Cameron Barrett, UH Energy Scholar; and Greg Bean, Executive Director of the Gutierrez Energy Management Institute
The goals of 100% renewable energy and zero carbon emissions are at the forefront of all energy transition/transformation conversations. However, the prospect of fully electrifying certain sectors of the transportation industry is daunting because of electricity’s limited capabilities regarding heavy-vehicle transportation. Tesla
That makes it critical to find alternative low- or no-emission solutions for heavy duty trucks if meeting zero-carbon goals is to remain feasible. The U.S. Environmental Protection Agency says medium and heavy duty vehicles – things like dump trucks, tractor-trailer rigs, trains, and ships – account for over 11.5% of all US greenhouse gas emissions.
That has spurred long-overdue interest in hydrogen fuel cells, which represents an opportunity to make this portion of the transportation sector fully green.
Among signs of this heightened interest: the European Commission recently released a report on hydrogen, and the investment community is seeing increased attention surrounding Nikola, which focuses on electric and hydrogen fuel cell transportation systems, even though it has yet to release a single product.
Hydrogen is unique in terms of energy carriers. Typically compared to natural gas, hydrogen has much higher energy density, meaning it has a much higher potential energy output per unit of weight. It makes economic sense, at least on paper, to transition from natural gas to hydrogen.
Hydrogen also burns cleanly, with no greenhouse gas emissions from its combustion. The key limiting factor in the use of hydrogen, which does not exist in nature as a separate molecule, is that it can’t be mined, extracted or otherwise produced in its desired state without a manufacturing process. Producing zero-carbon hydrogen on the scale required for industry typically requires either large-scale electrolysis (splitting water into hydrogen and oxygen) or carbon capture technology being coupled with fossil fuel plants. After capturing the carbon of fossil fuel production with carbon capture technology, hydrogen can be separated from the carbon and stored independently.
Industrial electrolysis is not quite at the viable operating stage, and using carbon capture to produce hydrogen is less than desirable as it relies upon the combustion of fossil fuels. Despite this, there are key developments on the way for transportation. Hydrogen’s energy density makes it an attractive candidate for medium and heavy-duty transportation, including rail and shipping. These transportation modes are very energy intensive, which comes with associated logistic, environmental and economic problems.
Despite the need, most of the focus on hydrogen in both research and deployment concerns hydrogen as a mechanism to transport or store energy or combust for electricity generation. Hydrogen can be used very effectively for these purposes, but the lack of attention to hydrogen’s ability to transform the heavy-duty transportation sector has caused a corresponding lack of investment.
Government response has been generic until recently. Although most governments across the world have yet to recognize the potential, the European Commission recently unveiled its plans for hydrogen in the coming decades. It calls for investments of at least €65 billion – about $75 billion – over the next decade in order to fully deploy this technology. In response, the commission created the “European Clean Hydrogen Alliance,” whose goal is to build a pipeline of viable investment projects involving hydrogen.
There is one company diving into the transition of heavy-duty transportation to hydrogen: Arizona-based Nikola. Nikola is a manufacturer and designer of battery electric and hydrogen powered vehicles, which also supports hydrogen infrastructure, mostly through the expansion of fueling stations. Analysts expect company revenue to experience over 200x growth by the conclusion of 2021. Nikola is positioning itself to be the Tesla of the hydrogen transportation industry, and its focus on heavy-duty transportation could be the key to transforming an industry which contributes disproportionately to the world’s greenhouse gas emissions. Nikola has nearly $10 billion in pre-orders for their trucks, so the big question, for it and for Tesla, is will they be able to develop an efficient production process to meet demand? This is yet to be proven, as Nikola has not commercially deployed any of its products.
Hydrogen will be key in the energy sector of the future, a truly clean alternative for natural gas and for transportation fuels. Hydrogen’s unique advantages make it an especially attractive investment opportunity for heavy-duty vehicles, and the world is beginning to notice.
Greg Bean is the Executive Director of the Gutierrez Energy Management Institute in the Bauer College of Business at the University of Houston. Prior to joining Bauer, he spent over thirty years in global oil and gas management consulting after starting his energy career with ExxonMobil
Cameron Barrett is currently a research associate at the Gutierrez Energy Management Institute and an Economics/Corporate Planning Analyst at Murphy Oil Corporation
UH Energy is the University of Houston’s hub for energy education, research and technology incubation, working to shape the energy future and forge new business approaches in the energy industry.