Heavy Vehicles and Hydrogen - a closer look
Industrial revolutions are like accelerators; they take our methods of communication, transport and energy and they propel them with the force of a slingshot onto a new platform, allowing innovation to drive new blood through old veins and create new ways of living.
In this fourth revolution, energy has been a leading light, so to speak, in carving a new future for the world, with renewable energy, batteries, electric vehicles (EVs) and virtual power plants now moving into mainstream utilisation. With all of these new technologies now competing for market space, who would have thought, however, that one of our oldest friends, hydrogen, would now be emerging so strongly. There is, as they say, nothing stronger than an idea whose time has come.
Over the last ten years, I’ve been helping clients around the world prepare for the energy transition through identifying trends in cost neutrality and new technologies. One of the strongest perspectives that’s emerged over that time has been identifying two tipping points of the transition; the first in 2021 when virtual power plants will reach parity with grid power, and the second in 2024 when EVs will reach parity with combustion engines.
While these tipping points are related, in that batteries drive them both, it is the latter that will see the most radical impact on society and industry, as transport and energy converge. By 2030, around half of all global vehicle sales will be electric, reducing the world’s oil consumption by about 7.3m barrels per day. At the same time, however, those that own and operate heavy vehicles, including mining companies, are taking the opportunity to more deeply consider their alternatives to combustion – and hydrogen is emerging as a credible future energy source. A new economic premise is being tested for the world post-combustion vehicle; electric vehicles for passenger transport, and hydrogen for anything larger. The reasons why may surprise you.
The economic premise for hydrogen vehicles
The world of the electric passenger vehicle is upon us. In Australia alone, almost 50% of all cars on the road by 2050 will be electric, increasing from a tiny 2% now to 30% by 2040. All over the world, governments are working to understand how charging stations will be placed, who will own them and how electricity systems will deal with them.
For heavy transport, however, it is worth considering a few compelling points when comparing the alternatives. For one, the size and weight of large electric batteries don’t currently lend themselves to the power needs of heavy vehicles. Secondly, the charging times for batteries versus refuelling times for heavy vehicles generally means a choice towards hydrogen equates to less time off the road. In short, when heavy vehicles can centrally or easily refuel, and can be undertaken at scale, hydrogen makes a lot of sense from a logistical and technical standpoint, although not necessarily from an economic one. While Japan, China, some parts of Europe and the US have seen investments in hydrogen-fuelled forklifts and buses, these have generally been in areas where economic support is being provided or where some inputs can be supplied at lower cost. 2025 is forecast to be a tipping point for hydrogen project economics, and our analysis suggests a roadmap for hydrogen-fuelled transport that spans the next 10 years.
Where to from here?
How quickly hydrogen can be added into the transportation mix, and what types of transportation it can economically fuel, depends on several variables. Firstly, the cost of hydrogen both in terms of the vehicle itself as well as the need for refuelling stations. Secondly, the cost of alternatives, in particular combustion engines and electric vehicles; and thirdly, the scale of adoption, specifically whether entire fleets can be shifted to new fuels simultaneously and at scale.
In this context, forklifts are an easy first move: they have a concentrated movement geography and run on costly (and polluting) diesel. Buses at scale with subsidised fuelling stations are also now competitive and are becoming more prevalent presently in California, Korea, and Quebec, among others. We will need to wait longer for trucks and short-haul trains, but not too much longer, and likely no later than 2025.
With momentum towards cleaner transportation growing, the case for hydrogen-fuelled heavy transport will become stronger. With proactive government policy, the development of supporting roadmaps, and the creation of new market players to provide access to well-priced hydrogen and fuelling options, businesses can make more confident decisions. The first movers will be those that can control the closed system of vehicles and refuelling: mining companies, municipal councils and industrial companies. We shall wait to see what follows.