Hydrogen infrastructure investment

A small shift away from the refinery sector towards the new and more labour-intensive hydrogen production sector could also be identified. Employment gains could also be made in the construction and the machinery and equipment sectors because of hydrogen infrastructure investments. 

The problems facing the development of a hydrogen infrastructure include the lack of demand for cars and trucks with limited fueling options and any incentive to invest in a fueling infrastructure unless there are enough vehicles on the road. 

Fuel companies like Royal Dutch/Shell have invested heavily in hydrogen. Transition fuels such as onboard methanol-to-hydrogen conversion would require infrastructure investments, which would be difficult to justify. 

In 1998 a report prepared for the California Air Resources Board (CARB) called Status and Prospects of Fuel Cells as Automotive Engines favored methanol fuel cell stacks in cars over a direct-hydrogen infrastructure. Hydrogen is not as ready for private automobiles because of the difficulties and costs of storing hydrogen on board and the large investments that would be required to make hydrogen more available. 

Figure 14.18 shows the average specific hydrogen costs (including feedstock, production, transport and refuelling), and the cumulated investment in hydrogen infrastructure aggregated for all countries for the FlyWays base case scenario. 

While refuelling dominates infrastructure investments in the early phases, in the later phases it is superseded by production. The total investment of the ten countries until 2025-2030 (i.e., to reach a hydrogen vehicle penetration rate of approximately 12%) is around 60 billion. Flowever, conventional fuels also require large investments e.g., the IEA recently assumed that a global investment of as much as US 4300 billion will be required in the oil sector until 2030, to maintain current production levels (IEA, 2006a). Even though a direct comparison of these numbers is not valid, this may be helpful for a placement of the investment needed for hydrogen infrastructure. 

Figure 15.9 shows the capital investments required for hydrogen infrastructure up to 2030. Onsite SMRs dominate in the early years. After 2025, central production, from biomass and coal, becomes significant, accompanied by pipeline delivery systems and stations. Later on, central production dominates in large cities, although onsite reformers persist in other areas. By 2030, the majority of capital investment is in central plants and pipeline delivery. 

Phase 2 is the Initial Market Penetration Phase. This could begin as early as 2010 using existing natural gas and electric grid infrastructure for applications such as portable power and some stationary and transportation applications it will continue as hydrogen-related technologies meet or exceed customer requirements. As markets are established, this leads to Phase 3, or the Infrastructure Investment Phase, in which there is expansion of markets and infrastructure. 

The same reduction in oil imports could be achieved right now (not by 2020), if automobile mileage was increased by only 5 mpg. Also, if the same 0.4 trillion was invested to build solarnhydrogen power plants in the Southwest, the amount of hydrogen produced would completely eliminate the need for all oil imports, not for 2.5 years, but forever. On top of all that, the jobs created by building the hydrogen infrastructure would result in the greatest economic boom of the century. 

The study notes, A substantial risk premium may thus be applied by potential hydrogen infrastructure investors. In this analysis, it takes ten years for an investment in infrastructure to achieve a positive cash flow, far too long for the vast majority of investors, and, to achieve this result, significant technological advances will be required in reformers and electrolyzers, compressors, and overall systems integration as well as mass production methods for that equipment. Also, even a small excise tax on hydrogen (to make up for the revenue lost from gasoline taxes) appears to delay positive cash flow indefinitely.59... 

Jeroen van der Veer, Shell s vice chairman, said in April 2003 remarks on this scenario, We estimate that the initial investment required in the US alone to supply just 2% of cars with hydrogen by 2020 is around 20 billion. 39 This suggests that the scenario of serving 25 percent of cars in 2025 would be very cosdy. And, indeed, Shell Hydrogen s former chief executive officer, Donald P. H. Huberts, told the House Science Committee in March 2003, Further build-up of the hydrogen infrastructure [beyond 2 percent] will require hundreds of billions of US dollars. 40... 

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