Written evidence submitted by ITM Power plc (EVP0035)

ITM Power plc is a U.K. manufacturer of electrolysers, which use renewable electricity to split water into hydrogen and oxygen www.itm-power.com. We export products across the world, have 20 years experience of designing, manufacturing, deploying and operating hydrogen systems and are the developer, owner and operator of nine public hydrogen refuelling stations in the U.K.. ITM Power is based in Sheffield at a brand new manufacturing facility, which has a world-leading production capacity of 1GW of electrolysers per annum.  ITM Power was referred to as a case study in Point 2 of the Prime Minister’s recent 10 Point Plan.

We appreciate the opportunity to provide a response to this consultation from the UK Government’s Transport Committee, which we present below in response to the topics it raises.

Summary of key messages and recommendations

We believe the government’s plan needs to:

-     Emphasise the production and use of renewable ‘green’ hydrogen, not ‘low-carbon’ hydrogen, for refuelling fuel cell vehicles.

-     Prioritise green hydrogen and any form of link between the expansion of U.K. renewables and zero-emission vehicles.

-     Improve the RTFO to permit grid-connected electrolysers, including on-site at refuelling stations.

-     Set a deployment target of 100 hydrogen refuelling stations by 2025 and 1000 by 2030.

-     Increase taxation levels on new petrol/diesel vehicles to help cover the funding gap for affording the switchover to zero-emission vehicles.

-     Assist U.K. manufacturers to build and deploy the necessary vehicles and infrastructure at pace.

Accelerating the shift to zero emission vehicles

•        The feasibility, opportunities, and challenges presented by the acceleration of the ban of the sale of new petrol and diesel vehicles to 2030;

There are two types of zero-emission vehicle (BEV and FCEV) which have been operating around the world for several years now and a large part of our future transport strategy must depend on these. Both have electric powertrains which are substantially more efficient than conventional vehicles with engine powertrains. The BEV offers the greatest efficiency, but the FCEV offers very rapid refuelling, longer range and is the only feasible option for most types of heavy vehicle (road and non-road) if they are to achieve zero emissions. Therefore much now depends on how the policy gaps are filled in order to help address the present financial gaps that inhibit a wider roll out and thereby accelerate the adoption of BEV and FCEV in the 2020s.

In that context a high annual rate of deployment needs to be achieved in the next few years for recharging points and hydrogen refuelling stations (HRS). The profile of the U.K. transport sector on an international platform needs to convince overseas vehicle OEMs to send their vehicles to the U.K.. The manufacturer of such vehicles in the U.K. needs to be ramped up across the 2020s, especially with respect to FCEVs (eg. hydrogen cars, buses, heavy vehicles, trains, small planes, ferries, small ships). Significant early experience has been gained with the deployment of HRS at petrol stations and bus depots, but the total number of stations is still only around 15 whereas the number of petrol stations and depot refuelling facilities exceeds 7000. Therefore with respect to FCEV refuelling, the number of HRS needs to be expanded substantially so that a basic level of national coverage (eg. 1000 stations by 2030) is achieved and conventional mainstream market forces can kick in. This requires Capex support for the hydrogen refuelling infrastructure and Opex support via the RTFO.

We would suggest that some measure of increased taxation on new vehicles that consume hydrocarbon fuel and road pricing for such vehicles should be built up across the period to 2030, in order to help afford the higher costs of BEVs and FCEVs and of implementing the necessary recharging points and HRS. Specific programmes focussed on types of heavy vehicle are needed (eg. hydrogen buses, trucks and trains). Relationships need to be built to attract overseas OEMs to deploy their ZEVs here (eg. Hyundai is now manufacturing 2000 Xcient hydrogen trucks per year, will deploy 1600 in Switzerland by 2025 and will deploy to other interested countries).

The U.K. has vast renewable resources, especially offshore wind, and McKinsey estimate that green hydrogen could be as cheap as diesel by 2030, so it’s very important to expand hydrogen mobility in an integrated way with renewables expansion. Synergies that benefit both the electricity sector and transport sector can be realised by promoting any form of link between renewables and FCEV refuelling.

•        The actions required by Government and private operators to encourage greater uptake of electric vehicles and the infrastructure required to support them;

First clarify your definition of electric vehicles to make sure it includes FCEV as well as BEV. The U.K. will not achieve full decarbonisation and zero emissions by deploying BEVs alone, for several reasons (overloading of electricity networks, excessive queuing at recharging points, recharging at home is impracticable for 40% of households, technically infeasible for most heavy vehicles, inappropriate for business fleets/consumers who want rapid refuelling, excessive use of critical raw materials etc). The actions then required are to help afford the roll out of refuelling and recharging infrastructures across the 2020s, encourage FCEV and BEV adoption in various sectors of the economy including local and national government, and encourage U.K. manufacturers to build the necessary infrastructures and vehicles. In isolation a single policy on renewable fuels (RTFO) where green hydrogen is included will simply not be enough to grow the refuelling infrastructure and number of hydrogen vehicles.

•        The particular challenges around decarbonising buses and how these should be addressed;

Buses and coaches require hydrogen in order to satisfy their load/range profile. This can be provided by depot based refuelling across U.K. cities and towns (eg. the bus refuelling depots in Tyseley Birmingham and Aberdeen with on-site electrolysers). 300 hydrogen buses are currently being deployed across Europe in the EU funded JIVE projects, but this now needs to be scaled up and replicated across the U.K.. Investments in refuelling infrastructure and specific incentives for adopting hydrogen buses in place of diesel buses are required. Policymakers need to invoke a transition that penalises the use of diesel buses by bus operators and passengers and incentivises hydrogen buses to ensure a substantial number of such buses are in operation by 2030.

•        The Government’s ambition to phase out the sale of new diesel heavy goods vehicles, including the scope to use hydrogen as an alternative fuel.

Public hydrogen refuelling stations for cars with on-site electrolysers have been operating in the U.K. since 2015, significant experience has thereby been gained together with longer experience for refuelling hydrogen buses. Together this provides the basis for HRS expansion to support the future roll out of any type of hydrogen vehicle. The architecture of a FCEV is common across all vehicle types (ie. a fuel tank for storing hydrogen at high pressure, a fuel cell for generating electricity, a small battery and an electric motor). Hydrogen heavy vehicles are under development and follow the same technological principle as a hydrogen car, although lagging by a few years.

To achieve a significant penetration of hydrogen heavy vehicles by 2030 requires a substantial programme to attract OEMs to supply their trucks etc to the U.K.. We need to be seen as a keen early adopter intent on reaping the rewards sooner rather than later. This requires investment in hydrogen refuelling at depots, because most trucks operate in return-to-depot mode, and motivation of the relevant stakeholders to change away from diesel. Then in due course investment will be needed at motorway service stations once the hydrogen demand from long distance heavy vehicles grows.

Road pricing

•        The case for introducing some form of road pricing and the economic, fiscal, environmental and social impacts of doing so;

This is the common sense must have option. A two tier system is required to penalise travel in conventional vehicles and penalise congestion, while incentivising the use of zero emission vehicles. Such a system will need regular adjustment every few years to enable the transition and help people acclimatise to road pricing. In the long term, road pricing will become a major revenue generator to help cover the gap left by declining revenues from taxing petroleum fuels.

•        Which particular road pricing or pay-as-you-drive schemes would be most appropriate for the UK context and the practicalities of implementing such schemes;

Schemes based on how often, when and where the vehicle is driven. Three tiers of pricing, one for BEVs and FCEVs, one for hybrids and one for petrol/diesel vehicles (excluding historic vehicles). Plus a scheme for heavy vehicles in urban environments based on pollution and time of day. Keep prices down initially, then escalate them in due course.

•        The level of public support for road pricing and how the views of the public need to be considered in the development of any road pricing scheme;

Most people (and businesses) recognise that pollution and congestion in and around cities wastes their time and money and is bad for their health and the environment. Both need to be tackled together. Focus on congestion schemes and increasing parking costs for urban environments initially, then extend road pricing to all motorways then to all major roads. Link the schemes to some road improvement and mobility activities across the next decade (like expanding stretches of the A1 from 2 to 3 lanes and installing HRS), so people see some emerging carrots as well as sticks. Continue to encourage modal shift, but evidence to date suggests this isn’t enough to achieve a mainstream behavioural change from cars to trains or bikes.

•        The lessons to be learned from other countries who are seeking to decarbonise road transport and/or utilise forms of road pricing.

Consider a form of banning/minimising truck movements on Sundays and public holidays (as in Germany, France, Italy, Spain etc.) with exemption for zero emission trucks.

Consider introducing annual quotas for the maximum number of new diesel or petrol vehicles in each class that can be registered from 2023 and reduce them year by year down to zero in 2030.

February 2021