A Honda Clarity Fuel Cell vehicle is displayed during an unveiling in Tokyo, Japan, on Thursday, March 10, 2016. Honda, beginning sales of its Clarity Fuel Cell sedan in Japan, said joint work with General Motors will help bring hydrogen-powered vehicle costs down to the level of hybrids within the next decade. Akio Kon /Bloomberg
A Honda Clarity Fuel Cell vehicle is displayed during an unveiling in Tokyo, Japan, on Thursday, March 10, 2016. Honda, beginning sales of its Clarity Fuel Cell sedan in Japan, said joint work with GeShow more

Tokyo hope's to find life's a gas

TOKYO // To become reality, Tokyo’s dream to have approaching 1 million hydrogen fuel-cell vehicles on Japan’s streets in 15 years time will require huge investment and major government support, analysts say.

A March report by Japan’s ministry of economy, trade and industry projects putting 40,000 hydrogen fuel-cell cars on the country’s roads by 2020, with a 20-fold expansion to 800,000 by 2030. Currently, about 400 such vehicles operate in Japan, the report says.

The report also outlines plans to double the number of hydrogen fuelling stations to about 160 by the end of the current fiscal year next March, doubling it again to 320 over the following five years.

Prime minister Shinzo Abe has called hydrogen “the energy of the future,” one that would allow Japan to diversify energy sources and cut carbon dioxide emissions.

The global Japanese car manufacturers Honda and Toyota are advocating fuel-cell vehicles to eliminate exhaust emissions – hydrogen-powered cars emit only water – while offering range and refuelling times similar to petrol-driven vehicles.

Fuel-cell cars use hydrogen gas to power an electric motor. Unlike conventional vehicles which run on petrol or diesel, fuel-cell engines combine hydrogen and oxygen to produce electricity, which runs the drive motor.

Since they are powered entirely by electricity, fuel-cell vehicles are considered electric vehicles. However, as opposed to current battery-powered electric vehicles, their range and refuelling figures are comparable to conventional cars and lorries.

In March, Honda launched its Clarity Fuel Cell saloon, a zero-emission vehicle with a range of approximately 750km. The company believes such vehicles will replace petrol and diesel engines in the future and, if they are used according to their performance capacity, there is a place for both battery-powered and fuel-cell electric vehicles, says the company’s corporate communications division assistant manager Tamon Kusakabe.

Mr Kusakabe points out the distance standard battery-powered vehicles can travel is short, making them more suitable for the city, whereas fuel-cell-powered ones can run for in excess of 750km. In addition, it takes only about three minutes to put hydrogen in the tank, about the same time as for petrol, whereas battery-powered cars usually need to be plugged in overnight to fully recharge. “Because of that, we think there is a bright future for fuel-cell vehicles,” Mr Kusakabe says.

However, the company places little store by the government’s target numbers. Instead, “Honda’s plan is, by 2030, to capture two-thirds of the world market for hybrid, plug-in hybrid, battery and fuel-cell vehicles,” Mr Kusakabe says.

Christopher Richter, the deputy head of research for CLSA Securities Japan, the Tokyo office of a Hong Kong brokerage agency, calls government plans “a stretch” for two reasons. For one, the necessary investment to have a fuelling network adequate for 800,000 hydrogen cars would be very heavy.

The other reason is the price of lithium-ion batteries is declining steeply, making battery-powered electric vehicles very affordable. Also, unlike fuel-cell vehicles, battery-powered ones do not really need a separate infrastructure in Japan, Mr Richter says.

“So maybe by the time when or if fuel-cell vehicles ever work out all of their technical problems, the investment for them is not going to be needed anymore,” he adds.

Honda believes the popularity of hydrogen-fuelled automobiles such as fuel-cell vehicles will vary according to the region. “As the US and Europe are the main regions where hydrogen refuelling facilities are being built, we think the US and Europe will be the centres of fuel-cell-vehicle dissemination,” Mr Kusakabe says.

But if there is not enough investment in hydrogen fuelling stations in other countries, fuel-cell vehicles will be very hard to sell outside Japan. So far, California seems to be the only other place where there is significant enthusiasm for the construction of hydrogen fuelling stations, Mr Richter says. The one big advantage of battery-powered electric vehicles over fuel-cell cars is 99 per cent of the fuelling infrastructure for the former is already in place. “It’s called the electric power grid,” Mr Richter says.

Echoing his comments, the physicist Gerhard Fasol, the founder and chief executive of Eurotechnology Japan, a Tokyo technology-focused business development, strategy and mergers and acquisition firm, says country-wide hydrogen infrastructure would be extremely expensive to develop.

“So it would be more suitable for constrained areas, for example municipal buses and refuse collection vehicles,” he says.

Mr Richter agrees, pointing out making batteries big enough for large vehicles is a challenge, so using hydrogen for buses and lorries makes more sense. The amount of infrastructure required for big vehicles is much smaller, and there are not so many lorries and buses on the roads compared with passenger cars, he said.

“Also, instead of having the fuelling infrastructure distributed randomly all over the place, you can probably have more centralised fuelling,” he says Richter.

The other problem is hydrogen systems do not generate energy, but only work as storage, so the energy still needs to be produced, Mr Fasol says. “Hydrogen does not directly address the need to produce the energy,” he said.

Regarding this issue, Honda is conducting research and development on hydrogen production and supply. In 2014, the company developed the Smart Hydrogen Station, a one-package production, storage and filling system. “By promoting this system, we aim to do our part to achieve a hydrogen society in the future,” Mr Kusakabe says. Toyota for its part will not directly enter the hydrogen infrastructure business, which would involve purchasing and selling hydrogen. Rather, the company expects infrastructure growth to be led and supported by energy companies, facilities integrators and governments, says the company’s strategic planning department expert Hisashi Nakai.

However, because in the early stages there may not be enough hydrogen stations to fully support widespread use of fuel-cell vehicles, Toyota will work with other Toyota Group companies and overseas affiliates to develop hydrogen supply schemes and operations as needed in individual countries and regions, Mr Nakai says.

“By supporting infrastructure up front, Toyota believes that public acceptance of this new technology will increase, and that the market for fuel-cell vehicles will grow and become self-sustaining, thus leading to continued hydrogen infrastructure development,” he says.

Kazuhito Asakawa, the environment department director general for the Japan Automobile Manufacturers Association, says as a medium-term (by 2020) response to the need for hydrogen stations’ development in Japan, some car makers Honda, Nissan and Toyota agreed last July to jointly provide up to a maximum of ¥11 million (Dh377,232) of the operational costs of every hydrogen refuelling station built.

But for Mr Richter, such a generous initiative simply proves hydrogen stations are not economic unless somebody subsidises them. “And from what I understand, the cost of building a typical gasoline station is about US$800,000, and the figure that I have heard kicked around for the cost of a hydrogen fuelling station is about $4 million or so,” he says.

It would therefore be very difficult to get somebody to invest privately in such stations with the hope of making a profit, or any decent return on their investment, Mr Richter says.

“It becomes incumbent on the largesse of the government or some corporations who feel that they gain a benefit from this conversion to hydrogen, whether they be the natural gas companies or whether they be the automakers,” he says.

Still, car makers in Japan, having already invested a lot in hydrogen, want to see if they can get a return. The technology has picked up the interest of the government, which believes there are many companies that could potentially benefit if a hydrogen economy really took off, Mr Richter says.

“Not just the automakers, but a lot of component makers and the natural gas industry,” he adds.

Enthusiasm for battery-powered electric vehicles is lower in the automobile industry because, aside from making the battery, which is not any car makers’ forte, such vehicles are very simple devices, so the entry barriers to building them are very low, Mr Richter says.

“Over the last 80 to 100 years, the internal combustion engine has been a great entry barrier for the automotive industry, because it’s complicated and capital-intensive, and [battery-powered] electric cars are not so complicated and not so capital-intensive. That’s why a company like [the electric car maker founded by the US technology billionaire Elon Musk] Tesla can even exist,” he says.

“But fuel cells, if you can make that the position of the industry, again we’re back to complicated and capital-intensive.”

Mr Fasol points out Japan has a tendency to produce “Japan-only” solutions, which he calls the “Galapagos effect”.

This could ultimately sound the death knell for global hydrogen vehicle uptake, he says.

“If Japan creates very sophisticated hydrogen solutions, which are Japan-only without gaining global traction, it can’t be scaled, and might be temporary, or Japan-only without global scale.”


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