Happy Thursday friends! Here’s my weekly take on the five most interesting developments in future fuels and vehicles trends over the last week.
A new Hydrogen Council was launched this week at a side event at the World Economic Forum’s Davos Summit to establish hydrogen as “among the key solutions of the energy transition”. The companies currently involved are: Air Liquide, Alstom, Anglo American, BMW GROUP, Daimler, ENGIE, Honda, Hyundai, Kawasaki, Royal Dutch Shell, The Linde Group, Total and Toyota. The Council is led by two Co-Chairs from different geographies and sectors, currently represented by Air Liquide and Toyota. The members of the Hydrogen Council collectively represent total revenues of €1.07 trillion and 1.72 million employees around the world.
As part of the launch, the group released How Hydrogen Empowers the Energy Transition, which sets out the vision of the Council and the key actions it considers crucial for policy makers to implement in order to harness the potential of hydrogen as part of the global clean energy transition.
The Council sees four main levers to decarbonize the energy system, shown in the figure below, which includes improving energy efficiency, switching to zero emission energy carriers, relying on increasing volumes of renewable energy and deploying carbon capture and storage (CCS).
The Council noted in the report:
“Efforts to decarbonize the energy system need to pull on four main levers: improving energy efficiency, developing renewable energy sources, switching to low/zero carbon energy carriers, and implementing carbon capture and storage (CCS) as well as utilization (CCU).
This will radically change energy supply and demand. Today, fossil fuels account for 82% of primary energy consumption; renewable energy sources contribute only 14%, and nuclear sources 4%. Towards 2050, growth in population and GDP will increase energy demand by 16%, despite projected energy efficiency achievements. By 2050, renewables are expected to increase their share of the energy mix by 3 to 5 times the current amount. At the same time, fossil fuels continue to make up a large share (partially using carbon capture and storage to offset or prevent emissions).
New energy carriers will be needed to transfer the growing share of decarbonized primary energy towards the energy demand side, while maintaining the quality of energy services provided to end uses (residential, industries, and transport). Two energy carriers promise to have the greatest possible impact when it comes to decarbonizing and implementing changes at scale: electricity and hydrogen.”
But there are challenges, as highlighted in the figure below.
The Council notes that hydrogen’s unique properties make it a powerful enabler for the energy transition in that it can: enable large-scale, efficient renewable energy integration, distribute energy across sectors and regions, Act as a buffer to increase system resilience, decarbonize transport and industry energy use. With respect to transport, the Council noted that hydrogen fuel cell electric vehicles (FCEVs) would be key not only in passenger transport but in trucking, rail, aviation and shipping as shown in the figure below.
In acknowledging the current high cost of ownership for passenger vehicles, the Council said:
“For passenger cars, total cost of ownership (TCO) for FCEVs is currently higher than for internal combustion engine (ICE) vehicles, while travel cost (hydrogen price per kilometer traveled) is already similar to the cost of HEVs in Japan. When FCEVs reach at-scale commercialization, we are confident that cost parity (from a TCO perspective) can be reached by 2025 for medium to large passenger cars.”
The Hydrogen Council members plan to shift investment from RD&D to commercialization to help develop the hydrogen market, as shown in the figure below.
Policy recommendations include the following:
All of the focus on fuel economy standards in the U.S. has been focused at the federal level, but the California Air Resources Board (CARB) has been working on its own mid-term review of its 2022-2025 standards (which are aligned with the federal government’s), which it released this week. No surprises: CARB has “confirm[ed] that the previously adopted package of GHG standards, technology-forcing zero-emission vehicle standards, and the most health-protective particulate matter standards in the world are appropriate.” Read more about it here.
At a June 2016 meeting hosted by the FIA Foundation a group of experts mostly from academia and NGOs met in response to the Dieselgate scandal “to discuss how civil society could contribute towards ensuring vehicles comply with emission legislation and consumers provided with reliable information.” Read more about it here.
KPMG recently published its 18th annual global automotive executive survey of 1,000 executives in more than 42 countries on the state of the industry. Read more about it here.
This week DOE released a review of its Co-Optima Program to accelerate the introduction of affordable, scalable, and sustainable fuels and high-efficiency, low-emission engines with a “first-of-its-kind effort to simultaneously tackle fuel and engine research and development (R&D).” DOE notes that Co-Optima is conducting research to identify the fuel properties and engine design characteristics needed to maximize vehicle performance and affordability, while deeply cutting harmful emissions.
“Rather than endorsing a single solution, this initiative is designed to arm industry, policymakers, and other key stakeholders with the scientific foundation and market intelligence required to make investment decisions, break down barriers to commercialization, and bring new high-performance fuels and advanced engine systems to market sooner.”
The idea is to:
The first phase, Thrust I, concentrated on:
DOE notes that researchers have also initiated R&D on Thrust II ACI combustion strategies focused on achieving higher efficiency with lower levels of harmful emissions than can be achieved today.
A few highlights from the report include the following: