Clean Hydrogen for Road Transport in Developing Countries W E N X I N Q I A O , B I N YA M R E J A , R O H A N S H A H MARCH 2025 © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Some rights reserved. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Contents Contents FOREWORD v ACKNOWLEDGMENTS vii EXECUTIVE SUMMARY viii ABBREVIATIONS xvii CHAPTER 1: HYDROGEN MOBILITY IN DEVELOPING COUNTRIES 1 Hydrogen Economy in the Transport Sector 2 Fuel Cell vs. Competing Vehicle Technologies 3 Hydrogen Fuel Cell Electric Vehicles (FCEV) 3 Fuel Cell Electric vs. Hydrogen Internal Combustion Vehicles 4 Fuel Cell Electric vs. Battery Electric Vehicles 6 Opportunities and Challenges of Hydrogen Mobility 8 Vehicle Technology Improvements and Capital Cost Reduction 8 Market Opportunities 9 Challenges 11 Motivation for an Economic Assessment of Hydrogen Mobility 12 Organization of the Report 12 References 12 CHAPTER 2: HYDROGEN PRODUCTION AND COST ESTIMATION 16 A Resurgence in Clean Hydrogen Power 17 Classification of Hydrogen Production Methods and Market Trends 17 Hydrogen Production Technologies and Costs 19 Hydrogen Liquefaction, Transmission, and Distribution 21 Estimates of Levelized Costs of Hydrogen and Levelized Costs of Refueling in Selected Countries 24 Levelized Cost of Hydrogen 24 Levelized Cost of Refueling 27 References 30 Clean Hydrogen for Road Transport in Developing Countries i Contents CHAPTER 3: ECONOMICS OF HYDROGEN MOBILITY 33 The Policy Questions 34 Overview of the Mobility Analysis Tool 34 Evaluating Hydrogen Mobility at the Country Level 35 Vehicle Capital Costs 36 Vehicle Operating Costs 41 Infrastructure Costs 48 Environmental Costs 49 Aggregating Across Cost Categories 52 Exploring the Sensitivity of Results 58 Conclusions 61 References 62 CHAPTER 4: HYDROGEN MOBILITY POLICY AND RECOMMENDATIONS 63 Pros and Cons of FCEV Adoption 64 Advantages of FCEVs 64 Disadvantages of FCEVs 65 Niche Market—Heavy-Duty Vehicles and Challenging Operating Environments 69 Regulatory Environment and Ecosystem for Hydrogen Mobility 71 Recommendations for Hydrogen Fuel Adoption 74 1. Promote a Clean Hydrogen Economy for Energy Security and Job Creation 74 2. Integrate Clean Hydrogen Pilot Projects into the Green Energy Transition 74 3. Target Fuel Cell Vehicle Deployment in High-Impact Niche Markets 75 4. Develop Enabling Policies and Regulations for a Clean Hydrogen Economy 75 5. Adopt a Coherent Strategy for Hydrogen Mobility in the Green Energy Transition 76 6. Conduct Country-Specific Economic Assessments for Hydrogen Mobility 76 References 77 APPENDIX A: POLICY QUESTIONS 79 APPENDIX B: DESCRIPTION OF COST ESTIMATION OF LCOH AND LCOR 89 References 92 Clean Hydrogen for Road Transport in Developing Countries ii Contents Boxes BOX 1.1. Range-Extending Fuel Cell Electric Vehicles (FCEVs) in China 4 BOX 1.2. India’s Pursuit of Hydrogen Internal Combustion Engine Trucks 5 BOX 1.3. Korea’s Hydrogen Mobility Policies 9 BOX 2.1. Classification of Hydrogen and New European Commission Rules 18 BOX 2.2. Liquefaction Refueling in Oakland, CA, United States 23 BOX 4.1. India Presents an Ambitious Plan for Green Hydrogen 67 BOX 4.2. Clean Energy Endowment Helps Chile Leapfrog in Hydrogen Economy 68 BOX 4.3. Niche Markets for FCEVs 69 BOX 4.4. The “Hydrogen Shot” in the United States 72 BOX 4.5. Green Hydrogen Corridor 73 Figures FIGURE 1.1. Indicative Energy Intensity Trends for a Diesel, Battery Electric, and Fuel Cell Electric Long- Haul Tractor in the United States, 2024–36 6 FIGURE 1.2. Indicative Purchase Price Trends for a Diesel, Battery Electric, and Fuel Cell Electric Long-Haul Tractor in the United States, 2024 – 36 7 FIGURE 2.1. Mid-Term (2030 and 2035) Levelized Cost of Green Hydrogen Production in Selected Countries  25 FIGURE 2.2. Mid-Term (2030 and 2035) Levelized Cost of Blue and Gray Hydrogen Production in the Selected Economies 26 FIGURE 2.3. Delivered Costs of Compressed Green Hydrogen in 2030 and 2035 in Six Economies 28 FIGURE 2.4. Delivered Costs of Compressed Blue and Gray Hydrogen in 2030 and 2035 in Four Economies  29 FIGURE 3.1. Fuel Cell and Battery Electric Vehicle Price Estimates, by Vehicle Type 37 FIGURE 3.2. Tax and Import Duty Rates for Diesel-Fueled, Battery Electric, and Fuel Cell Cars as of January 2025 38 FIGURE 3.3. Tax and Subsidy Rates for Gasoline, Diesel, and Electricity, 2022 42 FIGURE 3.4. Cost of Fossil Fuels, Electricity, and Hydrogen per Unit of Energy, 2030 43 FIGURE 3.5. Energy Efficiency of Fossil Fuels, Electricity, and Hydrogen per Unit of Travel by Vehicle Category, 2030 44 FIGURE 3.6. Cost of Fossil Fuels, Electricity, and Hydrogen per Unit of Travel by Vehicle Category, 2030 45 Clean Hydrogen for Road Transport in Developing Countries iii Contents FIGURE 3.7. PM2.5 Intensity by Unit of Travel, HDVs, 2022 51 FIGURE 3.8. Carbon Intensity by Unit of Travel, HDVs, 2022 51 FIGURE 3.9. Economic Cost Advantage of 30 ×30 Compared with BAU, India, 2030 57 FIGURE A.1. Average Capital Cost of ICEVs, BEVs, and FCEVs, by Vehicle Type, 2023 and 2030 80 FIGURE A.2. Total Cost of Ownership by Vehicle Type (Brazil, green hydrogen), 2023 vs 2030 81 FIGURE A.3. Averaged Energy Intensity, by Technology and Vehicle Type, 2023 82 FIGURE A.4. Carbon Intensity by Technology and Vehicle Type, 2023 83 FIGURE A.5. PM2.5 Intensity of Heavy-Duty Vehicles by Technology and Unit of Travel, 2022 84 FIGURE A.6. Local vs Global Environmental Benefits of 30 ×30 vs BAU for HDVs 84 FIGURE A.7. Economic Cost Advantage of 30 ×30 vs BAU, by Vehicle Type, India, 2030 85 FIGURE A.8. Cost of Fossil Fuel, Electricity, and Hydrogen per Unit of Energy, 2030 86 FIGURE A.9. Cost of Fossil Fuel, Electricity, and Hydrogen per Unit of Travel for Cars, 2030 86 FIGURE A.10A. Investment Needs of 30 ×30 for Green Hydrogen FCEVs in Brazil, Breakdown by Category, 2030 87 FIGURE A.10B. Investment Needs of 30 ×30 for BEVs in Brazil, Breakdown by Category, 2030 87 FIGURE A.11. Net Fiscal Impact of 30 ×30 vs BAU, Green Hydrogen FCEVs in Brazil, 2030 88 Tables TABLE 1.1. Hydrogen Bus Projects in Recent Years 11 TABLE 3.1. Capital Cost Advantage of FCEVs by Vehicle Category, 2030 40 TABLE 3.2. Fuel Cost Advantage of FCEVs (green hydrogen), by Vehicle Category, 2030 46 TABLE 3.3. Vehicle Maintenance Cost Advantage of FCEVs, by Vehicle Type, 2030 47 TABLE 3.4. Model Assumptions for FCEV Refueling and BEV Charging Infrastructure 49 TABLE 3.5. Charging and Refueling Infrastructure Cost Advantage, 2030 50 TABLE 3.6. Assumptions About the Well-To-Tank Emissions from Hydrogen Production 50 TABLE 3.7. Environmental Advantage of FCEVs (green hydrogen) and BEVs, 2030 53 TABLE 3.8. Aggregated Cost Advantage of Accelerated FCEV Adoption, 2030 (green hydrogen) 54 TABLE 3.9. Aggregated Cost Advantage of Accelerated BEV Adoption, 2030 56 TABLE 3.10. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$5/kg Green Hydrogen Product Cost, 2030 58 TABLE 3.11. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$10/kg Green Hydrogen Production Cost, 2030 60 Clean Hydrogen for Road Transport in Developing Countries iv Foreword Foreword As countries around the world seek to accelerate the global transition to clean energy, many are investigating the possibilities offered by clean hydrogen. As a sustainable alternative to fossil fuels, hydrogen can enhance energy security, improve air quality and support decarbonization. While hydrogen’s use is most often envisioned in industry and agriculture, some niche opportunities for clean hydrogen could open in road transport. The present study considers its application in road transport, with a focus on developing countries. Hydrogen fuel-cell vehicles are yet to be tested in the market. The transition from internal combustion engine vehicles to battery-powered electric vehicles has been underway for more than twenty years, with a fast pace of adoption. However, few vehicles run on hydrogen today, particularly in developing countries. The high capital and operating costs of fuel cell electric vehicles pose a challenge to their wider adoption, making them a rarity on the road. This report, based on findings from five countries through comprehensive modeling exercise, considers the most pertinent policy questions that may arise when comparing the benefits of fuel cell electric vehicles to those of battery electric vehicles. The key findings presented in this report provide a nuanced understanding of the economic viability and environmental impact of hydrogen fuel for road transport, tailored to the specific country contexts. Highlights from the findings include that, fuel cell electric buses and heavy-duty trucks could emerge as economically viable, clean fuel alternatives to internal combustion engine vehicles, in densely populated countries by 2030, where high environmental benefits offset the cost disadvantages. Meanwhile, in terms of their economics, cost comparisons indicate that battery electric vehicles outperform fuel cell electric vehicles in all vehicle segments across all countries studied. However, operational advantages of fuel cell electric vehicles that are not captured in economic analysis, could make them viable in certain niche markets, especially for bus and heavy-duty transport, given the longer driving ranges, faster refueling times, and higher payloads compared with battery electric vehicles. Each country will need to assess their unique conditions and find the right strategy. This report provides a foundation for policy makers and investors to navigate the evolving clean mobility landscape, taking in account their specific country circumstances. As countries advance toward the target of net zero emissions by 2050, it is critical that all viable pathways be considered. Ultimately, hydrogen mobility’s long-term success Clean Hydrogen for Road Transport in Developing Countries v Foreword depends on cost reductions, market readiness, and integration into broader clean energy strategies. A balanced, technology-neutral strategy will be essential to accelerate the decarbonization of road transport. Nicolas Peltier-Thiberge Global Director, Transport Global Practice The World Bank Clean Hydrogen for Road Transport in Developing Countries vi Acknowledgments Acknowledgments This report has been prepared by a core team led by Wenxin Qiao (Senior Transport Specialist) and Rohan Shah (Transport Specialist) of the World Bank’s Transport Global Practice, under the guidance of Nicolas Peltier-Thiberge (Global Director, Transport Practice) and Binyam Reja (Global Practice Manager, Transport Practice). Contributing members of the team include Michael Wilson, Yared Tadesse, Azeb Afework, and Emiye Deneke. Contributing authors include Lewis Fulton and Jacob Teter (University of California, Davis), Shanjiang Zhu (George Mason University), and Chenfeng Xiong (Villanova University), who provided key inputs to the report from background research and contributed to the modeling exercise. The team thanks our peer reviewers for their excellent comments and valuable suggestions during various stages of the report’s development: Dolf Gielen, Carlos Bellas Lamas, Surbhi Goyal, Megersa Abate, Yang Chen, David Blazquez, and Elizabeth Connelly (International Energy Agency). Valuable insights were also provided by Bianca Bianchi Alves, John Gregory Graham, Saurabh Sood, Carolina Monsalve, as well as Christoph Wolff and Herman Sips (Smart Freight Center). This report was partially financed by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and under the guidance of Dolf Gielen, the Global Hydrogen Program Lead at ESMAP. Team extends our sincere appreciation to the Korea Transport Institute (KOTI) for the collaboration, with special thanks to Jee Sun Lee and Goang Sung Jin. We appreciate the World Bank’s Carbon Price Assessment Tool team members Alexandra Andrea Maite Campmas, Paulina Estela Schulz Antipa, and Weronika Celniak for facilitating access to key data. Support from our Communication and Knowledge Management teams are appreciated, including Erin Scronce, Xavier Bernard Leon Muller, and Jonathan Davidar. The team is deeply grateful to Guangzhe Chen (Vice President, Infrastructure) for his leadership and guidance, and for supporting our initial idea to launch the study. Clean Hydrogen for Road Transport in Developing Countries vii Executive Summary Executive Summary Clean hydrogen is emerging as a key component of the global transition to clean energy, offering a sustainable alternative to fossil fuels. It can help boost energy security, improve air quality, and support decarbonization, particularly in industries where emissions are hard to abate, such as steel, cement, and chemicals. Clean hydrogen is produced via renewable-energy-based electrolysis (green hydrogen) or natural gas reforming with carbon capture (blue hydrogen), both of which significantly reduce carbon emissions. For developing countries with abundant renewable resources, green hydrogen presents an opportunity for economic growth, job creation, and energy security by reducing reliance on imported fossil fuels. Similarly, countries with natural gas reserves can benefit from blue hydrogen. However, scaling up the clean hydrogen economy requires stable demand and significant investment to reduce the costs of production and distribution. Global hydrogen demand, which reached 97 million tonnes (Mt) in 20231, is concentrated in the refining and chemical sectors. Clean hydrogen played only a marginal role, with production of less than 1 Mt in 2023, although production is projected to grow strongly, reaching 49 Mt a year by 2030. This growth in demand can lead to potential cost reductions, which can have a spillover effect and help to simulate demand for hydrogen in the transport sector. Hydrogen demand in transport. The transport sector is a significant contributor to global carbon emissions, accounting for 22 percent of carbon dioxide emissions in 2023. Achieving net zero emissions by 2050 requires an annual emissions reduction of more than 3 percent, yet transport demand continues to grow. While battery electric vehicles (BEVs) dominate the zero-emissions passenger vehicle market, hydrogen is playing an emerging role in the transport sector. ⦁ Shipping. Clean-hydrogen-based fuels are being explored as zero-emissions fuels for decarbonizing international shipping, replacing traditional fossil bunker fuels. The hydrogen derivatives of clean methanol and ammonia are gaining traction due to their higher energy density, and major shipping companies are investing in vessels capable of being powered by these fuels. Hydrogen fuel cells are also being tested in ferries and for short sea shipping. ⦁ Aviation. Hydrogen can be used in two ways in aviation—in fuel cell aircraft for short-haul flights and as a feedstock for sustainable aviation fuel (SAF). Airbus, ZeroAvia, and Universal Hydrogen are developing hydrogen-powered aircraft, while hydrogen-derived SAF is being pursued as a drop-in alternative for jet fuel. 1. IEA (International Energy Agency). 2024. Global Hydrogen Review 2024. Paris: IEA. https://www.iea.org/reports/global -hydrogen-review-2024. Clean Hydrogen for Road Transport in Developing Countries viii Executive Summary ⦁ Rail transport. Hydrogen-powered trains are increasingly being adopted in nonelectrified rail networks, with successful deployments in Germany, the United Kingdom, and China. The Alstom Coradia iLint, for example, has been operating hydrogen-powered passenger trains since 2018. ⦁ Road transport. The use of hydrogen for road transport is still at a nascent stage, despite 55 percent demand growth in 2023 (which, however, remains a fraction of the total hydrogen demand of less than 0.1 percent). There are few hydrogen vehicles in the world today, particularly in the developing world. The global stock of fuel cell electric vehicles (FCEVs) numbered 93,000 units by mid-2024, or one hydrogen vehicle for every 330 BEVs. Passenger FCEV sales have slowed, whereas sales of heavy-duty FCEVs, particularly trucks and buses, have grown significantly. China leads the market, accounting for 75 percent of global fuel cell buses and 91 percent of fuel cell trucks. Despite this progress, BEVs continue to outcompete FCEVs due to lower costs and more developed charging infrastructure. The high capital costs of entry and high costs of hydrogen fuel pose a challenge to the wider adoption of FCEVs, leaving them a rarity on the road. The key challenge to hydrogen-based mobility is economic viability. High vehicle costs, high fuel costs, and underdeveloped refueling infrastructure hinder the widespread adoption of hydrogen-powered vehicles. While several countries, including the Republic of Korea, the United States, and China, provide strong policy support for FCEVs, many pilot projects have struggled with operational challenges. Given these uncertainties, a country-specific economic assessment is essential to determine where hydrogen mobility makes economic sense as a clean transport option. This report assesses the economic viability of FCEVs in five selected countries (Brazil, Chile, India, South Africa, and the Republic of Korea) through comprehensive modeling exercises. 2 It provides a comparative analysis of BEVs, FCEVs, and internal combustion engine vehicles (ICEVs) across four key vehicle segments: passenger cars, light commercial vehicles (LCVs), buses, and heavy-duty vehicles (HDVs). The analysis models vehicle capital costs, fuel costs, maintenance expenses, infrastructure investments, and environmental benefits under two policy scenarios: (1) business-as-usual, with an ICE-dominated market trajectory, and (2) 30 ×30, which assumes that by 2030, 30 percent of new vehicle sales will be either BEVs or FCEVs. These exercises provide a nuanced understanding of the economic viability and environmental impact of hydrogen fuel for road transport, tailored to the specific contexts of the countries studied. 2. The model has been developed by World Bank, leveraging country-level data collected from various sources to ensure accuracy and relevance. Clean Hydrogen for Road Transport in Developing Countries ix Executive Summary Key Findings The modeling results indicate that the costs of FCEVs are high, primarily due to expensive hydrogen fuel and elevated vehicle capital costs. This economic rationale is unlikely to change between now and 2030, despite expected advances in FCEV technologies and a decline in the cost of producing clean hydrogen fuel. However, fuel cell electric buses and HDVs could emerge as economically viable clean fuel alternatives compared with ICEVs by 2030, in densely populated countries (India and Korea), where higher environment benefits offset the cost disadvantages. Air quality improvements could bring substantial health benefits in highly urbanized areas, making a strong economic rationale for FCEVs, especially in countries with power grids that rely heavily on fossil fuels. FCEVs face stiff competition from BEVs as alternative technologies to decarbonize road transport. By 2030, BEVs are projected to still economically outperform FCEVs across all vehicle segments. However, FCEVs have operational advantages that are not captured quantitatively in the economic analysis but could enable their growth in certain niche markets under specific operating conditions, especially the bus and HDV segments. Compared with BEVs, FCEVs have a longer driving range, shorter refueling time, and greater payload capacity, making it possible to operate them for longer hours. These operational advantages position FCEVs as a viable alternative in niche markets, such as hilly regions or under extreme weather conditions, and in logistics sectors with high-utilization fleets that require minimum downtime. Several countries, including developing and emerging economies, have already been investing heavily in the clean hydrogen economy. Leveraging the primary use of hydrogen in sectors such as industry, agriculture, and possibly maritime shipping could open niche opportunities for clean hydrogen technologies in road transport. In what follows, the above key findings are elaborated, by vehicle segment. The costs of FCEVs are high, primarily due to expensive hydrogen fuel and elevated vehicle capital costs. While costs are expected to decline, clean hydrogen remains significantly more expensive than diesel or electricity, with projected prices of around US$12/kg by 2030. This makes fuel costs a critical factor in the viability of FCEVs, especially for high-mileage vehicles, such as buses and HDVs. Compared with FCEVs, BEVs are currently more economically viable across all segments due to their lower operational costs and higher energy efficiency. However, in dense, populous cities, such as in India and Korea, the environmental benefits of FCEVs—including significant reductions in carbon dioxide emissions and local pollutants such as PM2.5 (particulate matter with a diameter of 2.5 microns or less), NOx (nitrogen oxides), and SOx (sulfur oxides)—may offset some of their cost disadvantages. By 2030, fuel cell buses and HDVs could emerge as economically viable clean fuel alternatives to ICEVs, particularly in densely populated countries. The viability of FCEVs depends on three key cost drivers: vehicle capital costs, fuel costs, and environmental externalities. Clean Hydrogen for Road Transport in Developing Countries x Executive Summary First, fuel cell buses and HDVs cost nearly three times as much as their ICE counterparts. While this premium is expected to decline by 2030, FCEVs will still cost roughly twice as much as conventional vehicles (see figure ES.1). Fuel costs present another challenge, as clean hydrogen remains significantly more expensive than fossil fuels and electricity, per unit of energy. While FCEVs are more energy efficient than ICEVs due to reduced heat loss, they are less efficient than BEVs due to energy losses in the hydrogen-to-electricity conversion process. As a result, FCEVs are projected to have significantly higher fuel costs than ICEVs in 2030, with fuel cell buses costing US$0.91/kilometer (km) compared with US$0.27/km for ICE buses, and fuel cell HDVs costing US$0.79/km versus US$0.23/km for ICE HDVs (see figure ES.2). Despite some reductions in capital costs, the overall total cost of ownership (TCO) for FCEVs will remain higher than for ICEVs and BEVs beyond 2030. FIGURE ES.1. HDV Capital Costs, by Technology, FIGURE ES.2. Cost of Energy Source per Unit 2023 vs 2030 of Travel, by Type of HDV, 2030 600 1.00 500 US$/vehicle-kilometer Thousands of US$/vehicle 0.80 400 0.60 300 0.40 200 0.20 100 0.00 0 Brazil Chile India South Korea, 2023 2030 Africa Rep. Diesel BEV FCEV ICE/Diesel BEV FCEV/Blue FCEV/Green Source: World Bank. Note: BEV = battery electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; ICE = internal combustion engine. However, FCEVs offer substantial environmental benefits that may offset the high cost premium associated with fuel cell buses and HDVs over their ICE counterparts in densely populated countries. FCEVs contribute to cleaner urban environments because they release zero tailpipe emissions, and they produce no emissions at all when powered by green hydrogen from renewables. Even with blue hydrogen derived from natural gas with carbon capture and storage, emissions remain significantly lower than those from diesel-powered vehicles (see figure ES.3). Additionally, FCEVs generate much lower levels of local air pollutants such as particulate matter, making them especially valuable in densely populated areas, where pollution-related health costs are high (see figure ES.4). For example, in India, reducing one tonne of PM2.5 emissions from road transport is valued at approximately US$380,000, compared with just US$60,000 in less densely populated South Africa. Clean Hydrogen for Road Transport in Developing Countries xi Executive Summary BEVs have higher carbon intensity compared with FCEVs where the power grid mostly relies on fossil fuels (India and South Africa). However, where power grids have shifted to more renewable energy sources (as in Brazil), this gap narrows. FIGURE ES.4. PM2.5 Intensity, by Unit of travel, FIGURE ES.3. Carbon Intensity of HDVs, 2023 HDVs 200 15 Grams PM2.5 per 100 vkm kg CO2/100 vkm 150 10 100 5 50 0 0 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. Diesel EV Blue Hydrogen Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Note: EV = electric vehicle; HDVs = heavy-duty vehicles; kgCO2 = kilograms of carbon dioxide; PM2.5 = particulate matter with a diameter of 2.5 microns or less; vkm = vehicle-kilometer. In countries like India and Korea, where the economic value of air quality improvements is substantial, the environmental benefits of FCEVs outweigh their cost premium by a factor of two to five. This makes fuel cell buses and HDVs economically viable compared with ICEVs in the same market segment. In contrast, Brazil, Chile, and South Africa have not yet reached the same economic threshold, since the environmental benefits of FCEVs currently cover only about one-third of the additional costs associated with vehicle capital and fuel. This suggests that FCEVs could become a compelling alternative to ICEVs in high-density urban areas with severe air pollution. Among all five countries under study, FCEVs have the highest economic advantage over ICEVs in the bus segment in India, where air quality improvements bring significant health benefits. This is especially beneficial in the densely populated metropolitan areas of India, where buses are heavily used for public transport. Turning to the economic competitiveness of BEVs, they are expected to achieve an economic cost advantage over ICEVs in the car and bus segments by 2030. The capital cost premium for battery electric cars, approximately US$4,000 today, is projected to reach cost parity by 2030. The capital cost premium of battery electric buses, currently double that of ICE buses, is expected to decline to approximately US$96,000 by 2030. BEVs also benefit from significant savings on fuel costs. Battery electric buses are projected to cost US$0.17/km, compared with US$0.27/km for ICE buses by 2030. This cost saving is largely due to BEVs’ superior energy Clean Hydrogen for Road Transport in Developing Countries xii Executive Summary efficiency—5.02 megajoules (MJ)/km compared with 18.48MJ/km for ICE buses. However, the associated charging infrastructure costs, estimated at US$27,000 per bus, remain a factor for BEVs. Despite these costs, battery electric cars and buses offer clear economic advantages in all the countries studied by 2030. For LCVs and HDVs, the economic viability of BEVs compared with ICEVs is more nuanced, with a strong case emerging in densely populated markets such as India and Korea, where environmental benefits justify the cost premium. In 2023, the vehicle capital cost premium for battery electric LCVs stood at US$25,000 and at US$278,000 for HDVs, but by 2030, these figures are projected to narrow to US$13,000 and US$95,000, respectively. BEVs in these segments also benefit from lower fuel costs, with HDVs expected to cost US$0.13/km compared with US$0.23/km for ICE HDVs. This is due to the higher energy efficiency of battery electric HDVs, which consume 3.81 MJ/km, compared with 15.80 MJ/km for ICE HDVs. However, battery electric HDVs require significant investment in charging infrastructure, with associated costs estimated at US$125,000 per vehicle. Ultimately, the economic case for battery electric LCVs and HDVs exists primarily in India and Korea, where the environmental benefits outweigh the additional costs; the case remains less compelling in other regions. While BEVs outperform FCEVs economically across all vehicle segments, FCEVs offer distinct operational advantages. One key advantage is their longer driving range, typically 300–350 miles, compared with 175–200 miles for battery electric buses, due to hydrogen’s higher energy density per unit of weight. FCEVs can also be refueled in just 5–15 minutes, compared with up to several hours for BEV charging, making them more suitable for operations requiring minimal downtime. Additionally, hydrogen storage tanks in fuel cell HDVs are generally lighter than the large battery packs needed for battery electric trucks, allowing for higher cargo payloads and reduced road wear. These advantages, though not reflected quantitatively in the economic analysis, can make FCEVs a viable option for certain transport applications where efficiency, range, and refueling time are critical considerations. These operational advantages could make FCEVs competitive in certain niche markets under specific applications, where BEVs face limitations. In hilly terrain, FCEVs can sustain peak power output over longer distances, whereas battery electric buses experience significant range losses on steep grades. Cold weather also impacts BEVs more severely, with range reductions of up to 37.8 percent at temperatures between 22 ° F and 32 ° F, compared with 23.1 percent for FCEVs. In emergency situations, where power outages disrupt electricity supply, FCEVs may continue to operate if hydrogen refueling stations have backup generators. Additionally, in the logistics sector, FCEVs hold a key advantage in offering longer operational hours, with limited downtime for refueling. These advantages position FCEVs as a viable alternative in the niche markets discussed above, where BEVs may not be the optimal solution. Equally important is the hydrogen storage and distribution infrastructure for the deployment and scale-up of FCEVs, similar to the critical role of charging infrastructure for BEVs. Hydrogen infrastructure, Clean Hydrogen for Road Transport in Developing Countries xiii Executive Summary including compression facilities, transport networks, and refueling stations, is crucial given that a reliable and affordable clean hydrogen supply is a prerequisite for FCEV operations. Providing such infrastructure is challenging since it mostly does not exist today and is costly to build.3 Therefore, it is important to integrate FCEV deployment in clean hydrogen strategies and leverage clean hydrogen infrastructure that can be shared with other industries to reduce refueling costs, which may boost the economic viability of FCEVs in road transport. The transition to hydrogen mobility hinges on scaling clean hydrogen production to lower fuel prices, sustained policy support, and strategic investments in infrastructure. While FCEVs are unlikely to outcompete BEVs in most vehicle segments due to their higher capital and fuel costs, FCEVs may play a complementary role, particularly in segments where battery limitations, such as weight and range, pose operational challenges. Ultimately, hydrogen mobility’s long-term success depends on cost reductions, market readiness, and integration into broader clean energy strategies. A balanced, technology-neutral strategy will be essential to accelerate transport decarbonization, leveraging BEVs where feasible and deploying FCEVs where battery solutions face limitations. This report provides a foundation for policy makers and investors to navigate the evolving clean mobility landscape, taking into account specific country circumstances. Recommendations for Hydrogen Fuel Adoption Promote a Clean Hydrogen Economy for Energy Security and Job Creation Developing countries with abundant renewable energy resources can boost energy security by producing hydrogen locally, in turn reducing their reliance on imported fossil fuels. The transport sector is a key pillar in the clean hydrogen ecosystem, offering stable demand, fostering economic opportunities, and generating employment. Incorporating hydrogen mobility into national clean hydrogen road maps can be especially beneficial for densely populated urban areas where air pollution is severe. FCEVs powered by clean hydrogen not only eliminate tailpipe emissions but also significantly reduce PM2.5, NOx, and SOx emissions from the energy production process. In regions where electricity generation relies heavily on fossil fuels, FCEVs may offer a net environmental advantage over BEVs—although this advantage may narrow as power grids transition to renewable sources. To fully leverage hydrogen mobility, it is critical to: ⦁ Assess the local energy and transport sector conditions; ⦁ Compare FCEVs with competing vehicle technologies; 3. The costs for a compression facility, a transport network, and refueling stations combined represent 65 percent of the green hydrogen cost at the pump by 2030 under current projection based on our model estimation. Clean Hydrogen for Road Transport in Developing Countries xiv Executive Summary ⦁ Develop a strategic road map for hydrogen mobility; ⦁ Continuously monitor technological and market developments; and ⦁ Encourage private sector participation. Integrate Clean Hydrogen Pilot Projects into the Green Energy Transition Given current economic constraints, FCEVs will remain uncompetitive until technological advancements and economies of scale drive down clean hydrogen costs. Meanwhile, BEVs are increasingly viable for decarbonizing road transport. Thus, green hydrogen should be prioritized for hard-to-abate sectors such as steel, fertilizer, chemicals, and refining, which rely on carbon-intensive gray hydrogen, requiring investments in green energy infrastructure for them to transition to clean alternatives. Developing countries can focus on hydrogen adoption in sectors where electrification is not a feasible alternative and capitalize on local renewable energy resources. Target FCEV Deployment in High-Impact Niche Markets As an emerging technology, FCEVs can be deployed strategically in niche markets where they offer operational advantages. Their higher range, faster refueling, and weight efficiency make them particularly suitable for the following focus areas, and strategic pilot programs should be prioritized in these areas to assess viability and drive early market adoption: ⦁ HDVs and buses, which benefit from greater payload capacity and lower pavement impact. ⦁ Hilly or cold-weather regions, where BEVs’ performance may be less optimal. ⦁ Logistics and high-utilization fleet operations, requiring continuous, long-hour operation with minimal downtime. Develop Enabling Policies and Regulations for a Clean Hydrogen Economy Robust policy and regulatory frameworks are essential for sustainable hydrogen adoption. These frameworks will have to: ⦁ Ensure that clean hydrogen production is aligned with clean electricity generation. Regulations should prevent reliance on fossil-fuel-based electricity for hydrogen production, avoiding unintended increases in carbon intensity. Clean Hydrogen for Road Transport in Developing Countries xv Executive Summary ⦁ Rationalize fiscal policies. Given the financial constraints of developing countries, large-scale subsidies may not be feasible. Fiscal incentives should be designed to support long-term cost reductions rather than artificially bridging the economic gap between FCEVs and BEVs. ⦁ Establish clear emission standards and incentives for zero-emission vehicles. Policies should promote renewable energy generation and support the transition to clean transport. Adopt a Coherent Strategy for Hydrogen Mobility in the Green Energy Transition FCEV adoption requires an integrated approach, encompassing market preparation, infrastructure investment, financial structuring, and policy development. For most developing countries, FCEVs may not be viable in the short to medium term due to constraints in capital, infrastructure, workforce, and technology readiness. However, for nations with abundant renewable energy resources, hydrogen mobility can be a strategic component of a broader green energy transition. Key actions include: ⦁ Assessing opportunities in hydrogen value chains for both domestic use and export. ⦁ Targeting promising vehicle segments to accelerate market entry, based on local economic conditions. ⦁ Building a regional or global green hydrogen ecosystem, aligning national strategies with broader hydrogen supply chains. Conduct Country-Specific Economic Assessments for Hydrogen Mobility Hydrogen mobility is one of many pathways for transport decarbonization and must compete with alternatives, particularly BEVs. The economic competitiveness of FCEVs depends on country-specific factors such as energy sources and prices, fleet composition, vehicle prices, and environmental valuation. Policy makers should: ⦁ Conduct detailed economic analyses to guide investments and policy decisions. ⦁ Evaluate scenarios featuring a transition to zero-emission vehicles, considering how FCEVs and BEVs can complement each other in a diversified clean transport strategy. ⦁ Actively monitor technological and market development, since potential unforeseen innovations may dramatically change market trends. ⦁ By adopting a data-driven and strategic approach, governments and industry stakeholders can determine the most effective role for hydrogen in the clean energy transition. Clean Hydrogen for Road Transport in Developing Countries xvi Abbreviations Abbreviations Acronym Definition AE alkaline electrolyzer ANL Argonne National Laboratory BAU business as usual BEV battery electric vehicle CAPEX capital expenditure CCS carbon capture and storage CH2 compressed hydrogen CO2 carbon dioxide EPC engineering, procurement, and construction EU European Union FCEV fuel cell electric vehicle FID final investment decision GHG greenhouse gas GW gigawatts HDRSAM Heavy-Duty Refueling Station Analysis Model HDV heavy-duty vehicle HRS hydrogen refueling station IEA International Energy Agency ICE internal combustion engine ICEV internal combustion engine vehicle kg kilograms km kilometers LCOE levelized cost of electricity LCOH levelized cost of hydrogen LCOR levelized cost of refueling LCV light commercial vehicle LH2 liquified hydrogen LHV lower heating value LMICs low- and middle-income countries Mt million tonnes MTPD metric ton per day MW megawatts Clean Hydrogen for Road Transport in Developing Countries xvii Abbreviations Acronym Definition NOx nitrogen oxides NREL National Renewable Energy Laboratory PEM proton exchange membrane PM2.5 particulate matter with a diameter of 2.5 microns or less PPP purchase price parity PV photovoltaic SMR steam methane reforming SOx sulfur oxides TCO total cost of ownership WACC weighted average cost of capital ZEV zero-emission vehicle Clean Hydrogen for Road Transport in Developing Countries xviii o ot k ph toc l/is nge do nur ©o CHAPTER 1: Hydrogen Mobility in Developing Countries 1 Hydrogen Mobility in Developing Countries Hydrogen Economy in the Transport Sector Mobility plays a crucial role in economic and social development, but sustainably meeting the growing demand for mobility has been a challenge for the transport sector. According to the International Energy Agency (IEA 2023a), the transport sector accounted for about 22 percent of global carbon dioxide (CO2) emissions in 2023, and emissions were growing rapidly (at an annual rate of 1.7 percent from 1990 to 2022 [IEA 2023b]). To meet the target of net zero emissions by 2050, CO2 emissions from the transport sector must fall by more than 3 percent annually. Meanwhile, vehicles generate significant local air pollutants that are associated with an estimated US$1 trillion in health damage (Anenberg et al. 2019). There has been a growing consensus on the role of clean hydrogen to decarbonize industries (refining, chemicals, steel, and fertilizers) and heavy-duty transport sectors, for example, aviation (Malina et al. 2022) and maritime shipping (Englert et al. 2021), where emissions are otherwise hard to abate. In road transport, despite the strong momentum of the adoption of battery electric vehicles (BEVs), hydrogen fuel cell electric vehicles (FCEVs) have attracted growing interest as an alternative zero-emissions technology that can bring substantial environmental benefits from the reduction of carbon emissions and local air pollutants. According to the IEA’S Global Hydrogen Review (IEA 2024c), more than 60 kilotonnes of hydrogen fuel were used in road transport in 2023—an increase of more than 55 percent over the previous year—mainly for trucks and buses. Despite the rapid growth, the road transport sector’s total hydrogen consumption represents less than 0.1 percent of global hydrogen demand. Growth of the hydrogen vehicle market varies by segment. By June 2024, the global FCEV stock had reached 93,000 (IEA 2024c). While the fuel cell passenger car stock grew only 15 percent in 2023, compared with 35 percent in 2022, sales of fuel cell trucks and buses grew by more than 50 percent and 25 percent, respectively (IEA 2024c). Given that battery electric trucks in heavy-duty long-haul segments face several challenges, the viability of FCEVs is seen as a promising alternative. China dominates hydrogen use in the heavy-duty trucks and buses segment—accounting for about 75 percent of the global stock of fuel cell buses and about 91 percent of fuel cell trucks, estimated using IEA 2023 data (IEA 2024b). The total global stock of fuel cell buses and trucks stands at 8,700 and 11,000, respectively (IEA 2024b).4 4. By the end of 2023, the existing stock of fuel cell electric cars, buses, trucks, and vans stood at 66,000, 8,700, 11,000, and 3,200, respectively. In comparison, the global stock of battery electric cars, buses, trucks, and vans stood at 28,000,000, 650,000, 330,000, and 1,300,000, respectively (IEA 2024b). Clean Hydrogen for Road Transport in Developing Countries 2 1 Hydrogen Mobility in Developing Countries The market for fuel cell trucks is expected to continue to expand outside of China, particularly in the United States and Europe. This growth is also bolstered by competition, policy support, and multilateral partnerships, for example, California’s Advanced Clean Truck Regulation (California Air Resources Board 2024), and the Global Memorandum of Understanding on Zero Emission Medium- and Heavy-Duty Vehicles (Drive to Zero 2024)— launched at the 2022 United Nations Climate Change Conference (COP27) to support countries in achieving 100 percent sales of new zero-emissions trucks and buses by 2040, signed by a consortium of 16 high-income (United States, United Kingdom, Canada, European Union) and middle-income (Chile, Dominican Republic, Uruguay, Türkiye) economies. Several developing countries, including Brazil, Chile, China, Costa Rica, and India, have also joined the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE 2024) to share information and facilitate multinational research, development, regulations, codes, standards, and deployment initiatives that advance the introduction of hydrogen and fuel cell technologies on a global scale. The public sector is leading the investment in hydrogen buses. The Republic of Korea had its first hydrogen bus registered in 2019. By 2024, the number surpassed 1,000 buses. Incheon, Jeollabuk-do, and Gyeongsangnam-do are the top three cities leading the effort, each operating a fleet of more than 100 hydrogen buses. A new initiative has been planned for Cheonan city, which will receive 350 hydrogen buses by 2027 from SK E&S (Argusmedia 2023). In California, the Alliance for Renewable Clean Hydrogen Energy Systems has been established with the support of the US Department of Energy (US DOE) and is planning to deploy over 1,000 new fuel cell buses (Sustainable-bus.com). China also shows a strong commitment to hydrogen buses and deployed over 75 percent of the 1,500 new hydrogen buses added globally in 2023 (IEA 2024c). Fuel Cell vs. Competing Vehicle Technologies Hydrogen Fuel Cell Electric Vehicles (FCEV) The FCEV technology replaced the internal combustion engine (ICE) and gasoline storage tank with a fuel cell power system and a hydrogen tank, as well as a small battery pack for storing electricity. In most modern FCEVs (for example, the Toyota Mirai and Hyundai XCIENT Truck), the electric motor receives most of its power from a large fuel cell stack, which is supplemented by a small lithium-ion battery that acts as a buffer, storing excess energy from the fuel cell and aiding in regenerative braking. In contrast, BEVs with a fuel cell “range extender” rely on batteries as the main energy source, with a smaller fuel cell stack providing an additional extended driver range (see box 1.1). Like batteries, fuel cell systems have evolved over the past 30 years in terms of system size reduction, performance improvement, and cost reduction. These systems are mainly of the proton exchange membrane Clean Hydrogen for Road Transport in Developing Countries 3 1 Hydrogen Mobility in Developing Countries BOX 1.1. Range-Extending Fuel Cell Electric Vehicles (FCEVs) in China China accounts for almost 97 percent of the global FCEV truck market. Its fleet had more than 3,100 units as of 2020. A sizable proportion of the fleet consists of vehicles with 30–50 kilowatt (kW) cells, while 75–150 kW cells constitute the norm elsewhere in the world (IEA 2021). This unique trend emerged after subsidies and other incentive structures implemented by central as well as local government agencies set 30 kW as the minimum eligibility criterion for compensation (IEA 2021). To leverage these schemes while ensuring that end users are not overly reliant on scarce hydrogen infrastructure, manufacturers developed vehicles that combined the battery electric vehicle (BEV) and FCEV technologies. These are known as range-extending FCEVs in China. Several BEV drivetrains have begun incorporating fuel cells to extend their ranges. Certain configurations only rely on the fuel cell when the primary battery is completely depleted and thus hydrogen is used to supplement the remaining part of the journey (Islam, Vijayagopal, and Rousseau 2022). Conversely, other vehicles, such as the Kangoo Z.E. Hydrogen by Renault, allow the fuel cell to continuously operate at its optimum rate, with the electricity then used to charge a battery that in turn drives the motor (ERM 2024). (PEM) type, which have fast on-off operation, can operate at high and low temperatures, and can be sized to fit into a small vehicle’s engine area (Huya-Kouadio and James 2023). FCEVs generally require low maintenance. Commercial models of lightweight FCEVs, such as the Toyota Mirai and Hyundai Nexo, have a good track record of reliability (NREL 2024). In the fuel cell bus segment, fuel cell stacks generally do not require replacement at half-life, based on a recent study in the United States (Eudy and Post 2021). The average service hours of fuel cell buses have exceeded 25,000 hours—approximately 7–10 years (Eudy and Post 2021). Fuel Cell Electric vs. Hydrogen Internal Combustion Vehicles Hydrogen internal combustion engine (HICE) vehicles have not received significant attention so far since they are not zero emissions. They use a modified gasoline or diesel engine that can operate smoothly on pure or high-percentage blends of hydrogen, but they produce air pollutants, notably NOx (nitrogen oxides). Some modern HICE vehicles with advanced emission control systems can achieve very low NOx emission levels and meet the strict global NOx standards (Wang and Fulton 2024). In the past five years, the HICE has reemerged as an important technology especially for trucks. The advantages of the HICE include a lower cost of production, potentially better reliability, and the ability to operate vehicles using less pure hydrogen streams Clean Hydrogen for Road Transport in Developing Countries 4 1 Hydrogen Mobility in Developing Countries than FCEVs require. Modern examples of HICEs are proliferating, with demonstration models from Daimler and Volvo, with Volvo having announced its intention to market HICE HDVs by 2026. The HICE is projected to play an important role in a few countries by 2030, probably led by India (see box 1.2). However, in Europe, Korea, and China, there is interest but no clear plan or industry activity yet that may lead to strong market development for the HICE (Fox 2024). Fuel cell electric trucks may continue to dominate for the foreseeable future. BOX 1.2. India’s Pursuit of Hydrogen Internal Combustion Engine Trucks India’s National Green Hydrogen Mission, established in 2023, seeks to make India the global hub for the production, use, and export of green hydrogen. Led by efforts from the private sector, India has made significant strides in developing hydrogen internal combustion engines (HICEs) for its commercial trucking industry. HICEs, much like traditional ICEs, work by harnessing the mechanical forces generated by the controlled combustion of a fuel source. The similarities in size and shape make it possible for HICEs to be readily incorporated into existing ICE drivetrains with comparatively few modifications (Srna 2023). In 2022, Reliance Industries Limited, in collaboration with truck manufacturer Ashok Leyland was looking to retrofit 5,000 trucks to run on HICEs in the near term. The company claims that original equipment manufacturers delivered 6 tons of green hydrogen over the course of the testing period, and the company plans to one day deploy its own network of refueling stations, particularly along heavily trucked routes, such as the 1,500 km Mumbai–New Delhi corridor (Parkes 2024). Following a US$426 million investment, in May 2024, power generation products manufacturer Cummins, in partnership with Tata Motors, began producing HICEs at a new facility in Jamshedpur, India (Parkes 2024). The joint venture will produce HICEs for medium- and heavy-duty commercial vehicles serving both domestic and export markets (Cummins Inc. 2024). The following are the key advantages of FCEVs when compared with HICE vehicles: ⦁ HICE vehicles release NOx emissions. They are not typically considered zero-emission vehicles (ZEVs), and the California Air Resource Board has designated them as non-ZEVs in California for compliance and ZEV credit purposes. Clean Hydrogen for Road Transport in Developing Countries 5 1 Hydrogen Mobility in Developing Countries ⦁ FCEVs typically have higher overall energy efficiency than HICE vehicles due to the fundamental difference in the energy conversion process. Figure 1.1 shows the average fuel efficiency estimate for different engine types (expressed in liters of diesel-equivalent per 100 kilometers [km]) for tractor-trailers in long-haul operations under the same assumptions (i.e., realization of scale economies and technological improvement); FCEVs show a clear advantage over HICE vehicles. FIGURE 1.1. Indicative Energy Intensity Trends for a Diesel, Battery Electric, and Fuel Cell Electric Long-Haul Tractor in the United States, 2024–36 40 35 Liters diesel equivalent per 100 km 30 25 20 15 10 5 0 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Diesel ICE BET FCET Hydrogen ICE Sources: original estimates based on ANL (2021); Basma, Beys, and Rodriguez (2021); Basma and Rodriguez (2022); and Ledna et al. (2024), and vetted by a council of industry advisors. Projections are based on a class 8 long-haul truck with a design range of 800 km in the United States. Note: BET = battery electric truck; FCET = fuel cell electric truck; H2 = hydrogen; ICE = internal combustion engine. ⦁ At the current stage, HICE vehicles are likely to have a purchase cost advantage. However, when FCEVs reach a large-scale market and fuel call packs achieve much lower costs of production, FCEVs can potentially provide a lower total cost of ownership (TCO) due to their higher fuel efficiency (see figure 1.2). Given the advantages of FCEVs in terms of fuel efficiency over HICE vehicles, this study will focus on FCEVs in its analysis of the economic cost advantage. Fuel Cell Electric vs. Battery Electric Vehicles The transition from ICEVs to BEVs is an effective way to address the sustainable development challenge facing the transport sector (Briceno-Garmendia, Qiao and Foster, 2023). Globally, BEVs were projected to Clean Hydrogen for Road Transport in Developing Countries 6 1 Hydrogen Mobility in Developing Countries FIGURE 1.2. Indicative Purchase Price Trends for a Diesel, Battery Electric, and Fuel Cell Electric Long-Haul Tractor in the United States, 2024–36 700 600 500 Thousand US dollars 400 300 200 100 0 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Diesel ICE BET FCET Hydrogen ICE Source: Original estimates based on ANL (2021); Basma, Beys, and Rodriguez (2021); Basma and Rodriguez (2022); and Ledna et al. (2024), and vetted by a council of industry advisors. Projections are based on a class 8 long-haul truck with a design range of 800 km in the United States. Note: BET = battery electric truck; FCET = fuel cell electric truck; ICE = internal combustion engine. account for more than 20 percent of new car sales in 2024 (IEA 2024a). This is on top of the 40 million electric vehicles on the roads by the end of 2023 (IEA 2024a). However, electrification in market segments such as heavy-duty vehicles (HDVs) and large transit buses is challenging. In addition, issues related to the wider adoption of BEVs, including the critical minerals supply chain, battery recycling, and sustainable battery disposal, remain to be addressed. FCEVs in road transport compete with BEVs as an alternative for operating vehicles with no tailpipe emissions and have the potential to substantially reduce life-cycle greenhouse gas emissions. Globally, the market for BEV and FCEV trucks is still in an early stage. In 2023, about 53,000 BEV trucks were sold globally, representing 0.9 percent of total global sales (IEA 2024b). In comparison, 3,600 FCEV trucks were sold globally, an even smaller share (IEA 2024b). Even in China, the most aggressive market for electric vehicles, electric trucks represented only 2.8 percent of new trucks sold (IEA 2024b) in 2023. Similarly, most fuel cell trucks (3,400 units) were sold in China in 2023. Both battery and fuel cell electric heavy-duty trucks are expensive. Because of the high payload, heavy- duty battery electric trucks require a much larger battery pack, resulting in a significant price premium. In 2022, heavy-duty battery electric trucks were equipped with a battery pack of about 300 kilowatt-hours (kWh), compared with 40–50 kWh for a passenger car (IEA 2023c). According to a recent study (ICCT 2023), in 2022, the purchase Clean Hydrogen for Road Transport in Developing Countries 7 1 Hydrogen Mobility in Developing Countries price of an electric long-haul freight truck was an estimated US$460,000, compared with US$150,000 for its diesel counterpart. This price markup for heavy-duty trucks is much higher than that for a car. Cost modeling for long-haul fuel cell electric trucks shows a price estimate of US$560,000 for a fuel cell Class 8 long-haul truck in 2022 (ICCT 2023), although technological improvements and economies of scale may drive down the price. Heavy-duty battery electric truck operation is less effective in its current form. Although the average declared range of battery electric HDVs is 300 km, they still face operational challenges due to factors such as charging time. One study based on field data for 61,598 electric trucks in China (Zhao et al. 2024) shows that under current operating conditions, it took an average of 3.8 electric delivery trucks and 3.6 electric semitrailers, respectively, to fulfill the same load assigned to their diesel counterparts. Anxiety around the actual driving range and availability of charging infrastructure were cited as the reasons for the underutilization of electric trucks. Battery electric truck operations could benefit from a higher energy density of the battery packs on a per kilogram basis or a further advancement in charging speeds, or both. Carrying a heavy battery pack reduces the effective payload, wastes energy, and reduces the environmental benefits. Although many studies express optimism for further improvement (ICCT 2023; IEA 2023c), the trucking sector faces many challenges to decarbonizing through electrification. This motivates researchers, industry leaders, and policy makers to look for alternative technologies that may provide a better fit for this sector. Hydrogen vehicles are one such option that has been frequently discussed. Although fuel cell electric trucks require less time to refuel, they could still face other challenges, including durability and cost issues for fuel cell stacks and membranes (Piras et al. 2024), as well as the reliability of refueling stations’ operations (California Air Resources Board 2023). In addition, there are few fuel cell electric trucks in operation and so their performance is yet to be observed. Opportunities and Challenges of Hydrogen Mobility Although most existing FCEV projects are run with heavy subsidies, technological improvements and economies of scale may drive down vehicle capital costs as well as operating costs. Systematic regulations on emissions and synergy with other industry sectors could also create an environment conducive to hydrogen vehicle deployment. This subsection discusses a few key areas to watch and explores the market niches where FCEVs can be promising. Vehicle Technology Improvements and Capital Cost Reduction Fuel cell stack systems are still far more expensive, but the cost of these systems has dropped dramatically over the past 15 years. It is estimated that the cost could decline another 50 percent, before reaching a limit (Huya-Kouadio and James 2023). PEM systems for commercial vehicles are in demonstration or early Clean Hydrogen for Road Transport in Developing Countries 8 1 Hydrogen Mobility in Developing Countries commercialization stages (Technology Readiness Level [TRL] 8–9). Currently, the median costs for fuel cell systems range from approximately US$400 to US$1,000/kW (ANL 2021; ICCT 2023). The cost range of a fuel cell system remains quite wide in 2030, at US$100–600/kW. Innovation in fuel cell stacks and fuel cell systems could drive vehicle cost reductions. Opportunities on the stack side include improving power density and the durability of power density, reducing catalyst loading and PEM membrane thickness, and increasing stack operating temperature. A balance of plant (BoP) cost reduction could be achieved by reducing the number of BoP parts. Substantial cost reductions would depend on achieving economies of scale in fuel cell production; achieving system costs in the range of US$230–275/kW would require annual production volumes of thousands to tens of thousands of vehicles (Huya-Kouadio and James. 2023; US DOE 2023). The most recent assessments by the US DOE indicate greater expected cost reductions as a function of cumulative production, most notably due to the trend among fuel cell original equipment manufacturers to produce modular stacks and systems that would allow multiple vehicular applications to share a common platform design (US DOE 2023). Market Opportunities Based on the literature review, hydrogen mobility offers opportunities for countries aspiring to develop sustainable transportation systems and industrial capabilities. The economy of hydrogen mobility depends on further cost reduction in hydrogen production, transportation, and distribution through technological improvement and economies of scale. The at-the-pump price for existing pilot hydrogen mobility projects is either heavily subsidized or too high for rapid scale-up. Insights into these projects’ potential are thus limited. Korea is one of the leaders in developing and deploying hydrogen vehicles, with a more mature automotive sector, offering rich data and a benchmark. See box 1.3 on Korea’s enabling hydrogen mobility policies. BOX 1.3. Korea’s Hydrogen Mobility Policies The Republic of Korea has one of the world’s largest hydrogen fuel cell fleets, with 34,000 cars and 650 buses registered as of 2023 (IEA 2024b). In 2021 alone, the country registered 8,532 vehicles representing 48 percent of the global fuel cell electric vehicle (FCEV) market. The proliferation of FCEVs in Korea follows a series of policy roadmaps developed in 2019 to specifically position hydrogen as a key driver of the country’s future growth and development. (continues) Clean Hydrogen for Road Transport in Developing Countries 9 1 Hydrogen Mobility in Developing Countries BOX 1.3. Korea’s Hydrogen Mobility Policies (continued) Korea aims to grow its FCEV fleet to 6,200,000 vehicles by 2040, and while most vehicles at this time are passenger cars, the government envisions widescale introduction of other modalities. With central and local government subsidies, the market price of vehicles can be offset by anywhere between 48 percent, in the case of passenger cars, to as much as 80 percent, in the case of garbage trucks. These measures bring the total real purchase price of FCEVs to parity with the prices of their internal combustion counterparts. Changwon City hosted the country’s first hydrogen bus pilot program in 2019, which sought to advance the deployment of non-passenger car fuel cell electric modalities. The program involved multiple ministries and provincial government entities, which provided US$379,000 in subsidies, while corporate actors such as Hyundai Motor Company provided buses at a US$154,000 discount. Running for three years and almost 6 million km on the city’s main trunk lines, the program contributed to greater public acceptance of fuel cell electric buses while also revealing key insights into the realities of operating these vehicles (Jin, 2022). Notably, it was observed that preexisting car charging infrastructure (5 kilograms [kg]) was inappropriate for the ideal 700 barr high-capacity charging of fuel cell buses (25 kg). This led to the government implementing domestic charging system research and development, which leveraged local industry to develop high-capacity-compressor, 80 kg/hour class chargers with a maximum charging speed of 3.6 kg/minute. Changwon is now looking to develop a 300 kg/hour class hydrogen refueling station at the Sungju Bus Depot, which would allow 12 buses to charge at once, dramatically improving operational efficiency. FCEVs in Korea benefit from the country’s wider efforts to promote hydrogen as a general energy source, to address its need to identify a core energy for carbon neutrality that can also help make its industry more competitive, stabilize electric power systems, and strengthen energy security (Jin 2022). The ultimate vision of developing an ecosystem catering to the entire hydrogen life cycle encourages the widespread use of hydrogen across various industries, enabling all stakeholders to capitalize on the cost savings generated by economies of scale, while simultaneously contributing to broader environmental benefits. Source: All baseline data are provided by the Korea Transport Institute (KOTI). Clean Hydrogen for Road Transport in Developing Countries 10 1 Hydrogen Mobility in Developing Countries Challenges The number of BEVs and FCEVs sold in the bus and HDV segments is increasing but from a very low baseline, and their market share is still quite small. Both are facing many technological challenges, requiring significant investment in research and development. Table 1.1 lists several failed FCEV pilot projects. These projects’ risk is not due to nascent hydrogen technology alone but also stiff competition from BEVs. A comprehensive assessment is therefore critical for countries aspiring to invest in hydrogen mobility to make informed decisions and develop a comprehensive strategy. TABLE 1.1. Hydrogen Bus Projects in Recent Years Location (year) Description Reference South Tyrol, Italy (ongoing) Hydrogen buses cost 2.3 times more to run per Collins 2023 kilometer than battery electric buses. Palma, Spain (2023) Five hydrogen buses were not working at Barnard 2024 all because the hydrogen refueling station suffered constant technical problems. Bakersfield, CA, United States (2023) A GET hydrogen bus, valued at US$1.1 million, Paronyan 2023 was destroyed by fire and part of the fueling station was damaged. Investigation is still underway to find the cause. Pau, France (2023) Hydrogen buses frequently broke down over Martin 2023 four years’ operation and hydrogen bills are nearly twice as expensive. They will be replaced by electric buses. Montpellier, France (2022) Hydrogen buses were six times more expensive Collins 2022a to run than electric buses after a two-year project. London, United Kingdom (2019) Hydrogen bus route RV1 was discontinued Mike 2021 on June 15, 2019, because of poor ridership, poor ride quality, and high interior noise levels equivalent to a diesel bus. Wiesbaden, Germany (2022) Wiesbaden’s public transport company ended Collins 2022b its hydrogen program centered on 10 fuel cell electric vehicle buses after one year because the filling station broke down. Clean Hydrogen for Road Transport in Developing Countries 11 1 Hydrogen Mobility in Developing Countries Motivation for an Economic Assessment of Hydrogen Mobility Many developing countries are planning for hydrogen mobility but there are knowledge gaps. Importantly, hydrogen mobility is one of many potential pathways to decarbonize the transport sector and needs to compete with other technologies, particularly BEVs. Competitiveness depends on many country-specific factors, such as energy prices, fleet composition, and the valuation of local and global environmental benefits. Green hydrogen may not be economically competitive in every country, nor in every market segment of the same country. Given the increasing role and the need for a menu of options to accelerate the decarbonization of road transport, particularly in developing countries, there is a growing need to take a realistic and pragmatic view of both the supply and demand side of this fast-growing technology, with a particular focus on how the transition to this technology and its deployment might evolve in developing countries. It is therefore necessary to provide a country-level economic assessment of hydrogen mobility to support planning and policy dialogue, and potential downstream investments. It also helps to compare different ZEV transition scenarios in which FCEVs and BEVs may complement each other, supporting a clean energy transition in the transport sector. Organization of the Report Chapter 1 provides an overview of the current FCEV landscape, comparing FCEVs with alternative competing technologies, for its development and deployment to decarbonize the transport sector. Chapter 2 analyzes hydrogen production costs in a few selected countries, based on best estimates and considering the development of the industry and other country-specific factors. Chapter 3 contains an economic analysis of the adoption of FCEVs, compared with BEVs and ICEVs, for four vehicle segments in five selected countries. It examines the cost advantages from the perspectives of vehicle capital costs, operation costs, infrastructure costs, and environmental costs. Chapter 4 builds on the analysis and discusses different transport and energy policies and regulations that may support the deployment of FCEVs. It also provides recommendations. References Anenberg, S., J. Miller, D. Henze, and R. Minjares. 2019. A Global Snapshot of the Air Pollution-Related Health Impacts of Transportation Sector Emissions in 2010 and 2015. Washington, DC: International Council on Clean Transportation. Clean Hydrogen for Road Transport in Developing Countries 12 1 Hydrogen Mobility in Developing Countries ANL (Argonne National Laboratory). 2021. Comprehensive Total Cost of Ownership Quantification for Vehicles with Different Size Classes and Powertrains. Lemont, IL: ANL. https://publications.anl.gov/anlpubs/2021/05/167399.pdf. Argusmedia. 2023. “South Korea’s SK E&S to Supply 350 H2 Buses in Cheonan.” Argusmedia, November 10, 2023. Accessed October 20, 2024. https://www.argusmedia.com/en/news-and-insights/latest-market-news/2508173-south -korea-s-sk-e-s-to-supply-350-h2-buses-in-cheonan. Barnard, Michael. 2024. “How Many Hydrogen Transit Trial Failures Are Enough?” Clean Technica, October 24, 2024. https://cleantechnica.com/2024/10/24/how-many-hydrogen-transit-trial-failures-are-enough. Basma, H., and F. Rodriguez. 2022. “Fuel Cell Electric Tractor-Trailers: Technology Overview and Fuel Economy.” ICCT Working Paper 2022–23, International Council on Clean Transportation. https://theicct.org/wp-content/uploads/2022/ 07/fuel-cell-tractor-trailer-tech-fuel-1-jul22.pdf. Basma, H., Y. Beys, and F. Rodríguez. 2021. “Battery Electric Tractor-Trailers in the European Union: A Vehicle Technology Analysis.” ICCT Working Paper 2021–29, International Council on Clean Transportation. https://theicct.org/publication/ battery-electric-tractor-trailers-in-the-european-union-a-vehicle-technology-analysis/. Briceno-Garmendia, C., W. Qiao and V. Foster. 2023. The Economics of Electric Vehicles for Passenger Transportation. Washington, DC: World Bank. California Air Resources Board. 2023. 2023 Annual Evaluation of Fuel Cell Electric Vehicle Deployment and Hydrogen Fuel Station Network Development. Sacramento, CA: California Air Resources Board. https://ww2.arb.ca.gov/sites/default/ files/2023-12/AB-8-Report-2023-FINAL-R.pdf. California Air Resources Board. 2024. “Advanced Clean Trucks.” Accessed October 20, 2024. https://ww2.arb.ca.gov/ our-work/programs/advanced-clean-trucks. Collins, Leigh. 2022a. “French City Drops Order for 51 Hydrogen Buses After Realising Electric Ones Six Times Cheaper to Run.” Recharge, January 12, 2022. https://www.rechargenews.com/energy-transition/french-city-drops-order-for -51-hydrogen-buses-after-realising-electric-ones-six-times-cheaper-to-run/2-1-1143717. Collins, Leigh. 2022b. “German City to Retire Its One-Year-Old Hydrogen Fuel-Cell Buses After €2.3m Filling Station Breaks Down.” Hydrogen Insight, December 16, 2022. https://www.hydrogeninsight.com/transport/german-city-to -retire-its-one-year-old-hydrogen-fuel-cell-buses-after-2-3m-filling-station-breaks-down/2-1-1375568. 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Clean Hydrogen for Road Transport in Developing Countries 13 1 Hydrogen Mobility in Developing Countries ICCT (International Council on Clean Transportation). 2023. “Total Cost of Ownership of Alternative Powertrain Technologies for Class 8 Long-Haul Trucks in the United States.” ICCT white paper, April. https://theicct.org/wp-content/ uploads/2023/04/tco-alt-powertrain-long-haul-trucks-us-apr23.pdf. IEA (International Energy Agency). 2021. An Energy Sector Roadmap to Carbon Neutrality in China. Paris: IEA. https:// www.iea.org/reports/an-energy-sector-roadmap-to-carbon-neutrality-in-china. IEA. 2023a. CO2 Emissions in 2022. Paris: IEA. https://www.iea.org/reports/co2-emissions-in-2022. IEA. 2023b. “Energy System: Transport.” Updated July 11, 2023. https://www.iea.org/energy-system/transport. IEA. 2023c. “Trends in Electric Heavy-Duty Vehicles.” In Global EV Outlook 2023. Paris: IEA. https://www.iea.org/reports/ global-ev-outlook-2023/trends-in-electric-heavy-duty-vehicles. 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Jin, Thomas. 2022. “Korea’s Hydrogen Mobility Policy and Future Directions.” 2022 WB-KOTI-ADB Joint Workshop Green Hydrogen for Decarbonizing Transport, Seoul, Republic of Korea, November 30, 2022. Ledna, C., M. Muratori, A. Yip, P. Jadun, C. Hoehne, and K. Podkaminer. 2024. “Assessing Total Cost of Driving Competitiveness of Zero-Emission Trucks.” Iscience 27 (4): 109385. https://doi.org/10.1016/j.isci.2024.109385. Malina, Robert, Megersa Abera Abate, Charles E. Schlumberger, and Freddy Navarro Pineda. 2022. The Role of Sustainable Aviation Fuels in Decarbonizing Air Transport. Mobility and Transport Connectivity series. Washington, DC: World Bank. Accessed October 20, 2024. http://hdl.handle.net/10986/38171. Martin, Polly. 2023. “French City that Pioneered Hydrogen Buses will Opt for Battery-Electric in Future Due to Ongoing Problems and High Costs.” Hydrogen Insight, November 9, 2023. https://www.hydrogeninsight.com/transport/ french-city-that-pioneered-hydrogen-buses-will-opt-for-battery-electric-in-future-due-to-ongoing-problems-and -high-costs/2-1-1551821. Mike, Long Branch. 2021. “The Second Coming of Hydrogen? London’s Hydrogen Buses (Hydrogen Part 1).” London Reconnections, January 26, 2021. https://www.londonreconnections.com/2021/the-second-coming-of-hydrogen -londons-hydrogen-buses/. NREL (National Renewable Energy Laboratory). 2024. “Fuel Cell Electric Vehicle Evaluations.” https://www.nrel.gov/ hydrogen/fuel-cell-vehicle-evaluation.html. Parkes, R. 2024. “Indian Giant to Retrofit Thousands of Trucks with Hydrogen Internal Combustion Engines Before July: Report.” Hydrogen Insight, February 6, 2024. Accessed October 20, 2024. https://www.hydrogeninsight.com/transport/ indian-giant-to-retrofit-thousands-of-trucks-with-hydrogen-internal-combustion-engines-before-july-report/2-1-1594011. Paronyan, Mary. 2023. “Fire Engulfs New Hydrogen Bus and Fueling Station at Golden Empire Transit.” BakersfieldNow, July 18, 2023. https://bakersfieldnow.com/news/local/fire-engulfs-new-hydrogen-bus-and-fueling-station-at-golden -empire-transit-kern-county-bakersfield-fire-department-get-bus. Piras, M., V. De Bellis, E. Malfi, R. Novella, M. Lopez-Juarez, 2024. “Hydrogen consumption and durability assessment of fuel cell vehicles in realistic driving”, Applied Energy, Vol 358, https://www.sciencedirect.com/science/article/pii/ S0306261923019232 Clean Hydrogen for Road Transport in Developing Countries 14 1 Hydrogen Mobility in Developing Countries Srna, A. 2023. “Overview of Hydrogen Internal Combustion Engine (H2ICE) Technologies.” Presentation at the monthly H2IQ hour, Hydrogen and Fuel Cell Technologies Office, US Department of Energy, February 22, 2023. https:// www.energy.gov/sites/default/files/2023-03/h2iqhour-02222023.pdf. US DOE (United States Department of Energy). 2023. “DOE Hydrogen Program Record 23002: Heavy-Duty Fuel Cell System Cost—2022.” https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/23002-hd-fuel-cell -system-cost-2022.pdf?Status = Master. Wang, Guihua, and Lewis Fulton. 2024. A Comparative Review of Hydrogen Engines and Fuel Cells for Trucks. Research Report UCD-ITS-RR-24-50. Davis, CA: Institute of Transportation Studies, University of California. https://itspubs .ucdavis.edu/publication_detail.php?id = 4492. Zhao, P., S. Zhang, P. Santi, D. Cui, F. Wang, P. Liu, Z. Zhang, J. Liu, Z. Wang, C. Ratti, and Y. Wu. 2024. “Challenges and Opportunities in Truck Electrification Revealed by Big Operational Data.” Nature Energy 9 (11): 1427–37. https:// www.researchgate.net/publication/383059746_Challenges_and_opportunities_in_truck_electrification_revealed_by _big_operational_data. Clean Hydrogen for Road Transport in Developing Countries 15 ck to eS dob /A A +W ©A CHAPTER 2: Hydrogen Production and Cost Estimation 2 Hydrogen Production and Cost Estimation A Resurgence in Clean Hydrogen Power In the late 2010s, there was renewed interest in hydrogen as a versatile and low-carbon energy carrier. In recent years, there has been a growing consensus on the necessity of clean hydrogen in industries— and sectors, such as transport—where emissions are hard to abate. The use of clean hydrogen as a feedstock to produce synthetic fuels for shipping and aviation and the direct application of clean hydrogen in road transport (IEA 2023a) are attracting growing interest. However, the clean hydrogen industry is still in its early stage, with only a handful of clean hydrogen projects at the final investment decision (FID) stage, and even fewer in operation. International focus is now shifting to opportunities to accelerate the scale-up of clean hydrogen production (IEA 2023b). Classification of Hydrogen Production Methods and Market Trends One important discussion is renewables-based hydrogen production, which is critical for decarbonizing road transport through the adoption of fuel cell electric vehicles (FCEVs). In the literature, hydrogen classification is commonly color coded based on the technology used to produce hydrogen (see box 2.1). The European Union (EU) now includes blue hydrogen with carbon capture and storage (CCS) as low-carbon hydrogen, together with renewables-based green hydrogen. The US Inflation Reduction Act offers tax credits based on carbon intensity, not production method, to encourage a mix of green, blue, and other hydrogen production technologies. This study will consider both green and blue hydrogen production technologies, referring to the two as clean hydrogen together, since low-carbon hydrogen, which helps the United States and European Union achieve their greenhouse gas emission thresholds, can be produced with both technologies. The production of clean hydrogen is ramping up, albeit from a low base. According to the International Energy Agency (IEA 2024c), as of November 2024, nearly 1 million tonnes (Mt) of low-emissions hydrogen production capacity was operational, constituting about 1 percent of total hydrogen consumption. Nearly three- quarters of this capacity (742 kilotonnes) was from fossil fuel–based production equipped with CCS, that is, “blue” hydrogen. Operational electrolyzer capacity totaled 1.5 gigawatts (GW). The total low-carbon hydrogen production capacity jumps seven-fold when considering all plants that have reached the FID stage, and 140-fold when considering all announced low-carbon hydrogen production projects. Notably, the reliance on blue hydrogen shrinks to approximately 50 percent when considering projects that have reached an FID, and to less than 15 percent when considering all announced projects. Green hydrogen shows a strong momentum in new hydrogen projects. Clean Hydrogen for Road Transport in Developing Countries 17 2 Hydrogen Production and Cost Estimation BOX 2.1. Classification of Hydrogen and New European Commission Rules In the literature and in policy documents, hydrogen is typically classified based on its production process and the resulting greenhouse gas (GHG) emissions, and assigned one of three colors (European Parliament 2021): ⦁ Green hydrogen is produced by electrolysis of water with renewable electricity (e.g., onshore and offshore wind–based, and photovoltaic-based power). The process does not release carbon dioxide (CO2). ⦁ Blue hydrogen is produced from natural gas by steam methane reforming or autothermal reforming, or through coal gasification, but combined with carbon capture and storage technologies. Advanced technologies can yield a higher capture rate and reduce the emission intensity to 0.8–6 kgCO2eq/kg of hydrogen (kgH2). ⦁ Gray hydrogen is produced through a process that is similar to the process of producing blue hydrogen, but without carbon capture. This production releases emissions of about 9.3 kgCO2eq/kgH2. Classification faces a challenge when applied to the electrolysis of water using grid electricity— which could be green if generated using renewables or could have been produced through a process with high CO2 emissions intensity, depending on the power generation source. The European Commission, through the Renewable Energy Directive (RED III) and EU Hydrogen strategy, has started to adopt the term “renewable hydrogen” in its regulations (European Commission 2024). Renewable hydrogen must have life cycle GHG emissions of 3.4 kgCO2/kgH2 or lower (Deloitte 2024). As of September 2024, the methodology to determine GHG emission savings from low-carbon fuels had not been finalized. Note: For green hydrogen, if the electricity used to produce it is diverted from other potential end users, then it may result in additional electricity generation, leading to indirect (or “market-mediated”) CO2 emissions. Policy frameworks have established “additionality” criteria specifically to minimize indirect emissions. Clean Hydrogen for Road Transport in Developing Countries 18 2 Hydrogen Production and Cost Estimation Achieving the 2015 Paris Agreement goal of limiting global warming to well below 2 ° C above preindustrial levels, and limiting temperature increase to 1.5° C, would require clean hydrogen production to grow over 50-fold (to nearly 50 Mt) through 2030, with an estimated three-quarters coming from electrolytic production, and the remaining quarter from fossil-fuel-based production with CCS (IEA 2021b) If all the currently announced electrolyzer-manufacturing projects were to be realized by 2030, they would be sufficient to provide nearly three-quarters of the annual electrolyzer project additions required for green hydrogen up to 2030, which is needed for alignment with the Paris Agreement. However, only about one-third (21 GW) of the announced expansions have reached an FID (IEA 2024c) so far. Hydrogen Production Technologies and Costs The technical and economic descriptions and assumptions used for clean hydrogen production technologies in this report are referenced from the open-source tools and supporting publications on these technologies developed by the National Renewable Energy Laboratory (NREL 2023a), Argonne National Laboratory (ANL 2023), and Agora (Agora Industry 2023). Hydrogen production via steam methane reforming (SMR) using natural gas—the dominant and mature technology globally (with the major exception of China)—costs approximately US$1–2/kg in the United States. Production varies significantly due to fluctuations in natural gas prices. The potential of a cost reduction for blue hydrogen also depends on the CCS costs. According to the IEA, the current carbon capture costs range from US$12–25/tonne of CO2 for highly concentrated gas streams (e.g., from ethanol production or natural gas processing) to US$40–120/tonne for dilute gas streams (e.g., from cement production or power generation). CO2 transport prices range from US$2/tonne to US$14/tonne and storage costs are less than US$10/tonne. The cost is falling rapidly. For example, the cost of CO2 capture from large-scale coal-fired power plants is expected to reduce to US$45/tonne by 2027, from about US$110/tonne in 2014 (IEA 2021b). The cost of green hydrogen produced by electrolysis depends heavily on the costs of electrolyzers (incurred as capital expenditure [CAPEX]) and the cost of electricity (incurred as operational expenditure). Annualized CAPEX represents only a modest share of the overall levelized cost of manufacturing electrolyzer stacks. Assuming a weighted average cost of capital (WACC) of 8 percent, CAPEX is estimated to generally constitute only 15–30 percent of the cost of alkaline electrolyzer (AE) stacks, with energy, material, component, and labor costs making up the rest (IEA 2024b). Hence, there is also strong potential to reduce electrolyzers’ costs by focusing on energy, materials, and components. The following are some potential approaches to reduce the cost: Clean Hydrogen for Road Transport in Developing Countries 19 2 Hydrogen Production and Cost Estimation Increasing stack size. Electrolyzer stacks range in size from around 1 to 10 megawatts (MW). Increasing stack capacity can also bring down equipment and civil works costs since this reduces the number of units installed in a plant. Prefabrication. Electric Hydrogen Co. in the United States and Longi in China have begun to sell prefabricated, modular electrolysis systems, with stacks and balance of plant sold together as a “kit.” This reduces the costs of engineering, procurement, and construction (EPC) and the labor needed in the field, and is likely to lessen the time to make a plant operational. Increasing electric current density. At the stack level, increasing the current density is expected to drive future cost reductions for alkaline and proton exchange membrane (PEM) electrolyzers (Krishnan et al. 2023). Increasing current density (measured in amperes per square centimeter) can increase hydrogen production, with trade-offs in terms of system efficiency. Also, as hydrogen production increases, PEM electrolyzers are expected to become increasingly cost-competitive against AEs. Transitioning technology type. A transition in technology could bring down costs—for example, from AEs to PEM electrolyzers or solid-oxide electrolyzer cells. As highlighted above, PEM electrolyzers, which constitute a smaller share of commercially available systems than AEs, come at a price premium, with estimated costs of approximately US$1,000/kW in 2025. The main advantage of PEM electrolyzers is that they can ramp up and down based on variations in the supplied electricity and, thus, their integration with variable renewables is far better. Cost reductions for PEM electrolyzers will be influenced by the quantity of expensive platinum group metals (iridium, in particular) in the catalyst (specifically, a reduction of this quantity) and by current intensity (specifically, an increase from about 200 grams/MW of stack capacity to 300 grams/MW of stack capacity) (PV International 2024). The substitution of catalyst materials with more affordable materials could also bring down costs. Much of the current expectations of reductions in the levelized cost of hydrogen (LCOH) for electrolytic hydrogen production rest in the potential for cost reductions in PEM stacks. While electrolyzer stacks are modular, other components of an electrolyzer plant are subject to economies of scale. A 2022 Bloomberg New Energy Finance survey on the costs of installed electrolyzer systems, including EPC, balance of plant, and other non-stack equipment (e.g., power electronics, primarily the rectifier and transformer), and the stack itself, found costs to vary widely. At the low end, and starting from approximately US$300/kW, were alkaline electrolyzers made in China, whereas those produced in North America and Europe cost about US$1,200/kW. Cost differences stem from labor costs, established supply chains, and economies of scale (since electrolyzer producers in China include polysilicon photovoltaic [PV] cell manufacturers), as well as differences in performance (such as current density, and durability and efficiency). Cost structures differ across current commercial electrolyzer systems. EPC account for 40–60 percent of costs in the United States and Europe but less than one-third in China. Clean Hydrogen for Road Transport in Developing Countries 20 2 Hydrogen Production and Cost Estimation Projects in planning are scaling up from the megawatt to the gigawatt scale, although only a few of these larger-scale projects have broken ground. These larger projects consist of modular electrolyzers with a capacity of 5–10 MW each. Governments and industries worldwide have announced a goal to scale capacity up to over 200 GW annually by 2030. Cost reductions are expected to be achieved from economies of scale, process automation, and decreasing EPC and financing costs as companies gain experience with constructing large-scale electrolysis plants, and as a result of increased competition. Hydrogen Liquefaction, Transmission, and Distribution Large-scale production is needed to achieve economies of scale and drive down costs. There are certain contexts where the large-scale production of hydrogen can be located close to points of its use (e.g., ports and industrial facilities). In this context, clean hydrogen may offer an opportunity to derive value from existing industries that rely on hydrogen, such as refineries, steel production, or other industrial processes. Increasing hydrogen’s use in road transport beyond its use in ports and industrial clusters would require delivering hydrogen to hydrogen refueling stations (HRSs) in other nearby cities, potentially driving up hydrogen costs significantly (especially given uncertainties regarding the utilization of expensive infrastructure). Options for hydrogen transport include the delivery of gaseous compressed hydrogen (CH2) at 350 or 700 bar in trucks, the delivery of liquefied hydrogen in trucks, or the delivery of gaseous CH2 via pipelines. The relative costs of these options depend on the scale of the hydrogen throughput transported and the distance. Pipeline delivery costs are lowest for transporting a high throughput of hydrogen over short distances. In the initial stages and below a certain throughput, and except for cases where dedicated pipelines can be built to distribute hydrogen over very short distances from the production site (on-site production), delivery from a dedicated hydrogen production facility (“centralized production”) to an HRS will require dedicated shipments by liquid tanker or tube trailer trucks. Tube trailers are designed to carry hydrogen at modest compression (e.g., 180 bar is common), allowing its further compression at stations (up to 350 bar or 700 bar tanks), which can be expensive and energy intensive. Further, tube trailers typically carry approximately 500–800 kg, about half the capacity of newer hydrogen stations in California (often rated at 1,500 kg/day). If such a station were to operate at full capacity, two deliveries of hydrogen would be needed per day for steady operation. For larger stations, such as the 4–8 tonnes/day sizes planned in California for heavy-duty truck refueling, tube trailer delivery becomes problematic since these stations, when operating at capacity, would require up to 10 deliveries per day. Weight restrictions for tractor-trailer operations, plus the low volumetric energy density of gas hydrogen (GH2), limit the amount of hydrogen that can be transported on these vehicles, with implications for the additional Clean Hydrogen for Road Transport in Developing Countries 21 2 Hydrogen Production and Cost Estimation levelized cost of hydrogen delivered to the stations, and ultimately dispensed to these vehicles, and for the scalability of truck delivery. To address the cost and scalability challenges of GH2 truck delivery, demonstrations of trailers equipped to deliver liquified hydrogen (LH2) are underway, for example, by Daimler (US DOE 2023a). If the requisite technologies are developed to become commercially viable, trailer-based delivery of LH2 could be competitive with pipeline delivery even at large scales. Using LH2 requires liquefaction capacity. The current liquefaction capacity is low but is ramping up. In California, a station with capacity of 18 metric tonne per day (MTPD) recently opened to fuel heavy- and light- duty vehicles with 700 bar storage tanks with LH2 via cryo-compression pumping technology. This liquid-to- compressed gas transfer allows vehicles to be refueled at up to 10 kg/minute, much faster than the 2.5 kg/minute rates that the commonly available CH2 pumping systems allow. For this reason, California expects most future stations to refuel from liquid storage. The liquefaction step would take place off site and the hydrogen would be delivered in a tank on a truck (at up to 4 tonnes per delivery). Liquifying hydrogen requires cooling (and slightly compressing) gaseous hydrogen to a temperature of −253° C. This is an energetically expensive process. While the storage and compression equipment to bring pressure to above 700 bar consumes electricity on the order of 10 percent of the lower heating value (LHV) of the energy in the hydrogen gas, the electricity requirements of the compressors to liquify hydrogen are on the order of 25–35 percent of the LHV of the resulting LH2 (Gómez and Santos 2023). However, at refueling stations, the LH2 delivered can be maintained and used for refueling with much less energy than is needed for compression systems (box 2.2). Liquefaction still needs significantly more energy on a systemwide basis. The costs of liquefaction equipment and the electricity needed to operate it can be reduced by achieving scale. Assuming US representative electricity costs, levelized liquefaction plus terminal facility costs can be cut by over 50 percent, to approximately US$3.15/kg, from their current representative level (of about US$6.60/kg at 5 MTPD) by producing for a market size of 1,000 MTPD (NREL 2024a). Hydrogen liquefaction can contribute substantially to the total LCOH, and is subject to some uncertainty and fluctuation, but can also benefit from strong economies of scale. In theory, the costs of the electricity requirements needed to liquefy hydrogen could be offset by lower energy needs and lower equipment costs by avoiding the need for compressors at stations. On-site hydrogen production is another strategy to reduce the overall cost of hydrogen production and refueling. Hydrogen produced via electrolysis is typically produced on site or at a short distance from the refueling station, utilizing a nearby natural gas supply (and SMR conversion process) or via electrolysis using the available electricity supply. On-site electrolytic hydrogen production facilitates electrolyzer modularity; electrolyzers can be added incrementally to increase station capacity as needed. Stations also may not require large footprints Clean Hydrogen for Road Transport in Developing Countries 22 2 Hydrogen Production and Cost Estimation BOX 2.2. Liquefaction Refueling in Oakland, CA, United States In early 2024, California-based FirstElement Fuel (FEF) introduced liquid cryopumps into the trucking industry with the world’s first H70 fast-fill lane designed specifically for heavy-duty vehicles (Hood 2024). For hydrogen to become a liquid, it must be cooled to at least –253° C. At these temperatures, the hydrogen turns into a cryogenic liquid, leading to the branding of the new technology as “cryopumps.” FEF developed its cryopump technology in response to the operational inefficiencies and end-user inconveniences associated with its gaseous hydrogen system. With the technology now proven, FEF was selected to operate a high-capacity, high-throughput liquid hydrogen fueling station for commercial heavy-duty trucks as part of the wider US$53 million NorCAL ZERO initiative (Port of Oakland 2024). A storage capacity of 18,000 kg (18 MTPD) and refueling times of approximately 10 minutes allow the site to handle up to 200 trucks a day (Port of Oakland 2024). The port of Oakland’s purchase of 30 Hyundai XCIENT Class 8 hydrogen trucks with a 400-mile range marks a major step forward in the push to decarbonize the industry (Port of Oakland 2024). for their location and operation, and can benefit greatly if they can be co-located with renewable power stations (e.g., wind farms and PV stations). In short, the range of LCOH estimates is wide for either centralized or on-site production. They are sensitive to economies of scale, CAPEX, and energy costs. The levelized costs could decline by 16–30 percent as stations scale from 2 to 18 MTPD in the case of LH2 delivery to HRSs, and by 28–47 percent in the case of on-site hydrogen production (based on 30–80 percent utilization rates, with lower-scale economies at higher utilization rates) (NREL 2024a). Regarding the price of hydrogen at the pump, some early cost-benefit studies indicated that off-site stations with tube-truck delivery could be economical within 300 kilometers (km), whereas liquid tanker delivery could be more economical within 300 km to about 1,000 km. Off-site stations with pipeline delivery of hydrogen could be more economical at higher rates of pipeline utilization (Wu et al. 2024). At refueling stations, optimization of station design based on local conditions and resources could help reduce the overall refueling costs, combined with reductions in energy and investment costs for compression, storage, and precooling (Maurer et al. 2023). Similar to the situation for the LCOH, estimates for the levelized cost of refueling (LCOR) vary widely for the Clean Hydrogen for Road Transport in Developing Countries 23 2 Hydrogen Production and Cost Estimation price markup associated with transporting and storing hydrogen, and refueling stations. In this report, we will use the best estimate based on the existing industrial experience and reasonable projections based on the literature. Estimates of Levelized Costs of Hydrogen and Levelized Costs of Refueling in Selected Countries Estimates of the cost of hydrogen production use a purpose-built optimization tool, which minimizes the LCOH for production. Based on inputs of resource availability (hourly data on solar irradiation and wind speed at a given turbine height, based on location data), the tool determines the optimal sizing for PV (in megawatts), wind (in megawatts), and stationary battery storage (in megawatt-hours) to power a hydrogen-producing PEM electrolysis plant. The tool is designed to calculate the minimum LCOH based on geographic location and CAPEX; operational expenditure; lifetime; repowering/replacement costs; and efficiency of electricity generation (PV and wind turbine) and storage (battery) components, and electrolyzers. The cost-minimized levelized cost of electricity (LCOE) from PV solar and wind is then input into other electrolytic hydrogen production cost calculators, namely, NREL’s Hydrogen Analysis Lite Production (H2A-Lite) and Agora’s LCOH Calculator (NREL 2024b; Agora Energiewende 2023), for comparison and validation of methods. The three tools produce quite similar estimates of the LCOH once the electrolyzer’s utilization (full load hours) and the LCOE of the coupled solar–wind–battery system are provided as inputs into the NREL and Agora tools. The optimization tool’s estimates are input into H2A-Lite, which incorporates many other inputs (e.g., grid connections, permitting, land costs, water costs), producing more conservative and realistic cost estimates of the LCOH for production. Levelized Cost of Hydrogen The cost estimates shown in figure 2.1 are based on the LCOH optimization tool developed by University of California, Davis. The differences in the estimated LCOH are mainly determined by resource availability (solar irradiation for PV, wind for onshore wind turbines) and complementarity (e.g., wind availability at night), and the cost of capital for all components (e.g., total installed costs of PV and onshore wind installations)—in decreasing order of importance. The parameters used in the model are based on real-world cases in these five countries, and relevant information is summarized in appendix B. LCOH reductions from 2030 to 2035 are driven primarily by the assumption that the WACC of electrolytic hydrogen production can decline significantly (by 15–30 percent), based on increased experience with technology deployment, and on assumed efficiency, cost, and durability improvements across technologies (especially electrolyzers). Clean Hydrogen for Road Transport in Developing Countries 24 2 Hydrogen Production and Cost Estimation FIGURE 2.1. Mid-Term (2030 and 2035) Levelized Cost of Green Hydrogen Production in Selected Countries 6.00 5.61 5.00 4.68 4.51 2.83 3.89 4.00 1.26 3.34 2024 US$/kg 2.31 3.03 2.84 3.00 2.71 2.15 1.13 0.53 2.19 2.23 2.19 0.97 1.05 2.00 1.71 0.47 2.49 2.00 0.73 0.76 1.66 0.40 1.51 1.84 1.26 1.00 1.04 1.09 1.00 0.78 0.70 0.87 0.24 0.24 0.26 0.23 0.23 0.21 0.24 0.24 0.24 0.24 0.24 0.24 0.47 0.37 0.52 0.45 0.43 0.40 0.45 0.36 0.47 0.38 0.52 0.41 0.00 30 35 30 35 30 35 30 35 30 35 30 35 20 20 20 20 20 20 20 20 20 20 20 20 India South Africa Chile Brazil Texas Korea wind + PV + PV + wind + PV + battery wind + battery wind + PV + PV + wind + battery battery battery battery CAPEX + depreciation OPEX Electricity/NG/coal costs Cost of capital Source: World Bank. Note: original estimates of hydrogen production costs in different economies. The production method is PEM electrolytic hydrogen production with an installed capacity of 57.56 MTPD, corresponding to 133 MW (2030) or 115 MW (2035) of capacity. The estimates are developed based on an optimization tool that sizes renewable electricity (PV + wind) production and battery storage to provide electricity to PEM electrolyzers using site-specific renewable resource potential (solar irradiation and wind speed, with hourly resolution over a year, from renewables.ninja) and applying estimates of the levelized cost of electricity (LCOE) based on the PV, wind, and battery storage costs in the NREL H2A-Lite model (NREL 2024b). CAPEX = capital expenditure; kg = kilogram; NG = natural gas; OPEX = operational expenditure; PV = photovoltaic. This original research projected hydrogen production costs up to 2035. It is based on different hydrogen production processes, the cost advantage of energy and feedstock in the countries under study (e.g., South Africa produces more coal than natural gas, while in Brazil and Chile, using renewable energy is much more likely given the abundance of such resources), and an original study on hydrogen storage and distribution cost trends up to 2030 and 2035. In the cases of “blue” or “gray” hydrogen, production costs are dominated by the costs of feedstock (i.e., natural gas in the case of steam methane and autothermal reforming) and, in the case of coal gasification, by operational expenditure. Estimates of the LCOH for hydrogen production in each selected economy (excluding Brazil and Chile, where the value proposition is exclusively for “green” hydrogen) are developed based on representative recent (industrial) natural gas and coal prices, using H2A-Lite (figure 2.2). Clean Hydrogen for Road Transport in Developing Countries 25 2 Hydrogen Production and Cost Estimation FIGURE 2.2. Mid-Term (2030 and 2035) Levelized Cost of Blue and Gray Hydrogen Production in the Selected Economies 4.00 3.81 3.64 3.50 0.42 3.16 3.00 1.66 2.83 2.78 2.72 0.97 2.60 0.39 2.47 2.50 0.17 0.93 2.26 2024 US$/kg 0.53 0.07 1.19 2.02 2.00 1.88 0.37 2.62 1.75 0.24 1.60 0.27 0.67 0.28 1.48 1.50 1.78 0.18 0.27 0.19 0.19 2.23 1.42 1.99 1.99 1.21 1.00 1.16 0.90 0.86 1.44 0.78 1.22 0.86 0.04 0.74 0.83 0.07 0.50 0.58 0.47 0.51 0.47 0.41 0.47 0.41 0.56 0.47 0.40 0.34 0.13 0.13 0.13 0.10 0.13 0.13 0.13 0.14 0.11 0.07 0.07 0.11 0.11 0.11 0.05 0.12 0.07 0.07 0.07 0.00 30 35 30 35 30 35 30 35 30 35 30 35 30 35 30 35 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 India India South Africa South Africa United United Korea Korea ATR w/CCS SMR coal + CCS coal States States ATR w/CCS SMR (blue H2, (grey H2, (blue H2, (grey H2, ATR w/CCS SMR (blue H2, (grey H2, w/NG) w/NG) w/coal) w/coal) (blue H2, (grey H2, w/NG) w/NG) w/NG) w/NG) CAPEX + depreciation OPEX Electricity/NG/coal costs Cost of capital Source: World Bank. Note: Author’s estimates of hydrogen production costs based on natural gas (SMR or ATR with CCS), or coal gasification (coal), in different countries, using the NREL H2A-Lite tool (NREL 2024b). These gray and blue hydrogen plants have a much higher installed capacity than the green facilities: 480 MTPD for gray hydrogen (SMR), 660 MTPD for natural gas–based blue hydrogen (ATR+CCS), and 1,000 MTPD for coal gasification + CCS in South Africa. Natural gas and coal prices are taken as representative industrial prices from official sources. Natural gas prices range from approximately US$3.25–4.10/metric million British thermal units (MMBtu) in the United States to US$7.25–8.50/MMBtu in India, to US$13.25/MMBtu in Korea. The WACC is estimated to range from 5 to 6 percent in the case of SMR, and 6.5 to 8.0 percent in the case of ATR. ATR = autothermal reforming; CAPEX = capital expenditure; CCS = carbon capture and storage; H2 = hydrogen; kg = kilogram; NG = natural gas; OPEX = operational expenditure; SMR = steam methane reforming. The costs of gray hydrogen production are by far the lowest in the United States (Texas), based on low natural gas prices. Blue hydrogen production is expected to remain the lower-cost low-carbon production technology option in 2030, but green hydrogen may emerge as a more affordable option in Korea by 2035. More generally, in regions with affordable and abundant natural gas, blue hydrogen is likely to remain the lowest-cost, low-emission hydrogen production option. Clean Hydrogen for Road Transport in Developing Countries 26 2 Hydrogen Production and Cost Estimation Levelized Cost of Refueling Beyond the production costs of hydrogen, additional costs are incurred for transporting hydrogen and delivering it at HRSs to vehicles. A review of the current practice shows that the liquefaction method for hydrogen delivery is still in an early stage of research and development and is unlikely to be the mainstream method by 2030. Therefore, this study focuses on CH2 for estimating refueling costs. Similar to the case of hydrogen production, technoeconomic assumptions on the costs, efficiencies, and lifetimes of the hydrogen transport, distribution, and dispensation stages are taken from recent, open-source tools, specifically, Argonne National Laboratory’s Heavy-Duty Refueling Station Analysis Model (HDRSAM) (ANL 2023) and NREL’s Levelized Cost of Dispensed Hydrogen for Heavy-Duty Vehicles (NREL 2023b). Simplifications and updates based on HDRSAM and a cost model developed by UC Davis were used to examine optimistic cases of CH2 station costs. Country-specific capital and labor cost estimates were adopted to estimate truck transport, electricity, and diesel prices. Figures 2.3 and 2.4 show, respectively, the 2030 and 2035 projected levelized costs of hydrogen delivered at the pump for a network of smaller CH2 stations. The estimated levelized cost of dispensed hydrogen (also referred to as the LCOR) is highly sensitive to two parameters: 1. Station size, where the unit cost of building and operating a station is lower (on a per kilogram of hydrogen dispensed basis) for larger stations, and 2. Utilization rate, where the unit cost of hydrogen depends on how quickly the capital costs and fixed operational costs can be amortized, based on the ratio of the actual utilization to the station capacity. Three variants are explored, to develop low, medium, and high estimates for the cost of dispensing hydrogen: 1. Large station size/high utilization. This assumes that stations are the size of the largest existing stations currently (CH2: 14 stations, each with a capacity of 1,500 kg/day), with a utilization rate of 80 percent. 2. Large station size/medium utilization. This assumes that stations are the size of the largest existing stations currently (CH2: 14 stations, each with a capacity of 1,500 kg/day), with a utilization rate of 40 percent. 3. Medium station size/medium utilization. This assumes that stations are of an intermediate size (CH2: 42 stations, each with a capacity of 500 kg/day), with a utilization rate of 40 percent. Clean Hydrogen for Road Transport in Developing Countries 27 FIGURE 2.3. Delivered Costs of Compressed Green Hydrogen in 2030 and 2035 in Six Economies 14.00 13.23 0.86 12.49 12.16 12.00 1.02 0.84 11.19 10.90 10.70 0.89 1.01 10.11 9.98 0.90 10.00 9.66 9.57 9.54 0.75 9.38 0.85 0.86 0.75 8.81 8.80 0.88 8.67 8.73 6.56 0.78 0.76 0.84 0.86 8.00 1.02 6.46 7.84 6.72 8.00 7.66 7.46 1.02 7.13 3.00 0.89 0.84 6.27 1.01 6.69 6.62 6.68 2.06 6.39 6.39 0.90 6.15 6.20 6.57 2.97 6.09 6.05 0.75 0.89 3.04 6.36 0.85 2024 US$/kg 6.00 5.60 6.28 1.01 1.96 5.46 5.50 2.24 0.88 0.20 0.20 0.20 0.75 0.78 0.90 6.45 6.32 5.07 2.92 6.24 5.02 0.75 4.86 0.85 0.76 2.95 6.22 1.76 Clean Hydrogen for Road Transport in Developing Countries 0.18 0.18 0.18 0.75 3.00 0.88 4.29 0.23 0.23 0.23 1.88 2.94 0.78 2.92 2.07 4.00 1.85 0.76 0.14 0.14 0.14 2.93 2.97 2.91 1.76 0.16 0.16 0.16 1.95 1.80 2.90 1.72 0.20 0.20 0.20 0.16 0.16 0.16 5.61 5.61 5.61 0.14 0.14 0.14 1.69 0.15 0.15 0.15 4.68 4.68 4.68 0.18 0.18 0.18 0.13 0.13 0.13 4.51 4.51 4.51 2.00 3.89 3.89 3.89 0.12 0.12 0.12 3.34 3.34 3.34 2.84 2.84 2.84 3.03 3.03 3.03 2.71 2.71 2.71 2.19 2.19 2.19 2.19 2.19 2.19 2.23 2.23 2.23 1.71 1.71 1.71 0.00 low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ low/mid/ high 2030 high 2035 high 2030 high 2035 high 2030 high 2035 high 2030 high 2035 high 2030 high 2035 high 2030 high 2035 Texas India South Africa Chile Brazil Korea wind + PV + battery wind + PV + battery PV + wind + battery PV + battery wind + battery PV + wind + battery Production Compression Station Tube-truck transport Source: World Bank. Note: original estimates of the cost of hydrogen delivered at the retail pump (LCOR), based on production cost estimates detailed in the previous section, and compression/liquefaction, transport, storage, and hydrogen refueling station costs derived from NDRSAM (ANL 2023), NREL’s Levelized Cost of Dispensed Hydrogen for Heavy-Duty Vehicles (NREL 2023b), and a cost model developed in UC Davis by Fulton et al. (2024). Assumptions underlying the low, medium, and high station sizes and utilization rates are outlined above. Hydrogen production costs are taken directly from the estimates shown in figure 2.2. kg = kilogram; PV = photovoltaic. 28 FIGURE 2.4. Delivered Costs of Compressed Blue and Gray Hydrogen in 2030 and 2035 in Four Economies 12.00 11.62 11.42 1.02 10.83 0.86 10.58 10.34 10.26 10.21 0.90 9.93 1.02 10.00 9.73 0.86 0.84 0.75 9.36 9.41 9.31 0.90 0.75 8.83 8.87 0.75 0.84 1.01 8.41 0.75 0.88 8.09 7.93 7.86 8.00 1.01 0.88 0.86 1.02 7.26 6.56 7.13 6.72 6.93 6.89 6.77 6.73 6.77 0.90 1.02 6.57 6.31 6.34 6.36 0.86 0.84 0.75 0.86 1.02 6.09 6.46 6.45 6.56 6.72 5.87 5.87 5.84 5.92 6.00 5.75 0.75 5.71 0.90 0.90 6.36 6.57 5.45 5.45 5.43 0.75 1.02 0.84 3.00 5.22 0.86 6.45 3.04 1.01 0.84 0.75 6.46 2024 US$/kg 4.98 6.39 4.86 0.75 4.90 4.80 0.88 2.06 2.24 0.90 4.70 6.36 0.75 3.00 6.32 4.32 4.36 0.75 1.01 2.97 0.84 2.97 3.00 2.07 1.01 3.04 6.39 0.88 3.90 2.94 6.32 0.75 4.00 1.96 1.95 2.06 2.24 3.00 0.20 0.20 0.20 Clean Hydrogen for Road Transport in Developing Countries 0.88 3.57 0.23 0.23 0.23 2.97 1.85 2.97 2.07 2.95 1.01 2.94 0.20 0.20 0.20 0.88 1.95 2.93 1.96 0.18 0.18 0.18 0.18 0.18 0.18 1.88 0.20 0.20 0.20 1.85 0.23 0.23 0.23 1.80 2.95 0.16 0.16 0.16 2.93 0.20 0.20 0.20 0.18 0.18 0.18 2.00 1.88 0.18 0.18 0.18 3.81 3.81 3.81 0.16 0.16 0.16 1.80 3.64 3.64 3.64 0.16 0.16 0.16 0.15 0.15 0.15 3.16 3.16 3.16 2.78 2.78 2.78 2.83 2.83 2.83 2.72 2.72 2.72 2.60 2.60 2.60 2.47 2.47 2.47 2.26 2.26 2.26 2.02 2.02 2.02 0.16 0.16 0.16 1.88 1.88 1.88 1.75 1.75 1.75 0.15 0.15 0.15 1.60 1.60 1.60 1.48 1.48 1.48 0.86 0.86 0.86 0.74 0.74 0.74 0.00 / / / / / / / / / / / / / / / / id id 5 id id 5 id id 5 id id 5 id id 5 id id 5 id id 5 id id 5 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 /m 030 /m 03 w w w w w w w w w w w w w w w w lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 lo h 2 lo gh 2 g hi g hi g hi g hi g hi g hi g hi g hi hi hi hi hi hi hi hi hi United States United States India India South Africa South Africa Korea Korea ATR w/CCS SMR ATR w/CCS SMR coal + CCS coal ATR w/CCS SMR (blue H2, w/NG) (grey H2, w/NG) (blue H2, w/NG) (grey H2, w/NG) (blue H2, w/coal) (grey H2, w/coal) (blue H2, w/NG) (grey H2, w/NG) Production Compression Station Tube-truck transport Source: World Bank. Note: original estimates of the cost of hydrogen delivered at the retail pump (LCOR), based on production cost estimates detailed in the previous section, and compression/liquefaction, transport, storage, and hydrogen refueling station costs derived from NDRSAM (ANL 2023), NREL’s Levelized Cost of Dispensed Hydrogen for Heavy-Duty Vehicles (NREL 2023b), and a cost model developed in UC Davis by Fulton et al. (2024). Assumptions underlying the low, medium, and high station size and utilization rates are outlined above. Hydrogen production costs are taken directly from the estimates shown in figure 2.2. ATR = autothermal reforming; CCS = carbon capture and storage; H2 = hydrogen; kg = kilogram; NG = natural gas; SMR = steam methane reforming. 29 2 Hydrogen Production and Cost Estimation Assuming large stations could achieve high utilization, the levelized cost of dispensed hydrogen for on-site CH2 could reach as low as approximately US$4.80–7.10/kg by 2030 using blue hydrogen, and approximately US$4.30–4.90/kg in 2035, in Chile and Brazil, using green hydrogen. Using a more conservative projection regarding the growth of hydrogen use and refueling station size, for compressed blue hydrogen, refueling costs at the pump range from US$9.31/kg (United States) to US$11.42/kg (South Africa) by 2030 and from US$8.83/kg to US$10.21/kg by 2035. For compressed green hydrogen, they range from US$9.98/kg (Chile) to US$13.23/kg (South Africa) by 2030 and from US$8.81/kg (Chile) to US$10.70 (Korea) by 2035. It should be emphasized that these cost projections assume that technology milestones are achieved at each stage of the complex hydrogen value chain, from production to transportation to storage and dispensation at the station, and that economies of scale and research and development are successful on the vehicle side in bringing down costs and improving reliability and performance. To put those numbers into context, the prevailing hydrogen price at the pump is about US$30/kg in the United States, US$11/kg in Europe (Zhou and Searle 2022), US$7.18/kg in Korea, and US$7.71/kg in Japan (Collins 2024). Note that these market prices are mainly for gray hydrogen and may include government subsidies. Given the current stage of technology development and the worldwide landscape of the deployment of hydrogen mobility projects, this report uses the higher estimates for both blue hydrogen and green hydrogen costs. For Brazil and Chile, given the abundance of renewable resources and other technological constraints, it does not make economic sense to deploy blue hydrogen projects. The blue hydrogen costs for these two countries are therefore estimated using the average for other countries. In practice, in these countries, only green hydrogen projects would make economic sense, if deployed. Finally, discussions in this chapter show that the hydrogen price at the pump depends on future technology and market development, and there are many uncertainties, ranging from the supply side (i.e., hydrogen production) to transport and supply infrastructure (i.e., compression or liquefaction, transport, and refueling), to the end-use technology (i.e., fuel cells and fuel cell vehicles). Recognizing such uncertainties, additional sensitivity tests on hydrogen production costs were performed for this report—in chapter 3—to make the analysis more robust. References Agora Industry. 2023. 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NREL. 2024b. “H2A-Lite: Hydrogen Analysis Lite Production Model.” https://www.nrel.gov/hydrogen/h2a-lite.html. Clean Hydrogen for Road Transport in Developing Countries 31 2 Hydrogen Production and Cost Estimation Port of Oakland. 2024. “Port of Oakland Celebrates Hydrogen-Powered Trucks Project.” Port of Oakland, May 2, 2024. Accessed October 23, 2024. www.portofoakland.com/port-of-oakland-celebrates-hydrogen-powered-trucks-project/. PV International. 2024. “Electrolyzer Prices—What to Expect.” PV Magazine, March 21, 2024. Accessed May 22, 2024. https://www.pv-magazine.com/2024/03/21/electrolyzer-prices-what-to-expect/. US DOE (United States Department of Energy). 2023a. Pathways to Commercial Liftoff: Clean Hydrogen. Washington, DC: US DOE. https://liftoff.energy.gov/wp-content/uploads/2023/05/20230523-Pathways-to-Commercial-Liftoff-Clean -Hydrogen.pdf. Wu, L., Z. Zhu, Y. Feng, and W. Tan. 2024. “Economic Analysis of Hydrogen Refueling Station Considering Different Operation Modes.” International Journal of Hydrogen Energy 52 (Part B): 1577–91. https://www.sciencedirect.com/ science/article/abs/pii/S0360319923047791. Zhou, Y., and S. Searle. 2022. “Cost of Renewable Hydrogen Produced Onsite at Hydrogen Refueling Stations in Europe.” International Council on Clean Transportation white paper, February 2022. https://theicct.org/publication/fuels-eu -onsite-hydro-cost-feb22/. Clean Hydrogen for Road Transport in Developing Countries 32 k oc rst utte h n/S ma Snow ed ©N CHAPTER 3: Economics of Hydrogen Mobility 3 Economics of Hydrogen Mobility The Policy Questions Although clean hydrogen technologies have shown their potential in decarbonizing transport, the use of hydrogen in road transport represents less than 0.1 percent of global hydrogen demand (IEA 2024). Many policy makers are trying to understand whether hydrogen mobility makes sense and, if so, when and how to pursue such a transition. The economics of hydrogen mobility entails several important questions. Is the higher capital cost of fuel cell electric vehicles (FCEVs) compensated by lower operating costs? Would it be preferable to wait until technological change and global economies of scale further bring down the costs of FCEV technology? Should countries prioritize FCEVs in certain transport market segments, such as heavy- duty trucks or large transit buses? Does it make sense environmentally to start with blue hydrogen when green hydrogen is still not at scale or too expensive? Can the move toward FCEVs be justified purely in terms of mitigating local air pollution? To what extent do the wide array of taxes, import duties, and subsidies levied on vehicles as well as on transport fuels and electricity services materially distort consumer choices between FCEVs and other competing vehicle types (internal combustion engine vehicles [ICEVs] and battery electric vehicles [BEVs])? Even if FCEVs are socially desirable, will vehicle owners have the incentive or financing capacity to adopt them without explicit public mandates? When answering those questions, it is important to note that hydrogen mobility is among many potential pathways to decarbonize the transport sector and needs to compete with other technologies, particularly BEVs. Competitiveness may depend on country-specific factors, such as energy prices, fleet composition, and the valuation of local and global environmental benefits. A country-level economic assessment of hydrogen mobility is therefore essential to support planning and policy dialogue, and potential downstream investments. It also helps to assess different scenarios of a transition to zero-emission vehicles (ZEVs) in which FCEVs and BEVs may complement each other, for a clean energy transition in the transport sector. Overview of the Mobility Analysis Tool This section introduces a succinct economic framework for answering critical questions on the sustainable mobility options based on an advanced understanding of the costs and benefits of the ZEV transition via different technological paths. The framework examines this issue at a national level, while exploring how conclusions may differ according to the conditions in individual countries and individual market segments within each country. A methodology similar to that developed in a World Bank study (Briceno-Garmendia, Qiao and Foster, 2023) has been followed for an economic analysis of FCEVs in low- and middle-income countries (LMICs), and the methodology is extended to include FCEVs and expanded to two more vehicle segments: light commercial vehicles (LCVs) and heavy-duty vehicles (HDVs). Clean Hydrogen for Road Transport in Developing Countries 34 3 Economics of Hydrogen Mobility The transition to low-carbon, sustainable mobility is gradual. The economic outcome of such a transition is constrained by the existing conditions of the transport sector, for example, the average age of the existing fleet, pace of vehicle retirement, fleet growth rate, and other local factors, in individual countries. This study, differing from many analyses that only highlight technologies themselves and the total cost of ownership (TCO) analysis for individuals, will model and track the evolution of the entire fleet of different transport market segments at a country level over time and under different policy scenarios. This approach has a higher requirement for data and meticulousness in modeling but could be useful for governments that are interested in where, when, and how the adoption of FCEVs in the road transport sector could justify and what policy levers are needed to support this transition. This report evaluates the net social benefit/cost of achieving an illustrative national target of 30 percent of the cars, buses, and trucks entering the national fleet being ZEVs (BEVs or FCEVs) by 2030, known as the “30 ×30 scenario.” The net social costs are calculated as the difference between the lifetime (capital, operating, infrastructure, and environmental) cost of the vehicle fleet that meets the policy target, compared to the lifetime cost for a baseline scenario, called business as usual (BAU), in which the vehicle fleets of different segments continue to evolve following historical trends, with no explicit policy mandating a low-carbon fleet. The analysis framework strips out fiscal wedges such as taxes, import duties, and subsidies to examine the underlying costs. In addition, the impact on local environmental externalities (e.g., urban air pollution) and greenhouse-gas-emission-related global externalities is incorporated to provide a full economic picture. Further, a comparison from a parallel financial analysis is provided to convey the financial implications of a transition to ZEVs. The overall framework is microeconomic and does not consider wider macroeconomic repercussions. Transition scenarios based on two vehicle powertrain types, FCEVs and BEVs, will be compared. The study includes four vehicle segments: cars, buses, LCVs, and HDVs. Throughout the report, results will be disaggregated by vehicle market segment and cost category. Evaluating Hydrogen Mobility at the Country Level The economics of a transition to ZEVs for road transport at the country level can be evaluated by comparing the present values of all the lifetime capital and operation costs for the new vehicles entering the fleet as of 2030 under the 30 ×30 versus BAU scenarios. Using FCEV adoption, for example, this framework is represented by Equation 1, where Δ denotes the difference between the 30 ×30 scenario and BAU, NSC denotes net social costs, PV denotes present value of costs, CC denotes vehicle capital costs, IC denotes Clean Hydrogen for Road Transport in Developing Countries 35 3 Economics of Hydrogen Mobility infrastructure costs (refueling stations in the case of FCEVs and charging infrastructure in the case of EVs), T denotes taxes, S denotes subsidies, EX denotes environmental externality costs, cap denotes capital costs, and ope denotes operating costs: DNSCFCEV = PV30#30, FECV `Economic cost j - PVBAU `Economic cost j DNSCFCEV = PV30#30, FCEV `CC + OC + IC - T + S + EX j - PVBAU `CC + OC + IC - T + S + EX j Or alternatively, DNSCFCEV = DPVFCEV `CC - Tcap + Scap j + DPVFCEV `CC - Tope + Sope j + DPVFCEV `IC j + DPVFCEV `EX j The same set of equations can be applied to the case of achieving the 30 ×30 policy target through BEVs, which yields a net social cost change of ΔNSCEV. These two measures, ΔNSCFCEV and ΔNSCEV, can be compared to shed light on the relative economic advantage of decarbonizing via FCEVs or EVs under the 30 ×30 scenario. The operating costs will be further decomposed into costs for fuel, maintenance, and battery replacement, while the environmental externality costs will be decomposed as local (air pollution reduction benefits) or global (carbon dioxide [CO2] emission reduction benefits). The decomposition makes it possible to understand which of these differences is primarily responsible for driving the results. To shed light on the potential of hydrogen mobility under a range of conditions in transport and energy, this report analyzes the economics of FCEVs in four representative LMICs: Brazil, Chile, India, and South Africa. These four countries are very different in their energy mix and availability of renewable resources, besides having quite different road fleet compositions. The result will be a variation in energy prices, valuation of environmental damages, and demand for the power grid, offering a wide range of reference points for other LMICs. In addition, Korea is added to the pool since it is among the leaders in the adoption of hydrogen mobility. Vehicle Capital Costs The composition of vehicle fleets varies across countries. Brazil and Chile have relatively small bus fleets, but India, South Africa, and Korea have large fleets. All five countries have large fleets of trucks. Chile and South Africa have more LCVs (above 20 percent), while large trucks are comparatively greater in number in Brazil and India (approximately 6 percent). Clean Hydrogen for Road Transport in Developing Countries 36 3 Economics of Hydrogen Mobility Estimating the vehicle capital cost for FCEVs is a challenge. The technology is still under development, though rapidly, and only a few small-scale deployments exist in a handful of countries (e.g., United States, Korea, and China). FCEVs’ prices vary significantly, partly due to different design and technical specifications. For example, some Chinese models are equipped with a small fuel cell, which functions as a distance extender for the battery pack. These models are very different from the mainstream models in Korea and the United States, in which mainly fuel cells power the wheels and which are in general more expensive to build. As indicated in chapter 1, further reduction of vehicle capital costs depends on technology advancement and economies of scale. The capital cost of FCEVs in this report is estimated based on several resources. For example, the cost estimate of fuel cell HDVs is based on an International Council on Clean Transportation (ICCT 2023) study for the years 2022, 2030, and 2040. For fuel cell buses, vehicle price is estimated using documented purchase costs from China and Korea (Jin 2022). For fuel cell cars and LCVs, the current price comes from the Alternative Fuel Life-Cycle Environmental and Economic Transportation (AFLEET) model (ANL 2024). Figure 3.1 shows FCEV vehicle price estimates for the vehicle types in this study. FIGURE 3.1. Fuel Cell and Battery Electric Vehicle Price Estimates, by Vehicle Type 800,000 700,000 600,000 500,000 US$/vehicle 400,000 300,000 200,000 100,000 0 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 FCEV Car FCEV Bus FCEV LCV FCEV HDV EV Car EV Bus EV LCV EV HDV Source: World Bank. Note: The prices are before applying country-specific adjustment factors. EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 37 3 Economics of Hydrogen Mobility The market for fuel cell and battery electric buses and HDVs features a limited number of manufacturers, and price is less affected by country-specific factors (i.e., captured by purchase price parity [PPP], tracked by the World Bank International Comparison Program), while PPP is likely to affect the manufacturing of cars and LCVs. Purchased vehicles are often subject to significant taxes and import duties, whereas FCEVs/BEVs may be treated favorably (figure 3.2). Although fiscal incentives are not considered in the economic analysis, they play an important role in the financial analysis. It is important to understand the impact of the vehicle tax burden and to what extent the tax burden on FCEVs, BEVs, and ICEVs is even handed or privileges one type of vehicle over another. Among the five countries, Chile, India, South Africa, and Korea do not offer any tax or imported duty incentives for FCEV/BEV HDVs. Brazil used to waive the import duty for FCEV/BEV HDVs (20 percent for diesel HDVs), although it phased out such incentives starting in 2024. As of January 2025, Brazil has a slightly higher tax for diesel HDVs than BEVs/FCEVs, but the import duty was even lower for diesel HDVs. None of the five countries offers any import duty advantage to battery electric or fuel cell cars, but three (Brazil, India, and Korea) offer some tax advantages to such cars. None offers any tax or imported duty advantages to battery electric or fuel cell LCVs and buses, except that Brazil offers slight tax advantages for LCVs (36.7 percent for diesel LCVs vs 30.6 percent for battery electric or fuel cell LCVs). FIGURE 3.2. Tax and Import Duty Rates for Diesel-Fueled, Battery Electric, and Fuel Cell Cars as of January 2025 140.0% 120.0% 100.0% 80.0% Rate 60.0% 40.0% 20.0% 0.0% Brazil Chile India South Africa Korea, Rep. Tax Rate (Petrol) Tax Rate (EV/FCEV) Imported Duty (Petrol) Imported Duty (EV/FCEV) Source: Customs Info Database, US International Trade Administration. Note: EV = electric vehicle; FCEV = fuel cell electric vehicle. Clean Hydrogen for Road Transport in Developing Countries 38 3 Economics of Hydrogen Mobility In addition to tax and import duty advantages, some countries also offer direct subsidies. In 2022, India offered US$1,795/vehicle for electric cars and US$59,866/vehicle for electric buses, while Korea offered US$5,897, US$4,4230, US$4,423, and US$4,423 for electric cars, buses, LCVs, and HDVs, respectively. The other three countries do not offer any subsidies to electric vehicles. Korea also offers the most comprehensive fiscal incentive programs for FCEVs as part of its road map for a hydrogen economy. The objective of this strategy is to foster an energy sector of carbon neutrality and energy security and make hydrogen mobility more competitive in Korea. As discussed in the first two chapters, economies of scale are vital for reducing vehicle capital costs as well as the operating costs of FCEVs, and this ambitious program in Korea is designed to reduce both. In general, this program brings the retail price of an FCEV after taxes and subsidies into a range comparable to that of ICEVs. Finally, the capital cost of the 30 ×30 scenario relative to that of the BAU is summarized in table 3.1. Throughout the chapter, the results of the economic analysis are expressed in terms of US$/vehicle normalized by the number of vehicles newly added to the fleet in that year. A parallel financial analysis is conducted by considering various fiscal wedges, such as taxes, import duties, and subsidies. The results are based on the year 2030, a common target year for policy analysis. The economic analysis indicates that, by 2030, FCEVs are still too expensive to show any purchase capital cost advantage. The gap ranges from a few hundred dollars for cars to about US$40,000 for buses in the four LMICs when comparing FCEVs to ICEVs. The gap is slightly smaller for fuel cell buses in Korea. Reporting the fiscal wedge makes it possible to establish the extent to which taxes and subsidies support FCEVs. Korea has a significant fiscal wedge for promoting FCEVs, mostly through heavy subsidies. FCEVs therefore start to show financial cost advantages for cars compared with the BAU. India’s incentive program has favorable tax treatment for FCEVs over ICE cars (12 percent vs 45 percent). Fuel cell cars in India therefore start to show a financial advantage over ICE cars by 2030. However, India does not have any similar incentive programs for buses, LCVs, and HDVs. Brazil also shows a slight advantage for fuel cell cars over ICE cars because of the tax advantage (48.2 percent vs 52.6 percent) by 2030. The next three columns in table 3.1 show the vehicle capital cost advantage for the BEV adoption scenario. Because battery electric cars are relatively inexpensive, in all five countries, such cars have shown an economic as well as a financial cost advantage. For buses, LCVs, and HDVs, both FCEV and BEV uptake requires greater support of vehicle capital expenses when compared with BAU. Finally, when the adoption of FCEVs and BEVs is compared (the last two columns in table 3.1), BEVs show an economic capital cost advantage in all market segments and in all five countries. This is because, based on Clean Hydrogen for Road Transport in Developing Countries 39 3 Economics of Hydrogen Mobility TABLE 3.1. Capital Cost Advantage of FCEVs by Vehicle Category, 2030 Hydrogen mobility scenario Electrification scenario Advantage? US$/vehicle US$/vehicle Economic Net taxes Financial Economic Net taxes Financial cost and cost cost and cost Economic Financial advantage subsidies advantage advantage subsidies advantage cost cost (a) (b) (a+b) (a) (b) (a+b) advantage advantage Country Car Car Brazil (141) 362 221 844 873 1,717 EV EV Chile (130) (44) (173) 777 262 1,039 EV EV India (98) 2,472 2,374 589 3,134 3,723 EV EV South Africa (136) (691) (827) 818 (222) 596 EV EV Korea, Rep. (90) 4,055 3,965 592 3,672 4,264 EV EV Bus Bus Brazil (35,754) (17,729) (53,483) (24,891) (12,342) (37,233) EV EV Chile (39,653) (13,366) (53,019) (28,789) (9,704) (38,494) EV EV India (38,612) (12,788) (51,400) (29,982) (9,930) (39,912) EV EV South Africa (36,999) (7,762) (44,762) (26,121) (5,480) (31,601) EV EV Korea, Rep. (35,648) 33,787 (1,861) (25,342) 7,064 (18,279) EV FCEV LCV LCV Brazil (8,537) (2,770) (11,306) (5,739) (1,576) (7,315) EV EV Chile (6,528) (2,200) (8,728) (3,973) (1,339) (5,313) EV EV India (5,480) (1,815) (7,295) (3,490) (1,156) (4,647) EV EV South Africa (6,958) (1,364) (8,322) (4,236) (830) (5,066) EV EV Korea, Rep. (3,938) 739 (3,199) (2,612) 402 (2,209) EV EV HDV HDV Brazil (31,427) (8,763) (40,190) (24,227) (6,417) (30,645) EV EV Chile (35,734) (12,045) (47,779) (28,534) (9,618) (38,152) EV EV India (45,621) (15,110) (60,730) (38,421) (12,725) (51,146) EV EV South Africa (32,747) (5,891) (38,638) (25,547) (4,596) (30,143) EV EV Korea, Rep. (33,990) 31,232 (2,757) (26,790) (1,352) (28,142) EV FCEV Source: World Bank. Note: EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 40 3 Economics of Hydrogen Mobility the current forecast of technology development, FCEVs will still be more expensive than BEVs. When the fiscal wedge is considered, as shown in the case of Korea, FCEVs could show a financial advantage over BEVs for HDVs and buses, since Korea offers heavy subsidies to FCEVs as part of its national strategy for a hydrogen economy. However, fuel cell cars and LCVs still cannot compete with BEVs even when fiscal incentives are considered. Vehicle Operating Costs Vehicle operation has two main components: fuel cost and maintenance cost. Analysis by the Argonne National Laboratory shows that the maintenance costs for fuel cell cars, buses, LCVs, and HDVs are, respectively, 60 percent, 60 percent, 65 percent, and 83.3 percent of the maintenance costs for their ICE counterparts on a per-mile basis. This is because they have fewer moving parts and require less frequent servicing. The fuel costs of vehicles include two components: the cost per unit of energy delivered (by hydrogen, electricity, or gasoline) and the energy consumption per unit of travel, which reflects the relative energy efficiency of BEVs/FCEVs versus ICEVs. In Equation 2, below, Δ denotes the difference between variables under the 30 ×30 scenario versus BAU, CE denotes the unit energy cost of transportation (US$ per vehicle-kilometer), PE denotes the unit energy price (US$ per joule), and EFF denotes the energy efficiency coefficient (joules per vehicle-kilometer): DCE = DPE # DEFF Analysis in chapter 2 shows that the levelized cost of green hydrogen at the pump is US$11.19/kg in Brazil and US$13.23 in South Africa, respectively, by 2030. The levelized cost of blue hydrogen at the pump ranges from US$10.26/kg in India to US$11.62/kg in Korea; no taxes or subsidies are considered for estimating hydrogen price at the pump. The retail price of electricity and fossil fuels varies considerably across countries. For example, the projected price of electricity varies from US$0.015/kWh in India to US$0.143/kWh in Brazil in 2030, and the price of diesel varies from US$0.742/liter in India to US$0.876/liter in Chile. The price of petroleum ranges from US$0.876 in Brazil to US$1.217 in Chile in 2030 based on an International Monetary Fund projection. One important reason for such variation in the prices of energy across countries is a wide range of tax and subsidy policies that distort the relative cost of electricity and fossil fuels, and that need to be removed before economic analysis (figure 3.3). Most striking is that, across most countries, gasoline and diesel are taxed, Clean Hydrogen for Road Transport in Developing Countries 41 3 Economics of Hydrogen Mobility FIGURE 3.3. Tax and Subsidy Rates for Gasoline, Diesel, and Electricity, 2022 80.0% 60.0% 40.0% 20.0% % of cost 0.0% –20.0% –40.0% –60.0% –80.0% Brazil Chile India South Africa Korea, Rep. Gasoline Diesel Electricity Source: CPAT model based on IMF data. while electricity is subsidized. Taxes on gasoline are typically in the 45–65 percent range, while diesel taxes are usually lower in the same country—0.4 percent in Chile to 37.7 percent in Korea in 2022. Electricity subsidies can go as high as 63.2 percent in India, while Brazil is an exception, charging a 9 percent tax on electricity. This pattern of fiscal policy tends to favor BEVs over ICEVs beyond what the underlying economic costs would suggest by substantially altering the relative prices of these alternate energy sources. Once tax and subsidy distortions are removed, electricity and liquid fuel prices can be normalized into consistent units so that the underlying economic costs can be compared Across countries, electricity is approximately twice as expensive as fossil fuels on a per-unit-of-energy basis, while hydrogen is over four times as expensive as fossil fuels. This finding is not entirely unexpected given that liquid fuels are a raw form of energy, whereas hydrogen and electricity are more extensively processed forms of energy, to which more economic value has been added through the production and delivery process. Hydrogen could be even more expensive than electricity because the electrolysis, compression, liquefaction, and refueling processes all consume power. By 2030, the blue hydrogen–green hydrogen cost gap gradually narrows because through careful planning, most green hydrogen can be produced on site through electricity generated from renewable sources. The savings in Clean Hydrogen for Road Transport in Developing Countries 42 3 Economics of Hydrogen Mobility distribution costs partially compensate for the higher production costs for green hydrogen over blue hydrogen (see chapter 2). As discussed earlier, using grid electricity to produce hydrogen via electrolysis does not make economic sense since more energy could be lost in the process, and it does not help from the pollution reduction perspective. However, the use of hard-to-preserve renewables or renewables that are difficult to connect to the grid could make green hydrogen competitive in the future. Although electricity may typically be a more expensive form of energy per unit (see figure 3.4), the actual cost of using electricity for travel may still be lower to the extent that electric vehicles are more energy efficient than ICEVs (see figure 3.5 for energy needed per kilometer of travel for all vehicle types). Hydrogen, as an energy storage medium, is similar to gasoline and diesel in that powering an FCEV requires a conversion of chemical energy into kinetic energy. However, the process is more efficient compared with fossil fuels since less energy is lost in the form of heat for FCEVs. In fact, fuel cell HDVs have an energy efficiency of about 9.5 MJ/vehicle-kilometer, compared with over 14 MJ/vehicle-kilometer for gasoline and diesel HDVs. In contrast, BEVs usually have an energy efficiency of about 3.5–4.3 MJ/vehicle-kilometer, three to four times more efficient (see figure 3.5). The trend is similar for cars, LCVs, and buses: FCEVs are in general more fuel efficient than ICEVs but less efficient than BEVs. FIGURE 3.4. Cost of Fossil Fuels, Electricity, and Hydrogen per Unit of Energy, 2030 100.0 90.0 80.0 70.0 60.0 US$/gigajoule 50.0 40.0 30.0 20.0 10.0 0.0 Brazil Chile India South Africa Korea, Rep. Petrol Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Clean Hydrogen for Road Transport in Developing Countries 43 3 Economics of Hydrogen Mobility FIGURE 3.5. Energy Efficiency of Fossil Fuels, Electricity, and Hydrogen per Unit of Travel by Vehicle Category, 2030 Cars Light commercial vehicles 3.50 4.00 3.00 3.50 3.00 2.50 Megajoule/km Megajoule/km 2.50 2.00 2.00 1.50 1.50 1.00 1.00 0.50 0.50 0.00 0.00 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. ICE/Petrol BEV FCEV/Blue FCEV/Green ICE/Diesel BEV FCEV/Blue FCEV/Green Buses Heavy-duty vehicles 25.00 20.00 18.00 20.00 16.00 14.00 Megajoule/km Megajoule/km 15.00 12.00 10.00 10.00 8.00 6.00 5.00 4.00 2.00 0.00 0.00 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. ICE/Diesel BEV FCEV/Blue FCEV/Green ICE/Diesel BEV FCEV/Blue FCEV/Green Source: World Bank. Note: BEV = battery electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; ICE = internal combustion engine; km = kilometer; LCV = light commercial vehicle. It is worth pointing out that for countries with abundant renewable energy sources such as solar or wind, green hydrogen could be more economically competitive than blue hydrogen, in addition to potential environmental benefits. This is the case for Chile and Brazil. Green hydrogen is either more economically competitive (in Chile) or very close (Brazil). Overall, when both energy efficiency and energy costs are considered, BEVs are the most cost-effective. Although FCEVs are more fuel efficient than ICEVs, they are still more expensive to operate given the high cost of hydrogen. The trend is consistent across vehicle categories (figure 3.6). Clean Hydrogen for Road Transport in Developing Countries 44 3 Economics of Hydrogen Mobility FIGURE 3.6. Cost of Fossil Fuels, Electricity, and Hydrogen per Unit of Travel by Vehicle Category, 2030 Cars Light commercial vehicles 0.100 0.25 0.090 0.080 0.20 US$/vehicle-kilometer US$/vehicle-kilometer 0.070 0.060 0.15 0.050 0.040 0.10 0.030 0.020 0.05 0.010 0.000 0.00 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. ICE/Petrol BEV FCEV/Blue FCEV/Green ICE/Diesel BEV FCEV/Blue FCEV/Green Buses Heavy-duty vehicles 1.20 1.00 0.90 1.00 0.80 US$/vehicle-kilometer US$/vehicle-kilometer 0.80 0.70 0.60 0.60 0.50 0.40 0.40 0.30 0.20 0.20 0.10 0.00 0.00 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. ICE/Diesel BEV FCEV/Blue FCEV/Green ICE/Diesel BEV FCEV/Blue FCEV/Green Source: World Bank. Note: BEV = battery electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; ICE = internal combustion engine; LCV = light commercial vehicle. The fuel cost advantage of the 30 ×30 scenario compared with BAU is summarized in table 3.2. FCEVs require higher fuel costs in all five countries, from the economic analysis. In most countries, taxes and subsidies work in favor of FCEVs, since gasoline and diesel are usually heavily taxed. FCEVs show a financial cost advantage for cars in Chile and Korea, whether green or blue hydrogen is used. However, such an advantage is not as significant as that for BEVs. The fiscal wedge in other vehicle segments is not enough to change the disadvantage for FCEVs in financial terms. Clean Hydrogen for Road Transport in Developing Countries 45 3 Economics of Hydrogen Mobility TABLE 3.2. Fuel Cost Advantage of FCEVs (green hydrogen), by Vehicle Category, 2030 Hydrogen mobility scenario Electrification scenario Advantage US$/vehicle US$/vehicle Economic Net taxes Financial Economic Net taxes Financial cost and cost cost and cost Economic Financial advantage subsidies advantage advantage subsidies advantage cost cost (a) (b) (a+b) (a) (b) (a+b) advantage advantage Country Car Car Brazil (1,347) 1,186 (161) 817 1,136 1,953 EV EV Chile (1,284) 1,991 706 902 1,944 2,846 EV EV India (2,061) 703 (1,358) 517 1,323 1,840 EV EV South Africa (2,622) 1,501 (1,121) 1,575 1,459 3,035 EV EV Korea, Rep. (1,130) 1,145 14 1,028 1,556 2,584 EV EV Bus Bus Brazil (122,491) 32,867 (89,623) 7,415 31,209 38,624 EV EV Chile (104,923) 35,958 (68,965) 10,959 34,098 45,057 EV EV India (206,480) 19,677 (186,803) 34,410 58,386 92,796 EV EV South Africa (54,097) 11,217 (42,880) 16,255 10,678 26,933 EV EV Korea, Rep. (79,026) 14,389 (64,637) 13,072 24,473 37,544 EV EV LCV LCV Brazil (22,955) 54,48 (17,507) 4,028 5,258 9,286 EV EV Chile (21,200) 6,073 (15,127) 4,199 5,898 10,097 EV EV India (19,691) 2,094 (17,597) 3,505 3,963 7,468 EV EV South Africa (10,704) 1,060 (9,645) 1,744 1,017 2,761 EV EV Korea, Rep. (12,997) 2,700 (10,297) 1,940 3,913 5,854 EV EV HDV HDV Brazil (96,804) 25,760 (71,044) 10,144 24,666 34,811 EV EV Chile (83,225) 28,275 (54,950) 12,534 27,045 39,579 EV EV India (261,141) 34,929 (226,212) 79,125 88,130 167,254 EV EV South Africa (103,790) 13,625 (90,165) 16,825 12,852 29,677 EV EV Korea, Rep. (83,128) 15,005 (68,123) 15,719 23,738 39,457 EV EV Source: World Bank. Note: The fuel cost advantages of FCEVs using blue hydrogen in 2030 are very similar to those of FCEVs using green hydrogen, with the same conclusions on economic competitiveness when compared with BAU. EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 46 3 Economics of Hydrogen Mobility Regarding the maintenance cost advantage, both FCEVs and BEVs have lower day-to-day maintenance costs than ICEVs (table 3.3). However, electric vehicles usually require a mid-life battery change, at about 10 years based on prevailing annual vehicle-kilometers traveled in most countries. The 30 ×30 scenario shows a lifetime maintenance advantage for FCEV cars, LCVs, and HDVs. For buses, the two scenarios have a similar advantage. TABLE 3.3. Vehicle Maintenance Cost Advantage of FCEVs, by Vehicle Type, 2030 Hydrogen mobility scenario Electric mobility scenario Advantage US$/vehicle US$/vehicle Maintenance Maintenance cost Battery cost Battery Maintenance advantage replacement advantage replacement cost (a) (b) Total (a) (b) Total advantage Country Car Car Brazil 689 0 689 814 (389) 425 FCEV Chile 695 0 695 821 (358) 463 FCEV India 627 0 627 741 (271) 470 FCEV South Africa 708 0 708 836 (377) 459 FCEV Korea, Rep. 466 0 466 557 (269) 288 FCEV Bus Bus Brazil 5,328 0 5,328 6,876 (1,523) 5,353 EV Chile 5,328 0 5,328 6,876 (1,523) 5,353 EV India 4,953 0 4,953 6,391 (1,210) 5,182 EV South Africa 7,381 0 7,381 9,525 (1,525) 8,000 EV Korea, Rep. 4,989 0 4,989 6,457 (1,444) 5,012 EV LCV LCV Brazil 90 0 90 799 (1,483) (684) FCEV Chile 877 0 877 1,585 (1,354) 231 FCEV India 656 0 656 1,481 (1,055) 427 FCEV South Africa 1,026 0 1,026 1,855 (1,443) 412 FCEV Korea, Rep. 111 0 111 465 (703) (238) FCEV (continues) Clean Hydrogen for Road Transport in Developing Countries 47 3 Economics of Hydrogen Mobility TABLE 3.3. Vehicle Maintenance Cost Advantage of FCEVs, by Vehicle Type, 2030 (continued) Hydrogen mobility scenario Electric mobility scenario Advantage US$/vehicle US$/vehicle Maintenance Maintenance cost Battery cost Battery Maintenance advantage replacement advantage replacement cost (a) (b) Total (a) (b) Total advantage HDV HDV Brazil 4,544 0 4,544 10,023 (26,516) (16,494) FCEV Chile 4,544 0 4,544 10,023 (26,516) (16,494) FCEV India 4,797 0 4,797 10,580 (13,771) (3,191) FCEV South Africa 4,797 0 4,797 10,580 (26,516) (15,937) FCEV Korea, Rep. 4,100 0 4,100 9,042 (13,771) (4,729) FCEV Source: World Bank. Note: EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Infrastructure Costs Refueling infrastructure of adequate density is needed to allow FCEVs to circulate freely and refuel as needed. Refueling at 350 bar or 700 bar is a commercially mature option and is available at most hydrogen refueling stations. This option, which can refuel FCEVs in about 20 minutes, with a travel range of up to 750 miles expected (California Air Resources Board 2024), is sufficient for serving all existing hydrogen buses and trucks on the market. Similar to gas stations, the capital investment in hydrogen refueling infrastructure is usually embedded in the hydrogen fuel costs at the pump. The cost of BEV chargers is considered explicitly, however. California has 52 hydrogen refueling stations, which served a fleet of about 8,000 FCEVs in 2023 (Alternative Fuels Data Center 2024). This study assumes similar density across fueling infrastructure—each station serving 150 FCEVs, with a capital cost of US$2.1 million per station. Similar to gas stations, a refueling station can serve all types of FCEVs as long as the hydrogen pumps match the technical specifications. Table 3.4 summarizes the assumptions for the unit cost per charging/refueling station, as well as density. Table 3.5 reports the infrastructure cost estimates associated with the 30 ×30 scenario compared with the BAU to directly compare the requirements for refueling and charging infrastructure for FCEVs and BEVs in Clean Hydrogen for Road Transport in Developing Countries 48 3 Economics of Hydrogen Mobility the national fleet. The cost is assumed to be averaged over the total number of TABLE 3.4. Model Assumptions for FCEV Refueling newly added vehicles in 2030, where the and BEV Charging Infrastructure average costs for refueling infrastructure Density are US$4,200 per vehicle. For BEVs, the (refueling costs for charging infrastructure vary from stations/ Unit cost chargers per US$700 per car to US$6,000 per bus. Mode Charger type (US$) 1,000 vehicles) Refueling infrastructure Environmental Costs All Public refueling station 2,100,000 6.7 Charging infrastructure The most significant local air pollutants Car Private chargers 875 1,000 from transport are nitrogen oxides (NOx), sulfur oxides (SOx), and particulate matter Workplace chargers 1,051 325 with a diameter of 2.5 microns or less Public slow chargers 9,713 100 (PM 2.5). The adoption of FCEVs/BEVs Public fast chargers 29,140 11 presents an environmental advantage Bus Workplace chargers 30,000 500 on two factors: the relative air pollution Public fast chargers 50,000 250 intensity of energy sources and the energy LCV Workplace chargers 3,032 1,000 efficiency of the vehicles (FCEVs vs ICEVs Public fast chargers 33,873 35 vs BEVs). A related factor is exposure, HDV Workplace chargers 70,972 1,000 which depends on the proximity of the Public slow chargers 71,644 250 polluting source to the population. Public fast chargers 180,656 200 FCEVs do not generate any CO2, NOx, or Note: HDV = heavy-duty vehicle; LCV = light commercial vehicle. SOx from the tailpipe. They do generate PM2.5 through tire and brake wear, and road surface wear. The PM2.5 emission intensity from operating FCEVs is 0.256 grams per kilogram of hydrogen (g/kgH2) produced according to Argonne National Lab’s AFLEET model. The emissions intensity in the hydrogen production process varies based on the feedstock source, the production process, and the energy sources. For green hydrogen, which is produced through electrolysis of water using renewables-based power, emissions could be close to zero. For blue hydrogen, state-of-the-art carbon capture and storage technology reduces CO2 emissions from about 9 kg/kgH2 produced to about 1 kg/kgH2 produced. For PM2.5, NOx, and SOx, the emission intensity could vary significantly, depending on the feedstock source and the electric power used in the production process. The emission intensity of blue hydrogen production is 0.33g/kgH2 produced for PM2.5, 8.51 g/kgH2 produced for NOx, and 4.42g/kgH2 produced for SOx according to the AFLEET model. And these estimations are used in this study. Clean Hydrogen for Road Transport in Developing Countries 49 3 Economics of Hydrogen Mobility TABLE 3.5. Charging and Refueling Infrastructure Cost Advantage, 2030 US$/vehicle Charging Charging Refueling infrastructure Refueling infrastructure infrastructure cost advantage Advantage infrastructure cost advantage Advantage Country Car Bus Brazil (4,122) (757) EV (4,194) (6,304) FCEV Chile (4,158) (765) EV (4,194) (6,304) FCEV India (4,032) (740) EV (3,332) (5,008) FCEV South Africa (4,105) (762) EV (4,199) (6,313) FCEV Korea, Rep. (2,788) (551) EV (3,926) (5,980) FCEV Country LCV HDV Brazil (4,200) (1,270) EV (4,200) (30,812) FCEV Chile (4,200) (1,270) EV (4,200) (33,767) FCEV India (4,186) (1,266) EV (4,200) (49,211) FCEV South Africa (4,199) (1,270) EV (4,199) (33,581) FCEV Korea, Rep. (2,099) (635) EV (4,199) (28,330) FCEV Source: World Bank. Note: EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Therefore, for green hydrogen, there are no CO2 emissions in the upstream production TABLE 3.6. Assumptions About the Well-To-Tank process and the entire well-to-wheel process Emissions from Hydrogen Production has zero CO2 emissions. Even when blue Well-to-tank emissions hydrogen is used, the overall well-to-tank-to- Pollutant Unit Blue hydrogen Green hydrogen wheel emissions from FCEVs are very limited CO2* kg/kg 1*** 0 (table 3.6). FCEVs therefore offer an effective PM2.5** g/kg 0.33 0 way to decarbonize road transport. NOx** g/kg 8.51 0 SOx** g/kg 4.52 0 FCEVs show a substantial advantage for Source: *Argus Hydrogen and Future Fuels, April 2023; **AFLEET Model (ANL local as well as global pollution reduction. 2021). *** Without CCS (gray hydrogen), the emission intensity is about 9 kg/kgH2 In the case of local pollutants, such as produced. Note: CO2 = carbon dioxide; g = gram; kg = kilogram; NOx = nitrogen oxides; PM2.5 (figure 3.7), either blue hydrogen PM2.5 = particulate matter with a diameter of 2.5 microns or less; SOx = sulfur oxides. or green hydrogen FCEVs release much Clean Hydrogen for Road Transport in Developing Countries 50 3 Economics of Hydrogen Mobility FIGURE 3.7. PM2.5 Intensity by Unit of Travel, HDVs, 2022 16.00 14.00 Grams PM2.5 per 100 vehicle-kilometers 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Brazil Chile India South Africa Korea, Rep. Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Note: HDV = heavy-duty vehicle; PM2.5 = particulate matter with a diameter of 2.5 microns or less. FIGURE 3.8. Carbon Intensity by Unit of Travel, HDVs, 2022 180.00 160.00 kg CO2 per 100 vehicle-kilometers 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Brazil Chile India South Africa Korea, Rep. Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Note: HDV = heavy-duty vehicle; kgCO2 = kilograms of carbon dioxide. Clean Hydrogen for Road Transport in Developing Countries 51 3 Economics of Hydrogen Mobility less pollutants on a per-unit-of-energy basis, even when compared with HDVs following the strictest EURO VI standard. The advantage is even larger when compared on a unit-of-travel basis. The pollution intensity from electricity generation varies widely across countries. When green hydrogen is used, FCEVs outperform BEVs in all five countries. The same is the case for blue hydrogen FCEVs. The advantage is more significant in countries where the power sector relies heavily on coal (e.g., India and South Africa), although it is worth pointing out that in countries generating power primarily from renewable energy sources (e.g., Brazil), the gap narrows (figure 3.8). When the power grid mostly receives fossil-fuel-based generation, BEVs are not as effective compared with clean-hydrogen-fueled FCEVs. However, if the power grid in these countries shifts to more renewable energy sources, the FCEV-EV environmental benefits gap will narrow. Emissions related to vehicle production and disposal also have to be included. This study considers vehicle life-cycle analysis based on the greenhouse gases, regulated emissions, and energy use in transportation (GREET) vehicle-cycle model. It covers raw material recovery, material processing, vehicle component production, vehicle assembly, vehicle disposal, and material recycling (ANL 2020b). The environmental advantage of either green hydrogen FCEVs (table 3.7) or blue hydrogen FCEVs is significant when compared with ICEVs under the 30×30 scenario. The process of manufacturing FCEVs typically produces more pollutants than for ICEVs, which cancels some of the advantage of using fuel cell vehicles, particularly in terms of the local pollutant sulfur dioxide (SO2). Meanwhile, buses and HDVs usually carry more annual mileage than cars and consume more fuel on a per vehicle-kilometer basis because they are heavier, resulting in more emissions reduction, and thus a larger environmental advantage for these vehicles. Blue hydrogen FCEVs have a smaller environmental advantage than green hydrogen FCEVs, but the gap is small (from 2.7 percent to 7.2 percent for cars and 0.2 percent to 1.2 percent for HDVs). FCEVs could achieve significant environmental benefits even when blue hydrogen production is still the mainstream industrial process. Aggregating Across Cost Categories The above discussion has examined the relative costs of FCEV adoption in the 30 ×30 scenario by each cost component. The results indicate a significant premium on vehicle capital, hydrogen fuel, and infrastructure costs, but lower maintenance and environmental costs under the 30 ×30 scenario. When adding all cost components, the 30 ×30 FCEV scenario only makes economic sense for the segments of buses and HDVs, in two countries, India and Korea, which benefit greatly from high valuation due to air pollutant reduction, since both countries have densely populated metropolitan areas (table 3.8). Clean Hydrogen for Road Transport in Developing Countries 52 3 Economics of Hydrogen Mobility TABLE 3.7. Environmental Advantage of FCEVs (green hydrogen) and BEVs, 2030 Hydrogen mobility scenario Electrification scenario Advantage US$/vehicle US$/vehicle Economic Economic Local Global cost Local Global cost externalities externalities advantage externalities externalities advantage (a) (b) (a 1 b) (a) (b) (a 1 b) FCEV or BEV Country Car Car Brazil 178 229 407 86 222 308 FCEV Chile 140 217 358 29 190 219 FCEV India 184 138 322 (32) 37 5 FCEV South Africa 29 303 332 (13) 153 140 FCEV Korea, Rep. 332 196 528 43 151 194 FCEV Bus Bus Brazil 26,610 7,281 33,891 25,307 6,334 31,641 FCEV Chile 122,491 7,298 129,788 121,057 5,347 126,404 FCEV India 336,617 10,949 347,565 329,271 3,406 332,677 FCEV South Africa 7,926 3,880 11,806 7,514 1,663 9,177 FCEV Korea, Rep. 116,650 4,372 121,022 112,446 2,866 115,312 FCEV LCV LCV Brazil 1,432 1,149 2,581 998 1,074 2,072 FCEV Chile 2,301 1,207 3,508 1,795 1,056 2,851 FCEV India 2,234 731 2,965 1,461 399 1,860 FCEV South Africa 119 335 454 71 193 264 FCEV Korea, Rep. 2,057 564 2,621 1,193 401 1,594 FCEV HDV HDV Brazil 37,812 5,689 43,502 36,582 5,057 41,639 FCEV Chile 29,401 5,722 35,122 28,041 4,423 32,464 FCEV India 459,051 19,467 478,518 446,647 9,103 455,751 FCEV South Africa 28,955 4,730 33,685 28,336 1,560 29,896 FCEV Korea, Rep. 569,176 4,557 573,733 564,382 3,248 567,630 FCEV Source: World Bank. Note: The production of BEV battery packs generates air pollutants (especially SOx), potentially outweighing the air pollution reduction benefits from vehicle operation in countries relying heavily on fossil fuel grids. Blue hydrogen and green hydrogen FCEVs have very similar environmental cost advantages in 2030, with the same conclusions on economic competitiveness when compared with BAU. BEV = battery electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 53 3 Economics of Hydrogen Mobility Regarding the financial cost advantages, by excluding environmental benefits and adding back taxes and subsidies, Brazil, Chile, India, and Korea have fiscal wedges that favor the adoption of FCEVs, but only for the car segment, through taxes or subsidies (Brazil, India, and Korea have favorable tax rates for ZEVs, and Korea also offers a substantial subsidy; Chile has the highest tax rate on petrol fuel). The results based on the scenario where blue hydrogen is used are similar to the results based on the green hydrogen scenario, with the same conclusion. In both scenarios, FCEVs bear a significant capital cost and fuel cost disadvantage relative to ICEVs. TABLE 3.8. Aggregated Cost Advantage of Accelerated FCEV Adoption, 2030 (green hydrogen) BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) Brazil 4W (141) (658) (799) 178 229 (391) 1,548 749 Bus (35,754) (117,163) (152,917) 26,610 7,281 (119,026) 15,139 (137,778) LCV (8,537) (22,865) (31,401) 1,432 1,149 (28,820) 2,678 (28,723) HDV (31,427) (92,259) (123,687) 37,812 5,689 (80,185) 16,997 (106,690) Chile 4W (130) (589) (719) 140 217 (361) 1,947 1,229 Bus (39,653) (99,595) (139,248) 122,491 7,298 (9,460) 22,591 (116,656) LCV (6,528) (20,323) (26,851) 2,301 1,207 (23,343) 3,873 (22,978) HDV (35,734) (78,681) (114,414) 29,401 5,722 (79,292) 16,230 (98,184) India 4W (98) (1,434) (1,532) 184 138 (1,210) 3,175 1,643 Bus (38,612) (201,528) (240,140) 336,617 10,949 107,425 6,889 (233,251) LCV (5,480) (19,036) (24,516) 2,234 731 (21,551) 279 (24,236) HDV (45,621) (256,345) (301,965) 459,051 19,467 176,552 19,820 (282,146) (continues) Clean Hydrogen for Road Transport in Developing Countries 54 3 Economics of Hydrogen Mobility TABLE 3.8. Aggregated Cost Advantage of Accelerated FCEV Adoption, 2030 (green hydrogen) v BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) South Africa 4W (136) (1,914) (2,050) 29 303 (1,718) 811 (1,240) Bus (36,999) (46,716) (83,715) 7,926 3,880 (71,909) 3,455 (80,261) LCV (6,958) (9,678) (16,636) 119 335 (16,183) (304) (16,940) HDV (32,747) (98,994) (131,741) 28,955 4,730 (98,056) 7,734 (124,007) Korea, Rep. 4W (90) (664) (754) 332 196 (226) 5,200 4,446 Bus (35,648) (74,037) (109,685) 116,650 4,372 11,336 48,176 (61,509) LCV (3,938) (12,886) (16,824) 2,057 564 (14,203) 3,439 (13,385) HDV (33,990) (79,028) (113,018) 569,176 4,557 460,715 46,237 (66,781) Source: World Bank. Note: Data in this table represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averaged over fleet additions). The BAU scenario assumes that no policy target will be imposed for FCEVs and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of FCEVs will reach 30 percent by 2030. “Externality cost” refers to global (CO2) and local (NOx, PM2.5, SOx,) air pollution costs. Red and parentheses indicate negative values. The capital costs associated with the refueling infrastructure are reflected in the hydrogen fuel costs under vehicle operating costs, and thus not explicitly listed. 4W = four-wheeler; BAU = business as usual; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Finally, it is useful to compare FCEVs and BEVs. Table 3.9 shows the cost advantage of BEVs when compared with ICEVs. Battery electric cars and buses show economic cost advantages by 2030 in all five countries. LCVs and HDVs show cost advantages only in India and Korea. Although FCEVs show a greater advantage in reducing environmental externalities, this does not outweigh the higher costs in other cost categories when compared with BEVs. Overall, FCEVs do not show a cost advantage when compared with BEVs in all vehicle segments and in any of the five countries. Figure 3.9 presents a comparison, by vehicle segment, of the magnitude of economic cost advantages for the 30 ×30 scenario over BAU from FCEV and BEV adoption in India—BEVs still outperform FCEVs even though the Indian power grid relies heavily on fossil fuels. Clean Hydrogen for Road Transport in Developing Countries 55 3 Economics of Hydrogen Mobility TABLE 3.9. Aggregated Cost Advantage of Accelerated BEV Adoption, 2030 BAU scenario minus 30330 scenario (US$/vehicle) d5 a b c a1b1c e f5d1e g h5d1g Cost advantage Net taxes including Cost and fiscal Vehicle Vehicle advantage subsidies wedge Vehicle capital Charging operating Local Global (economic (fiscal (financial type cost infrastructure cost Subtotal externality externality analysis) wedge) advantage) Brazil 4W 844 (757) 1,242 1,329 86 222 1,637 2,009 3,338 Bus (24,891) (6,304) 12,768 (18,427) 25,307 6,334 13,215 18,867 441 LCV (5,739) (1,270) 3,344 (3,666) 998 1,074 (1,594) 3,682 16 HDV (24,227) (30,812) 6,397 (48,643) 36,582 5,057 (7,004) 18,249 (30,394) Chile 4W 777 (765) 1,365 1,377 29 190 1,596 2,206 3,583 Bus (28,789) (6,304) 16,312 (18,781) 121,057 5,347 107,624 24,394 5,613 LCV (3,973) (1,270) 4,431 (813) 1,795 1,056 2,038 4,559 3,746 HDV (28,534) (33,767) 8,786 (53,514) 28,041 4,423 (21,050) 17,426 (36,087) India 4W 589 (740) 987 836 (32) 37 841 4,457 5,293 Bus (29,982) (5,008) 39,591 4,602 329,271 3,406 337,279 48,456 53,058 LCV (3,490) (1,266) 3,931 (825) 1,461 399 1,035 2,807 1,982 HDV (38,421) (49,211) 75,934 (11,698) 446,647 9,103 444,053 75,405 63,706 South Africa 4W 818 (762) 2,035 2,091 (13) 153 2,231 1,237 3,328 Bus (26,121) (6,313) 24,255 (8,178) 7,514 1,663 999 5,198 (2,980) LCV (4,236) (1,270) 2,156 (3,350) 71 193 (3,086) 187 (3,163) HDV (25,547) (33,581) 13,634 (45,495) 28,336 1,560 (15,599) 8,256 (37,239) (continues) Clean Hydrogen for Road Transport in Developing Countries 56 3 Economics of Hydrogen Mobility TABLE 3.9. Aggregated Cost Advantage of Accelerated BEV Adoption, 2030 (continued) BAU scenario minus 30330 scenario (US$/vehicle) d5 a b c a1b1c e f5d1e g h5d1g Cost advantage Net taxes including Cost and fiscal Vehicle Vehicle advantage subsidies wedge Vehicle capital Charging operating Local Global (economic (fiscal (financial type cost infrastructure cost Subtotal externality externality analysis) wedge) advantage) Korea, Rep. 4W 592 (330) 1,317 1,578 43 151 1,772 4,710 6,288 Bus (25,342) (5,928) 18,084 (13,187) 112,446 2,866 102,125 31,536 18,350 LCV (2,612) (635) 1,702 (1,545) 1,193 401 49 4,479 2,935 HDV (26,790) (28,330) 10,990 (44,130) 564,382 3,248 523,501 22,713 (21,416) Source: World Bank. Note: Data in this table represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averaged over fleet additions). The BAU scenario assumes that no policy target will be imposed for BEVs and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of BEVs will reach 30 percent by 2030. 4W = four-wheeler; BAU = business as usual; BEV = battery electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. FIGURE 3.9. Economic Cost Advantage of 30×30 Compared with BAU, India, 2030 Cost advantage in 2030 by vehicle type (% of BAU values) 30% 20% 10% % of BAU values 0% –10% –20% –30% –40% 4W Bus LCV HDV Economic Cost, FCEV Economic Cost, EV Source: World Bank. Note: Based on green hydrogen FCEVs. The results for blue hydrogen FCEVs are similar. 4W = four-wheeler; BAU = business as usual; EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 57 3 Economics of Hydrogen Mobility Exploring the Sensitivity of Results The price of hydrogen at the pump has a major impact on the economic competitiveness of FCEVs. Sensitivity analysis is therefore important to assess the robustness of results and explore plausible alternative scenarios. As shown in chapter 2, the cost of hydrogen depends on, among other factors, technology development, economies of scale, availability and cost of capital, and cost of energy. The current analysis is based on a projection that hydrogen production costs will drop to between US$2.71/kg (Chile) and US$5.61/kg (South Africa) by 2030 for green hydrogen. Adding additional costs due to compression, transport, and station capital and operational expenditure, the cost of green hydrogen at the pump is in the range of US$9.98/kg (Chile) to US$13.23/kg (South Africa) by 2030. This section will evaluate two scenarios, where uniform hydrogen production costs of US$5 and US$10 are assumed for all five countries. Tables 3.10 and 3.11 summarize the cost advantages of adopting FCEVs relative to BAU in 2030 under green hydrogen production costs of US$5/kg and US$10/kg, respectively. The conclusion remains the same: FCEVs show an economic cost advantage in the segments of buses and HDVs, in India and Korea, due to the large environmental benefits gained in densely populated areas. TABLE 3.10. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$5/kg Green Hydrogen Product Cost, 2030 BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) Brazil 4W (141) (978) (1,118) 178 229 (711) 1,548 430 Bus (35,754) (133,489) (169,243) 26,610 7,281 (135,352) 15,139 (154,104) LCV (8,537) (25,934) (34,470) 1,432 1,149 (31,889) 2,678 (31,792) HDV (31,427) (105,134) (136,562) 37,812 5,689 (93,060) 16,997 (119,565) (continues) Clean Hydrogen for Road Transport in Developing Countries 58 3 Economics of Hydrogen Mobility TABLE 3.10. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$5/kg Green Hydrogen Product Cost, 2030 (continued) BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) Chile 4W (130) (1,272) (1,402) 140 217 (1,044) 1,947 545 Bus (39,653) (133,374) (173,027) 122,491 7,298 (43,239) 22,591 (150,436) LCV (6,528) (26,826) (33,354) 2,301 1,207 (29,846) 3,873 (29,481) HDV (35,734) (105,408) (141,142) 29,401 5,722 (106,019) 16,230 (124,912) India 4W (98) (1,521) (1,619) 184 138 (1,298) 3,175 1,555 Bus (38,612) (209,099) (247,711) 33,6617 10,949 99,854 6,889 (240,822) LCV (5,480) (19,707) (25,188) 2,234 731 (22,222) 279 (24,908) HDV (45,621) (266,994) (312,615) 459,051 19,467 165,902 19,820 (292,795) South Africa 4W (136) (1,672) (1,808) 29 303 (1,476) 811 (997) Bus (36,999) (42,843) (79,843) 7,926 3,880 (68,037) 3,455 (76,388) LCV (6,958) (9,053) (16,011) 119 335 (15,558) (304) (16,315) HDV (32,747) (92,526) (125,274) 28,955 4,730 (91,589) 7,734 (117,540) Korea, Rep. 4W (90) (773) (863) 332 196 (334) 5,200 4,337 Bus (35,648) (78,392) (114,040) 116,650 4,372 6,982 48,176 (65,864) LCV (3,938) (13,568) (17,506) 2,057 564 (14,885) 3,439 (14,067) HDV (33,990) (83,597) (117,587) 569,176 4,557 456,146 46,237 (71,350) Source: World Bank. Note: Data in this table represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averaged over fleet additions). The BAU scenario assumes that no policy target will be imposed for FCEVs and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of FCEVs will reach 30 percent by 2030. The capital costs associated with the refueling infrastructure are reflected in the hydrogen fuel costs under vehicle operating costs, and thus not explicitly listed. 4W = four-wheeler; BAU = business as usual; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; kg = kilogram; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 59 3 Economics of Hydrogen Mobility TABLE 3.11. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$10/kg Green Hydrogen Production Cost, 2030 BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) Brazil 4W (141) (2,419) (2,560) 178 229 (2,152) 1,548 (1,012) Bus (35,754) (207,115) (242,869) 26,610 7,281 (208,978) 15,139 (227,731) LCV (8,537) (39,775) (48,312) 1,432 1,149 (45,730) 2,678 (45,633) HDV (31,427) (163,197) (194,625) 37,812 5,689 (151,123) 16,997 (177,628) Chile 4W (130) (2,765) (2,895) 140 217 (2,537) 1,947 (947) Bus (39,653) (207,170) (246,823) 12,2491 7,298 (117,035) 22,591 (224,232) LCV (6,528) (41,033) (47,561) 2,301 1,207 (44,053) 3,873 (43,688) HDV (35,734) (163,797) (199,531) 29,401 5,722 (164,409) 16,230 (183,301) India 4W (98) (2,878) (2,976) 184 138 (2,655) 3,175 198 Bus (38,612) (326,663) (365,275) 336,617 10,949 (17,710) 6,889 (358,386) LCV (5,480) (30,139) (35,619) 2,234 731 (32,654) 279 (35,340) HDV (45,621) (432,350) (477,971) 459,051 19,467 546 19,820 (458,151) South Africa 4W (136) (3,650) (3,786) 29 303 (3,454) 811 (2,975) Bus (36,999) (74,454) (111,454) 7,926 3,880 (99,648) 3,455 (107,999) LCV (6,958) (14,153) (21,112) 119 335 (20,658) (304) (21,416) HDV (32,747) (145,315) (178,062) 28,955 4,730 (144,377) 7,734 (170,328) (continues) Clean Hydrogen for Road Transport in Developing Countries 60 3 Economics of Hydrogen Mobility TABLE 3.11. Aggregated Cost Advantage of Accelerated FCEV Adoption Based on a US$10/kg Green Hydrogen Production Cost, 2030 (continued) BAU scenario minus 30330 scenario (US$/vehicle) a b c5a1b d e5c1d f g5c1f Cost Cost advantage Vehicle Vehicle advantage Net taxes and including fiscal Vehicle capital operating Local Global (economic subsidies wedge (financial type cost cost Subtotal externality externality analysis) (fiscal wedge) advantage) Korea, Rep. 4W (90) (1,883) (1,973) 332 196 (1,445) 5,200 3,227 Bus (35,648) (122,865) (158,513) 116,650 4,372 (37,492) 48,176 (110,337) LCV (3,938) (20,533) (24,471) 2,057 564 (21,850) 3,439 (21,033) HDV (33,990) (130,262) (164,252) 569,176 4,557 409,481 46,237 (118,015) Source: World Bank. Note: Data in this table represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averaged over fleet additions). The BAU scenario assumes that no policy target will be imposed for FCEVs and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of FCEVs will reach 30 percent by 2030. The capital costs associated with the refueling infrastructure are reflected in the hydrogen fuel costs under vehicle operating cost, and thus not explicitly listed. 4W = four-wheeler; BAU = business as usual; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; kg = kilogram; LCV = light commercial vehicle. When the green hydrogen production cost is US$10/kg, the economic advantage of FCEVs shrinks further, to only HDVs in India and Korea. The sensitivity analysis reinforces the message that, compared with ICEVs, FCEVs are likely to become cost competitive by 2030 in the segments of buses and HDVs due to their environment benefits, in countries with high population concentration, under a variety of production cost scenarios. Conclusions The economic analysis in this report shows that by 2030, FCEVs will have higher capital costs and hydrogen fuel costs compared with ICEVs but lower maintenance and environmental costs in all vehicle segments and in all five countries. Overall, FCEVs show a lifetime economic cost advantage only in the segments of buses and HDVs, in India and Korea, which have higher valuation for environmental benefits due to dense population. In financial terms, when the taxes and subsidies for vehicle and fuel costs are included, fuel cell cars will outperform ICE cars only in a few countries due to tax incentives and subsidy. Meanwhile, BEVs outperform Clean Hydrogen for Road Transport in Developing Countries 61 3 Economics of Hydrogen Mobility FCEVs across all vehicle segments and in all five countries by 2030 under the current projection, although FCEVs may be viable should hydrogen costs decline quickly or in some niche markets. Financially, when environmental benefits are excluded, the costs of FCEVs are still higher than those of ICEVs in most cases. Vehicle capital costs and hydrogen fuel costs rely heavily on economies of scale. Therefore, for industry and governments intending to harness the potential environmental benefits associated with FCEVs, especially for HDVs and buses, how to overcome the initial cost barriers and expand the market until the economic force reaches its critical point, is a challenge. In addition, FCEVs have a few other advantages that cannot be quantified in this analysis—several niche markets with special operational requirements. The next chapter will further elaborate on the pros and cons and discuss policy levers that could help achieve better overall performance and wider decarbonization benefits for transport and energy. References Alternative Fuels Data Center. 2024. “Hydrogen Basics.” Accessed October 20, 2024. https://afdc.energy.gov/fuels/hydrogen -basics#:∼:text= California%20is%20leading%20the%20nation,construction%20or%20planning%20in%20California. ANL (Argonne National Laboratory). 2020. “GREET Vehicle-Cycle Model—GREET2_2020 version.” http://greet.es.anl.gov. ANL. 2021. Comprehensive Total Cost of Ownership Quantification for Vehicles with Different Size Classes and Powertrains. Lemont, IL: ANL. https://publications.anl.gov/anlpubs/2021/05/167399.pdf. ANL. 2024. “Alternative Fuel Life-Cycle Environmental and Economic Transportation (AFLEET) Tool.” https://afleet.es.anl .gov/home/. Argus Media Group, Argus Hydrogen and Future Fuels. April 2023. Briceno-Garmendia, C., W. Qiao and V. Foster. 2023. The Economics of Electric Vehicles for Passenger Transportation. Washington, DC: World Bank. California Air Resources Board. 2024. “Hydrogen Fuel Cell Electric Vehicle 101 | ZEV TruckStop.” https://ww2.arb.ca.gov/ our-work/programs/truckstop-resources/zev-truckstop/zev-101/hydrogen-fuel-cell-electric-vehicle-101#:∼:text= FCEVs %20are%20fueled%20with%20pure,way%20up%20to%20750%20miles. ICCT (International Council on Clean Transportation). 2023. “Purchase Costs of Zero-Emission Trucks in the United States to Meet Future Phase 3 GHG Standards.” ICCT Working Paper 2023-10, International Council on Clean Transportation. Accessed October 20, 2024. https://theicct.org/wp-content/uploads/2023/03/cost-zero-emission-trucks-us-phase-3 -mar23.pdf. IEA (International Energy Agency). 2024. Global Hydrogen Review 2024. Paris: IEA. https://iea.blob.core.windows.net/ assets/89c1e382-dc59-46ca-aa47-9f7d41531ab5/GlobalHydrogenReview2024.pdf. Jin, Thomas. 2022. “Korea’s Hydrogen Mobility Policy and Future Directions.” 2022 WB-KOTI-ADB Joint Workshop Green Hydrogen for Decarbonizing Transport, Seoul, Republic of Korea, November 30, 2022. Clean Hydrogen for Road Transport in Developing Countries 62 ck to eS dob A U/ GK UN © MY CHAPTER 4: Hydrogen Mobility Policy and Recommendations 4 Hydrogen Mobility Policy and Recommendations Fuel cell electric vehicles (FCEVs) are still in the early stage of technology development and adoption. Even in the most promising market segments, heavy-duty trucks and buses, FCEVs are still facing stiff competition from battery electric vehicles (BEVs). Based on the advantages and disadvantages of FCEVs compared with BEVs in these market segments, this chapter proposes several promising niche markets, the regulatory environment for these markets, and policy recommendations for the adoption of FCEVs. Pros and Cons of FCEV Adoption Advantages of FCEVs Driving range. Fuel cell buses and heavy-duty vehicles (HDVs) typically have a higher driving range than BEVs because hydrogen has higher energy density per unit weight than lithium batteries, making it possible to store more energy in a smaller and lighter tank than the heavier battery pack. One case in California shows that FCEV buses have a range of 300–350 miles compared with a range of 175–200 miles for similar BEV buses, a key logistical advantage (Parkes 2024).1 Refueling time. FCEVs can be refueled faster, in about 5–15 minutes, compared with up to several hours for battery counterparts, meeting the requirements for niche market operation. Payload capability. FCEVs offer a higher payload than BEVs. The hydrogen tanks of fuel cell HDVs are generally lighter than the large battery packs required for an equivalent range in a battery electric truck. A Hyundai XCIENT fuel cell truck weighs 9,795 kg for a range of 400 km (net weight, no cargo). The Volvo FH Electric Globetrotter EV weighs 11,985 kg with a range of up to 300 km, more than 2 tonnes heavier than an FCEV. Therefore, FCEVs are lighter than BEVs, offering more payload for cargo with the same gross vehicle weight limit. This weight advantage may allow FCEVs to run on roads of lower standards and cause less damage to the pavement. Environmental benefit. About half of the hydrogen projects that reach the final investment decision stage are green hydrogen production projects using purely renewable energy sources, according to the International Energy Agency.5 The percentage is likely to increase further in the future. Therefore, FCEVs not only eliminate tailpipe emissions but also greatly reduce air pollutants and greenhouse gas emissions from power generation. 5. IEA Hydrogen Production Projects Database shows that by October 2, 2024, projects with a capacity of 5.4 MTH2 /year reached the stage of final investment decision/construction, of which 2.5 MTH2 /year used electrolysis with dedicated renewables as the energy sources. Clean Hydrogen for Road Transport in Developing Countries 64 4 Hydrogen Mobility Policy and Recommendations In countries that rely heavily on fossil fuels for the power grid, the environmental advantage of FCEVs over BEVs could be significant, although such an advantage could become smaller as the power grid switches to more renewable sources. Resilience to extreme conditions. FCEVs can still work if a natural disaster cuts off electricity supply to the city. Although refueling stations also require power to run, hydrogen refueling pumps can be backed by diesel generators. In addition, FCEVs outperform BEVs in extreme cold weather with less range losses. Fuel cells generate electricity through a chemical reaction between hydrogen and oxygen, which is far less affected by external temperatures than lithium-ion batteries. Battery electric bus operation is optimal in the 55°–60 ° F temperature range. Operating at 22 °–32 ° F reduces battery electric buses’ range by up to 37.8 percent, whereas for fuel cell buses, the reduction is up to 23.1 percent. Therefore, fuel cell buses are more resistant to cold weather conditions than battery electric buses. Disadvantages of FCEVs High capital costs for the vehicles. Many studies, including this report, show that FCEVs are still more expensive than BEVs across all vehicle segments in the near to mid term, even though the price gap is projected to converge beyond 2040. High energy price. Hydrogen is still expensive to produce. Even under an optimistic assumption, hydrogen is more expensive than electricity as a power source on a per-kilometer basis. Less energy efficiency compared with BEVs. FCEVs are less energy efficient due to energy losses resulting from having a hybrid powertrain: fuel cells converting energy from hydrogen to electricity and electric motors converting energy from electricity to kinetic energy. Infrastructure cost challenge. Infrastructure to support FCEVs, including refueling stations, liquefaction facilities, and/or hydrogen pipelines, is not readily available in most countries and is expensive to build. Although costs could reduce as more FCEVs enter the market, the initial infrastructure investment poses a significant barrier. Safety concerns. Hydrogen gas is flammable, and FCEVs naturally prompt safety concerns regarding their operation and at refueling stations. Such concerns cannot be dispelled until a sufficiently long safety record is established through large-scale field deployment. BEVs also pose a significant challenge, as demonstrated in the many fire accidents reported. Clean Hydrogen for Road Transport in Developing Countries 65 4 Hydrogen Mobility Policy and Recommendations FCEVs are in a position similar to the early stage of BEV adoption: (1) they offer huge environmental benefits at the tailpipe, but upstream emissions (in the energy production and distribution stage) are uncertain; (2) they usually require lower maintenance costs and offer a better driving experience, although long-term performance needs to be validated through more cumulative mileage; and (3) the up-front costs are much higher than those of internal combustion engine vehicles (ICEVs), but these costs are expected to drop and could eventually reach parity or FCEVs could become cheaper. However, there are differences between FCEVs and BEVs, which give them relative advantages in different markets and may require different enabling policies to harness the benefits of hydrogen mobility. The following sections will discuss the differences between FCEV and BEV adoption and the policy implications of their adoption. Although up-front vehicle purchase costs are higher for BEVs, energy costs are much lower than the fuel costs for ICEVs. BEVs usually have lower energy costs than ICEVs due to high energy efficiency. In addition, most countries tax fossil fuels but subsidize electricity, which further improves BEVs’ operating cost advantage from the users’ perspective. Therefore, once the barrier of high vehicle purchase costs is mitigated through tax incentives, subsidies, or other instruments, market forces will quickly accelerate the adoption of BEVs. Factors reducing the up-front vehicle capital cost barrier could also come in the form of low-interest loans, which could be paid off from operating cost savings later. Market expansion will encourage more research and development investment in key BEV technologies and, in return, the capital costs for vehicles will fall because of technological improvement and economies of scale. Almost all major economies have offered some incentives in the early stage of BEV adoption and many are still in place today. For example, the US federal government started offering tax credits for electric vehicles from 2009, and the credit amount is up to US$7,500/vehicle based on the latest policy (IRS 2023). In addition, many state governments provide additional rebates, tax exemptions, and tax credits to encourage BEV adoption (EESI 2018). Similarly, the Chinese government provided a total of US$29 billion to the BEV industry (including subsidies and tax breaks to both consumers and vehicle manufacturers) from 2009 to 2022 (Yang 2023). The subsidies gradually phased out after 2022. Many EU countries continue to offer tax benefits and incentives to BEVs (ACEA 2024), but some have started to phase out. In contrast, FCEVs face not only hefty up-front vehicle purchase costs, even by 2030, but also higher fuel costs per vehicle-kilometer traveled. In total, the cost of production, storage, distribution, and hydrogen refueling (costs at the pump) is in the range of US$7 to US$8 per 100 km of travel for hydrogen HDVs. In comparison, the cost per 100 km of travel is about US$1 for battery electric HDVs and about US$2–US$3 for diesel HDVs. Therefore, even if tax incentives and subsidies can help reduce the up-front vehicle purchase costs, users still face much higher operating costs, which are not sustainable in the long term. Clean Hydrogen for Road Transport in Developing Countries 66 4 Hydrogen Mobility Policy and Recommendations To make FCEVs a viable option, the fuel costs of hydrogen need to be reduced significantly. Economies of scale can be achieved by building larger refueling stations, accepting additional hydrogen deliveries per day, and adding more pumps. For BEVs, adding additional chargers does not boost economies of scale—adding 10 chargers does not necessarily lead to lower costs per charger at the station, and usually requires an expensive upgrade of the grid network. A refueling station can serve more FCEVs by adding additional pumps at a lower marginal cost. For refueling stations, large volumes of hydrogen can be reached with one or a few stations in an area where the FCEV fleet is scaled to complement the total station capacity. The economy of scale usually starts at a utilization level of 2 tonnes of hydrogen per day and will accelerate at a level of 4 tonnes per day. The energy and transport industries have an opportunity here. As discussed earlier, hydrogen is widely used in many industries, including oil and biofuel refining, chemicals and heavy industry, and energy storage. This diversity of industrial applications for clean hydrogen creates great potential for countries that are ambitious to not only decarbonize their transport sector but also develop new industrial capacity in other sectors. It makes sense to explore this synergy between industries, which not only reduces the fuel costs for hydrogen vehicles but also fosters a vibrant ecosystem for clean hydrogen. Together, these industries will facilitate a most reliable and secure offtake for clean hydrogen. Countries with existing industry with a high requirement for clean hydrogen or with abundant natural resources for green hydrogen production may be poised to benefit from this process (see box 4.1 on India and box 4.2 on Chile). BOX 4.1. India Presents an Ambitious Plan for Green Hydrogen In the context of India’s heavy import dependence for primary energy and fossil fuels, as well as its goal to achieve net zero emissions by 2070, its National Green Hydrogen Mission (henceforth, “the Mission”) seeks to provide a comprehensive and integrated action plan to accelerate the adoption of domestic green hydrogen production for use in mobility, industry, and energy storage, and for export of hydrogen-derived products and fuels, such as green ammonia and methanol (Ministry of New and Renewable Energy 2023). The Mission targets reducing fossil fuel imports by US$12.5 billion and cut carbon dioxide emissions by 50 Mt by 2030. The Mission aims to leverage India’s competitive advantages, doubling down on renewable energy investments to date, which position the country to provide low-cost renewable energy, in turn (continues) Clean Hydrogen for Road Transport in Developing Countries 67 4 Hydrogen Mobility Policy and Recommendations BOX 4.1. India Presents an Ambitious Plan for Green Hydrogen (continued) helping the country to become a leading hydrogen producer. It targets adding 125 GW more of renewable energy capacity. The Mission targets the production of at least 5 Mt of green hydrogen by 2030, citing this as India’s current consumption of fossil-fuel-derived hydrogen. It aims to produce up to 10 Mt by 2030, highlighting potential to export and a domestic demand for both current applications (e.g., the production of ammonia and other chemicals, petroleum refining, steel production) and novel applications (e.g., use of hydrogen and derived fuels for road transport, railways, shipping, and aviation). The Mission further emphases the aim to make India a leader in electrolyzer manufacturing. Toward this end, the government seeks to develop innovative models to reduce the cost of capital for green hydrogen projects, including US dollar–denominated bids for green hydrogen and ammonia, as well as to explore the use of green finance and green bonds. BOX 4.2. Clean Energy Endowment Helps Chile Leapfrog in Hydrogen Economy Recognizing its rich solar and wind endowment, and the potential to be among the lowest-cost producers of electrolytic hydrogen in the world, Chile launched its National Green Hydrogen Strategy in November 2020, which targets 5 GW of green hydrogen capacity to be produced at one of at least two hubs, and focuses on export opportunities for hydrogen and hydrogen-derived products, and estimates potential exports of up to US$30 billion by 2030 (Ministry of Energy 2020). “The strategy aims for 4–5 GW of green hydrogen production in 2025 and up to 25GW by 2030. It wants to achieve the lowest levelized cost of green hydrogen production globally by 2030 in the Magallanes region.” A study examining the economics of an off-grid green hydrogen plant in Chile assessed the optimal sizing of an alkaline electrolyzer stack, water desalination, and two separate hypothetical installations coupled with dedicated wind (in Patagonia) and solar (in the Atacama Desert) renewable energy plants. The potential levelized cost of hydrogen (LCOH) production was assessed from the perspective of a project initiator, on a net present value basis (León et al., 2023). The study assumed a weighted-average cost of capital of 4 percent per year, an income tax rate of 25 percent, and incorporated all key capital and operational expenditure components. It found best-case LCOH-production costs of approximately US$3.50–US$4.80/kgH2 for gaseous hydrogen for the wind plant and US$5.30–US$7.00/kgH2 for the solar installation. Clean Hydrogen for Road Transport in Developing Countries 68 4 Hydrogen Mobility Policy and Recommendations Niche Market—Heavy-Duty Vehicles and Challenging Operating Environments Since FCEVs are still in their early stage of field deployment, how they evolve is yet to be observed. While incentives and an enabling regulatory framework are critical for a transition to clean hydrogen, the transport sector can provide a reliable demand for clean hydrogen and develop an incremental and implementable pathway for FCEV pilot projects. These early demonstration projects are critical to the industry to test the technology, learn from real-world experience, and improve quickly. FCEVs could show advantages over BEVs in some niche markets as presented below (with more details in box 4.3). BOX 4.3. Niche Markets for FCEVs Payload and Operational Time Challenge FCEVs are lighter than BEVs, offering more payload for cargo and causing less damage to the road pavement. The hydrogen tanks of fuel cell heavy-duty vehicles are generally lighter than the large battery packs required for equivalent range in a battery electric truck. A Hyundai XCIENT fuel cell truck weighs 9,795 kg for a range of 400 km (net weight, no cargo) (Hyundai 2025). The Volvo FH Electric Globetrotter EV weighs 11,985 kg with a range of up to 300 km, more than 2 tonnes heavier than an FCEV (Volvo 2025). Therefore, fuel cell trucks can offer more payload than battery electric trucks at the same gross vehicle weight limit. This weight advantage may allow FCEVs to run on roads of lower standard and they may cause less damage to the pavement. One study in Orange County, California, shows that fuel cell buses have a range of 300–350 miles compared with a range of 175–200 miles for similar battery electric buses, a key logistical advantage (Parkes 2024). Together with a much faster refueling time—that is, 5–15 minutes, compared with hours of battery charging time—FCEVs enable longer and more efficient operational periods. Hilly Conditions A National Renewable Energy Laboratory (NREL) study (Huya-Kouadio and James 2023) shows that the fuel cell system can operate at continuous peak power load over a longer range, making FCEVs more suitable for hilly conditions than battery electric buses. Ascending steeper grades (continues) Clean Hydrogen for Road Transport in Developing Countries 69 4 Hydrogen Mobility Policy and Recommendations BOX 4.3. Niche Markets for FCEVs (continued) drains the battery faster than driving on a flat road, significantly reducing the range of battery electric buses (Aamodt, Cory, and Coney 2021). Also, battery electric buses are usually heavier than fuel cell buses, causing more range loss in hilly terrain. Other field experiments in California (Collins 2023) and Pennsylvania (Schmidt 2024) also showed that battery electric buses are not suitable for hilly conditions and that fuel cell buses are the preferred choice. As noted by the California transit authority in one field study (Collins 2023), “no-one makes an electric bus that has enough power to take a fully loaded electric bus over the hill at the speed limit.” Cold Weather Condition Fuel cells generate electricity through a chemical reaction between hydrogen and oxygen, which is far less affected by external temperatures compared with lithium-ion batteries. In addition, the waste heat generated by a fuel cell can be utilized for cabin heating, reducing the additional energy burden for air-conditioning under cold weather. Battery electric bus operation is optimal in the 55° F–60 ° F temperature range. Operating at 22–32 ° F reduces battery electric buses’ range by up to 37.8 percent, whereas for fuel cell buses, the reduction is up to 23.1 percent (Henning, Thomas, and Smyth 2019). Therefore, fuel cell buses could be more resistant to cold weather conditions than battery electric buses. More studies are needed to compare them in a wide range of extreme temperatures, including under hot and cold conditions. FCEVs offer a higher payload than BEVs for heavy-duty trucks. FCEVs are lighter than BEVs, offering more payload for cargo at the same gross vehicle weight limit, and cause less damage to the road pavement. This weight advantage may allow FCEVs to run on roads of a lower standards and they may cause less damage to the pavement. FCEVs outperform BEVs on hilly conditions. The fuel cell system can operate at continuous peak power load over a longer range, making FCEVs more suitable for hilly conditions than battery electric buses. Ascending steeper grades drains the battery faster than driving on a flat road, significantly reducing the range of battery electric buses. Also, battery electric buses are usually heavier than fuel cell buses, causing more range loss in hilly terrain. Clean Hydrogen for Road Transport in Developing Countries 70 4 Hydrogen Mobility Policy and Recommendations FCEVs outperform BEVs in cold weather. Fuel cells generate electricity through a chemical reaction between hydrogen and oxygen, which is far less affected by external temperatures compared with lithium-ion batteries. Fuel cell buses are more resistant to cold weather conditions than are battery electric buses, with a field study indicating approximately 15 percent less driving range loss at specific temperatures. A few field studies that compare fuel cell with battery electric buses or trucks indicate that FCEVs have operating advantages in a few niche markets. FCEV may enable longer, and more efficient operational periods given their longer driving range and faster refueling time. Given these considerations, projects can focus on heavily utilized and captive fleets (such as buses and heavy-duty trucks), or on heavy-duty roles within a concentrated geographic area of activity (e.g., drayage operations at port). Regulatory Environment and Ecosystem for Hydrogen Mobility An enabling regulatory environment is needed to ensure that the new hydrogen economy is low emission along the entire value chain and the environmental impact of hydrogen development is fully accounted for. Hydrogen is used by a number of industries where most hydrogen is gray. As shown in chapter 2, even under an optimal scenario, the cost of clean hydrogen is still much higher than the cost of gray hydrogen, which is about US$1 per kg. Both the European Union and the United States provide tax credits and other incentives to accelerate the development of a green hydrogen economy (see box 4.4). The United States proposed eligibility criteria for production tax credits under the US Inflation Reduction Act, with efforts to ensure that the renewable energy used for green hydrogen production is not indirectly leading to additional fossil-fuel-based electricity generation. Based on these efforts, clean hydrogen must meet three criteria: 1. Additionality. The intention of this criterion is to ensure that clean electricity sourced for hydrogen production is not diverted from other uses, in which case fossil-fuel-based electricity generation may be dispatched (in the short term) or capacity may be added (in the medium to long term), potentially resulting in increased net grid emissions. In practice, regulations require that energy generation capacity is added within a reasonable time window (a few years), to incentivize economic coordination and project planning to align clean energy generation with electrolytic hydrogen production. 2. Low carbon intensity. The hydrogen must be produced with minimal emissions in kilograms of carbon dioxide-equivalent per kilogram of hydrogen. This includes emissions from production, transportation, and use application. Clean Hydrogen for Road Transport in Developing Countries 71 4 Hydrogen Mobility Policy and Recommendations BOX 4.4. The “Hydrogen Shot” in the United States The “Hydrogen Shot” announced by the US government in 2021 aims to cut the cost of clean hydrogen by 80 percent by 2030 and has been followed by announcements of federal and state-level direct subsidies, grants, and tax incentives. Many of these financial supports are conditional on hydrogen meeting certain requirements, or are calculated based on meeting carbon intensity thresholds. In 2022, the US Congress passed the Infrastructure Investment and Jobs Act, which allocates US$8 billion over five or more years toward the establishment of at least four regional clean hydrogen hubs. Of the total, US$1 billion is allocated for electrolysis and US$500 million for manufacturing and recycling. In 2023, the Inflation Reduction Act provided tax credits of up to US$3.00/kg for clean hydrogen, and of up to US$40,000 for the purchase of commercial heavy-duty on- and off-road vehicles/equipment. The US Department of Energy’s 2023 National Clean Hydrogen Strategy and Roadmap established a comprehensive national framework to accelerate the scale-up of large-scale clean hydrogen production, processing, delivery, storage, and use (US DOE 2023). It envisions reaching 10 Mt of clean hydrogen domestic production by 2030, 20 Mt by 2040, and 50 Mt by 2050, up from approximately 10 Mt of current production capacity, mostly gray hydrogen, with less than 1 percent clean hydrogen. It identifies transportation (including medium- and heavy-duty vehicles, maritime, aviation, and railways) as among the strategic, high-impact uses of clean hydrogen. While trucks are not seen in the strategy as one of the early demand sectors, by 2040, they could constitute more than 5 Mt (about 25 percent of the total demand) and by 2050 nearly 10 Mt (nearly 20 percent of the total demand). The Strategy and Roadmap targets reducing the cost of clean hydrogen production to US$2/kg by 2026, and to US$1/kg by 2031, and the (additional) delivery and dispensing cost to US$2/kg by 2030. Public financing, tax breaks, and other incentives will be targeted to seven hydrogen hubs across the country, with the aim of catalyzing innovation and investment. 3. Geographical correlation and temporal matching. These steps ensure that hydrogen is produced at the same time as low-carbon electricity and in the same region by matching supply and demand to prevent relying on fossil-fuel-based electricity generation and net increases in carbon intensity. The European Union’s renewable fuels of non-biological origin adopts monthly matching requirements through the end of 2029, and hourly matching from 2030 (European Parliament, 2023), while the guidance proposed by the United States will require annual matching through the end of 2027, moving to hourly matching thereafter (IRS 2023). Clean Hydrogen for Road Transport in Developing Countries 72 4 Hydrogen Mobility Policy and Recommendations Although hydrogen mobility has economic potential, scaling clean hydrogen in developing countries will require holistic planning, prioritizing industries and other secure offtakers, and pilot projects that secure partnerships with industry leaders for low-cost financing, and reliable offtake at scale. A supporting regulatory environment is vital to accelerating potential deployment. For example, introducing carbon markets could be one of the interventions that allow hydrogen mobility to reach economic viability. Uncertainties exist around whether clean hydrogen can be delivered at competitive costs compared with ICEVs and BEVs, especially given the rapid progress in lithium-ion battery technologies. Whether capital costs can be reduced more quickly is one of many questions. “Learning by doing” could allow the transport sector to innovate and harness the promising potential of hydrogen mobility (see box 4.5). BOX 4.5. Green Hydrogen Corridor Given the uneven distribution of the mobility demand and renewable resources critical to green hydrogen production, international collaboration must be encouraged and facilitated through various policy frameworks. An effective way to foster a vibrant hydrogen ecosystem could be a dedicated “Green Hydrogen Corridor,” where infrastructure is developed to connect regions with high renewable energy potential to areas with a high hydrogen demand. For example, the H2med is Europe’s first major green hydrogen corridor, which seeks to connect the hydrogen networks of the Iberian Peninsula to Northwest Europe (H2Med 2025). It helps to scale up the hydrogen market from a single country to all of Europe and accelerate the deployment and competitive advantage of green hydrogen across the region. Similarly, the SoutH2 Corridor project is a 3,300 km dedicated hydrogen pipeline corridor that seeks to connect North Africa, Italy, Austria, and Germany, enabling the supply of low-cost renewable hydrogen produced in the South to key European clusters of demand (South2corridor.net 2025). A similar concept can also be implemented between different regions within a country. For example, India is implementing the Green Energy Corridor scheme, which includes tax incentives for green hydrogen projects until 2030’s end, across 10 states (T&D India 2024). By linking supply and demand, and scaling up the market, the Green Hydrogen Corridor could play a central role in fostering the global green hydrogen ecosystem. Clean Hydrogen for Road Transport in Developing Countries 73 4 Hydrogen Mobility Policy and Recommendations Recommendations for Hydrogen Fuel Adoption The deployment of FCEVs requires significant capital investment and infrastructure support. FCEVs cannot compete with BEVs economically but have an advantage in some niche markets based on operating requirements. There are still significant uncertainties in both technology and market development. Some overarching policy recommendations emerge from our economic analysis and market discussions. 1. Promote a Clean Hydrogen Economy for Energy Security and Job Creation Developing countries with abundant renewable energy resources can boost energy security by producing hydrogen locally, reducing their reliance on imported fossil fuels. The transport sector is a key pillar in the clean hydrogen ecosystem, offering a stable demand, fostering economic opportunities, and generating employment. Including hydrogen mobility in national clean hydrogen road maps can be particularly beneficial for densely populated urban areas where air pollution is severe. Clean-hydrogen-powered FCEVs not only eliminate tailpipe emissions but also significantly reduce particulate matter with a diameter of 2.5 microns or less (PM2.5), nitrogen oxides (NOx), and sulfur oxides (SOx) emissions from the energy production process. In regions where electricity generation relies heavily on fossil fuels, FCEVs may offer a net environmental advantage over BEVs—although this advantage may narrow as power grids transition to renewable sources. To fully leverage hydrogen mobility, it is vital to: ⦁ Assess local energy and transport sector conditions; ⦁ Compare FCEVs with competing vehicle technologies; ⦁ Develop a strategic road map for hydrogen mobility; ⦁ Continuously monitor technological and market developments; and ⦁ Encourage private sector participation. 2. Integrate Clean Hydrogen Pilot Projects into the Green Energy Transition Given current economic constraints, FCEVs remain uncompetitive until clean hydrogen costs drop significantly due to technological advancements and economies of scale. Meanwhile, BEVs are increasingly viable for decarbonizing road transport. Thus, green hydrogen should be prioritized in sectors where emissions are hard to abate, such as steel, fertilizers, aviation, and maritime transport, which currently rely on carbon-intensive Clean Hydrogen for Road Transport in Developing Countries 74 4 Hydrogen Mobility Policy and Recommendations gray hydrogen, and where green energy infrastructure investments are required to support a transition to clean alternatives. Developing countries can (1) focus hydrogen adoption in sectors where electrification is not a feasible alternative, and (2) capitalize on local renewable energy resources. 3. Target Fuel Cell Vehicle Deployment in High-Impact Niche Markets As an emerging technology, FCEVs can be deployed strategically in niche markets where they offer operational advantages. Their higher range, faster refueling, and weight efficiency make them particularly suitable for: ⦁ HDVs and buses, which benefit from greater payload capacity and a lower pavement impact. ⦁ Hilly or cold-weather regions, where BEVs’ performance may be less optimal. ⦁ Logistics and high-utilization fleet operations, where continuous, long-hour operation with minimal downtime is required. Strategic pilot programs should be prioritized in these areas to assess viability and drive early market adoption. 4. Develop Enabling Policies and Regulations for a Clean Hydrogen Economy Robust policy and regulatory frameworks are essential for the adoption of sustainable hydrogen: ⦁ Ensure clean hydrogen production is aligned with clean electricity generation. Regulations should prevent a reliance on fossil-fuel-based electricity for hydrogen production, avoiding unintended increases in carbon intensity. ⦁ Rationalize fiscal policies. Given the financial constraints of developing countries, large-scale subsidies may not be feasible. Fiscal incentives should be designed to support long-term cost reductions rather than artificially bridging the economic gap between FCEVs and BEVs. ⦁ Establish clear emission standards and incentives for zero-emission vehicles (ZEVs). Policies should promote renewable energy generation and support the transition to clean transport. Clean Hydrogen for Road Transport in Developing Countries 75 4 Hydrogen Mobility Policy and Recommendations 5. Adopt a Coherent Strategy for Hydrogen Mobility in the Green Energy Transition The adoption of FCEVs requires an integrated approach that entails market preparation, investment in infrastructure, financial structuring, and policy development. For most developing countries, FCEVs may not be viable in the short to middle term due to constraints in capital, infrastructure, workforce, and technology readiness. However, for nations with abundant renewable energy resources, hydrogen mobility can be a strategic component of a broader green energy transition. Key actions include: ⦁ Assessing opportunities in hydrogen value chains for both domestic use and export; ⦁ Targeting promising vehicle segments to accelerate market entry, based on local economic conditions; and ⦁ Building a regional or global green hydrogen ecosystem, aligning national strategies with broader hydrogen supply chains. 6. Conduct Country-Specific Economic Assessments for Hydrogen Mobility Hydrogen mobility is one of many pathways for transport decarbonization and must compete with alternatives, especially BEVs. The economic competitiveness of FCEVs depends on country-specific factors such as energy sources and prices, fleet composition, vehicle prices, and environmental valuation. Policy makers should: ⦁ Conduct detailed economic analyses to guide investment and policy decisions, and ⦁ Evaluate scenarios for a transition to ZEVs, considering how FCEVs and BEVs can complement each other in a diversified clean transport strategy. By adopting a data-driven and strategic approach, governments and industry stakeholders can determine the most effective role for hydrogen in the clean energy transition. Developing a green and sustainable transport system to achieve mobility and social and economic development objectives is the shared goal of all countries. The feasibility and viability of FCEVs is still to be tested by the market. Each country will have to assess its unique conditions and find the right strategy. For countries aspiring to invest in FCEVs, it will make sense to target niche markets like HDVs and buses, improve the technology and deploy a plan based on the lessons learned, and coordinate closely with energy and other industrial sectors. Clean Hydrogen for Road Transport in Developing Countries 76 4 Hydrogen Mobility Policy and Recommendations References Aamodt, A., K. Cory, and K. Coney. 2021. Electrifying Transit: A Guidebook for Implementing Battery Electric Buses. NREL Technical Report NREL/TP-7A40-76932. Golden, CO: National Renewable Energy Lab. ACEA (European Automobile Manufacturers Association). 2024. “Tax Benefits and Incentives: Electric Cars | 27 EU Member States.” Accessed October 20, 2024. https://www.acea.auto/files/Electric-cars-Tax-benefits-purchase-incentives​ _2024.pdf.pdf. Collins, Leigh. 2023. “We Will Place the Biggest Hydrogen Bus Order in US History Because Battery-Electric Can’t Do the Job.” Hydrogen Insight, October 4, 2023. https://www.hydrogeninsight.com/transport/we-will-place-the-biggest​ -hydrogen-bus-order-in-us-history-because-battery-electric-cant-do-the-job/2-1-1528769. EESI (Environmental and Energy Study Institute). 2018. “Comparing U.S. and Chinese Electric Vehicle Policies.” EESI, February 28, 2018. Accessed October 20, 2024. https://www.eesi.org/articles/view/comparing-u.s.-and-chinese -electric-vehicle-policies. European Parliament. 2023. Establishing a Union methodology setting out detailed rules for the production of renewable liquid and gaseous transport fuels of non-biological origin, Legislative Observatory (OEIL), https://eur-lex.europa.eu/ legal-content/EN/TXT/?uri = CELEX%3A32023R1184&qid =1704969010792 H2Med. 2025. “Europe’s First Major Green Hydrogen Corridor.” Accessed January 24, 2025. https://h2medproject.com/. Henning, M., A. R. Thomas, and A. Smyth. 2019. An Analysis of the Association Between Changes in Ambient Temperature, Fuel Economy, and Vehicle Range for Battery Electric and Fuel Cell Electric Buses. Cleveland, OH: Maxine Goodman Levin School of Urban Affairs Publications. Huya-Kouadio, J., and B. D. James. 2023. “Fuel Cell Cost and Performance Analysis.” Presentation for the DOE Hydrogen Program “2023 Annual Merit Review and Peer Evaluation Meeting,” June 6, 2023. , https://www.hydrogen.energy.gov/ docs/hydrogenprogramlibraries/pdfs/review23/fc353_ james_2023_o-pdf.pdf. Hyundai. 2025. “XCIENT Fuel Cell.” https://hyundaihm.com/wp-content/uploads/2020/10/XCIENT-Fuel-Cellcatalog_print​ .pdf. IRS (Internal Revenue Service). 2023. “Credits for New Clean Vehicles Purchased in 2023 or After.” Accessed October 20, 2024. https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after. León, M.; Silva, J.; Ortíz-Soto, R.; Carrasco, S. 2023. “A Techno-Economic Study for Off-Grid Green Hydrogen Production Plants: The Case of Chile.” Energies 2023, 16, 5327. https://doi.org/10.3390/en16145327 Ministry of Energy. 2020. National Green Hydrogen Strategy., https://energia.gob.cl/sites/default/files/national_green​ _hydrogen_strategy_-_chile.pdf Ministry of New and Renewable Energy. 2023. National Green Hydrogen Mission., https://cdnbbsr.s3waas.gov.in/ s3716e1b8c6cd17b771da77391355749f3/uploads/2023/01/2023012338.pdf. Parkes, Rachel. 2024. “California Transit Authority Signs Off Plan to Buy 40 Hydrogen Buses—After Trials of H2 and Battery Models.” Hydrogen Insight, November 29, 2024. https://www.hydrogeninsight.com/transport/california-transit-authority​ -signs-off-plan-to-buy-40-hydrogen-buses-after-trials-of-h2-and-battery-models/2-1-1746057. Schmidt, Sophia. 2024. “SEPTA to Try Out Hydrogen Fuel Cell Buses as Early as This Fall.” WHYY News, September 23, 2024. https://whyy.org/articles/septa-buses-hydrogen-fuel-cell/. South2corridor.net 2025. “The SoutH2 Corridor.” Accessed January 24, 2025. https://www.south2corridor.net/south2. T&D India. 2024. “Green Energy Corridor Scheme Planned in Ten States.” T&D India, December 12, 2024. https://www.tndindia​ .com/green-energy-corridor-scheme-planned-in-ten-states/. US DOE (United States Department of Energy). 2023. “National Clean Hydrogen Strategy and Roadmap 2023.” https://​ www.hydrogen.energy.gov/library/roadmaps-vision/clean-hydrogen-strategy-roadmap. Clean Hydrogen for Road Transport in Developing Countries 77 4 Hydrogen Mobility Policy and Recommendations Volvo. 2025. “Model Range: NEW FH Battery Electric 6x4 Tractor—Full Air Suspension FH 64T E.” https://stpi.it.volvo.com/ STPIFiles/Volvo/ModelRange/fh64te_gbr_eng.pdf. Yang, Zeyi. 2023. “How Did China Come to Dominate the World of Electric Cars?” MIT Technology Review, February 21, 2023. https://www.technologyreview.com/2023/02/21/1068880/how-did-china-dominate-electric-cars-policy/#:∼:text=​ Starting%20in%202009%2C%20the%20country,spending%20to%20improve%20their%20models. Clean Hydrogen for Road Transport in Developing Countries 78 ck to eS dob 8 6/A inn rfs s cha © APPENDIX A: Policy Questions Policy Questions For policy makers, there are many questions to consider regarding the relevance of hydrogen mobility, especially in developing countries. The original research conducted for this report sheds light on the pros and cons of hydrogen mobility when compared with other decarbonizing technologies (e.g., direct electrification) in the road transport sector. The discussion below attempts to address the six most pertinent policy questions that may arise during the green transition in the transport sector, based on our study findings from five countries (Brazil, Chile, India, the Republic of Korea, and South Africa). A more comprehensive analysis is provided in the report. The associated original modeling can be adapted and applied to other countries to gain deeper, customized insights into the most appropriate policy trajectory. Question 1: Could the vehicle capital cost disadvantage of fuel cell electric vehicles improve over time? Compared with internal combustion engine vehicles (ICEVs), the capital cost premiums of fuel cell electric vehicles (FCEVs) are substantial, but gradually declining across all segments—cars, buses, light commercial vehicles (LCVs), and heavy-duty vehicles (HDVs) (figure A.1). Meanwhile, battery electric vehicles (BEVs) have a lower capital cost than FCEVs for all segments, showing their competitiveness in the zero-emission vehicle market. FIGURE A.1. Average Capital Cost of ICEVs, BEVs, and FCEVs, by Vehicle Type, 2023 and 2030 Cars Light commercial vehicles Thousands of US$/vehicle Thousands of US$/vehicle 60 150 40 100 20 50 0 0 2023 2030 2023 2030 Petrol BEV FCEV Diesel BEV FCEV Buses Heavy-duty vehicles 400,000 600 Thousands of US$/vehicle 300,000 US$/vehicle 400 200,000 200 100,000 0 0 2023 2030 2023 2030 Diesel BEV FCEV Diesel BEV FCEV Source: World Bank Note: BEV = battery electric vehicle; FCEV = fuel cell electric vehicle. Clean Hydrogen for Road Transport in Developing Countries 80 Policy Questions Question 2: From individual users’ perspective, what is the total cost of ownership (TCO) of FCEVs when compared to ICEVs and BEVs? By 2030, compared with ICEVs, FCEVs’ TCO is still more across most vehicle segments, with the exception of cars, although the gap is gradually closing (figure A.2). Meanwhile, FCEVs are not competing with BEVs across all vehicle types. The cost disadvantage of FCEVs is not only due to high up-front capital costs, but also the cost of hydrogen fuel, whose reduction depends on technological improvement and economies of scale. FIGURE A.2. Total Cost of Ownership by Vehicle Type (Brazil, green hydrogen), 2023 vs 2030 Cars Light commercial vehicles 100,000 400,000 350,000 80,000 300,000 US$/vehicle US$/vehicle 250,000 60,000 200,000 40,000 150,000 100,000 20,000 50,000 0 0 2023 2023 2023 2030 2030 2030 2023 2023 2023 2030 2030 2030 ICE EV FCEV ICE EV FCEV ICE EV FCEV ICE EV FCEV Capital costs Capital costs NPV of fuel costs NPV of fuel costs NPV of maintenance costs NPV of maintenance costs NPV of battery change costs NPV of battery change costs Charging Charging Buses Heavy-duty vehicles 1,600,000 2,000,000 1,400,000 1,200,000 1,500,000 US$/vehicle US$/vehicle 1,000,000 800,000 1,000,000 600,000 400,000 500,000 200,000 0 0 2023 2023 2023 2030 2030 2030 2023 2023 2023 2030 2030 2030 ICE EV FCEV ICE EV FCEV ICE EV FCEV ICE EV FCEV Capital costs Capital costs NPV of fuel costs NPV of fuel costs NPV of maintenance costs NPV of maintenance costs NPV of battery change costs NPV of battery change costs Charging Charging Source: World Bank. Note: BEV = battery electric vehicles; EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle; NPV = net present value. Clean Hydrogen for Road Transport in Developing Countries 81 Policy Questions Question 3: Are fuel cell vehicles using clean hydrogen more environment friendly than battery electric vehicles before the power grid shifts to more renewable sources? Both FCEVs and BEVs have higher energy efficiency compared with their ICEV counterparts, measured by megajoules of energy consumed per 100 vehicle-kilometers of travel. However, BEVs have even greater energy efficiency because fuel cell stacks experience energy loss during the conversion of hydrogen to electricity to power their electric motors (figure A.3). FIGURE A.3. Averaged Energy Intensity, by Technology and Vehicle Type, 2023 2,000 1,800 1,600 1,400 1,200 MJ/100 vkm 1,000 800 600 400 200 0 Car LCV Bus HDV ICEV EV FCEV Source: World Bank. Note: EV = electric vehicle; FCEV = fuel cell electric vehicle; HDV = heavy-duty vehicle; ICEV = internal combustion engine vehicle; LCV = light commercial vehicle; MJ = megajoule; vkm = vehicle-kilometer. FCEVs have zero carbon dioxide (CO2) emissions on the road. Green hydrogen is typically produced through off-grid renewable energy (from on- and off-shore wind, photovoltaics) with no CO2 emissions produced. Blue hydrogen is typically produced from natural gas but combined with carbon capture and storage technologies that can reduce the CO2 emissions from about 9 kilograms (kg) to 1 kg per kg of hydrogen produced, resulting in minimal CO2 emissions. As a result, FCEVs offer an effective way to decarbonize road transport (figure A.4). Meanwhile, when the power grid relies on mostly fossil fuels, BEVs are not as effective as FCEVs. However, if the power grid shifts to more renewable energy sources, the gap in environmental benefits between FCEVs and BEVs narrows. Clean Hydrogen for Road Transport in Developing Countries 82 FIGURE A.4. Carbon Intensity by Technology and Vehicle Type, 2023 Cars Light commercial vehicles 35 40 kg CO2/100 vkm kg CO2/100 vkm 25 30 15 20 5 10 –5 0 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. Petrol EV Blue Hydrogen Diesel EV Blue Hydrogen Buses Heavy-duty vehicles 200 200 150 kg CO2/100 vkm 150 kg CO2/100 vkm 100 100 50 50 0 0 Brazil Chile India South Korea, Brazil Chile India South Korea, Africa Rep. Africa Rep. Diesel EV Blue Hydrogen Diesel EV Blue Hydrogen Source: World Bank. Note: Green hydrogen has no CO2 emissions and is not included in the charts. EV = electric vehicle; HDV = heavy-duty vehicle; kgCO2 = kilogram of carbon dioxide; LCV = light commercial vehicle; vkm = vehicle-kilometer. Question 4: How important are local environmental benefits compared to global ones in the adoption of fuel cell electric vehicles? FCEVs can significantly reduce local air pollutants—PM2.5 (particulate matter with a diameter of 2.5 microns or less), NOx (nitrogen oxides), and SOx (sulfur oxides)—especially in countries with densely populated urban areas (figure A.5). The local air quality improvement benefits are much higher than those from CO2 mitigation, from the uptake of both FCEVs and BEVs (figure A.6). Carbon finance, together with other tools that monetize environmental externalities associated with the transport sector, can be an effective policy lever for the deployment of FCEVs. Clean Hydrogen for Road Transport in Developing Countries 83 Policy Questions FIGURE A.5. PM2.5 Intensity of Heavy-Duty Vehicles by Technology and Unit of Travel, 2022 16 Grams PM2.5 per 100 vehicle-kilometers 14 12 10 8 6 4 2 0 Brazil Chile India South Africa Korea, Rep. Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Note: Calculation of PM2.5 also includes wear and tear on tires, brake pads, and pavement. HDV = heavy-duty vehicle; PM2.5 = particulate matter with a diameter of 2.5 microns or less. FIGURE A.6. Local vs Global Environmental Benefits of 30×30 vs BAU for HDVs 600,000 500,000 400,000 US$/vehicle 300,000 200,000 100,000 0 Brazil Chile India South Africa Korea, Rep. FCEV Local FCEV Global EV Local EV Global Source: World Bank. Note: Based on FCEVs using green hydrogen. The results are similar for blue hydrogen. BAU = business as usual; EV = electric vehicle; FCEV = fuel cell electric vehicle. Clean Hydrogen for Road Transport in Developing Countries 84 Policy Questions Question 5: Is the uptake of fuel cell electric vehicles economically viable and what is the entry market? FCEVs do not present an economic case in most segments but start to show some cost advantage for buses and HDVs in countries with dense populations (India and Korea), driven by significant environmental benefits, which could be the entry segments (figure A.7). However, FCEVs cannot compete with BEVs due to their competitive vehicle capital costs and low electricity costs. Across countries, electricity is about twice as expensive as fossil fuels on a per-unit-of-energy basis, while hydrogen is more than four times as expensive as fossil fuels (figure A.8). If costs are compared on a per-unit-of-travel basis, FCEVs can be twice as expensive as ICEVs and up to four times as BEVs (figure A.9). The high hydrogen cost would require a rapid and significant drop through technology advancement and economies of scale for FCEVs to become economically viable. For developing countries, the integration and promotion of hydrogen pilot projects should be included within each country’s mobility strategy, but on an opportunistic and selective basis. This can help create the right ecosystem and market demand to scale up quickly when technology is affordable. FCEV pilot projects should focus on niche markets including heavily utilized buses and long-haul trucks, or captive fleets in concentrated geographic areas of avctivity (drayage operations at port). FIGURE A.7. Economic Cost Advantage of 30×30 vs BAU, by Vehicle Type, India, 2030 30% 20% 10% % of BAU values 0% –10% –20% –30% –40% 4W Bus LCV HDV Economic Cost, FCEV Economic Cost, EV Source: World Bank. Note: Based on green hydrogen FCEVs. The results for blue hydrogen FCEVs are similar. 4W = four-wheeler; BAU = business as usual; EV = electric vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Clean Hydrogen for Road Transport in Developing Countries 85 Policy Questions FIGURE A.8. Cost of Fossil Fuel, Electricity, and Hydrogen per Unit of Energy, 2030 100.0 90.0 80.0 70.0 60.0 US$/gigajoule 50.0 40.0 30.0 20.0 10.0 0.0 Brazil Chile India South Africa Korea, Rep. Petrol Diesel Electricity Blue Hydrogen Green Hydrogen Source: World Bank. Note: Once tax and subsidy distortions are removed, electricity and liquid fuel prices can be normalized into consistent units so that the underlying economic costs can be compared. Hydrogen and electricity are a more extensively processed form of energy. Hydrogen could be even more expensive than electricity because the electrolysis, compression, liquefaction, and refueling processes all use electric power. FIGURE A.9. Cost of Fossil Fuel, Electricity, and Hydrogen per Unit of Travel for Cars, 2030 0.100 0.090 0.080 0.070 US$/vehicle-kilometer 0.060 0.050 0.040 0.030 0.020 0.010 0.000 Brazil Chile India South Africa Korea, Rep. ICE/Petrol ICE/Diesel BEV FCEV/Blue FCEV/Green Source: World Bank. Clean Hydrogen for Road Transport in Developing Countries 86 Policy Questions Question 6: What are the investment needs and fiscal implications from the uptake of fuel cell electric vehicles? The significant investment needs for FCEV adoption are mainly from vehicles’ capital cost and refueling stations’ investment, similar to the case of BEVs. The requirements for public sector investment could be huge, for the purchase of buses as well as charging/refueling infrastructure. However, the investment needs for BEV adoption are generally less than those for FCEV adoption, based on current market conditions (figure A.10a, A.10b). FIGURE A.10A. Investment Needs of 30×30 for FIGURE A.10B. Investment Needs of 30×30 Green Hydrogen FCEVs in Brazil, Breakdown by for BEVs in Brazil, Breakdown by Category, 2030 Category, 2030 (Total: US$32.808 billion) (Total: US$18.174 billion) Breakdown of investment needs, 2030 Breakdown of investment needs, 2030 Public charging infrastructure 3/4W Public charging infrastructure E-bus Public incremental vehicle cost Bus Public incremental vehicle cost Bus Public hydrogen refueling station Public charging infrastructure E-LCV Private incremental vehicle cost 4W Public charging infrastructure E-HDV Private incremental vehicle cost LCV Private charging infrastructure Private incremental vehicle cost HDV Private incremental vehicle cost LCV Private incremental vehicle cost HDV Source: World Bank. Note: 3/4W = three/four-wheeler; E-HDV = electric heavy-duty vehicle; E-LCV = electric light commercial vehicle; HDV = heavy-duty vehicle; LCV = light commercial vehicle. Regarding the fiscal impact, the adoption of FCEVs is expected to reduce the receipts from fossil fuel taxes, while increasing the receipts from vehicle sales tax and import duties as FCEVs are more expensive than ICEVs, if there are no tax incentives for FCEVs (figure A.11). This fiscal impact is similar for BEVs, depending on whether electricity is taxed or subsidized. Policy makers need to consider these fiscal impacts during the transition to BEVs/FCEVs. Clean Hydrogen for Road Transport in Developing Countries 87 Policy Questions FIGURE A.11. Net Fiscal Impact of 30×30 vs BAU, Green Hydrogen FCEVs in Brazil, 2030 Net Fiscal Impact in Year 2030 (30×30 - BAU) 3,000 2,000 1,000 0 US$, millions (1,000) (2,000) (3,000) (4,000) (5,000) Cars Buses LCVs HDVs Diesel tax Petrol tax Vehicle duties Vehicle taxes and subsidies Source: World Bank. Note: Sales tax rate for ICE cars (52.6 percent) vs fuel cell cars (48.2 percent). Same tax rate of 49.6 percent for FCEVs and diesel buses. HDVs’ sales tax for diesel (36.7 percent) vs FCEVs (30.6 percent) and LCVs’ sales tax of 34.4 percent for diesel vs 30.6 percent for FCEVs. Brazil does not import buses. Brazil provides tax incentives for cars, LCVs, and HDVs, while no tax incentive for buses. FCEVs’ uptake will reduce tax receipts for the car segment, but increase tax receipts for buses, LCVs, and HDVs as their higher vehicle capital costs for FCEVs are more than enough to offset the lower tax rates. FCEV adoption also leads to a large increase in import duty receipts. This transition also leads to significant reduction of tax receipts from fossil fuels. In conclusion, developing a green and sustainable transport system to meet mobility and social and economic development objectives is the shared goal of all countries. Like many transitions, while the trajectory is uncertain, the ultimate destination is clear. The feasibility and viability of FCEVs is still to be tested by the market. Each country will need to assess its unique conditions and find the right strategy. For countries that aspire to invest in FCEVs, it will make sense to target niche markets like HDVs and buses, improve the technology, develop a strategy based on lessons learned, and coordinate closely with energy and other industrial sectors. Clean Hydrogen for Road Transport in Developing Countries 88 ck to eS dob A to/ ofo tofot © fo APPENDIX B: Description of Cost Estimation of LCOH and LCOR Description of Cost Estimation of LCOH and LCOR Assumptions and parameters are taken from recent and authoritative sources, including the ones listed below. Total installation costs for wind and solar (capital expenditure, CAPEX), operational expenditure (OPEX), efficiency, lifetime, and weighted average cost of capital (WACC) are taken from the International Renewable Energy Agency (IRENA 2021, 2024) and include projections of potential future improvements based on historical trends. Stationary battery storage CAPEX, OPEX, efficiency, and lifetime are taken from “Cost Projections for Utility- Scale Battery Storage” (NREL 2024a). Estimates for 2030 use the moderate case whereas those for 2035 use the advanced case described in the NREL report. Electrolyzer CAPEX, OPEX, efficiency, and lifetime are taken from recent tools (NREL 2024b; Agora Energiewende 2023) and for the 2035 case from industry sources and literature (including IEA 2024b) on potential for improvements in electrolyzer technology cost, performance, and durability. The WACC for proton exchange membrane electrolysis plants is markedly higher than for the other more established renewable energy technologies, reflecting added risks of this nascent industry, and the associated uncertainties in technology (and their impact on risk and therefore on the cost of capital), as well as uncertainty in offtake. Country-specific WACC values for electrolytic hydrogen were estimated based on the Organisation for Economic Co-operation and Development (OECD 2023). The locations of electrolytic hydrogen production in each of the six focus countries were based on the International Energy Agency’s (IEA 2024a) tracking of planned hydrogen production plants. The projects considered are: Brazil ⦁ Facility: Pecém Industrial and Port Complex ⦁ Products: Green Hydrogen and Ammonia (Ammonia Energy Association 2024) ⦁ Status: Operational pilot, further projects in feasibility/concept stages ⦁ Total potential capacity: ∼1.2 million tons of H2 /year Clean Hydrogen for Road Transport in Developing Countries 90 Description of Cost Estimation of LCOH and LCOR Chile ⦁ Facility: HyEx Phase 2 ⦁ Products: Green Ammonia (Ammonia Energy Association 2023) ⦁ Status: Feasibility study ⦁ Total potential capacity: 347 kilotons (kt) of H2 /year India ⦁ Facility: ACME Tamil Nadu Plant (Chidambaram Port) ⦁ Products: Green Hydrogen and Ammonia (India Sea Trade News 2024) ⦁ Status: Feasibility study ⦁ Total potential capacity: 260 kt of H2 /year South Africa ⦁ Facility: Nelson Mandela Bay Ammonia Plant ⦁ Products: Green Ammonia (NS Energy News 2024) ⦁ Status: Feasibility study ⦁ Total potential capacity: ∼ 470 kt of H2 /year South Korea ⦁ Facility: Changwon Industrial Complex/Jeju Island ⦁ Products: Multiple—Electricity Generation, Hydrogen for FCEVs, Others (Doosan Corporation 2024) Clean Hydrogen for Road Transport in Developing Countries 91 Description of Cost Estimation of LCOH and LCOR ⦁ Status: Final investment decision /under construction, further projects in the feasibility studies stage ⦁ Total potential capacity: >50 kt of H2 /year United States ⦁ Facility: HIF (Gulf Coast) ⦁ Products: E-fuel Production (e-gasoline) (Hydrogen Insight 2023) ⦁ Status: Feasibility study ⦁ Total potential capacity: 270 kt of H2 /year References Agora Energiewende. 2023. “Levelised Cost of Hydrogen Calculator.” Agora Energiewende, July 5, 2023. https://www.agora -energiewende.org/data-tools/levelised-cost-of-hydrogen-calculator. Ammonia Energy Association. 2023. “HyEx: Ammonia from the Chilean Desert.” Ammonia Energy Association, March 08, 2023. https://ammoniaenergy.org/articles/hyex-ammonia-from-the-chilean-desert/. Ammonia Energy Association. 2024. “Sixth Renewable Ammonia Project Announced for Ceara State, Brazil.” Ammonia Energy Association, June 26, 2024. https://ammoniaenergy.org/articles/sixth-renewable-ammonia-project-announced -for-ceara-state-brazil. Doosan Corporation. 2024. “Doosan Enerbility Attends Ceremony to Celebrate Construction Completion of ‘Changwon Hydrogen Liquefaction Plant’.” Press release, January 31, 2024. https://www.doosan.com/en/media-center/press -release_view?id =20172562. Hydrogen Insight. 2023. “HIF Global Gets Green Light to Build World’s Largest E-Fuels Facility in Texas—With 1.8GW of Green Hydrogen Production.” Hydrogen Insight, April 25, 2023. https://www.hydrogeninsight.com/innovation/hif-global -gets-green-light-to-build-worlds-largest-e-fuels-facility-in-texas-with-1-8gw-of-green-hydrogen-production/2-1-1440684. IEA (International Energy Agency). 2024a. “Hydrogen Production Projects Interactive Map.” Accessed April 2, 2024. https:// www.iea.org/data-and-statistics/data-tools/hydrogen-production-projects-interactive-map. IEA. 2024b. Global Hydrogen Review 2024. Paris: IEA. https://www.iea.org/reports/global-hydrogen-review-2024. India Sea Trade News. 2024. “V.O. Chidambaranar Port Allocates 501 Acre Land for Green Hydrogen.” India Sea Trade News, September 17, 2024. https://indiaseatradenews.com/v-o-chidambaranar-port-allocates-501-acre-land-for-green-hydrogen/. IRENA (International Renewable Energy Agency). 2021. Renewable Power Generation Costs in 2020. Abu Dhabi: IRENA. https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020. IRENA. 2023. Renewable Power Generation Costs in 2023. Abu Dhabi: IRENA. https://www.irena.org/Publications/2024/ Sep/Renewable-Power-Generation-Costs-in-2023. Clean Hydrogen for Road Transport in Developing Countries 92 Description of Cost Estimation of LCOH and LCOR NREL (National Renewable Energy Laboratory). 2024a. “Utility-Scale Battery Storage.” https://atb.nrel.gov/electricity/2024/ utility-scale_battery_storage. NREL. 2024b. “H2A-Lite: Hydrogen Analysis Lite Production Model.” https://www.nrel.gov/hydrogen/h2a-lite.html. NS Energy. 2024. “Coega Green Ammonia Project, South Africa” https://www.nsenergybusiness.com/projects/coega -ammonia-project-south-africa/?cf-view OECD (Organisation for Economic Co-operation and Development). 2023. “Financing Cost Impacts on Cost Competitiveness of Green Hydrogen in Emerging and Developing Economies.” OECD Environment Working Paper 227, OECD Publishing, Paris. https://www.oecd.org/en/publications/financing-cost-impacts-on-cost-competitiveness-of -green-hydrogen-in-emerging-and-developing-economies_15b16fc3-en.html. Clean Hydrogen for Road Transport in Developing Countries 93