Assessing the Competitiveness of Hydrogen

and Biofuels in European Transport

Timur Gül, Socrates Kypreos, Leonardo Barreto

Energy Economics Group, Laboratory for Energy Systems Analysis

Paul Scherrer Institute / Switzerland

World Energy Congress, 13 November 2007, Rome / Italy

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Presentation Outline

1. Research Objective

2. Cost Analysis of Hydrogen and Biofuels

3. Modeling Framework

4. Scenario Analysis

5. Conclusions

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Research Objective

1. Analysis of costs and prospects of hydrogen and biofuels for

European transport (US H2A analysis, literature review)

→ Modeling input

2. Understand the competitiveness of hydrogen and biofuels under

CO2 reduction policies, fuel subsidies and increasing oil prices

→ Modeling analysis in a cost-optimization framework

Part 1: Cost Analysis

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Hydrogen Production Cost in 2030

Sources: adapted from US DoE (2006) and Felder (forthcoming)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Natural Gas

Natural Gas w/ CCS

Coal

Coal w/ CCS

Wind + Electrolysis

Nuclear SI cycle

Nuclear HT Electrolysis

Nuclear HP Electrolysis

Biomass

Electrolysis

HP Electrolysis

Solar Coke

Solar Zn/ZnO

US$2000/ kg H2

Production Cost Feedstock CostNote: Interest rate 5%

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Cost of Delivered H2 from Coal Gasification 2030

Source: US DoE (2006)

0

10

20

30

40

50

60

Liquid DirectTruck Delivery,

Small FS

Gaseous DirectTruck Delivery,

Small FS

Liquid DirectTruck Delivery,

Large FS

Pipeline RingSystem, Large

FS

Pipeline,Terminal,

Liquid TruckDelivery, Large

FS

Pipeline,Terminal,

Gaseous TruckDelivery, Large

FS

US$2000/GJ Large Fueling Station

Small Fueling Station

Gaseous Truck Delivery

Liquid Truck Delivery

Terminal

Liquefaction

Pipeline

Compression

Production

Gasoline $0.5/litre

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Biofuels Costs

Source: Ragettli (2007)

0 5 10 15 20 25 30 35 40

Wood-to Biodiesel

Wood-to-FT-Diesel

Wood-to-DME

Wood-to-SNG

Wood-to-MeOH

Stover-to-EtOH

Corn-to-EtOH

Sugar Beet-to-EtOH

Oil Crops-to-FAEE

Waste-to-SNG

US$2000/GJ

Production [$/GJ] Biomass [$/GJ] Energy [$/GJ] T&D [$/GJ]

Gasoline $0.5/litre

2nd Generation

1st Generation

Part 2: Modeling Framework

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European Hydrogen Model EHM

• developed at Paul Scherrer Institute

• MARKAL-class model

• „bottom-up“ energy-system model with detailed representation of

technologies

• cost-optimization model: identifies least-cost solutions for the energy

system under given sets of assumptions and constraints

• represents the energy system of EU-29

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EHM Reference Energy System - Structure

Resource

Extraction

•Oil

•Gas

•Coal

•Renewables

•Uranium

Conversion

Technologies

•Electricity / Heat Generation

•Fuels Production (Oil products, Biofuels, Hydrogen, etc.)

T&D

End-Use

Technologies

•Transportation

•Industrial Thermal

•Industrial Specific

•Res./Comm. Thermal

•Res./Comm. Specific

•Feedstocks

PrimaryEnergy Carriers

FinalEnergy Carriers

Each Technology isrepresented by its costs

and efficiency!

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European Hydrogen Model EHM

• detailed representation of hydrogen and biofuels production & delivery

pathways

• detailed, but still stylised personal transport sector

• calibrated to year 2000 statistics from IEA

• based on an updated IPCC-SRES B2 scenario („middle-of-the-road“)

• 10 year time steps until the year 2100

• exogenous technology learning assumptions

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General Key Modeling Assumptions

• We use European biomass potential only (7.2 EJ)

• No biomass or biofuels imports considered

• Low oil prices assumed as

• US$2005 60/bbl in 2050 (old IEA projections), and

• US$2005 80/bbl in 2100

• Interest rate 5%

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Key Modeling Assumptions in Transport

• Exogenous cost reduction assumptions for all vehicles

• Fuel cell costs assumed

• US$ 250 /kW at market launch in 2020, and

• US$ 40 /kW 50 years later due to learning progress

• Share of 1% of total market for new personal vehicles at market

launch

• Maximum growth rate car technology of 10% per year

Scenario Analysis

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Scenario Analysis

1. Baseline Scenario under given set of assumptions

2. Impact of a 50% CO2 reduction target by 2050

• Additional higher oil prices and fuel subsidies as of 2010

3. Impact of a more stringent CO2 reduction target: 60% reduction by

2050

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Baseline Scenario: Personal Transport EU-29

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

billion vehicle-km

Biofuels Hybrid

CNG Hybrid

CNG ICEV

Diesel ICEV

Gasoline ICEV

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50% CO2 Reduction Target in 2050

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

billion vehicle-km

Hydrogen FCV

Plug-in Hybrid

Gasoline HEV

Hydrogen HEV

Biofuels HEV

CNG HEV

Biofuels ICEV

CNG ICEV

Diesel ICEV

Gasoline ICEVICEVs

Hybrids

H2 Fuel Cells

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Mid-term Impacts of Oil Price and Fuel Subsidies

Biofuels in 2050

0

12

34

5

5358

6368

7378

10%

15%

20%

25%

Biofuels Market

Share

Biofuels

Subsidy

[US$/GJ]

Oil Price in 2050 [US$/bbl]

Hydrogen in 2050

0

12

34

5

5358

6368

7378

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Hydrogen

Market Share

Hydrogen

Subsidy

[US$/GJ]

Oil Price in 2050 [US$/bbl]

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Long-term Impacts of Oil Price and Fuel Subsidies

Hydrogen in 2100

0

12

34

5

7080

90100

110120

70%

75%

80%

85%

90%

95%

Hydrogen

Market Share

Hydrogen

Subsidy

[US$/GJ]

Oil Price in 2100 [US$/bbl]

Biofuels in 2100

0

1

23

45

7080

90100

110120

0%

5%

10%

15%

Biofuels Market

Share

Biofuels Subsidy

[US$/GJ]

Oil Price in 2100 [US$/bbl]

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More stringent CO2 Targets in 2050

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Biofuels H2 Biofuels H2

50% Target 60% Target

Market share

Year 2020 Year 2050 Year 2100

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Again: 50% CO2 Reduction Target in 2050

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

billion vehicle-km

Hydrogen FCV

Plug-in Hybrid

Gasoline HEV

Hydrogen HEV

Biofuels HEV

CNG HEV

Biofuels ICEV

CNG ICEV

Diesel ICEV

Gasoline ICEVICEVs

Hybrids

H2 Fuel Cells

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Conclusions

• The lower the costs of the fuel cell become in a foreseeable future, the better the

prospects for hydrogen in transport

• CO2 reduction policies support the penetration of hydrogen and biofuels in

transport.

�More stringent CO2 reduction targets increase the competitiveness in particular

of hydrogen in transport

• Subsidies as well as high oil prices can increase the competitiveness for such

alternative fuels, particularly for biofuels in the mid-term

�Note: here only moderate oil price increases were assessed

Thank you for your attention