1. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY H2 Policy Analysis using the ETP model Dolf Gielen Giorgio Simbolotti IPHE Task Force on Socio-Economics, Paris, 30 June 2005

2. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Key points Hydrogen may play a significant role by 2050 This will require R&D successes and cost reduction FCV cost constitute a key issue for a hydrogen transition Total incremental investment cost till 2050 1.7-3.5 trillion USD The environmental & supply security benefits could be substantial, but require policies and technology advance Competing options may also play a key role

3. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Presentation Overview Technology input data Investment analysis Baseline scenarios Sensitivity analysis Observations

4. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY Part 1: Technology input data

5. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Technology types Production  Centralized  Decentralized Distribution Refueling stations Vehicles  Fuel cell  On-board storage

6. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Production cost 0 5 10 15 20 25 30 35 Decentralized Centralized Natural gasElectrolysisNatural gas CoalNuclearSolarBiomass No CCSCO2-free electricity No CCSCCS S/I cycle Gasification H2 production cost [USD/GJ]

7. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE H 2 transportation cost Pipelines constitute the only viable transportation mode Some hydrogen (up to 9% e/e) can be mixed into natural gas in existing pipelines New pipelines will be needed Transportation cost six times those for natural gas 0.5-1 trillion USD for refuelling station supply, 5 trillion for all stationary gas users

8. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Distribution and refueling cost Distribution (pipeline/LH 2 ) adds 2 USD/GJ delivered Liquefaction: 7-10 USD/GJ H 2 delivered Refuelling station cost 3-6 USD/GJ H 2 delivered (incl. pressurization, excl. decentralized production cost)

9. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Hydrogen vehicles Engines  Hydrogen hybrids  Hydrogen FCVs On-board storage  Gaseous 700 bar  Gaseous 350 bar  Liquid  Metal hydrides  Other

10. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Fuel cells Present cost 2000 USD/kW <50 USD/kW needed Proton Exchange Membrane Fuel Cells (PEMFC) Current technology: Nafion membrane, Pt/C catalyst Significant cost reduction possible (mass production), but less than 100 USD/kW seems not likely with current materials New catalyst alloys needed, or HT-membranes New materials may offer cost reduction potential

11. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Future Cost Structure (2020) 50% higher power density, 10 times cheaper membranes, more than 50,000 cars/y (engines) Cost Share [USD/m 2 ][USD/kW][%] Membrane501716 Electrode1505049 Bipolar plates913029 Platinum catalyst833 Peripherals411 Assembly22 Total103100 This is still too costly !!!

12. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Further cost reduction e.g. through higher power density Factor 2 gain 100 ￫ 50 USD/kW Present 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 02468 Power [kW/m2] Stack power delivery cost [USD/kWh] Stack 66 USD/kW Stack 50 USD/kW due to better membrane - Higher power density gives lower efficiency - Higher power density gives lower stack cost - Therefore a balancing of fuel & stack cost needed Long term Short term

13. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE H 2 onboard storage Gaseous 700 Bar seems the technology of choice for cars (350 bar for buses &vans) 4-5 kg storage needed/car (450-500 km) Present cost: 3300 USD/kg Present mass production: 400-500 USD/kg Assumed 150 USD/kg by 2025 Pressurization (1-800 bar) takes 14% energy content (GJe/GJ H 2 ) (assumed 10%, higher starting pressure) Other storage systems may succeed, but they are still far away from commercialization

14. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE H 2 production Comparison on GJ-basis is deceptive, as FCV efficiency is 2.5 times current ICE efficiency H 2 can be supplied at 15-20 USD/GJ (2020-2030) Fuel cost (ex tax)/km about the same as current gasoline vehicles

15. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY Part 2: Investment analysis

16. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Assumed FC stack cost reduction 35 USD/kW stack; 10 USD/kW storage; 15 USD/kW drive system 10 100 1000 10000 200020102020203020402050 [USD/kW] GLO50 Sensitivity Analysis

17. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE FCVs: USD 1- 2.3 tr. incremental cost 201020152020203020402050 Assumptions Used in Both Cases Cumulative FCV Production, OECD (millions) 0.000.040.218.4133.3502.4 Cumulative FCV Production, World (millions) 0.000.040.228.6143.7727.5 FCV Share of Sales, OECD 0.0%0.1%0.2%5.0%50.0%100.0% FCV Share of total vehicle stock, OECD 0.0% 0.1%2.2%13.1%31.0% Optimistic Case Results FCV drive system cost, optimistic case (0.78 progress ratio) [USD/kW] 545207134695450 Total incremental cost of FCV, cumulative (bln USD) 0.10.62.127244965 Pessimistic Case Results FCV cost drive system, pessimistic case (0.85 progress ratio) 5452842071148169 Total incremental cost of FCV, cumulative (bln USD) 0.10.93.4605852,264

18. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Incremental investment needs Excludes centralized production processes FCVs: 1-2.3 trillion USD Distribution: 0- 1 trillion USD Refueling infrastructure: 0.2-0.7 tr. USD Total: 1.7-3.5 trillion USD Total GDP 2000-2050: 4,500 trillion USD Therefore 0.03-0.1% of GDP

19. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY Part 3: Baseline scenarios

20. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Why model analysis? Account for competing options (e.g. biofuels) Account for competing use of resources (e.g. electricity from renewables) Account for regional differences (resource endowment, capital availability, car use etc.) Quantify the relevance of H 2 & FC on a global/regional level Map uncertainties Quantify the cost and specify additional policy requirements

21. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Hydrogen model structure

22. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Structure of the analysis, so far BASE scenario: no CO 2 policies GLO50 scenario: CO 2 policies plus reasonable assumptions for H 2 /FC GLO50 w/o H 2 /FC: what are the benefits on a systems level Sensitivity analysis: individual parameter variations for GLO50

23. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE GLO50 (reference) 21 model runs ESTEC +++++ ESTEC ----- ESTEC ++--- ESTEC +--+- GLO50 w/o H2 & FC BASE w&w/o H2 & FC GLO25 w&w/o H2 & FC GLO50 w&w/o H2 & FC BASE Fuel Market Analysis H2&FC Benefits Analysis Scenario Analysis + Regional Results H2&FC Potentials Analysis Sensitivity Analysis GLO50 how robust are H2 & FC results H2 & FC supply security benefits H2 & FC CO2&monetary benefits DRAFT REPORT what are the key assumptions

24. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Assumptions GLO50 (+range) 50 USD/t CO 2 incentive (0-100 USD/t) Fuel cell system 65 USD/kW (65-105) Same kW for ICE and FCV (80-100%) Oil price 2030 29 USD/bbl, slowly rising (29-35 USD/bbl) (WEO 2004) Biomass potential rising to 200 EJ/yr by 2050 (100-200 EJ) No transition issues (infrastructure transition considered yes/no) Discount rates transport 3-12% (3-18%) Alternative fuel taxes rise to 75% of gasoline tax (75-100%)

25. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE CO 2 price A gradual rise to 50 USD/t

26. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE CO 2 emissions: 50 USD/t CO 2 = Emissions Stabilization 0 10 20 30 40 50 60 70 197019801990200020102020203020402050 [Gt CO2/yr] Base GLO50 Statistics

27. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Transport fuels

28. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Key insights No CO 2 policy: more than a doubling in fuel use; 2/3 oil products; 1/3 alternative fuels CO 2 policy: 1/3 oil products, 1/3 biofuels, 1/10 H 2 ; 30% efficiency gains 1/10 hydrogen replaces 2 times as much oil products (27% H 2 FCV by 2050)

29. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Transport CO 2 emissions (WTW) -50% in 2050 but still rising 0 5 10 15 20 200020102020203020402050 [Gt CO2/yr] BASE GLO50

30. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Key emission reductions Globally 32 Gt CO 2 reduction in 2050 Transport (WTW) 8.5 Gt CO 2 reduction in 2050:  Biofuels: 1.5 Gt  CCS: 2 Gt (alternative fuels production) (+1.9 Gt H 2 production)  Substitution effect H 2 use: 1 Gt due to H 2 use  Efficiency: 4 Gt (including 1 Gt due to H 2 use)  Total 2 Gt due to H 2 use

31. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Hydrogen in transport GLO50 0 2 4 6 8 10 12 14 200020102020203020402050 [EJ/yr] Hydrogen FC cars Hydrogen hybrid cars Buses FCVs

32. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Stationary fuel cells MCFC/SOFC At present 10,000-15,000 USD/kW (50% stack) 1,600 USD/kW target (50% stack) This is an order of magnitude higher than for mobile applications Electric efficiency decentralized 40-45% Efficiency centralized integrated 45-70% (wide range of estimates)

33. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Stationary fuel cell use by sector 0 100 200 300 400 500 200020102020203020402050 [GW] Power sector Residential & Services Industry

34. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Stationary fuel cell use by fuel 0 100 200 300 400 500 200020102020203020402050 [GW] Oil Coal Natural gas Hydrogen

35. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Comparison GLO50 to GLO50 w/o H 2 &FC Systems effect: 1.3 Gt higher emissions in 2050 (+4%) Systems effect: 7% higher crude oil use in 2050 This suggests significant benefits

36. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY Part 4: Sensitivity analysis

37. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Hydrogen sensitivity analysis 2050GLO5015.7 EJ Parameter PerturbationChange [%] CO 2 incentives 0-77 25 USD/t CO 2 -15 100 USD/t CO 2 +80 CO 2 policy scope IEA only-77 Market structure High hurdle rate-31 Nuclear No constraints on nuclear-19 Biomass 100 EJ biomass potential+9 CCS No CCS-52 FCV cost FCV system cost 105 USD/kW-80 FC life span 2 cells during vehicle life span-17 FC power 25% less than ICE+6 Cost path FCV cost reduction delay-26 Delivery vans FCV considered+50 Transition H 2 supply transition considered-42

38. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE H 2 Production with & w/o transition The technology path is a key issue 0 2 4 6 8 10 12 14 16 18 2030 2050 GLO50GLO50CHEGLO50GLO50CHE [EJ/yr] Other Decentralized natural gas Centralized natural gas + CCS FutureGen

39. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Prospects for electrolysis Electricity becomes virtually CO 2 -free at relatively low CO 2 price levels A trade-off between diurnal electricity prices and H 2 storage cost So far diurnal H 2 storage not considered May reduce production cost by 3 USD/GJ H 2 So far no reliable data for efficiency & cost of advanced electrolysis

40. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE CO 2 -emissions of electricity production 0$ 10$ 25$ 25$ No CCS 50$ 50$ No CCS

41. AGENCE INTERNATIONALE DE L’ENERGIEINTERNATIONAL ENERGY AGENCY Part 5: Observations

42. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Need for secure, alternative transportation fuels beyond 2030 (supply argument) CO 2 policies (reduction/stabilization) also imply oil substitution (environmental argument) Non-conventional oil, FT-synfuels, CNG have limited transition problems, but no substantial CO 2 benefits Efficiency, biofuels have limited transition problems, offer substantial CO 2 benefits but limited potential The H 2 option requires R&D breakthroughs and cost reduction, transition will take decades; but holds potential for substantial benefits The main challenge is the affordable FCV Buses, delivery vans, H 2 hybrids as a transition strategy Overall benefits of having H 2 /FC: 4% lower GHG emissions, 7% less oil use

43. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Workshop Summary Relevant other studies  WBCSD SMP  Concawe/EUCAR/JRC WTW study  H2A  CUTE  Hyways  ETSAP 4 working groups  Production, transportation&distribution  FCVs  Stationary&portable FCs  Technology scenarios

44. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Workshop conclusions Data are uncertain (present and future) Challenge to get “true” FC data Demand for more sensitivity analysis Optimisation vs. policy simulation scenarios More emphasis on regional differences/details Focus more on R&D policies & transition instead of long-term economics