Reed Smith In-Depth / Pratt’s Energy Law Report

Hydrogen is the most abundant element in the universe. Considered by many in the energy industry as the “Swiss Army knife” of climate solutions due to its potential to replace fossil fuels in transportation, power plants, and many other industries, hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. Due to its versatility and potential to decarbonize hard-to-abate sectors such as shipping and steel production, hydrogen is currently enjoying exceptional political, business, and investor support, with global policies, targets, and projects expanding rapidly.

Authors: Nicolas Borda Karim Alhassan

Furthermore, the World Energy Council, in conjunction with PwC and the U.S. Electric Power Research Institute, estimates that hydrogen could account for 6 percent to 25 percent of global energy consumption by 2050, illustrating the integral role this multipurpose fuel will have in reducing global emissions, which is essential to arresting the worst effects of climate change.

The future of mobility (aviation, marine transportation, trains, and cars) is based on clean energy technologies. In addition to lithium-powered electric vehicles (EVs), hydrogen will be a game-changer in the near future. In terms of range, speed, acceleration, and time to recharge, hydrogen-powered cars are better than EVs. However, the average price of a new entry-level hydrogen-powered car is still above the average price of an entry-level lithium-powered EV.

China is a massive player in the world of clean energy. The Chinese government is aiming to have one million hydrogen-powered vehicles on the country’s roads by 2030, starting with trucks and buses. The central government will provide incentives to those cities that achieve hydrogen adoption targets. This approach may also be used in the United States to increase the use of clean transportation.

Texas is the largest hydrogen producer in the United States and a leader in solar and wind energy, which is essential to the production of low-cost green hydrogen. Therefore, when analyzing the feasibility of hydrogen in the transportation sector, it is important to consider the role of China as a producer of hydrogen-powered cars and hydrogen engines and the role of Texas as a producer of hydrogen fuels, especially green hydrogen using solar and wind energy.

Hydrogen has myriad use cases, such as powering vehicles, buildings, and manufacturing processes. Although hydrogen is capable of disrupting every aspect of a zero-emission economy, this article will focus on its role in the Californian commercial transportation sector as the state races to meet its commitments under the recently enacted Advanced Clean Truck regulation.

Moreover, with private capital flowing toward the development, deployment, and scaling of hydrogen capabilities, market participants should continue to stay abreast of exciting developments in this emerging space. And, as will be discussed below, the medium- to heavy-duty commercial transportation sector is ripe for hydrogen-enabled disruption, affecting incumbents, investors, and end users. Lastly, California has emerged at the forefront of the establishment of the “hydrogen economy,” instituting regulatory, infrastructure, and business policies to facilitate the continued growth of the industry, further improving both the near- and long-term prospects for hydrogen utilization within the commercial transportation sector.

The Advanced Clean Truck regulation, approved by the California Air Resources Board (CARB) on June 25, 2020, and one of the first of its kind in the world, requires manufacturers to sell increasing percentages of zero-emission trucks in an effort to reduce the life cycle emission of greenhouse gases (GHGs) and eliminate tailpipe emissions of air pollutants in California. In 2024, zero-emission trucks will begin to replace dirty diesels, with the aim of nearly one in three new tractor-trailers producing no pollution by 2030.

The rule extends to 2035, providing a clear market signal to industry that they can plan and make investments with increased certainty. Furthermore, through the Clean Transportation Program, California is investing in projects throughout the state that accelerate both the advancement and adoption of emission-free medium- and heavy-duty vehicle technologies and fueling stations to support increased deployment.

Additionally, in California, fossil fuel-powered transportation accounts for 50 percent of GHG emissions, with heavy-duty trucks, which only represent 2 percent of road vehicles, contributing 9 percent of such emissions. Accordingly, California’s regulatory and market landscape, coupled with existing familiarity, investment, and infrastructure related to hydrogen, creates a strong opportunity for hydrogen-powered vehicles to play a primary role in supplanting conventional medium- and heavy-duty vehicles in the state.

Why hydrogen for heavy-duty vehicles?

Hydrogen-powered trucks are seen by many industry watchers as the future of long-haul heavy-duty trucking. Currently, heavy-duty trucking in the United States makes up 40 percent of truck routes, consumes 75 percent of all diesel fuel used by the trucking sector, and accounts for roughly 17 percent of transportation GHG emissions.

Thus, decarbonization of the heavy-duty trucking sector is paramount, with hydrogen poised to play a significant role. There are manifold factors justifying this view. Firstly, trucks powered by hydrogen have a much longer range than those powered by electric batteries, with the former expected to reach twice the number of miles per full charge/tank.

Secondly, since fuel cell trucks are much lighter, they are better suited to carry heavy cargo. For instance, when comparing cargo capacity losses relative to diesel-powered trucks, it has been estimated that hydrogen-powered trucks lose 1,000 pounds while battery-powered trucks have the potential to lose up to 5,000 pounds.