The development of new technologies to address the challenges of decarbonized mobility in cities, such as hybrid, battery or fuel cell technologies, suffer from low market shares. As identified by Meunier and Ponssard (2019), two externalities are responsible for problems in the early stages of commercialisation: networks and initial costs. To solve this chicken-dilemma related to infrastructure and fleets and to drive down high initial costs, a public intervention in the form of subsidies is necessary. In the past decade, the European Commission chose to distribute his fund earmarked for green mobility through a coordination process between different clusters of cities.
This report empirically tests the effectiveness of the coordination and financing mechanisms set up in clusters based on the development of fuel cell electric buses (FCEB). We aim to assess the role they play in the dissemination of the fuel cell technology. In order to establish as precise a diagnosis as possible of the relevance of such public intervention, we cover and highlight the several economical, technological and legal aspects of the fuel cell electric bus deployments in Europe, as well as around the world, and how they are handled by the clusters.
FCEB development is currently in the latter half of the technology demonstration phase and is about to enter in a few years in the mass uptake phase thanks to the joint action of industry and the public sector. The joint ventures initiated by the cluster have proven to be essential to demonstrate the technical and economic feasibility of FCEBs, and thus reassure investors.
Intended to pave the way to commercialization of FCEBs by coordinating procurement activities to unlock economies-of-scale and reduce costs, Europe’s funding program succeeded in having the initial costs dropped from about €1,000,000 to €600,000. They demonstrated the technical readiness of FCEBs and outlined the lack of economic attractiveness to private investors and policy makers. A difference of €1.4 per km in the total cost of ownership between diesel buses and FCEBs results indeed in an average abatement cost of around 1000€/tCO2 eq and thus make FCEBs less cost effective than diesel buses. In order to achieve enough orders of FCEBs to enter the mass market phase and become competitive with diesel, the clusters need to find a way to integrate more cities in their deployment programs. Convincing more than twice as many cities to adopt hydrogen technology for their bus fleets would result in the deployment of more than 8,000 buses by 2025. Conditions to support hydrogen deployment are numerous and concern regulation, changes in law, public transport financing, and incentives for OEMs.
Since the economic viability of hydrogen buses is only a matter of time, recommendations for a successful mass market phase are simple. Procurements should be easier, insofar as the coordination structure should mirror typical arrangements between OEM and bus operator without transport authority being involved. It is furthermore essential to ensure understanding of the technology and its benefits, in order to facilitate the social acceptance of hydrogen as an energy carrier.
Most of the investigation concerning hydrogen buses in this report can be used to find synergies with other emerging heavy-duty hydrogen vehicle applications such as trucks, dump trucks and train. Hydrogen is an energy solution of today, and not only of tomorrow. That is why it is very important to re think a structure for the mass market phase, when the cluster coordination and the funding program will no longer be needed, to ensure the sustainability of the fuel cell technology.
Master thesis supervised by Guy Meunier
