Article 5
π Energy π Industry π Mobility
Sustainable hydrogen: still a long way to go?

Will hydrogen fuel the future of mobility?

Olivier Perrin, Partner in the energy, resources and industry sector at Deloitte and Alexandre Kuzmanovic, Director at Monitor Deloitte in the field of energy, resources and industry, with a focus on the aerospace sector
On July 8th, 2021 |
4 mins reading time
4
Will hydrogen fuel the future of mobility?
Olivier Perrin
Olivier Perrin
Partner in the energy, resources and industry sector at Deloitte
Alexandre Kuzmanovic
Alexandre Kuzmanovic
Director at Monitor Deloitte in the field of energy, resources and industry, with a focus on the aerospace sector
Key takeaways
  • Transportation, being responsible for a considerable part of GHG emissions, is indeed one of the main targets of the hydrogen industry.
  • Fuel cell powered vehicles could reduce GHG emissions by 80% if the hydrogen used is blue and 15% if it is grey, compared to current vehicles.
  • Their deployment in EU countries is planned within the next ten years, but this project remains very expensive.
  • Hydrogen as a fuel will not only be used for terrestrial mobility but could also find its place in space exploration.

The EU has set ambi­tious Green­house Gas (GHG) emis­sion reduc­tion tar­gets, aim­ing at car­bon neu­tral­i­ty by 2050, with a mile­stone of ‑40% emis­sions by 2030. Hydro­gen is a major pil­lar of this strat­e­gy, and its share in the Euro­pean ener­gy mix is expect­ed to grow from less than 2% (includ­ing use as a feed stock) in 2018 to ~14% in 2050 1. There­fore, as of 2030, Euro­pean hydro­gen demand is expect­ed to increase sig­nif­i­cant­ly (+340 TWh between 2015 and 2030), with indus­try (+ 164 TWh) and mobil­i­ty (+70 TWh) being the main growth con­trib­u­tors. Eco­nom­ic com­pet­i­tive­ness and car­bon foot­print of the hydro­gen sup­ply is cru­cial to ensure its suit­abil­i­ty for these key applications. 

The hydro­gen economy

Even though it is cur­rent­ly more expen­sive, there is eco­nom­ic room for hydro­gen elec­trol­y­sis; the only cred­i­ble way to pro­duce sus­tain­able and car­bon-free hydro­gen. For that, the mar­ket will need to find areas of cost com­pet­i­tive­ness in the form of “semi-cen­tralised” mod­els as mid-to-large scale mobil­i­ty hubs capa­ble of pro­duc­ing 10–50MW. Attrac­tive green hydro­gen costs are expect­ed to be achieved by 2030, in the 2–3$/kg range, if cou­pled with best cost and capac­i­ty fac­tor renew­ables, such as Solar PV around the Mediter­ranean Basin or Off-Shore Wind near to North Sea Coasts.

For indus­tri­al appli­ca­tions, costs of “blue” hydro­gen are expect­ed to match with cur­rent “grey” process­es, which are cur­rent­ly the low­est 2. As these pro­duc­tion meth­ods still pro­duce CO2, they must be com­bined with high CO2 cap­ture, expect­ed to reach up to 90% as car­bon cap­ture and stor­age reach­es tech­ni­cal matu­ri­ty. Wher­ev­er its imple­men­ta­tion is fea­si­ble such as the North Sea (where Total­En­er­gies, Shell and Equinor are deploy­ing major invest­ment) “blue” hydro­gen it will be able chal­lenge “green” (or CO2-free) hydro­gen costs and emis­sions. In oth­er areas, large green hydro­gen projects like Masshylia (50MW) or Port-Jérôme (200MW) appear to be the best options.

Dis­trib­uted hydro­gen pro­duc­tion, tech­ni­cal­ly con­sis­tent for light mobil­i­ty appli­ca­tions, is nonethe­less struc­tural­ly ham­pered by lim­it­ed scale and high grid pow­er sup­ply costs and requires con­se­quent­ly pub­lic subsidies.

Hydro­gen vehicles 

The EU has laid out a Hydro­gen Roadmap plan that includes the deploy­ment of 45,000 fuel cell trucks and bus­es (FCEB) on Euro­pean roads by 2030, posi­tion­ing hydro­gen as a linch­pin in the decar­bon­i­sa­tion of pub­lic trans­porta­tion. Indeed, heavy-duty road trans­porta­tion (either long-haul trucks or urban bus­es) appears to be one of the most promis­ing can­di­dates to lever­age hydro­gen mobil­i­ty hubs in the mid-term. 

From a tech­ni­cal stand­point, fuel cell (FC) heavy-duty vehi­cles are a tech­ni­cal­ly attrac­tive solu­tion as they use a set of mature tech­nolo­gies (fuel cells, stor­age tanks, etc.). As such, they have been exten­sive­ly val­i­dat­ed in test­ing pro­grams such as Jive 1 / Jive 2 for bus­es in Europe, while most alter­na­tives to ICE (inter­nal com­bus­tion engines) like bat­ter­ies are still fac­ing tech­ni­cal chal­lenges includ­ing lim­it­ed auton­o­my, long charg­ing times and pay­load lim­it­ed by weight, for example. 

Eco­nom­i­cal­ly, pur­chas­ing costs of FCEV are also expect­ed to decrease over the next decade reach­ing 120k€ for a FC truck and 325k€ for a FC bus by 2030 – com­pared to 300k€ and 650k€ today, respec­tive­ly. Cou­pled with com­pet­i­tive hydro­gen price, these cost improve­ments will put FCEV TCO at par with tra­di­tion­al vehicles.

Even with “grey” or “blue” hydro­gen, which still emit CO2, FCEV vehi­cles do bring over­all improve­ments in CO2 emis­sions com­pared to cur­rent mod­els, about 10–15% if pow­ered with “grey” hydro­gen, then up to 80% less with “blue” hydro­gen. Also, they do so whilst stay­ing on the same lev­el as the best EURO 6 trucks in terms of NOx emissions.

How­ev­er, there is no such thing as a free lunch. In addi­tion to the devel­op­ment of elec­trol­y­sers (or CCS sys­tems if rel­e­vant), the deploy­ment of heavy hydro­gen mobil­i­ty requires rapid – albeit, real­is­tic – end-to-end val­ue chain acti­va­tion. This includes stan­dard­i­s­a­tion of dis­tri­b­u­tion infra­struc­ture – today a major part of hydro­gen deliv­ered costs – which is a key chal­lenge to rapid­ly gain scale and wide­ly deploy refu­elling sta­tions at strate­gic loca­tions, such as logis­tic hubs along Pan-Euro­pean freight key routes (“TEN‑T”).

Deploy­ment costs are expect­ed to be size­able, too. For instance, switch­ing 10% of long-haul freight trans­port in 6 Key EU coun­tries (France, Ger­many, Italy, Benelux) – equiv­a­lent to ~20,000 trucks – would require €2bn to €3bn CAPEX for refu­elling infra­struc­ture. The funds would cre­ate 600 refu­elling sta­tions, and as much for hydro­gen liq­ue­fac­tion and trans­porta­tion equip­ment in the case of remote hydro­gen pro­duc­tion. How­ev­er, such invest­ments are of rea­son­able mag­ni­tude when com­pared to gov­ern­men­tal announce­ment for hydro­gen, and bold moves are also expect­ed from pri­vate play­ers (indus­tri­al gas pro­duc­ers, high­way oper­a­tors, truck man­u­fac­tur­ers, logis­tics, O&G play­ers, pow­er & gas utilities).

Hydro­gen in space

Ter­res­tri­al mobil­i­ty will how­ev­er not be the only hydro­gen appli­ca­tion to wit­ness major trans­for­ma­tions in the next decade. Indeed, Lunar and Mars explo­ration are expe­ri­enc­ing a resur­gence of inter­est glob­al­ly, as NASA award­ed SpaceX a $2.9bn con­tract to build a Moon lan­der by 2024 and Elon Musk recent­ly reit­er­at­ed his ambi­tion to land manned space­craft on Mars before 2030. 

The huge dif­fer­ence in the ener­gy required to launch from Earth and from the Moon is push­ing indus­tri­al play­ers to con­sid­er refu­elling points (e.g. EML‑1, NRHO) in cis-lunar space with an ener­gy source that will be mined and processed on the Moon. Being able to pro­duce eco­nom­i­cal­ly space pro­pel­lants (LH2, LOX) on the moon could fos­ter deep-space explo­ration programs.

There­fore, new fron­tiers are on the rise for hydro­gen elec­trol­y­sis. To pro­duce space pro­pel­lants on the Moon, the whole val­ue-chain must be repli­cat­ed in situ: regolith min­ing, water sep­a­ra­tion and pro­cess­ing, logis­tics and trans­porta­tion, robot­ic oper­a­tions, com­mu­ni­ca­tion sys­tems and pow­er plants. Nec­es­sary tech­nolo­gies hav­ing been devel­oped or are cur­rent­ly in devel­op­ment. Sev­er­al play­ers are cur­rent­ly address­ing this nascent val­ue chain in a rather scat­tered way, an inte­grat­ed approach being how­ev­er fun­da­men­tal as iso­lat­ed ini­tia­tives are unlike­ly to deliv­er tan­gi­ble results. 

As of 2030, if the cur­rent ambi­tion is achieved, a ~240-tonne-per-year pro­pel­lant mar­ket could emerge at the future Gate­way sta­tion (NHRO), with a fore­seen eco­nom­ic via­bil­i­ty if space launch prices from Earth do not plum­met sig­nif­i­cant­ly and if cur­rent­ly con­tem­plat­ed CAPEX lev­els are kept under con­trol. Scale will play a major role, to absorb major one-shot R&D costs, through the devel­op­ment of com­ple­men­tary uses such as rovers and human life support.

1https://​ec​.europa​.eu/​e​n​e​r​g​y​/​s​i​t​e​s​/​e​n​e​r​/​f​i​l​e​s​/​h​y​d​r​o​g​e​n​_​s​t​r​a​t​e​g​y.pdf
2https://​www​.glob​al​cc​sin​sti​tute​.com/​w​p​-​c​o​n​t​e​n​t​/​u​p​l​o​a​d​s​/​2​0​2​1​/​0​4​/​C​i​r​c​u​l​a​r​-​C​a​r​b​o​n​-​E​c​o​n​o​m​y​-​s​e​r​i​e​s​-​B​l​u​e​-​H​y​d​r​o​g​e​n.pdf

Contributors

Olivier Perrin

Olivier Perrin

Partner in the energy, resources and industry sector at Deloitte

Olivier Perrin is co-developing one of the 4 "Future of Mobility" centres of excellence for Deloitte and works more specifically on strategy and transformation issues related to the energy transition. He has more than 20 years of consulting experience and has worked with many large groups in more than 30 countries.

Alexandre Kuzmanovic

Alexandre Kuzmanovic

Director at Monitor Deloitte in the field of energy, resources and industry, with a focus on the aerospace sector

Alexandre Kuzmanovic is a consultant in strategy and business transformation in various heavy industries (mining, metals, building materials, utilities, energy production, etc.). Prior to consulting, he worked at Saint Gobain in engineering and production management functions.