Report | Date: 2004-06-22 | Ministry of Transport and Communications
An Expert Group appointed by the Ministry of Transport and Communications March 2003, has conducted a study on the possibilities and consequences of using Hydrogen as a fuel in the transport sector of Norway. The report provides advice and recommendations on how to approach the field of hydrogen in order to make the transport sector more sustainable.
Possibilities and consequences of using Hydrogen as a fuel in the transport sector of Norway – Summary in English
An Expert Group appointed by the Ministry of Transport and Communications March 2003, has conducted a study on the possibilities and consequences of using Hydrogen as a fuel in the transport sector of Norway. The report was handed over to the Minister of Transport and Communications May 3rd, 2004, and provides advice and recommendations on how to approach the field of hydrogen in order to make the transport sector more sustainable. The Expert Group was headed by Mrs. Elisabet Fjermestad Hagen, Norsk Hydro. A summary in English is now available.
The full report from the Expert Group is available in Norwegian: "Hydrogen i transportsektoren – hvorfor og hvordan".
Summary in English
Hydrogen has for many years, been considered as a potential solution to the world’s environmental and energy challenges. In recent years with the development of low-temperature fuel cells for use in motor vehicles, the interest in the use of hydrogen as a fuel has gained momentum. As a result, major national and international projects have been launched in the EU, the United States and Japan. These projects are motivated by environmental problems associated with the use of fossil energy sources and challenges associated with a long-term and secure supply of energy as well as a wish to improve local utilization of resources, and the potential for commercial and industrial development.
Lower greenhouse gas emissions
In a long-term perspective, i.e. from 2020 onwards, the environmental gains associated with the use of hydrogen as fuel in the transport sector will be primarily with greenhouse gas emissions and to a lesser extent with other types of environmentally harmful emissions. This particularly applies to the road transport sector, and stems from the fact that development of conventional technologies can be expected to result in very low emissions of other gases. The extent of the environmental benefit will depend on how the hydrogen is produced. As regards maritime transport, transition to hydrogen as fuel will in addition result in considerable reductions in NOX emissions. However, this benefit can alternatively be derived to a great extent from a transition to the use of natural gas as fuel.
Better energy supply security
Crude oil is a limited resource. The forecasts for new oil discoveries, oil reserves and development of oil consumption differ greatly and are uncertain. On the basis of the current development in worldwide consumption, it is assumed that crude oil will be available until approximately 2050. Low price crude oil (USD 20-30 per barrel) can be expected to be in short supply far earlier.
A considerable proportion of the world’s oil resources are located in areas perceived by many as politically unstable. The wish to reduce dependence on oil from these areas is a major impetus behind the promotion of hydrogen as fuel in the transport sector in a number of countries. Hydrogen can be produced from almost all energy sources, and the production can be adapted to local conditions and energy base. Improved energy supply security is associated both with reduction of vulnerability in relation to political instability and with the fact that the world’s oil reserves will eventually come to an end.
Major potential for commercial and industrial development and value creation
In the wake of the initiatives in research and demonstration of hydrogen technologies, considerable potential can emerge for technology-based commercial and industrial development and value creation. Many countries have potential to create more favourable conditions for industrial growth, establishment of new enterprises and job creation based on further development of competence in industrial and research environments. Positioning is important in relation to future commercialization of know-how, components, products and system solutions. Norway has considerable competence in areas such as hydrogen production, storage in vehicles, marine technology and fuel cell technology.
Better local utilization of resources
Many countries have a goal to improve their exploitation of the natural resources they have at their disposal. Today, hydrogen is mainly produced from fossil raw materials, primarily natural gas. In a medium-term perspective, natural gas will continue to be the most important raw material for large-scale production of hydrogen, provided that a solution is found for the problem associated with separating and depositing CO2. Extraction, for example, of natural gas or coal, further processing to hydrogen, handling of CO2, distribution, sale and conversion of hydrogen, constitute a process where all stages contribute to increased value creation and potential for improved utilization of resources.
What are the challenges?
There is considerable uncertainty associated with the timing of the introduction of hydrogen-fuelled vehicles on the market. Efficient fuel cells are a key technology for full exploitation of the potential of hydrogen. Commercialization of hydrogen vehicles is dependent on the solving of a number of challenges, both technological and non-technological.
- Costs associated with fuel cells: For use in vehicles, costs must approach the current level of costs for internal combustion engines.
- The lifetime of the fuel cells: A limitation on commercialization of fuel cells today is that suppliers are not able to guarantee the lifetime of the cells.
- Storage: There is a need for better solutions for storage of hydrogen in vehicles.
- Production costs of hydrogen: Using current production technology, hydrogen is not competitive with conventional fuel.
- Infrastructure: There are currently no satisfactory solutions or concrete plans for development of the necessary infrastructure, for example filling stations.
- Standards and regulations: Regulations and standards for production and use of hydrogen differ considerably from one country to another. Differing regulations may be both a barrier to commercialization and a means of distorting competition.
- Acceptance by users: Depends on the availability of fuel, usability, safety perceptions and customer attitudes. Users’ insecurity in relation to adopting new technology must also be addressed.
In addition, the price of crude oil and conventional fuel is vital both for the development of new technology and new fuel and for how rapidly this can be implemented on the market.
EU targets for hydrogen consumption and consequences for the vehicle population
The EU has adopted a target of 5 per cent of fuel consumption in the road transport sector for hydrogen by 2020. The expert group has examined what this would imply in terms of number of vehicles in Norway and has made corresponding estimates for domestic shipping. The group has made corresponding assessments of what is required in order to replace, respectively, 2 and 5 per cent of fuel consumption in the transport sector with hydrogen. In the case of road transport, estimates exclude heavy goods vehicle traffic.
If hydrogen is to constitute a significant proportion of energy consumption, a relatively considerable proportion of the vehicle population will need to be replaced. If, for example, all buses in Oslo/Akershus, the Kristiansand area and the Stavanger region (a total of approximately 1100 buses) were replaced by hydrogen fuel cell buses, hydrogen would constitute 1 per cent of the total fuel consumption of passenger cars and buses. If in addition approximately 40 000 passenger cars were to use hydrogen and fuel cell vehicles instead of petrol or diesel, hydrogen would constitute 2 per cent of total consumption.
If all buses in Oslo/Akershus, Bergen, Trondheim, Tromsø, Sarpsborg/Fredrikstad, the Kristiansand area and the Stavanger region (a total of approximately 1850 buses) were replaced by hydrogen fuel cell buses, hydrogen would constitute approximately 1.5 per cent of the total fuel consumption of buses and passenger cars. If in addition approximately 130 000 passenger cars were to use hydrogen instead of petrol or diesel, hydrogen would constitute 5 per cent of total fuel consumption for buses and passenger cars.
In order to achieve 2 per cent hydrogen penetration of the bunker market for domestic shipping, fuel in 19 ferries would have to be replaced by hydrogen. In order to achieve 5 per cent hydrogen penetration, a total of 47 ferries would have to be replaced by hydrogen-operated vessels. Seven supply ships consume bunkers equivalent to approximately 2 per cent of the total consumption by domestic shipping, while 5 per cent hydrogen penetration would require 18 supply ships.
What must be in place and when?
There are a number of challenges associated with the implementation of new technology and new types of fuel. Even if car manufacturers supply vehicles at affordable prices, advance provisions must be made for the use of such vehicles. Provisions include both availability of fuel and facilities for approval, maintenance, repair and insurance of vehicles.
In order that hydrogen-driven vehicles shall be able to replace conventional vehicles in the passenger car market to a certain extent, the vehicles must not only be available to users, but also have competitive price, comfort, driving characteristics, security and range. For road transport it is assumed that vehicles can be available at an approximately competitive price by 2010 to 2015 at the earliest.
Early users are likely to be somewhat less critical and more willing to pay a higher price than the average customer. For special users, such as taxi owners and companies, which will be appropriate fleet users, characteristics associated with operational reliability will be of particular importance. It will therefore be necessary to build up knowledge and experience of how such vehicles function in use.
When the market for hydrogen fuel is to be developed, hydrogen supply will be facilitated by means of local production at the filling station or by means of hydrogen delivered from an industrial plant where this is available.
In order to achieve a hydrogen proportion of 5 per cent, approximately every tenth filling station should supply hydrogen. If the focus on hydrogen is concentrated in a small number of towns, it should be possible to reduce the number of filling stations. However this would considerably reduce the market potential. For an affordable price of hydrogen, there will nonetheless be a need for a considerable product development both as regards electrolyzers (for production of hydrogen from electricity) and reformers (for production of hydrogen from natural gas).
Regulations and standards
Before introduction on the market, it is necessary that rules and standards be developed in order to enable approval of new technology and fuel for use in a wider market. The relevant authorities must have acquired the necessary competence to develop the standards needed for approval of both vehicles and filling stations. In the long term, international standards will be required but, in an introductory phase, national rules will probably be needed. It is also important both to participate in and to attempt to speed up the international work on standards and regulations.
In order to avoid accidents in the introduction of hydrogen, systematic safety work is important throughout the introductory phase. Hydrogen has quite different properties than petrol and diesel, and special safety requirements are necessary. These apply both to storage of hydrogen and the possible consequences of hydrogen leakages that might be caused by accidents. There is a need for increased knowledge, regulations and technological development before large-scale implementation of hydrogen.
What must be done?
The expert group recommends that Norway make targeted investments in the transition to the use of hydrogen in the transport sector. An active Norwegian policy in this area may result in considerable economic as well as environmental gains, particularly in the longer term. This entails that an active policy must be developed and implemented without delay. The expert group is aware of the challenge involved in outlining the content of a hydrogen initiative for Norway that takes all aspects into consideration.
From now until mass production of hydrogen-fuelled vehicles
- An organization must be established that can assist in developing and implementing a national initiative on hydrogen including the use of hydrogen in the transport sector. This is necessary in order to ensure an overall cross-sectoral use of instruments.
- Considerable annual targeted allocations must be made to research and development. Various types of development projects will be necessary, inter alia, for development of technology and improved products and for development and testing of satisfactory systems solutions.
- It is important that demonstration projects be implemented in order to gain experience, create user acceptance and develop national competence and regulations.
- Public support for vehicles for early use of hydrogen should preferably be provided directly in the form of investment support or project financing, and not indirectly via the taxation system.
When hydrogen-fuelled vehicles are available
- Tax incentives and other preferential measures must be used to assist initial market penetration for hydrogen and fuel cell vehicles.
- Exemption from registration tax for zero-emission vehicles should be continued. All technologies with the same characteristics should have equal framework conditions, and “start aid” in the form of tax exemption must be reserved for new technology.
- Like natural gas today, hydrogen should be exempted from taxes until the fuel has penetrated the market and can compete on equal terms. The tax level should then reflect the environmental characteristics.
- In connection with public purchase of transport services for bus traffic and ferry traffic, specification of technology and/or fuel requirements should be considered.
- Measures, such as access to bus and taxi lanes or free parking, that are found on assessment to be successful in promoting the use of electric vehicles, should also be considered in connection with a future introduction of fuel cell vehicles on the market.