This month John Denslinger explores the competing technologies in the zero- emissions race and argues that only when the advantages are truly clear will consumers pick the winner.
For all the attention and seemingly endless funding, one would think the decisive winning technology in America’s race to zero-emitting vehicles is a battery solution. It’s a reasonable assumption considering companies have collectively announced somewhere north of $200B in new EV and battery investments. Not to be outdone, the Fed also chipped in another $245B with the passage of the Inflation Reduction Act and the Bipartisan Infrastructure Law further supplementing the same companies investing in domestic manufacturing of EVs and batteries, as well as others investing in charging stations. It’s a grand assumption considering the technology is still evolving and years away from optimization.
As with any revolutionary disruption, upstream and downstream conditions must support innovative technology. Electrifying America’s vehicles is truly a radical shift from an ICE and fossil fuels legacy. The road ahead is anything but smooth. Upstream, power generation from renewable energy sources is still emerging. Currently, renewables is slightly above 20 per cent, and according to EIA, both coal and natural gas generation each exceed renewables at this time. Also, the grid itself is outdated and in need of massive infrastructure investment. Today’s grid was built on a complex delivery network of fossil fuels to power plants near users while the best solar and wind farms today are distant from those same users. Another vital link to electrification is EV charging stations. Other than Tesla, widespread build-out is much too slow. Finally, we get to mining and processing primary metals used in batteries (lithium, cobalt, nickel, manganese, et al). Mining has its own environmental challenges and regulatory slow-walks. On the downstream side, the mass consumption buyer is still sitting on the sidelines seemingly undecided about the real benefits of EV. Overall, America is truly advancing electrification, zero-emissions and renewable green energy, but the measured pace has allowed alternatives to challenge the presumption that EV is the best solution for zero-emitting vehicles.
While fundamentals still favor BEV (lithium battery) solutions, HFC (hydrogen fuel cell) is gaining attention. But like electrification, H₂ has its own viability issues. First, there is a non-existent H₂ infrastructure for manufacturing, storage, delivery and vehicle refueling stations. Although H₂ can be produced from abundantly available domestic resources, there are environmental differences to consider: brown H₂ is generated from coal, blue H₂ (also called gray H₂) is generated from natural gas while green H₂ is produced with electrolyzers powered by solar or wind splitting water into hydrogen and oxygen. Obviously, green H₂ is widely preferred but presently costs 3X more to generate.
Last month in a positive announcement, the Treasury Department and IRS issued tax credit guidance intended to stimulate new green H₂ generation as authorized by the Inflation Reduction Act. Unfortunately, bureaucracy managed to undermine the mission by setting onerous rules for claiming credits. It begs two questions: (1) is this really a sincere effort to financially support H₂ as a zero-emission alternative fuel source, and (2) where is the financial support enabling the build-out of a national hydrogen infrastructure like that of electrification?
The future mass implementation of a BEV or HFC solution (and supporting infrastructures) appears complicated and costly, two words that turn most dreams into nightmares. When it comes to vehicle selection, consumers expect simplicity, convenience, performance and reliability at a cost parity to their ICE experience. Both technologies offer pathways to zero-emissions, both continue to evolve and both need to pass the test of time. When the advantages are clear to the consumer that solution will win the race.