At the World Economic Forum in Davos, carmakers and energy companies have announced the foundation of the Hydrogen Council to lay the foundations for major investment in hydrogen.
Bringing together oil giants such as Royal Dutch Shell and Total and car manufacturers such as Toyota, Daimler, BMW and Hyundai, the global initiative is the first of its kind and aims to drive forward the hydrogen fuel cell industry, as well as hydrogen in the power, industrial and residential sectors. It will also act as a voice to further this vision.
The 13 CEOs and chairpersons, which come from major corporations with combined revenues of $1.14 trillion (€1.07 trillion) and 1.72 million employees, met as members of this new Hydrogen Council. They plan to invest $10.7 billion (€10 billion) in hydrogen-related products over the next five years, up from €1.4 billion currently. The council is led by two co-chairs, to spread council leadership across both the automotive and energy sectors and two different geographical locations. The current chairs are Air Liquide and Toyota.
Hydrogen does not produce any CO2 at the point of use. Following on from the Paris Agreement to limit climate change, the Hydrogen Council aims to promote the energy source among policymakers, businesses, international agencies and consumers.
Air Liquide chief operating officer Benoît Potier said: ‘The 2015 Paris Agreement to combat climate change is a significant step in the right direction but requires business action to be taken to make such a pledge a reality.’
Pontier says hydrogen is a ‘key solution for the energy transition,’ and that the council will act to promote and further this objective. However, he added: ‘But we cannot do it alone. We need governments to back hydrogen with actions of their own―for example through large-scale infrastructure investment schemes. Our call today to world leaders is to commit to hydrogen so that together we can meet our shared climate ambitions and give further traction to the emerging hydrogen ecosystem.'
BMW plans to launch fuel cell cars in 2025. BMW Development Board member Klaus Fröhlich said: ‘We are currently seeing a change in the automotive industry as it has not existed for the last 30 years. The CO2 targets and the emissions scandal have accelerated the development towards sustainable propulsion. China also relies heavily on electromobility and creates appropriate framework conditions. And with a view to the Tokyo Olympics in 2020, Japanese manufacturers are pushing the issue of hydrogen even more than before.’
Toyota chairman Takeshi Uchiyamada said: 'The Hydrogen Council will exhibit responsible leadership in showcasing hydrogen technology and its benefits to the world. It will seek collaboration, cooperation and understanding from governments, industry and most importantly, the public.'
This announcement is potentially very welcome news, in particular as it marks the oil giants finally choosing to invest heavily in clean energy solutions. Carmakers have been struggling to gather the funds required to invest sufficiently in electric vehicles. This initiative for hydrogen is hugely significant because it has the oil giants on board, which have gigantic investment potential and want to diversify from oil as world supplies decline over the coming decades.
Oil companies have been reluctant to invest in renewable energies and electric car infrastructure primarily because they do not see the vast returns on investment they are used to with fossil fuels. Carmakers have been merging and restructuring in an attempt to fund this. However, with hydrogen bearing a similar operation to fossil fuels – with fuel providers supplying ‘petrol’ stations – oil companies see this as a strong platform to future-proof their businesses.
Critics argue that oil companies are acting to protect their monopolies on sourcing, transport and supply of fuel – which is under threat if people recharge their electric cars at home rather than visiting a petrol station. In addition, they warn that the vast majority of hydrogen is currently produced from natural gas. However, this is not the only viable method of producing hydrogen, and the Hydrogen Council has stressed front and centre at its founding their commitment to the Paris Agreement on climate change. Therefore, hydrogen looks like it provides an opportunity for a business- (and investment-) friendly phase towards a low-carbon future.
Electric vehicles also have their own problems. Electric cars are provoking their own environmental concerns with the sourcing of battery materials. Once manufacturing and battery production and recycling are taken into account, electric cars can also be more polluting than fossil fuels in key markets. And since the electricity they use is often sourced from fossil fuel power stations, they have been accused of simply shifting where the pollution is. Some argue that the automotive industry has jumped on electric vehicles as they see them as an easy fix that does not require any massive changes to vehicles or infrastructure. Furthermore, with dense cities and ever-increasing urbanisation, many do not have a suitable home base to charge electric vehicles.
This adds further to the notion that, like petrol and diesel, there is a very real possibility that neither electric nor hydrogen will dominate over the other – hydrogen may be more advantageous for longer trips for example, and in dense urban centres. Fröhlich says that BMW will use fuel cells ‘for large and heavy cars with high range requirements’, adding: ‘We would probably use the fuel cell [on BMW cars] above the 5-Series. Under that, this makes no sense because the battery-electric vehicles with the increasing energy density are the better solution.’ With the US favouring larger, heavier cars like pickup trucks and many other markets including Europe increasingly favouring SUVs, hydrogen represents an even better proposition. Fröhlich added: ‘Think of SUVs in the USA, for example, which take a boat trailer up the mountain. This would greatly reduce the range of a pure battery vehicle. The fuel cell is also interesting for commercial vehicles.’
As ACEA has highlighted, it is also essential that policies are technologically neutral. Parallel technologies – such as hydrogen and electric – need scope to develop and compete to ensure the best outcome. The potential costs of failing to do this are highlighted in the history of THORP reprocessing in the nuclear industry in the UK. It is something that the energy companies on the council will be particularly aware of, particularly as many decisions in the energy industry last for decades.
It is likely that the Paris Agreement in 2015 was the real instigator that has finally convinced the oil giants that they need to plan for a post-fossil fuel automotive future. The Paris Agreement aims to limit global warming, caused largely by greenhouse gases, to 2°C ‘above pre-industrial levels’.
The companies in the Hydrogen Council are currently: Honda, Toyota, Daimler, BMW Group, Hyundai Motor, Kawasaki, Air Liquide, Royal Dutch Shell, Total, Alstom, ENGIE, The Linde Group, and Anglo American. The council says it ‘invites governments and key society stakeholders to […] work with us to create an effective implementation plan.’ Read the Hydrogen Council’s report outlining its vision and calls to policymakers here.
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