- Journal Article
Hydrogen fueled transportation has been proposed as a low carbon alternative to the current gasoline-powered fleet. Using a computable general equilibrium model of the world economy we explore the economic viability of hydrogen transportation in several different tax and carbon dioxide stabilization policy scenarios. We represent the capital, labor, fuel and other costs of hydrogen production and hydrogen powered vehicles in the economic model. We examine scenarios where the hydrogen fuel price and vehicle cost are varied over a wide range to evaluate what technology improvements would be needed, in terms of cost reductions, for hydrogen vehicles to penetrate the market. We consider scenarios with and without climate policy, and in competition with other reduced-carbon fuel substitutes, such as ethanol-blend fuels. We find that hydrogen-powered fuel-cell vehicles could make a significant contribution to de-carbonization of the transportation fuel cycle if production of hydrogen itself is not carbon-intensive. Cost targets needed for the technology to penetrate in the USA are such that the hydrogen fuel would need to be in the range of 1 to 1.7 times the 1997 price of gasoline and the vehicle mark-up above an average fuel cell automobile would need no more than 1.3 to 1.5 times an average conventional vehicle. At the lower end of these cost ranges, the vehicle fleet could be competitive by 2020 but at the upper end we would only see entry of the fleet toward the end of the century. High fuel taxes in Europe makes fuel-efficient hydrogen fuel cell technology more competitive there than in the USA. Along with cost reductions, these results assume that technical issues are solved and that market hurdles of establishing the fuel distribution system are overcome. For those involved in hydrogen vehicle research this analysis provides cost targets that would need to met and, given they are achieved, an idea of when vehicles could be competitive and under what conditions.