This is an extract from a recent white paper “Fuel-Cell Hydrogen Long-Haul trucks in Europe: A Total Cost of Ownership Analysis” published by the International Council on Clean Transportation (ICCT)
Road freight activity is expected to grow continuously through 2050, offsetting the expected CO2 reduction benefits mandated by heavy-duty vehicle (HDV) CO2 standards in the European Union (EU). For the EU to reach its carbon neutrality goals by mid-century, more ambitious CO2 reduction targets are warranted. Such a transition toward a low- and eventually a zero-carbon economy will require a shift from internal combustion engines to zero-emission HDV technologies. Fuel cell trucks are a decarbonization option that could help achieve these goals. However, the economic viability of this technology is still uncertain.
This study evaluates the total cost of ownership (TCO) of fuel cell electric trucks (FCETs), focusing on long-haul tractor-trailers, the highest-emitting HDV segment in the EU. The geographic scope of this study includes seven European countries—France, the United Kingdom, Germany, Italy, Spain, the Netherlands, and Poland—representing more than 75% of HDV registrations in the EU in 2020. The TCO is evaluated through a detailed analysis of the different costs facing truck operators, including truck acquisition costs, renewable electrolysis hydrogen and diesel fuel costs, maintenance costs, road tolls, and other country-specific taxes and levies. The analysis is conducted from a first-user perspective over a 5-year ownership period.
- Fuel cell long-haul trucks can reach TCO parity with their diesel counterparts by 2030 in Europe if the at-the-pump green hydrogen fuel price is around 4 €/kg. The break-even hydrogen price varies among the countries considered in this study; the highest break-even price is recorded in the United Kingdom at 5 €/kg, and the lowest is found in Poland at 3.5 €/kg. This disparity is driven by the country-specific diesel fuel prices, road tolls, and other taxes and levies. The break-even hydrogen
prices to achieve total cost of ownership parity by 2030 between FCETs and diesel trucks are shown in the Figure below.
Break-even hydrogen price to achieve total cost of ownership parity by 2030 between fuel cell electric and diesel trucks in selected countries.
- Hydrogen fuel subsidies will be needed to justify the business case for FCETs in Europe during this decade. The expected hydrogen fuel price is higher than the break-even price required to achieve TCO parity by 2030. Subsidies needed vary from 1.2 €/kg in the Netherlands to more than 4 €/kg in Italy and Germany, as shown in the figure below. The price of hydrogen fuel will be the primary driver of the technology’s economic viability as the retail price gap between FCETs and diesel trucks is expected to narrow significantly by 2030.
Hydrogen fuel subsidy needed to achieve total cost of ownership parity between fuel cell electric trucks and diesel trucks by 2030, assuming onsite hydrogen production through renewable electrolysis.
- Increase the ambition of the heavy-duty vehicle CO2 standards as more stringent standards are needed to comply with the EU Climate Law. Zero-emission trucks have the ability to replace the current diesel fleets, significantly reducing the heavy-duty vehicle sector CO2 emissions. Greater stringency can provide certainty to invest in fuel cell trucks and other zero-emission technologies, which would help to elevate their market demand. This can ramp up the technology economies of scale, reducing its total deployment costs.
- Expedite the implementation of the Eurovignette directive into national law and fully exempt zero-emission trucks from road tolls. Road tolls are a significant contributor to the TCO of long-haul trucks in general. Similar to what is currently implemented in Germany, a 100% road toll waiver for zero-emission trucks can reduce the TCO of fuel cell trucks by 14% to 25% by the end of the decade, helping fuel cell trucks to achieve TCO parity with diesel trucks in France and the Netherlands. Furthermore, the proposed CO2 charge of between 0.08 €/km and 0.16 €/km can narrow the TCO gap between fuel cell and diesel trucks.
- Provide fiscal incentives for renewable electricity used for hydrogen production. The price of hydrogen fuel is the primary driver of the TCO of fuel cell trucks. Such incentives can reduce the at-the-pump green hydrogen price, narrowing the TCO gap between fuel cell and diesel trucks. Battery-electric trucks would also benefit from such incentives. Further, the at-the-pump hydrogen fuel price can be directly incentivized through policy measures such as grant support for capital costs and
- Incentivize the purchase of zero-emission trucks and limit these incentives to their early market uptake phase. Germany, France, and the Netherlands already provide purchase subsidies based on the retail price differential between fuel cell and diesel trucks. This can help reduce the TCO gap between the two technologies. Because these subsidies are designed on a price differential basis, they will decrease and eventually be phased out as the retail prices of zero-emission and diesel trucks become comparable. Although purchase premiums cannot cover the entire TCO gap between fuel cell and diesel trucks, they can significantly reduce the capital investment needed to ramp up market demand for the technology.
- Incentivize demonstration projects of fuel cell trucks in real-world applications. This would help in closing the existing knowledge gaps and address some uncertainties around the technology, mainly regarding fuel economy, refueling, and costs. This would help in identifying the real-world challenges that hinder wides-cale deployment of fuel cell trucks.
- The price of hydrogen fuel is the primary driver of the economic viability of fuelcell electric trucks in Europe. The fuel costs of FCETs are expected to be three times higher than those of an equivalent diesel truck today. These will decrease by 2030 and become 1.8 times higher, driven by the expected improvement in the FCET fuel economy and the reduction in hydrogen fuel price. The retail prices of FCETs and diesel trucks are expected to be within the same range by 2030, making fuel costs the main TCO driver at that time.
- A break-even hydrogen price of around 5 €/kg is needed for fuel-cell electric trucks to reach TCO parity with their diesel counterparts by 2030 given 2021 average diesel fuel prices. Lower FCET operational expenses are required to offset the higher technology investment cost relative to diesel trucks. The breakeven hydrogen price varies among the countries considered in this study. FCETs operating in the United Kingdom would require a break-even hydrogen price of 5.6 €/kg by 2030, while trucks operating in Spain and Poland would require a lower break-even hydrogen price of 4 €/kg.
- Hydrogen fuel subsidies would likely be necessary to make fuel cell electric trucks financially viable for truck operators at least until 2035. The price of hydrogen fuel in 2030 is expected to be higher than the required break-even price to achieve TCO parity between FCETs and diesel trucks by the end of the decade. Hydrogen fuel subsidies will be necessary in this case throughout the entire analysis period in this study (2022–2035). The needed subsidies vary among the countries considered in this study ranging from 1.2 €/kg in the Netherlands to greater than 4 €/kg in Italy given 2021 average diesel fuel prices. There are several EU proposals that may require member states to provide hydrogen subsidies, but the magnitude of such subsidies is still unknown at the moment.
- Purchase incentives do not significantly cover the TCO gap between fuel cell electric trucks and their diesel counterparts. Generous purchase incentives are already provided for ZE-HDVs in several European countries today. While such incentives can significantly reduce the retail price gap between FCETs and their diesel counterparts, the higher hydrogen fuel costs of FCETs offset these benefits.
This study can be accessed here