WHY REFUELLING WITH HYDROGEN WILL BE CHEAPER THAN FILLING UP WITH PETROL

Energy prices are very much on people’s minds currently and hydrogen is moving to centre stage in terms of plans for energy security in the US and in Europe, so let’s take a look at what this might mean in terms of impacting the cost of driving. 

Firstly, we need to equalise hydrogen, which is measured by weight, with petrol, which is measured by volume. As a benchmark, the Toyota Mirai uses 1kg of hydrogen per 80 miles, whereas an equivalent petrol car, such as a Ford Focus would use 7.5 litres to cover the same distance (using the Ford’s official fuel consumption of 47.9 mpg). That suggests you can get the same mileage from 1kg of hydrogen as 7.5 litres of petrol.

Before the techies complain, we are not saying 1kg of hydrogen has the same energy as 7.5 litres of petrol - the pure energy equivalence is more like 4:1. However, a fuel cell is more efficient at converting energy to power: a fuel cell in a car is 60% efficient, whereas a petrol engine is approximately 33% efficient, as most of its energy is wasted as heat.

Green hydrogen is currently pretty expensive – According to PWC, the manufacturing cost of green hydrogen is $5-$7 per kg today (the cheaper the renewable electricity, the cheaper the hydrogen), and they believe that, by 2030, the average price will be $2-$3 /kg. The EU has set a target of €1.8 ($1.86) for hydrogen production cost in 2030, and India and some Middle Eastern states believe they can get down to $1/kg, thanks to abundant sunshine.

At $2 (£1.67)/kg, divided by 7.5 (to give the equivalent driving range to one litre of petrol), that gives a production price equivalent to 22p/litre of petrol (or 11p per litre if we can get to $1/kg).

Of course, production price is not the same as retail price, but a hydrogen manufacturing price of 22p would equate to a pre-tax pump price of 50p – 60p, according to a recent presentation by Anglo-American.  Let’s put that into the context of petrol prices. According to the latest figures from the RAC, the current pre-tax price of petrol is 83p/litre, plus 53p of fuel duty and 27p of VAT, giving a retail price of 163p/litre.

So, how much would the motorist pay for hydrogen in 2030? Let’s take the absolute worst-case scenario:  if green hydrogen costs 22p/litre to make and retails at 60p/litre pre-tax, with the government taxing it as if it was petrol, the retail price would be equivalent to 136p/litre. However, the government would have a very hard time explaining why zero-emission green hydrogen should attract fuel duty when electricity for electric vehicles does not. After all, green hydrogen is effectively stored electricity – the fuel cell reacts the hydrogen with oxygen to produce electricity.

Greener and cheaper than fossil fuels, more convenient than batteries: is it any wonder that so many major corporations are now investing in green hydrogen?