Economic prospects and policy framework for hydrogen as fuel in the transport sector

Abstract For a long time hydrogen has been considered a clean energy carrier to be applied universally and contribute to a sustainable energy system. However, in the real energy world hydrogen has not yet delivered. The major reason is that it has still to become economically feasible. With increasing electricity generation from variable renewables and its temporarily cheap surplus production, new prospects for hydrogen are on the horizon especially due to the rising need for a solution to the problem of the long-term storage of excess electricity. The core objective of this paper is to analyze the economic prospects of hydrogen use in the energy system keeping in mind two challenges: (i) integration of variable renewables in power systems, and (ii) substitution of fossil fuels in the transport sector. The future economics of hydrogen in passenger car transport is investigated regarding hydrogen production costs and possible learning effects of the fuel cell vehicles. The major conclusion is that the future perspective of hydrogen use depends on the policy framework, the full exploitation of economies-of-scale and technological learning for electrolysis as well as possible full-load hours per year. However, cost reduction of fuel cells for mobility through technological learning is essential for the economic competitiveness of hydrogen use in transport.