and significantly reduce US emissions of carbon dioxide, bringing the technology from its current state to market viability will require substantial time and additional investment, according to a new study by the National Research Council.

The study estimates a total public-private investment of about $200 billion would be required from 2008 to 2023, at which point fuel cell vehicles would become competitive with gasoline-powered vehicles. The government cost to support the transition would be roughly $55 billion. This funding includes a substantial research and development program ($5 billion), support for the demonstration and deployment of the vehicles while they are more expensive than conventional vehicles ($40 billion), and support for the production of hydrogen ($10 billion).

Private industry would be investing far more, the authors concluded: about $145 billion for R&D, vehicle manufacturing, and hydrogen infrastructure over the same period.

Current US government expenditures in this area, largely for R&D, are about $300 million per year. If 2 million HFCVs are to be on the road by 2020 (the maximum number determined practicable by the study), R&D funding may have to be increased by as much as 20% over the next several years.

The National Research Council (NRC) study was performed in response to a congressional request in the Energy Policy Act of 2005. The study estimated the maximum practicable number of hydrogen fuel cell vehicles (HFCVs) that could be deployed in the United States by 2020 and beyond, together with the investments, time, and government actions needed to carry out this transition. The study also assessed the consequent reductions in US oil consumption and emissions of carbon dioxide that could be expected and compared those reductions with the potential impact that the use of alternative vehicle technologies and biofuels might have on oil consumption and CO₂ emissions.

A portfolio of technologies including HFCVs, advanced conventional vehicles, hybrids, and use of biofuels has the potential to nearly eliminate oil demand from light-duty vehicles by 2050, while reducing fleet greenhouse gas emissions to less than 20% of current levels. Click to enlarge.

One of the primary conclusions of the report is that:

A portfolio of technologies including hydrogen fuel cell vehicles, improved efficiency of conventional vehicles, hybrids, and use of biofuels—in conjunction with required new policy drivers—has the potential to nearly eliminate gasoline use in light-duty vehicles by the middle of this century, while reducing fleet greenhouse gas emissions to less than 20 percent of current levels. This portfolio approach provides a hedge against potential shortfalls in any one technological approach and improves the probability that the United States can meet its energy and environmental goals. Other technologies also may hold promise as part of a portfolio, but further study is required to assess their potential impacts.

Other main conclusions from the report were:

• Lower-cost, durable fuel cell systems for light-duty vehicles are likely to be increasingly available over the next 5-10 years, and, if supported by strong government policies, commercialization and growth of HFCVs could get underway by 2015, even though all DOE targets for HFCVs may not be fully realized.

• If appropriate policies are adopted to accelerate the introduction of hydrogen and HFCVs, hydrogen from distributed technologies can be provided at reasonable cost to initiate the maximum practicable case. If technical targets for central production technologies are met, lower-cost hydrogen should be available to fuel HFCVs in the latter part of the time frame considered in this study. Additional policy measures are required to achieve low-carbon hydrogen production in order to significantly reduce CO₂ emissions from central coal-based plants.

• The maximum practicable number of HFCVs that could be on the road by 2020 is around 2 million, out of a light-duty fleet of 280 million (0.7%). Subsequently, this number could grow rapidly to as many as 60 million by 2035 and more than 200 million by mid-century, but such rapid and widespread deployment will require continued technical success, cost reductions from volume production, and government policies to sustain the introduction of HFCVs into the market during the transition period needed for technical progress.

• While it will take several decades for HFCVs to have major impact, under the maximum practicable scenario fuel cell vehicles would lead to significant reductions in oil consumption and also significant reductions in CO₂ emissions if national policies are enacted to restrict CO₂ emissions from both mobile and stationary sources (such as central hydrogen production plants).

• The unit costs of fuel cell vehicles and hydrogen in the Hydrogen Success scenario—the maximum practicable case—decline rapidly with increasing vehicle production, and by 2023 the cost premium for HFCVs relative to conventional gasoline vehicles is projected to be fully offset by the savings in fuel cost over the life of the vehicle relative to a reference case based on the EIA high-oil-price scenario. At that point, according to the committee’s analysis, HFCVs become economically competitive in the marketplace. The committee estimated that about 5.5 million fuel cell vehicles would be on the road at that time.

• Policies designed to accelerate the penetration of HFCVs into the US vehicle market will be required to exploit the long-term potential of HFCVs. The committee concluded that these policies must be durable over the transition time frame but should be structured so that they are tied to technology and market progress, with any subsidies phased out over time. Such policies are likely to deliver significant long-term reductions in US oil demand, but additional policies limiting greenhouse gas emissions will be required in order to also reduce CO₂ emissions significantly.

• With appropriate policies or market conditions in place, potential synergies between the transportation sector and the electric power sector could accelerate the potential for reduced oil use and decreased CO₂ emissions as benefits from the use of hydrogen in both sectors. In the near term, electrolysis of water at refueling sites using off-peak power, and in the longer term (after 2025), cogeneration of low-carbon hydrogen and electricity in gasification-based energy plants, are potential options that offer additional synergies.

• Continued advancements in conventional vehicles—which includes hybrid electric vehicles—offer significant potential to reduce oil use and CO₂ emissions through improved fuel economy, but policy measures and/or significant long-term increases in fuel cost probably will be required to realize these potential fuel economy gains in a significant number of on-road vehicles.

• Although use of corn- and oil-based biofuels can provide some benefits in reducing US oil use and CO₂ emissions, cellulosic biofuels will be required for such benefits to be significant. Lower-cost biofuel production methods and conversion processes will have to be developed for large-scale commercialization, but the initial high costs of biofuels, together with other barriers, may limit their market potential, absent policy interventions or significant oil price increases or supply disruptions.

• The committee’s analysis indicates that at least two alternatives to HFCVs—advanced conventional vehicles and biofuels—have the potential to provide significant reductions in projected oil imports and CO₂ emissions. However, the rate of growth of benefits from each of these two measures slows after two or three decades, while the growth rate of projected benefits from fuel cell vehicles is still increasing. The deepest cuts in oil use and CO₂ emissions after about 2040 would come from hydrogen.

  The committee chose not to include plug-in hybrid electric vehicles (PHEVs) in its alternative vehicle case even though it noted that PHEVs have “significant long-term potential.” The main issue for the committee was predicting the rate of battery advancement to achieve significant driving distances. Such advancement, in the committee’s view, represents more than evolutionary technology.

The National Research Council (NRC) functions under the auspices of the National Academy of Sciences (NAS), the National Academy of Engineering (NAE), and the Institute of Medicine (IOM). The four organizations are collectively referred to as the National Academies.

Resources

• Transitions to Alternative Transportation Technologies—A Focus on Hydrogen (NRC, 2008)