Since the Biden administration released the US National Blueprint for Transportation Decarbonization (Blueprint) on January 10, 2023, the administration has continued to invest significantly in the development of electric vehicles (EVs), hydrogen fuel cell vehicles, and the much-needed charging infrastructure.
EVs and hydrogen fuel cell vehicles have been identified as key players in nationwide and industrywide efforts to cut emissions and the likely focus of attention as the United States continues its decarbonization efforts. In the transportation sector, the top two percentage shares of current emissions are held by light-duty vehicles (49%) and medium- and heavy-duty vehicles (21%).
The Biden administration laid out its strategy for decarbonizing the transportation sector to achieve the economywide 2030 and 2050 emission reduction goals in the Blueprint. Developed by the US Department of Energy (DOE), Department of Transportation, Environmental Protection Agency, and Department of Housing and Urban Development, the Blueprint focuses on the major transportation modes, identifies specific decarbonization opportunities and challenges for each, and discusses the role of clean technologies.
The Blueprint identifies three key strategies to achieve the nation’s 2030 emission reduction goals:
While the Blueprint acknowledges that “the first two strategies will contribute to reducing [greenhouse gas] emissions and produce significant co-benefits,” it also notes that it expects the third transition strategy to drive most emissions reductions.
Achieving the third strategy will require transitioning to clean options by deploying zero-emission vehicles and fuels for all passenger and freight travel modes. This will require the adoption of highly efficient zero-emission EVs, hydrogen fuel cell vehicles, and sustainable fuels produced from biomass and waste feedstocks to decarbonize hard-to-electrify forms of transportation such as air transport and long-haul shipping. It will also require continued development of EV charging and clean-fuel infrastructure, as well as continued development and innovation of clean energy technologies.
Following the issuance of the Blueprint, the administration announced that it had invested additional funds to accelerate the creation of zero-emission vehicle corridors. It awarded $7.4 million to seven projects to develop medium- and heavy-duty EV charging and hydrogen corridor infrastructure plans across 23 states.
This infusion of money into the development of infrastructure will be important to achieving the administration’s ambitious greenhouse gas emission reduction goals of deploying 500,000 EV chargers, ensuring that 50% of new light-duty vehicle sales are electric by 2030, and increasing the percentage of new medium- and heavy-duty zero-emission vehicles sold to 30% by 2030 and 100% by 2040. Achieving these emission reduction goals, however, will require those in the industry to consider and address a variety of commercial and legal issues.
The US transportation sector’s electrification efforts continue to grow. More than 800,000 EVs were sold in the United States in 2022, which was nearly 6% of all vehicles sold. In comparison to recent years, EV sales in 2022 affirm that policy efforts to encourage EV deployment are taking root and consumer appetite for electrified transportation is growing. However, certain key issues must be confronted to move from where we are currently with respect to EV deployment to where policymakers want to be.
Public Charging Stations
First, continued emphasis and aggressive pursuit of public EV charging-station development will remain a key issue in 2023 and beyond. Absent a robust network of fast public charging opportunities, consumer range anxiety will persist, which will undoubtedly hamper EV sales to certain market segments (namely, those that need transport for long distances and/or in underserved areas). Simply put, the United States currently lacks the requisite volume of public chargers to alleviate consumer range anxiety.
What’s more, recent studies reveal that a material percentage of existing chargers suffer from outages or maintenance issues that render them inoperable. Thus, it is critically important that more chargers be developed and put into operation and that those chargers offer reliable uptime. To accomplish these two items, charging-station development must occur in a manner that is commercially successful—for the charge point operator (CPO) and the site host alike.
A commercially successful development opportunity requires a circumstance whereby the CPO can have an advantageous revenue stream as well as minimize risk exposure arising from the siting and operation of the station itself. This raises two issues: (1) the best way in which to monetize charging infrastructure, and (2) the best type of contractual protections in infrastructure licensing or site-host agreements.
With respect to (1), innovation in utility rate design and demand charge application is likely to remain a relevant point of discussion and/or an obstacle through 2023. With respect to (2), CPOs and site hosts should take care to consider various matters of importance to charging infrastructure, such as exclusivity in installation; operations and maintenance responsibility; revenue sharing and leasing payments; ownership of property after termination; indemnification and insurance; and utility easements and site access.
Second, with regard to EV deployment, market participants must continue to grapple with issues relating to the battery component and critical supply chain. This is particularly important given the Inflation Reduction Act’s imposition of domestic content requirements for batteries and, in turn, vehicle eligibility for a $7,500 tax credit.
Third, a key issue in 2023 is whether undeveloped cybersecurity and data protection standards and requirements applicable to EV infrastructure may create vulnerabilities for the safety of consumer data and opportunities for hackers to exploit as an entry point in US electric grid disruption attempts. EV sector participants should carefully monitor any developments relating to the regulation of data privacy or cybersecurity imposed on CPOs, interconnected utilities, or EV manufacturers.
Hydrogen fuel cell vehicles can serve as a complement to EVs for transportation modes that require longer ranges and faster refueling times and will play an important part in decarbonizing long-haul, heavy-duty trucks and other forms of transportation. Although hydrogen fuel cell systems can offer long driving ranges, short refueling times, and high payload capacities, they require significant quantities of hydrogen.
Key Factors to Address
Scaling hydrogen fuel cell vehicles will require continued investment and research, development, and demonstration (RD&D) of hydrogen fuel cell technologies and the continued development of a connective hydrogen infrastructure in the United States.
The Bipartisan Infrastructure Law made significant investments in the RD&D of transportation technologies, including hydrogen fuel cell technologies, infrastructure deployment, and supply chains for materials and minerals, and the Inflation Reduction Act has made available significant tax credits for developers of hydrogen facilities.
The availability of infrastructure and means to safely and efficiently transport hydrogen are among the key factors that will need to be addressed in order to successfully scale hydrogen fuel cell vehicles. Although hundreds of miles of hydrogen pipelines exist, additional connective infrastructure that is capable of moving hydrogen from the production facility to the end user as well as hydrogen storage facilities are still under active development.
This development is being spurred in large part by the DOE’s $7 billion program to establish regional clean hydrogen hubs across the United States. These hubs will form the foundation of a national clean hydrogen network of hydrogen producers, consumers, and local connective infrastructure and will help facilitate the delivery, storage, and end use of hydrogen (for example, in hydrogen fuel cells).
DOE Funding Opportunities
The cost, durability, and comparability of hydrogen fuel cell technologies will also need to be addressed. The DOE has announced several funding opportunities targeted at these priorities and is expected to issue additional funding opportunities to further these efforts. These opportunities include the recent earmarking of $47 million to support the RD&D of hydrogen fuel cell technologies, with a focus on enabling the use of clean hydrogen in medium- and heavy-duty vehicles and other heavy-duty transportation applications.
The development of liquid hydrogen (LH2) storage vessels, LH2 transfer and vehicular fueling technologies, and approaches to enable high-flow LH2 transfer and fueling for medium- and heavy-duty transportation application are among the topics of interest. LH2 storage vessels can enable low-cost, energy-dense LH2 storage onboard medium- and heavy-duty transportation applications. Further development of advanced LH2 components, systems, and technologies is necessary to address the need for fueling times that are comparable to those of liquid fuels as well as hydrogen losses, compatibility of materials, and safety concerns from LH2 fueling and transfer operations.
Additional funding opportunities that are currently expected from the DOE include $500 million for the development of manufacturing and recycling of clean hydrogen technologies and $1 billion for electrolyzer development.
While the development of regional clean hydrogen hubs, hydrogen fuel cell technologies, and refueling infrastructure continues, the industry will also need to determine whether and how existing infrastructure can be paired with hydrogen use. For example, interstate natural gas pipelines will need to determine whether and the extent to which hydrogen can be blended into and transported on their systems. The industry will need to determine how to best integrate hydrogen with and into existing infrastructure, as that can be relied upon, at least in part, to move hydrogen from the hydrogen producer to the hydrogen end user.
There is also a need for clarity as to which agencies will exercise jurisdiction over infrastructure that is used to produce, transport, and store hydrogen. For example, the Federal Energy Regulatory Commission (FERC) may assert jurisdiction over pipelines that transport hydrogen and hydrogen storage facilities. If it does, it is unclear under which framework (i.e., the Natural Gas Act or Interstate Commerce Act) FERC will regulate such facilities. Separately, the Surface Transportation Board has the authority to exercise economic regulation of pipelines transporting any commodity other than water, gas, and oil and therefore may assert or exercise jurisdiction over hydrogen pipelines, although it has not yet done so.
Addressing these regulatory uncertainties will be critical in facilitating efforts to establish a nationwide hydrogen network and infrastructure and ensure the continued development of hydrogen pipelines and storage facilities.