Switch from ICE to FCEV passenger vehicles

The transport industry accounts for 16.2% (1) of annual global carbon dioxide emissions, producing approximately 7.3 giga tonnes of CO2 emissions per year (2), with passenger vehicles representing around 40% of these emissions (3.0 GtCO2e/year). However, the pre-dominant powertrain system for passenger vehicles is still based on the internal combustion of fossil fuels.

Fuel cell electric vehicles (FCVs or FCEVs) demonstrate potential to lower direct fuel combustion emissions from fossil fuels – by 20 to 60% – compared to conventional internal combustion engine vehicles (ICEVs). FCEVs use fuel cells to generate electricity from compressed hydrogen and oxygen to power an electric motor.

Production and use account for roughly 90% of an FCEV’s life cycle emissions. Its production emissions are higher than those of conventional internal combustion engine vehicles and lower when compared to battery electric vehicles. Use phase emissions are driven mostly by Scope 3 upstream emissions by hydrogen production, compressed hydrogen manufacturing and transportation to refueling stations.

Demand for hydrogen-based FCEVs has grown in recent years to a total market value of US$ 1.17 billion in 2021. Over the next decade, the FCEV market is expected to grow to US$ 47 billion by 2030, with a CAGR of 68.5% from 2022 to 2030. Faster refueling and charging times for FCEVs are a key advantage over battery electric vehicles (BEVs). FCEVs refuel around 15 times faster than BEVs, while only requiring around half the capital investment for refueling infrastructure.

Total cost of ownership for FCEVs is expected to break even by 2030 (vs conventional ICEVs and BEVs) – due to decreasing equipment costs (fuel cells and hydrogen tanks) and the cost of hydrogen.

Climate impact

Targeted emissions sources

Switching from ICE to FCEV passenger vehicles targets carbon dioxide emissions along all phases of a vehicle’s life cycle:

• Manufacturing phase

• Use phase

• End-of-life treatment phase

This impacts Scope 1 and Scope 2 emissions e.g., through expected increased compressed hydrogen usage, while also impacting Scope 3 emissions:

• Category 1 (purchased goods and services)

• Category 11 (use of sold products)

• Category 12 (end-of-life treatment of sold products)

Decarbonization impact

Hydrogen vehicles in the manufacturing phase lead to slightly higher carbon dioxide emissions than their fossil fuel-based counterparts, due to the manufacturing of additional electric components and powertrain elements. Nevertheless, their production CO2 emissions are lower than those of electric vehicles.

The use phase carbon dioxide emissions of FCEVs are heavily reliant on the emission intensity of the hydrogen production process method chosen and its efficiency. Most use phase CO2 emissions are assigned to Scope 3 upstream categories. Overall, hydrogen vehicles are expected to have lower emissions than ICEs and not much higher than BEVs.

End-of-life treatment CO2 emissions for hydrogen fuel cell vehicles are lower (vs ICEs) due to the increased potential for powertrain components recycling.

Business impact

Benefits

Less frequent refueling (higher energy density), decreased operating costs, exemption from clean air zones charges/fees, tax breaks and subsidies, free parking in cities.

Costs

• Impact on operating costs

FCEVs in the last decade had the highest operating cost of all passenger vehicle powertrain options. Over the next few years (baseline of 2022) operational costs are expected to lower significantly and reach competitive levels with all other solutions by 2030 – decreasing by roughly 40% (in USD/km).

• Investment required

Capital investment in FCEVs is 94% higher in 2022 than internal combustion counterparts. By 2030, capital investment in hydrogen vehicles is likely to decrease by 25% (USD/km) due to powertrain efficiency improvements and manufacturing cost efficiency increases.

• Eventual subsidies used

Regional and country specific subsidies apply based on the location of use.

Indicative abatement cost

Abatement cost for passenger transportation (compared to ICE vehicles):

• > US$ 300 /tCO2e in 2022

• US$150-300 /tCO2e by 2030

Impact beyond climate and business

Co-benefits

No operating CO2 emissions, health benefits in densely populated regions.

Potential side-effects

May cause fire accidents due to compressed hydrogen high flammability.

Typical business profile

All institutions, private businesses or individuals interested in switching to hydrogen vehicles in all geographies.

Approach

Adoption of hydrogen passenger vehicles should be recognized at a local level, based on available refueling infrastructure, associated costs, subsidies, tax breaks and maintenance center accessibility.

Stakeholders involved

• Company functions: All functions

• Main providers: Hyundai, Toyota, Honda

Key parameters to consider

• Solution maturity: In development and iterating, solution available in selected global markets

• Life time: around 10-15 years

• Technical constraints or pre-requisites: higher initial cost of investment, vehicle specification

• Additional specificities (e.g., geographical, sector or regulation): scarce refueling infrastructure

• Eventual subsidies available: dependent on country of use

Implementation and operations tips

The implementation of hydrogen vehicles needs further advancement. Without greater popularity and FCEV manufacturer availability, scaling this solution is challenging. Charging infrastructure is scarce and investment or operating costs for hydrogen cars are higher in 2022.

If you’re considering investing in hydrogen cars, review the availability of regional refueling stations and the accessibility of maintenance centers.