Market penetration analysis of hydrogen vehicles in Norwegian passenger transport towards 2050

13
Market penetration analysis of hydrogen vehicles in Norwegian passenger transport towards 2050 Eva Rosenberg a, *, Audun Fidje a , Kari Aamodt Espegren a , Christoph Stiller b , Ann Mari Svensson c , Steffen Møller-Holst c a Institute for Energy Technology, Energy Systems Department, P.O. Box 40, NO-2027 Kjeller, Norway b Department of Energy and Process Engineering, The Norwegian University of Science and Technology, NO-7491 Trondheim, Norway c Department of Energy Conversion and Materials, SINTEF Materials and Chemistry, NO-7465 Trondheim, Norway article info Article history: Received 11 January 2010 Received in revised form 27 April 2010 Accepted 27 April 2010 Keywords: MARKAL modelling Energy system NorWays Regional Hydrogen cars abstract The Norwegian energy system is characterized by high dependency on electricity, mainly hydro power. If the national targets to reduce emissions of greenhouse gases should be met, a substantial reduction of CO 2 emissions has to be obtained from the transport sector. This paper presents the results of the analyses of three Norwegian regions with the energy system model MARKAL during the period 2005e2050. The MARKAL models were used in connection with an infrastructure model H2INVEST. The analyses show that a transition to a hydrogen fuelled transportation sector could be feasible in the long run, and indicate that with substantial hydrogen distribution efforts, fuel cell cars can become competitive compared to other technologies both in urban (2025) and rural areas (2030). In addition, the result shows the importance of the availability of local energy resources for hydrogen production, like the advantages of location close to chemical industry or surplus of renewable electricity. ª 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved. 1. Introduction Hydrogen is foreseen to play an important role in sustainable energy systems. There are three major drivers towards a future where hydrogen will supplement electricity as energy carrier; the challenge of global warming, the scarcity of fossil resources and the need for an energy storage medium as the share of renewable energy is increasing. In this perspective hydrogen may provide fuel for transportation, supporting the replacement of the Internal Combustion Engine (ICE) by the more efficient fuel cell technology, and thereby bridging the transition from fossil based fuels to mobility powered by renewable energy. In recent years many countries and regions have devel- oped roadmaps towards a hydrogen-oriented economy, including the US, Europe, Germany and Japan. A number of studies have addressed the technological, as well as socio- economic prerequisites and impacts of introduction of hydrogen in the energy system. In the US, the STEPS (Sustainable Transportation Energy Pathways) programme [1] is currently investigating the introduction of hydrogen, bio fuels and electricity for transportations, in comparison to Abbreviations: Boe, barrels of oil equivalent; CCS, CO 2 capture and storage; GHG, green house gases; FCHEV, fuel cell hybrid electric vehicle; H 2 , hydrogen; HFCV, hydrogen fuel cell vehicle; HICE, hydrogen internal combustion engine; Hydrogen cars, HFCV and HICE; ICE, internal combustion engine; LCA, life cycle assessment; MARKAL, MARKet ALocation (model generator); NG, natural gas; SMR, steam methane reforming; PHEV, plug-in hybrid electric vehicle * Corresponding author. Tel.: þ47 63806096; fax: þ47 63812905. E-mail address: [email protected] (E. Rosenberg). Available at www.sciencedirect.com journal homepage: www.elsevier.com/locate/he international journal of hydrogen energy 35 (2010) 7267 e7279 0360-3199/$ e see front matter ª 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhydene.2010.04.153

Transcript of Market penetration analysis of hydrogen vehicles in Norwegian passenger transport towards 2050

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Market penetration analysis of hydrogen vehiclesin Norwegian passenger transport towards 2050

Eva Rosenberg a,*, Audun Fidje a, Kari Aamodt Espegren a, Christoph Stiller b,Ann Mari Svensson c, Steffen Møller-Holst c

a Institute for Energy Technology, Energy Systems Department, P.O. Box 40, NO-2027 Kjeller, NorwaybDepartment of Energy and Process Engineering, The Norwegian University of Science and Technology, NO-7491 Trondheim, NorwaycDepartment of Energy Conversion and Materials, SINTEF Materials and Chemistry, NO-7465 Trondheim, Norway

a r t i c l e i n f o

Article history:

Received 11 January 2010

Received in revised form

27 April 2010

Accepted 27 April 2010

Keywords:

MARKAL modelling

Energy system

NorWays

Regional

Hydrogen cars

Abbreviations: Boe, barrels of oil equivalevehicle; H2, hydrogen; HFCV, hydrogen fuel cinternal combustion engine; LCA, life cyclemethane reforming; PHEV, plug-in hybrid el* Corresponding author. Tel.: þ47 63806096;E-mail address: [email protected] (E.

0360-3199/$ e see front matter ª 2010 Profedoi:10.1016/j.ijhydene.2010.04.153

a b s t r a c t

The Norwegian energy system is characterized by high dependency on electricity, mainly

hydro power. If the national targets to reduce emissions of greenhouse gases should be

met, a substantial reduction of CO2 emissions has to be obtained from the transport sector.

This paper presents the results of the analyses of three Norwegian regions with the energy

system model MARKAL during the period 2005e2050. The MARKAL models were used in

connection with an infrastructure model H2INVEST. The analyses show that a transition to

a hydrogen fuelled transportation sector could be feasible in the long run, and indicate that

with substantial hydrogen distribution efforts, fuel cell cars can become competitive

compared to other technologies both in urban (2025) and rural areas (2030). In addition, the

result shows the importance of the availability of local energy resources for hydrogen

production, like the advantages of location close to chemical industry or surplus of

renewable electricity.

ª 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.

1. Introduction transition from fossil based fuels to mobility powered by

Hydrogen is foreseen to play an important role in sustainable

energy systems. There are three major drivers towards

a future where hydrogenwill supplement electricity as energy

carrier; the challenge of global warming, the scarcity of fossil

resources and the need for an energy storage medium as the

share of renewable energy is increasing. In this perspective

hydrogen may provide fuel for transportation, supporting the

replacement of the Internal Combustion Engine (ICE) by the

more efficient fuel cell technology, and thereby bridging the

nt; CCS, CO2 capture andell vehicle; HICE, hydrogeassessment; MARKAL, Mectric vehiclefax: þ47 63812905.Rosenberg).ssor T. Nejat Veziroglu. P

renewable energy.

In recent years many countries and regions have devel-

oped roadmaps towards a hydrogen-oriented economy,

including the US, Europe, Germany and Japan. A number of

studies have addressed the technological, as well as socio-

economic prerequisites and impacts of introduction of

hydrogen in the energy system. In the US, the STEPS

(Sustainable Transportation Energy Pathways) programme [1]

is currently investigating the introduction of hydrogen, bio

fuels and electricity for transportations, in comparison to

storage; GHG, green house gases; FCHEV, fuel cell hybrid electricn internal combustion engine; Hydrogen cars, HFCV and HICE; ICE,ARKet ALocation (model generator); NG, natural gas; SMR, steam

ublished by Elsevier Ltd. All rights reserved.

i n t e rn a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 97268

“business-as-usual” scenarios dominated by fossil fuels, and

also the potential of CO2 capture and storage (CCS). The

research topics focused within the programme are consumer

behaviour, infrastructure, LCA, policy making, in relation to

vehicle technologies. The main message of the programme so

far is that all of these options are needed in order to fulfil the

ambitious long termGHG emission goals. Results indicate that

low-cost bio fuels could be made available to consumers in

several regions in the US in a short timeframe, but that high

volume production will be a challenge. Furthermore, it was

found that Plug-in Hybrid Electric Vehicles (PHEVs) with a long

driving range aremost likely to be preferred by the consumers.

For hydrogen cars, the investments required for high volume

introduction are basically related to incentives for entering

a state of mass production of cars.

In 2008, results of several studies of the transition to

hydrogen powered fuel cell vehicles (HFCVs) supported by US

Department of Energy (DOE) were published in a report [2].

The Hydrogen Scenario Analysis indicates that with targeted

deployment policies in place during 2012e2025, the HFCVmarket

share could grow to 50% by 2030 and 90% by 2050. This would

lead to a sustainable, competitive market for hydrogen HFCVs

beyond 2025, without a continuing need for policy support.

The success for HFCVs requires that the technical targets are

met (except for on-board hydrogen storageweight and volume

targets). Incentives are, however, required for establishing

a hydrogen refuelling infrastructure and bring down the cost

of HFCVs. The scenario analysis evaluated the cost of alter-

native government policies to support a successful transition

to HFCVs.

Another US study addressed the need for investments in

R&D, demonstrations, skilled people (education), and infra-

structure required for the development of fuel cell technolo-

gies and the transition from petroleum to hydrogen in

a significant percentage of the vehicles sold by 2020 [3]. The

major conclusions from this survey is that a portfolio of

technologies including hydrogen HFCVs, improved efficiency

of conventional vehicles, hybrids, and use of bio fuels e in

conjunction with required new policy drivers e has the

potential to nearly eliminate gasoline use in light-duty vehi-

cles by the middle of this century, while reducing fleet GHG

emissions to less than 20 percent of current levels. This

portfolio approach provides a hedge against potential short-

falls in any one technological approach and improves the

probability that the United States can meet its energy and

environmental goals. It is estimated that the maximum

practicable number of HFCVs that could be on the road by 2020

is around 2 million. Subsequently, this number could grow

rapidly to as many as 60 million by 2035 and more than 200

million by mid century, but such rapid and widespread

deployment will require continued technical success, cost

reductions from volume production, and government policies

to sustain the introduction of Fuel Cell Hybrid Electric Vehicle

(FCHEV) into the market during the transition period needed

for technical progress.

HyWays [4] was an integrated project, co-funded by

research institutes, industry and by the European Commis-

sion (EC) under the 6th Framework Programme. For the

timeframes 2020, 2030 and 2050, the aggregated member state

specific results for greenhouse gas (GHG) emissions, preferred

hydrogen production and infrastructure technologies, the

build-up of supply infrastructure and end-use technologies

was integrated into a proposal for an EU Hydrogen Energy

Roadmap for the participating countries. The project

commenced in April 2004 andwas finalized after 39months in

June 2007. Norway was one of the 10 European countries

included in the HyWays project.

The HyWays project differs from other road mapping

exercises as it heavily integrates stakeholder preferences,

obtained from multiple member state workshops, with

extensive modelling in an iterative way covering both tech-

nological and socioeconomic aspects. The stakeholder vali-

dation process, which takes into account country specific

conditions, is considered to be a key element of the HyWays

road mapping process.

There are more than 230 MARKAL-TIMES licensed insti-

tutions in 69 countries, (TIMES is a successor of MARKAL)

[5]. Several MARKAL studies have been published simu-

lating the impacts of hydrogen technologies on the energy

system, e.g., [6e11]. The Japan MARKAL model has been

used to validate the technical targets of Japan’s hydrogen

energy roadmap by analyzing the market penetration of

hydrogen Fuel Cell Vehicles (HFCVs), and evaluating the

effects of a carbon tax [12]. This latter study reveals that

substantial increase in carbon tax is needed to fulfil the

Japanese targets for early market penetration of hydrogen

powered HFCVs.

The work presented here are results from the NorWays

project [13] covering energy system modelling of three

selected regions using MARKAL. The purpose of this paper is

to present the modelling approach, and report on findings

from energy system analysis in regions of distinct character-

istics. This paper includes evaluation of how differences in

available resources, energy demand and population density as

well as carbon tax and restrictions on CO2 emissions and

vehicle costs affect the introduction of hydrogen as fuel for

passenger vehicles. The NorWays project work was following

up on and carried out in close cooperation with the EU

hydrogen roadmap project HyWays [4].

2. Hydrogen’s potential role in Norway

2.1. Norwegian governmental engagement in hydrogen

The Norwegian hydrogen initiative was initially described in

the White Paper ”Hydrogen as the energy carrier of the

future” [14] by the Norwegian Hydrogen Committee. The

Committee set up the following vision for the initiative:

“Sustainable energy technologies will play a significant role

in the consumption of energy and fuels in the future ewhere

use of hydrogen as energy carrier will be pivotal”. The

committee presented the rational in terms of three main

arguments justifying the Norwegian hydrogen initiative:

extensive national resources of natural gas, the environ-

mental arguments and the potential for business develop-

ment. The Government’s response to the Hydrogen

Committee’s report was summarised in the Hydrogen Strategy

[15]. As part of this strategy the national Hydrogen Council

was established and operative from January 2006, to act as

Fig. 1 e Sources of GHG emissions in Norway in 2008 [19].

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an advisory board that will give strategic input to priorities

and further investments in matters related to hydrogen. The

first national Action Plan 2007e2010 for the Norwegian

hydrogen initiative (published December 2006 [16]) provide

detailed recommendations for actions, activities and

measures and pinpoints stakeholders responsible for

implementation.

2.2. The NorWays project providing a national hydrogenroadmap

In the research project NorWays, the overall aim was to

provide decision support for introduction of hydrogen as an

energy carrier in the Norwegian energy system [13].

Important objectives of the NorWays project have been

to develop scenarios, carry out analyses and identify

suitable market segments and regions for introduction of

hydrogen. Furthermore, emphasis was put on identifying

the role of hydrogen in relation to other alternatives and

energy carriers. Active participation of stakeholders has

been an important working methodology of the project in

order to ensure consensus and feedback from industrial

participants related to selection processes, assumptions,

and reliability of results. The NorWays project also

comprised assessments of large scale energy export

options from Norway to continental Europe in the

2020e2030 timeframe [17].

The work presented here supports the main goals of the

NorWays project by developing suitable, regionalized models

for analyzing the introduction of hydrogen as energy carrier in

competition with other alternatives such as natural gas,

electricity, district heating and bio fuels [13]. The work was

carried out in close cooperation with the EU hydrogen road-

map project HyWays [4].

2.3. Most promising market segments for hydrogen inNorway

Norwegian energy production is more than 10 times higher

than the domestic energy consumption [13]. The substantial

oil and gas production is primarily subject to export. Elec-

tricity production in Norway is matching the domestic elec-

tricity demand and is mainly based on renewable energy.

Hydro power currently constitutes around 96% of the total

domestic electricity production capacity [18]. In addition there

is an increasing production of wind power, with an installed

capacity of 385 MW in 2007 (0.9 TWh). The potential for elec-

tricity production from wind is enormous, related to the long

and windy Norwegian coastline especially suited for off-shore

wind installations.

The NorWays study concludes that the potential for

introduction of hydrogen in Norway is high especially in the

transport sector. This is due to the high share of renewable

energy in the stationary energy sector, making the trans-

portation sector take a comparably higher (1/3) share of

Norwegian GHG emissions (Fig. 1) compared to ¼ globally.

Substantial coastal traffic contributes to these high

numbers. Hydrogen may also, to some degree, play a role as

an energy carrier for distributed and remote energy systems

in Norway.

3. Modelling approach

3.1. Model structure

MARKAL (MARKet ALocation model) is a linear partial equi-

librium modelling tool for representing technical economic

aspects of the energy system [20]. In this bottomeup approach

a detailed representation of all energy aspects of the economy

are given, both technically and economically, with resources,

energy carriers and conversion technologies. The model is

demand driven, thus the projected energy demand must be

supplied exogenously to MARKAL and this demand is then

satisfied over the modelling periods at least cost.

MARKAL models can be used for a wide range of applica-

tions such as strategic planning of future energy supply

options, analyses of least cost strategies, the effect of energy

policies andmeasures, examination of the collective potential

of technologies and resources, and evaluation of different

research strategies for energy technologies. In most MARKAL

models, the time period has equal intervals, typically five

years. The analysis period for the three regionalmodels in this

study is from 2010 to 2050 in five years intervals.

The MARKAL model generator provides a framework for

representing a regional energy economy. The reference

energy system (RES) in MARKAL consists of:

e Demand for energy services

e Available energy sources (mining or imports)

e Sinks (exports)

e Technologies

e Commodities

The model boundaries are set by the available sources and

the demand for energy services, as represented by supply and

demand curves, respectively. The available commodities are:

e Energy carriers

e Energy services

e Materials

e Emissions

Technologies are divided into resource, conversion,

process and demand technologies. Resources technologies

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handle energy sources and sinks. Conversion technologies

handle conversion of available carriers and resources to

electricity and low temperature heat. Process technologies

handle other conversion between resources and energy

carriers, such as production of high temperature heat or bio

pellets. Demand technologies handle the conversion of

available energy carriers to energy services. The building

blocks of MARKAL, referred to as a Reference Energy System

(RES), is presented in Fig. 2.

As part of the NorWays project a generic regional MARKAL

model was constructed to represent a general region, without

any adaptations or special local conditions. From this generic

model, three regional models were developed. These MARKAL

models have been used to analyse the entire energy system

and compare hydrogen technologies with other options for

transportation applications.

The regional models were divided into urban and rural

areas in order to evaluate different production and distribu-

tion alternatives and demand variations. The model differ-

entiates between a car used in urban and rural areas in order

to take into account the variations in drive cycles. Further,

limitations on options for new technologies in the rural areas

have been set, e.g., hydrogen pipelines to rural areas were not

allowed. Production of hydrogen may occur either at a large

scale plant with distribution to urban and/or rural areas or

locally in smaller scale, see Fig. 3. Hydrogen is modelled as an

energy carrier with dayenight and seasonal storage capacity

adopted from the HyWays project [21]. It is also assumed that

hydrogen would be used mainly in the transportation sector

and therefore the load profile for hydrogen will probably be

uniform on a seasonal basis, but there will be a difference

between the day and night load, hence dayenight storage for

onsite generation was considered.

The regional models take into account different transport

needs in rural and urban areas, as well as local resource

availability. Distributed hydrogen for use in stationary appli-

cation is not included in the current study, because the

demand is expected to be very low, and the necessary infra-

structure investments will be disproportionately high. This is

due to the characteristics of the Norwegian energy system,

Import

-fossil fuels-electricity-bio fuels

Exploitation

-oil-gas

Renewables

-hydro-wind-solar-bio mass

Export

-electricity-oil-gas

Electricity production

Heat production

CHP

Bio mass processing

Hydrogen production

etc.

Ind

-bo-co-fe-en

Tra

-ca-bu-tru-tra

Re

se

-bo-st-el-di-en

Resources

Conversion /

ProcessesDe

Fig. 2 e Simplified structure of the Reference Energy

including the absence of a natural gas distribution grid, low

population density in Norway, in combination with the high

fraction of electricity used for heating solely produced from

hydro power.

Even though hydrogen is not modelled as a possible energy

carrier in the stationary sector, it is still crucial to take into

account both the stationary and the transport sector in an

integrated model, since there is a competition of scare

resources. The infrastructure investments as well as the uti-

lisation of hydrogen production plants are detrimental to the

introduction of hydrogen as an energy carrier. The availability

for e.g., natural gas (NG) in a certain area influences the

selection of energy source for hydrogen production. Thus, any

large scale introduction of hydrogen or electric vehicles will

have a significant impact on the use of energy in stationary

sector.

Liquid H2 was not included as potential energy carrier in

the regional MARKALmodels. This is because the liquefaction

process is a very energy intensive process and requires large

production volumes and large transport distances to become

viable. In a recent study the liquid H2 option was included for

long transport distances and higher supply volumes [22].

These features are, however, not representative for the

Norwegian regions studied here.

3.2. Selection of geographical regions

The rational behind choosing different regions for the anal-

yses in the NorWays project was to assess how the resource

availability and energy end-use demand might influence the

introduction of hydrogen in the energy systemwith respect to

the production and use of hydrogen. To select the three

different regions, a set of criteria characterising the energy

system was identified, such as energy demand, electricity

production, untapped resources, energy infrastructure and

geographical conditions.

In the selection of the three regions, variations in the local

energy resources and energy end-use demand were emphas-

ised, in order to evaluate how these variations influence the

analysis results. For instance, regions with a large potential of

ustry sectors

ilersgenerationed stockergy efficiency etc.

nsport sector

rssescksins etc.

sidential & Service

ctors

ilersovesectric heatingstrict heating ergy efficiency etc.

Heating

Cooling

Power

Transportation

Feed stock

etc.

mand technologiesDemand /

Energy services

System (RES) of the Norwegian MARKAL model.

Bio

NG

NG

NG

H2

H2

pipe

Gas trailer Filling station

Gas storage

Electrolysis

SMR

H2 production

Electrolysis

Bio gasific.

H2

+ el

SMR

SMR CCS

H2

bi-prod

El

Gas trailer Filling station

Gas storage

Electrolysis

SMR

Rural

Urban

Fig. 3 e Modelling of hydrogen in the regional models. Hydrogen production is allowed centrally in large scale units or

locally (onsite) in smaller units.

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wind power, will be able to produce zero-emission hydrogen

based on electricity fromwind power, while areas with access

to natural gas pipeline, as well as possibilities for CCS, can

produce hydrogen fromnatural gas. In other regions hydrogen

is also available as a by-product from industrial processes.

Based on a set of criteria (with available energy sources,

energy demand, population and population density as the

most important), the following three regions were selected, as

illustrated in Fig. 4:

e City Region: The region selected to represent a city area

was Oslo, the capital of Norway with approximately

500 000 inhabitants and no major industry or energy

resources.

e Industry Region: Telemark was selected to represent

a region with heavy chemical industry and sufficient

hydro power but with no potential for wind power or

other renewable energy resources. This region also has

hydrogen available as a by-product from local chemical

industries.

e Energy region: The third region modelled was Rogaland;

a region with significant hydro power and potential for

wind power, a landing of natural gas and the only gas

power plant in Norway.

3.3. Interaction with the infrastructure modelH2INVEST

In addition to the MARKAL model, a hydrogen infrastructure

model calledH2INVESTwas developed in theNorWays project

[13,23]. This infrastructure model optimizes the evolution of

a hydrogen supply infrastructure for a given development in

hydrogen demand. The H2INVEST model has a higher level of

detail for hydrogen technologies and infrastructure, and

includes technical, geographical and economical parameters

in the optimization routine. The models allows for the

screening and analysis of hydrogen supply in the

transportation segment. An example of result from the

H2INVEST model is presented in Fig. 5.

In this study, the MARKAL model for the industry region

(Telemark) was used in connection with the infrastructure

model H2INVEST. As a starting point for the analysis with

H2INVEST it was assumed a gradual increase in hydrogen

penetration to 70% by 2050. To validate and calibrate the

MARKAL assumptions on hydrogen distribution, an iterative

procedure between the infrastructure model H2INVEST and

MARKAL was followed, where the infrastructure model

supplied transport costs and distances to MARKAL and MAR-

KAL returned the hydrogen demand for urban and rural areas

back to the infrastructure model.

The interaction between MARKAL and H2INVEST is

described in the following steps and shown in Fig. 6:

1. Hydrogen technology data from the NorWays database was

implemented in the MARKAL and Infrastructure model

2. A distribution pattern of hydrogen demand to filling

stations (based on results related to penetration rates of

vehicles from the HyWays project) was used as a starting

point for hydrogen demand in the Infrastructure model.

3. Demand for hydrogen by region and type was calculated by

MARKAL (first based on initial assumptions regarding

transport distances) and the resulting hydrogen demand

development was entered into the Infrastructure model.

4. Updated costs and distances for transportation of hydrogen

were calculated by the Infrastructure model and entered

into MARKAL.

5. Four iterations on the revised cost assumptions (3e4) were

completed to obtain a converging solution.

3.3.1. Model calibration resultsAs a starting point for the MARKAL model of Telemark, it was

assumed that H2 is distributed by pipeline (5 km) and trailer

(20 km) in urban areas. In rural areas only trailer distributionwas

anoption,with twodifferent distances and costs (50 and 100 km).

Fig. 4 e Map of Norway showing the three regions analysed in this study e the city region Oslo (blue), the industry region

Telemark (red) and the energy region Rogaland (green) (For interpretation of the references to colour in this figure legend,

the reader is referred to the web version of this article).

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Results from the H2INVEST model of Telemark, after a few

iterations, gave a total pipeline length in urban areas of

10.2 km, giving a total investment cost of 660 NOK/kW, which

is twice as much as originally assumed. The average distance

for trailer distribution of hydrogen in urban areas was 8.7 km

and the costs and fuel consumption were adjusted corre-

spondingly to 750 NOK/kW and 0.004 kWh diesel/kWh H2. In

rural areas all hydrogen is distributed by trailer and the

average distance was found to be 54 km in 2050. In the MAR-

KAL model this average trailer distance is used (8.7 in urban

and 54 in rural).

The iteration converged to a scenario where the hydrogen

fuel cell vehicles enters the market in 2025 in the urban areas

and in 2030 in the rural areas, and achieves 100% penetration

by 2035 in the urban areas and by 2045 in the rural areas. The

results of the iterations between the MARKAL and H2INVEST

models for Telemark are also used in the MARKAL models for

Rogaland and Oslo.

Another result of the interaction process between the

models was a restriction on the share of hydrogen used in

urban areas that can be transported by pipeline. In Telemark

and Rogaland at least 50% must be locally produced or trans-

ported by trailer and in Oslo the minimum is 5%. The interac-

tions of themodels are used as pre-calculations, completed for

a scenariowithHyWaysassumptions, for the regionTelemark.

4. Assumptions

Key assumptions for the analyses:

� The price of imported and exported electricity is based on

a quota price of 25 V/ton CO2

� The import price of natural gas is a linear interpolation to

2050 when the price is expected to be 100 $/boe [25]

� The crude oil price is expected to be 110 $/barrel in 2050 [25]

� The models includes no possibility to import or export

hydrogen into or out of a region or between regions

� The growth from 2005 to 2050 in the transportation sector is

on average about 40%

Fig. 5 e Example of result from the H2INVEST model for the industry region of Telemark [24].

i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 9 7273

The energy demand predictions used in the analyses are

based on the work of the Norwegian Low Emission Commis-

sion [26]. Each major industry was separately handled in the

different regional models. The forecast for energy demand in

the household sector increases according to the population

growth of the middle alternative of Statistics Norway [27] in

each region modelled and with the energy use per capita

assumed to be constant. The expected growth from 2005 to

2050 in the transportation sector is on average about 40%.

The price of imported and exported electricity is based on

a quota price of 25 V/ton CO2. The price of import and export

of electricity fluctuate both by season and by day/night. Prices

are based on forwards in Germany (EEX) and a stakeholder

evaluation within the NorWays project. A fluctuation of 10 V/

MWh over the season for the whole analysis period was

assumed. The day/night fluctuation is assumed to be 25 V/

MWh. The increased price of different biomass products was

based on the same slope as for electricity. The price in 2005

was based on Norwegian statistics.

The natural gas pricewas taken from [25] where the price is

expected to increase to 100 $/boe (18 $/GJ) in 2050. A linear

interpolation of the pricewas usedwith an assumed exchange

rate of 6 NOK/$. All the various petroleum products were

forecasted similar to crude oil in WETO-H2, where the crude

oil price was predicted to be 110 $/barrel (19 $/GJ) in 2050.

The models allow import and export of electricity and bio

energy, however the models do not include the possibility to

import or export hydrogen into or out of a region or between

regions. The existing electricity transmission capacities are

modelled. The bio energy resources of each region are

modelled with possibilities of unlimited import of bio energy

at a higher price.

The regions Telemark and Rogalandmay invest in pipeline

import of natural gas, while Oslo only can choose natural gas

import by ship. The planned pipeline to Sweden, Denmark

and Poland is supposed to be invested in 2010, with

a connection to Telemark. There are no restrictions on

investments in local distribution of natural gas.

Each demand sector has a number of demand technologies

fulfilling the exogenously given demand. Most of the tech-

nology data was based on previous MARKAL models, with

some minor updating [28,29]. Technology data such as

investment cost, operational cost, efficiency, life-time etc. for

most transport technologies as well as production technolo-

gies for hydrogen were gathered in a common spreadsheet

used by all research partners of the NorWays project. The

input to this database was mainly based on the HyWays

project [4], andwhere available, thewidely accepted dataset of

the CONCAWE-EUCAR-JRC [30].

The fuel consumption of internal combustion engine (ICE)

cars is different in urban and rural areas in the MARKAL

analysis. The fuel consumption was based on the manufac-

turer information and the assumption that 70% of the

passenger kilometres are undertaken in cities and 30% at

longer distances (highway) for those living in urban areas. In

rural areas 30% of the travelled distances were assumed to be

in cities and 70% at longer distances. The same shares

between rural and urban travel fuel consumption was

NorWays Interface

MARKAL Infrastructure model

1) Cost/efficiency parameters

4) H2 transport distance/costs/type

Hydrogen demandanalysis

Energy chain calculation

2) H2 demand transport by filling station

3) H2 demand

Fig. 6 e Linking of MARKAL and the H2INVEST models within the NorWays project.

i n t e rn a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 97274

assumed for the natural gas powered ICE car and the

hydrogen combustion car. Fuel consumptions were kept

constant during the whole period.

To calculate the investment cost of H2 vehicles, the pene-

tration rate from HyWays was used. The total number of

hydrogen cars was calculated by the penetration rate, the

projection of population and the projection of number of cars

per inhabitant. The vehicle costs curves have been generated

by individually assessing the cost developments of all major

vehicle components (batteries, motors, tanks, fuel cells, and

power electronics) through learning curves. Most data,

including the progress ratios and the world-wide deployment

volumes come from the HyWays scenario “High policy

support, modest learning” [4]; the basic component costs

come from the CONCAWE-EUCAR-JRC study [30]. The cost of

a hydrogen fuel cell car was gradually decreased from more

than 45 000 V with a cumulative production of 10.000 vehicles

to 25.000 V when the cumulative number of vehicles exceeds

5 millions, as shown in Fig. 7. The cumulative vehicle costs

are combined with the penetration rate to calculate the cost

of hydrogen cars for the analysis period 2010e2050. Table 1

shows the investment and operation and maintenance

costs over time for all cars types as well as the fuel

consumption.

5. Scenario analysis

The rational for developing the regional energy system

models discussed above was to enable robust analyses of how

hydrogen might be introduced in the Norwegian energy

system. These models may be used in conjunction with

various policy scenarios to determine how policy measures

might contribute to an early introduction of hydrogen. To

realize substantial reductions in CO2 emissions in Norway, the

transportation sector must shift from fossil fuels to carbon

free or carbon neutral fuels. The NorWays project included

numerous analyses of which some are presented here. A

series of scenarios were used with the regional models to

determine how taxes, emission constraints and energy prices

may affect the production and use of hydrogen and to identify

the key parameters and conditions to make a profitable

transition to hydrogen powered cars.

5.1. Scenario A e “HyWays”

Scenario A is based on the work of the HyWays project [4]. The

other scenarios below are modifications of this “base case”

scenario. An important input is the deployment of hydrogen

cars at different times and hence the investment cost of

vehicles. Currently, natural gas is exempted from tax in

Norway. No changes in energy policies are assumed, except

that a tax, similar to the gasoline tax, on natural gas for

transportation is included.

5.2. Scenario B e “Neutral taxation”

Scenario B is a No-tax scenario; a pragmatic approach and

a reference for analyzing the effects of taxes on transport

energy. Since less primary energy is used by e.g., electrical

cars than gasoline cars this will not be the same as a revenue

neutral tax system, but it is a simple way to show some of the

effects of taxes on conventional fuels like gasoline, diesel and

natural gas while lowering or removing taxes on alternatives

like hydrogen, bio fuels and electricity.

5.3. Scenario C e “CO2-reduction”

In this scenario a restriction on CO2 emissions starting in 2020

with a 20% reduction compared to 1990 e level was assumed,

followed by a reduction of 66% in 2030 and a linear decrease to

75% reduction in 2050. There were no restrictions on emis-

sions in the period prior to 2020.

5.4. Scenario D e “Fuel prices”

Energy prices may spike significantly, as we have experienced

over the last few years. There are, thus, large uncertainties

related to future fuel prices. The sensitivity of higher prices of

crude oil and natural gas were analysed in different combi-

nations. This assessment reveals that it is the relative changes

in prices between fuel alternatives that are most important in

Fig. 7 e Learning curves adopted from the HyWays project [4].

i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 9 7275

these analyses, rather than the absolute price of each energy

carrier. In Scenario D, a sensitivity analysis with a steep

increase of the crude oil price to 200 $/barrel is assessed. The

price of natural gas was assumed to be 70% of the crude oil

price corresponding to 163 $/boe in 2010e2050. The increase

for crude oil was applied for oil products, including the price of

heavy distillate, light distillates, diesel, gasoline and kerosene.

In these analyses the electricity price and the prices of

biomass were kept unchanged.

Table 1 e Investment costs, fuel consumption and fixed opera2030 and 2050.

Investment

NOK/1000 vehicle-km/year

2010 2020 2030 20

H2-ICE 19 196 11 605 11 405 11

H2-ICE Hybrid 25 009 13 607 13 066 12

H2-FC 48 346 12 919 11 824 11

H2-FC Hybrid 52 004 14 208 12 921 12

Gasoline car 11 343 11 343 11 343 11

Gasoline hybrid car 16 927 13 117 12 776 12

Diesel car 12 206 12 206 12 206 12

Diesel hybrid car 17 962 14 151 13 810 13

NG car 12 293 12 293 12 293 12

NG Hybrid car 17 586 13 776 13 434 13

Plug-in Hybrid 24 555 15 821 15 076 14

Battery electric vehicle (Full range) 42 822 20 996 19 180 18

Battery electric vehicle (City) 47 145 24 850 22 985 22

5.5. Scenario E � “Technology costs”

In addition to future energy prices, the future development of

costs of various technologies is difficult to predict. The

assessment included analyses the sensitivity of investment

costs, operation and maintenance (O&M) costs and fuel

consumption of cars. In Scenario E the investment costs of

battery electric vehicles (PHEV), hybrids, and plug-in hybrids

were reduced and the costs of hydrogen powered FC and ICE

tion and maintenance costs of different cars in 2010, 2020,

Consumption Fix O&M

Vehicle-km/MWh NOK/1000 vehicle-km/year

50 2010e2050 2010 2020 2030 2050

299 3830 7365 760 592 429

828 4301 7365 760 592 429

304 2149 571 571 571 571

325 2424 571 571 571 571

343 1895 571 571 571 571

643 2208 571 571 571 571

206 2034 571 571 571 571

677 2465 571 571 571 571

293 1923 571 571 571 571

301 2583 571 571 571 571

786 4267 571 571 571 571

473 6579 286 286 286 286

259 6579 571 571 571 571

i n t e rn a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 97276

cars were increased. The investment cost of PHEV decreased

by 24% in 2010 and approx. 10% in 2020e2050, compared to the

other analyses. In 2010, the investment cost of hybrid cars

decreasedby10%and in 2020e2050by 3%.The investment cost

of HFCV was doubled in 2010 and increased by approx. 10% in

2025e2050. In addition to changes in investment cost, forHFCV

the fuel consumption increased by 30% and the maintenance

cost increased by 133% in 2010, 62% in 2020 and 12% in 2030.

5.6. Reference scenario

In order to quantify the shift in fuels and propulsion tech-

nologies as compared to the transport system of today,

a reference scenario was included, based on the assumptions

of World Energy Outlook [31] assuming that no new transport

technologies are introduced. The baseline of WEO uses 3% bio

fuels, and the rest are petroleum products (roughly equally

shared between gasoline and diesel) converted in ICEs. For

simplicity, equal shares of gasoline and diesel as today were

assumed in the reference scenario of this study.

6. Results and discussion

A series of scenarios have been assessed in the NorWays

project as basis for iterations and discussions in national

workshops and stakeholder validation. A selection of

scenarios (Section 5) and the results thereof are presented

here. In the following the results for each regional model are

presented, seeFig. 8. Thebasecasewith theassumptionsof the

HyWays project (Scenario A) is compared with the alternative

assumptions of scenario BeE. Each region and their charac-

teristics are described in Section 3.2. It should be stressed that

the selected regions were modelled as isolated regions, not

allowing for import or export of hydrogen between regions.

In the following sections the results from each of the three

selected regionsare reviewanddiscussed, followedbysections

evaluating the corresponding changes in primary energy use

(efficiency) as well as preferred energy resources and produc-

tion technologies for hydrogen, respectively (Sections 6.4e6.5).

Finally, the pros and cons of the MARKAL modelling versus

other modelling approaches are elaborated upon.

6.1. City region

This region is characterized by no major industry and limited

availability of energy resources. The modelling results for the

city region (Oslo) show that massive introduction of hydrogen

cars requires strong limitations on CO2 emissions (Scenario C)

or high oil and gas prices (Scenario D). In these scenarios,

hydrogen is produced by gasification of biomass in 2050 and in

2030 local electrolysis is used when the oil and gas prices are

high and central Steam Methane Reforming (SMR) are used in

2030 with limitations on CO2 emissions.

In scenario A (base case) for the city region, bio diesel is

dominating in the mid-term (2030) and in the long term (2050)

plug-in hybrids are preferred. This is due to the high produc-

tion costs of hydrogen, since this region does not produce

electricity and has no major industry to share the cost of

transport of natural gas. If the energy taxes are removed

(Scenario B), natural gas becomes competitive andwill be used

for hydrogen production in 2050.

6.2. Energy region

The surplus of electricity in the energy region (Rogaland)

makes both central and local (onsite) electrolysis most prof-

itable. Somewhat surprisingly, central SMR was the preferred

option for H2 production in 2030 even when NG is subject to

taxation (Scenario A). If the energy taxes are removed

(Scenario B), the use of hydrogen is reduced dramatically and

NG is used in urban areas and gasoline in rural areas. With

strong limitations on CO2 emissions (Scenario C), the use of

hydrogen increases and closely resembles that of Scenario A

(HyWays) for 2030. The taxation of NG and restrictions to CO2

emissions, thus, give significant and similar hydrogen uti-

lisation (ca 60%) whereas neutral taxation (Scenario B) elimi-

nates hydrogen penetration in 2030. In 2030 bio diesel is used

mainly in rural areas while fuel cell cars are in use in urban

areas. In the long term (2050), bio diesel is replaced by

hydrogen and hybrid technologies, but if no taxes are applied

(Scenario B), hydrogen is almost eliminated and NG converted

in ICEs plays a significant role (as a supplement to gasoline

hybrid vehicles) in the energy region of Rogalandwith highNG

availability (at lower cost).

6.3. Industry region

As can be seen from Fig. 8, cars using hydrogen are used in all

scenarios in 2050 in the industry region of Telemark. This is

partly due to the available by-product hydrogen. Conse-

quently, hydrogen powered internal combustion engine cars

are preferred in the middle timeframe (2030) if there are high

limitations on CO2 emissions (Scenario C) or if the car tech-

nology prices are less favourable for fuel cell cars (Scenario E).

The presence of a natural gas pipeline supplying the

chemical industry makes natural gas available at a favourable

price for SMR-plants. As shown in Fig. 8 hydrogen will be

produced in SMR-plants in most scenarios, except with high

natural gas prices (Scenario D). In this case, central electrol-

ysis is used for hydrogen production. With limitations on CO2

emissions, central SMR with CCS of some of the major

industrial emission sources is selected.

6.4. Primary energy use

Compared to the reference scenario (only gasoline and fossil

diesel cars), the reduction in energy use in most scenarios is

substantial (Fig. 8). The exception is the “Neutral taxation”

scenario (B) for which the energy use is somewhat lower for

the City and Industry regions, whereas for the energy region

no significant reduction is seen compared to the reference

case in the 2030 timeframe. Even in the long term (2050) the

reduction in energy use is minor.

Fig. 8 clearly illustrates that the choice of car technology

depends highly on the investment costs. If the cost of

hydrogen cars is higher (Scenario E) than in the base case

battery electric and plug-in hybrids becomemore competitive

and are used in combination with hybrid hydrogen cars and

bio diesel cars in 2050.

Fig. 8 e Snapshot on Energy use, preferred fuels and propulsion technologies (upper diagrams) and production of hydrogen

(lower diagrams) and for the mid-term (2030) and long term (2050) for the city, energy and industry regions, respectively (PJ/

year). The results for Rural and Urban areas are pooled together in the figure, but are commented on in the results and

discussion section.

i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 9 7277

6.5. Hydrogen production

The preferred source for hydrogen and hydrogen production

technology vary widely from region to region and between

scenarios (Fig. 8). The studies of the three different types of

regionspoint out the importance of the conditions of hydrogen

production. In case of industry using large amounts of natural

gas, SMR-plants will be able to produce hydrogen at a reason-

able price and with strong limitations on CO2 emissions even

CCSwill be used. On the other hand, if excess/cheap electricity

is available, electrolysis would be the technology selected for

hydrogen production. In a city region with few energy

resources, the more energy efficient electrical cars are

preferred since hydrogen only can be produced at high cost.

In all analyses, high tax differences between fossil fuels

and other fuels (hydrogen, electricity and bio fuels) must be

implemented for new propulsion technologies to be compet-

itive in the mid-term. With limitations on CO2 emissions

hydrogen cars would be used earlier and to a higher extent.

Higher oil and gas prices decrease the use of hydrogen in 2020

and 2030 due to more expensive hydrogen production (elec-

trolysis instead of SMR).

6.6. The pros and cons of MARKAL modelling

Amainadvantageof energy systemmodels suchasMARKAL is

the ability to analyse the total energy system without any

assumptions on penetration rates for specific technologies.

The best technology with respect to economics is obtained

with the MARKAL model. On the other hand, models that are

more detailed in selected areas require the input of expected

penetration ratesandvolumesat specified times.Oneexample

is the H2INVESTmodel, which requires an exogenous demand

of hydrogen and then calculates the most economical way to

produce and distribute the fuel. In contrast, the MARKAL

model endogenously calculates the need for hydrogen based

on demand of transportation and other energy resources. The

H2INVEST model, however, model the different parts of

a hydrogen system in more spatial detail than the MARKAL

model. Consequently, each hydrogen filling station and

transport corridor is modelled in the H2INVESTmodel and the

entire country is modelled with the exchange of hydrogen

between all regions. Models of this type are therefore better

suited to analyse the early introduction of hydrogen than

models like MARKAL. Hence the two models benefit from

exchanging results with each other, and by iteration, more

robust and valid results are achieved. This was the rational for

including both modelling tools (MARKAL and Infrastructure

analysis (H2INVEST)) in the NorWays project [13].

A feature of the MARKAL modelling effort is that the share

of various fuels and propulsion technologies as well as

hydrogen production technologies is individually selected for

each region on a pure economic basis, irrespective of results

from the other regions. So, while e.g., hydrogen fuel cell

vehicles may be the most economic favourable option in one

region, another region may favour other propulsion technol-

ogies (e.g., ICE or battery electric vehicles), and hydrogen

powered vehicles may be completely absent. This is not

i n t e rn a t i o n a l j o u r n a l o f h y d r o g e n en e r g y 3 5 ( 2 0 1 0 ) 7 2 6 7e7 2 7 97278

a robust solution because certain vehicles can only be used in

some regions and not in others, and this will severely reduce

the customer’s freedom to use the vehicle. Moreover, a refu-

elling infrastructure for hydrogen will either be nationwide or

limited to some regions for fleet vehicle applications (buses,

postal and municipal services etc.).

The present MARKAL studies would be improved if the

exchange of hydrogen and other energy sources between the

regions were allowed. Further, this type of model is not suited

to analyse nichemarkets (except themarket for fleet vehicles)

or the realistic pace of introduction of new technologies, since

100% penetration of the most profitable technology choice is

adopted as quickly as theoretically possible if no limitations

are added. This neglects first of all the fact that production

facilities and supply chains cannot be shifted without causing

time lags, and secondly that consumer behaviour is not only

oriented on costs. Other factors influencing customers when

purchasing a vehicle include societal aspects, like image,

customer convenience and comfort. The higher the

purchasing power, the more the selection of a private vehicle

differs from the most economic option. The technology

development and hence the vehicle performance e.g., vehicle

driving range as well as the availability of a fuelling network

also plays a crucial role. Despite the technology being avail-

able and all other obstacles removed, customer scepticism

towards new, novel technologies, may delay the market

penetration severely. To account for this, one approach would

be agent based modelling [32].

For the modelling work presented here, the only plug-in

alternative vehicle was a hybrid gasoline vehicle. This was

done to limit the possibilities and the analyses would be

improved if several types of plug-in cars were included, since

this technology appears to be one of the greatest competitors

to hydrogen cars.

7. Conclusions

The analyses carried out in this work show that a transition to

a hydrogen fuelled transportation sector could be feasible in

the long run. The iteration between MARKAL and H2INVEST

modelling tools was found to strengthen the robustness of the

results. Under the HyWays assumptions for the Industry

region results converged to a scenario where the HFCVs enter

the market in 2025 in the urban areas and in 2030 in the rural

areas. Full (100%) penetration rate was reached within

a decade, i.e., by 2035 for the urban areas and by 2045 in the

rural areas. These results indicate that with substantial

hydrogen distribution efforts, HFCV can become competitive

compared to other technologies both in urban and rural areas.

However, the deployment will require continued technolog-

ical progress, cost reductions from volume production, and

policies to support the introduction of HFCVs into the market.

The analysis shows the importance of the availability of local

energy resources for hydrogen production, like the advan-

tages of location close to chemical industry or surplus of

renewable electricity.

The results of the MARKAL analysis for the City region,

with no major industry or energy resources, show that the

introduction of HFCV requires strong limitations on CO2

emissions or high oil and gas prices. This is in line with the

results from the corresponding study for Japan by Endo [12]

where HFCV are not competitive before 2050. HFCV become

competitive when fuel prices increase, due to the higher effi-

ciency of HFCV compared to the internal combustion engine,

or with strong CO2-emmission constraints, limiting the use of

all carbon containing fossil fuels.

Both in the Industry and Energy region there is a faster intro-

duction of HFCV then in the city region. In the energy region the

surplus of electricity makes both centralised and onsite water

electrolysis for hydrogen production profitable. The available by-

product in the Industry region at a relatively low-cost makes

hydrogen cars profitable, in 2020 HICEV and in 2025 HFCVs.

Acknowledgements

We would like to acknowledge the contributions from the

project team, particularly Dr. Ulrich Bunger, at NTNU/LBST,

for his vast knowledge and experience in this research area.

We also appreciate our industrial partners Statoil, Hydro,

Statkraft and Hexagon for supplying the necessary feedback

and the helpful discussions during the project period. The

work presented here has been carried out with financial

support from the Research Council of Norway and the indus-

trial partners, and the support is gratefully acknowledged.

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