UK Hydrogen and Fuel Cell Association – Written evidence (BAT0008)

 

Responses to Inquiry Questions

 

  1. To what extent are battery and fuel cell technologies currently contributing to decarbonisation efforts in the UK?

 

Fuel cells have a key role to play in decarbonisation, not least through being a core element of the hydrogen component of the transition to net zero. The Government’s Committee on Climate Change predicting over 200TWh of hydrogen in the UK by 2050 (see Figure 1), with fuel cells being a primary means of creating valuable zero carbon power and heat. Applications include surface transport, shipping, buildings (where fuel cells can provide CHP at domestic scale), power generation and aviation.

 

Figure 1: Projected hydrogen demand in the UK

(Source: Committee on Climate Change)

 

However, with its focus on EVs and other options, Government policy fails to reflect this, with the risks that the envisaged role for hydrogen will fail to be realised and that existing UK capability will be overtaken by imports, rather than becoming a clean growth and export success story.

 

  1. What advances have been made in battery and fuel cell technologies in recent years and what changes can we expect in the next ten years (for example, in terms of energy density, capacity, charging times, lifetimes and cost reduction)?

 

The past 10 years has seen significant improvements in the performance and durability of fuel cells, and further progress is expected. This extends right through from membranes and catalysts to long-running applications. Costs of both components and manufacturing continue to fall as production scales up.

 

As discussed in Question 6, fuel cells are expected to become the most competitive low carbon option across a range of heavy-duty transport modes, with total cost of ownership falling below that of ICE alternatives by 2030.

 

  1. What are the opportunities and challenges associated with scaling up the manufacture of batteries and fuel cells, and for manufacturing batteries and fuel cells for a greater number and variety of applications? Is the UK well placed to become a leader in battery and fuel cell manufacture?
  2. Is the right strategy, funding and support in place to enable the research, innovation and commercialisation of battery and fuel cell technologies in the UK?

 

The UK has a number of world class companies active in the fuel cell space (see Question 5) and, as outlined above and below, the opportunities are substantial. Figure 2 shows growth in fuel cell vehicle applications out to 2030.

 

Figure 2: Projected growth in fuel cell vehicle sales to 2030

 

The challenges in realising these opportunities lie in the failure of Government to recognise and act. There is a general sense in UK policy of “UK Technology for UK problems”. Whilst this is a valid component of overall strategy, on its own it is destined for failure; if the UK doesn’t add a global perspective as a second component, and position itself as a home for Great Technology, Great Innovation for Global problems, it won’t generate the reach and scale for its technology to achieve the required costs and so it will be overtaken by countries with a more ambitious global perspective for deployment and ultimately, the UK will be economically compelled to buy foreign – like it did in wind.

 

The innovation market is global and UK companies are actively considering off-shore subsidiaries to access more competitive, larger scale, and more streamlined funding opportunities. In the context of hydrogen and fuel cell innovation specifically, (and from a cash perspective) the UK is “orders of magnitude” behind S. Korea, Ger many and the US, with all of these courting UK companies to establish subsidiaries there.

 

For the UK to prosper, investment in skills (from undergraduate courses to R&D) and infrastructure, such as technology centres, as well as support for high risk, high reward innovation will be needed to capitalise in a nascent market. These will need to be augmented by improved awareness of Knowledge Economies, commercialising IP and licensing models in the Civil Service (i.e. not just making stuff in the UK).

 

At a practical level, fuel cell technologies use platinum and other precious metal catalysts. The UK is well placed and established in the precious metal world, being home to the LBMA and the infrastructure of precious metal banks, trade houses & vaults built up around this in London. This makes the UK a natural home to catalyst technology, with examples being UK HFCA members Johnson Matthey & Ames Goldsmith Ceimig.

 

In both battery and fuel cell technologies there is a limit to the availability of the rare earth elements required for their manufacture. Through the presence of established names, the UK can be at the forefront of catalyst technology - improving efficiency and allowing for adoption of fuel cells.

 

Ongoing access to EU funding opportunities, such as Horizon, will be key – allowing UK companies to collaboration with large customers and supply chain partners, as well as accessing and knowledge.

 

With similar levels of support and a policy framework in place for fuel cells such as have been developed for batteries, the UK could become amongst the leaders in the global market. Unlike batteries, there is still ‘plenty to play for’ in this space. Initiatives similar to the Faraday Institute and UK Battery Innovation Centre should be established to support and accelerate fuel cell manufacture, with the parallel development of policy measures to stimulate demand.

 

The much-anticipated Hydrogen Strategy should include both the supply and demand side, setting out a Roadmap for hydrogen and fuel cells to deliver the scale-up envisaged in the UK’s transition to net zero.

 

  1. Which countries are currently the leaders in battery and/or fuel cell science and technology and where, if anywhere, does the UK have a lead or other advantages?

 

The global fuel cell market is predicted to be worth $13.7 billion by 2026. In the longer term, the hydrogen market is predicted to be worth $11Tn by 2050, 2/3 of which is in hardware - fuel cells and electrolysers. In 2020, 1.3GW of fuel cells were sold globally. Across some 82,5000 units, the majority went into stationary applications. In terms of power capacity, over half went into transportation uses in cars, buses and trucks in Asia.[1]

 

Japan, China and South Korea are all pushing ahead with fuel cells; by way of example:

 

In these countries, the growth spurt of the battery industry allied with climate change and emission reduction drivers, are catalysing thinking in where and how fuel cells can fit. There are valuable lessons for the UK in terms of an ‘all of the above’ approach, where all the tools at our disposal to reach net zero are being progressed.

 

The UK has companies active across the fuel cell space which help the UK to stand along-side these global leaders; these include:

 

Others include Arcola Energy and Optare Group which are co-developing a double-decker fuel cell bus, Wrightbus which plans to manufacture low-cost fuel cell technology for buses at its Northern Ireland site, and AFC Energy which has a partnership with ABB to supply fuel cell powered EV charge points.

 

Alongside the range of companies ready to scale up further, the UK has been an ‘early mover’ in the fields of fundamental research, with world leading electrochemical research across groups at the University of Birmingham, University of Nottingham and Cranfield University among others.

 

Notwithstanding these areas of UK activity, there has been little and patchy support for fuel cells in recent years. Without intervention, the UK is set to be overtaken by countries with a more ambitious global perspective for deployment and ultimately, the UK will be economically compelled to import technology as happened in the wind industry. There will also be substantial lost export opportunities. However, the race for global leadership in fuel cells has only just started and, with the right support in place, the UK has potential to be among the leaders, building on our science base for electrochemistry, innovative companies and overall engineering design and system capability.

 

  1. In what sectors could battery and fuel cell technologies play a significant role?

 

A recent report from the Hydrogen Council[5] examined 35 applications for hydrogen and found that 22 could become the most competitive low carbon option by 2030 (See Figure 3). All of those circled in orange represent immediate applications for fuel cells, with shipping expected to see a transition to fuel cells over the medium term.

Figure 3 Hydrogen and fuel cell competitiveness per end application in 2030

 

By way of illustration, hydrogen fuelled fuel cell vehicles are the lowest-cost way (based on total cost of ownership or TCO) to decarbonise both the medium and heavy-duty vehicle segments. Figure 4 shows cost trajectories based on global sales of 150,000 per annum by 2030. Similar benefits and cost trajectories apply to buses.


Figure 4 – Cost trajectories based on global sales of 150,000 per annum by 2030

 

 

In the UK context, as of 2018, HGVs were estimated to account for around 17% of the GHG emissions from domestic transport. Research suggests up to 30 MtCO2 per year could be saved in the UK by incorporating hydrogen-fuelled vehicles into the transport fleet[6]. Thus, if the change to the phase out only covers light vehicles, its impact will be significantly limited. We need a phase out policy, strategy and action plan for all forms of transport.

 

  1. How should battery and fuel cell technologies be integrated into the wider UK energy system, and what are the challenges associated with integration (e.g. infrastructure, deployment, system operation, regulatory frameworks)?

 

As illustrated above, fuel cells have wide range applicability across the energy system and are key to the transition to net zero. A primary barrier to deployment is the lack of a cohesive whole system strategy for fuel cells which encompasses transport, power and heat, and complements the planned hydrogen strategy. A recent report from Ballard and Deloitte found that “UK Government support for hydrogen and the fuel cell market was less consistent and coordinated compared with other European countries”[7]. The UK needs an overarching approach which marries both supply and demand. This vision currently faces wide ranging challenges, not least the focus on electrification in the transport sector, and complete absence of support for fuel cells for stationary power. If developed correctly, hydrogen infrastructure can serve a number of markets / applications and careful design will be necessary to achieve this – for example, in terms of purity, pressure etc. Support is needed to help UK fuel cell companies scale up supply, build supply chains and develop export markets. We envisage a strategy with the following elements:

 

 

  1. What are the costs and benefits of using battery and fuel cell technologies in their various applications, including when integrated into the wider energy system?

 

The Figure reproduced in Question 6 above shows the cost competitiveness of fuel cells in a range of applications out to 2030. As a key component of the transition to net zero, fuel cells are zero emission at point of use and offer a range of other benefits:

 

 

The Government is beginning work to scale up hydrogen production and this will be key to fuel cells’ realising their potential. There remains much work to be done, particularly in respect to hydrogen refuelling which is a fundamental requisite for fuel cell vehicles.

 

Fuel cells are also an area with a strong UK technical tradition, areas of global UK leadership (see Question 5 above) and offer significant export opportunities. Unlike other technologies, there is a ‘window of opportunity’ remaining for the UK to scale up and build on its current activities to take a leadership role.

 

26 March 2021

 

[1] The Fuel Cell Industry Review 2020, E4Tech, https://fuelcellindustryreview.com/.

[2] https://fuelcellsworks.com/news/china-defies-elon-musks-warnings-and-pushes-ahead-with-hydrogen/

[3] https://www.powermag.com/new-fuel-cell-power-plants-deployed-in-south-korea-and-california/

[4] https://matthey.com/en/products-and-services/fuel-cells

[5] https://hydrogencouncil.com/wp-content/uploads/2021/02/Hydrogen-Insights-2021.pdf

[6] E4Tech and Element Energy for Innovate UK: ‘Hydrogen and Fuel Cells: opportunities for growth’, 2016 - https://www.scottishcities.org.uk/site/assets/files/1108/hfcroadmap-mainreport.pdf

[7] https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-fueling-the-future-of-mobility-en-200101.pdf