Though climate change is only now receiving the attention it deserves, Ballard has been working for four decades to deliver fuel cell power for a sustainable planet. For Randy MacEwen, CEO of Ballard, hydrogen is the missing link to a sustainable society, because it offers a storage medium for renewable energy that can later be used to power a variety of applications. Indeed, if we are to achieve the global climate objectives needed to cap temperature rise at 1.5 or 2 degrees, we need to decarbonize mobility and transportation now. By enabling a fully electric power train running on renewables, hydrogen can play a critical role in reaching this goal. Together with his insights on the development of fuel cells, Randy MacEwen underlines the critical role of scale to usher in the hydrogen society.
Randy MacEwen, CEO of Ballard
This year is our 40th anniversary and last year we celebrated our 25th anniversary as a publicly listed company. Though we have a long history, the vision of the company has not changed: we have always focused on delivering fuel-cell power for a sustainable planet by decarbonizing mobility and energy.
What has changed in the last 40 years are the dramatic strides taken by Ballard and the entire industry to improve fuel cell technology in terms of performance improvement and cost reduction, through higher power density, durability and reliability, even at relatively low volumes. This proven technology is now coinciding with a number of macro drivers that will lead to high-volume adoption.
These macro drivers are quite different than even 5 years ago, in that we continue to have growing population and urbanization, but climate change and air quality have become top of the agenda. The recent climate strikes provide a good example of this fact. Another difference today, even compared to a few years ago, is the very low cost of renewable energy, particularly with wind and solar now offering more affordable forms of renewable electricity that can be used to produce hydrogen.
These global megatrends pair with four ACES trends that are changing the landscape in mobility: Autonomy, Connectivity, Electrification and Shared Mobility. In fact, if you look back 100 years to the first real disruption of mobility, when we shifted from horse and buggy to internal combustion engines and vehicles, that transformation spawned a whole new paradigm with an ecosystem of cars, buses, trucks, roads and highways, parking lots, dealerships, service centers, gas stations and then, of course, traffic congestion and pollution as a result. Now we believe mobility is at its second greatest transformation, with electrification as the key of the four ACES technology trends that will enable zero-emission transportation. Going forward, mobility will be safer, cleaner, more convenient and cheaper.
"The value proposition for fuel cells is strongest in heavy duty motive applications, as fuel cells offer unique value propositions with zero emissions from the tailpipe, long range and fast refueling."
In the space of just a few years, the industry has made good progress. There are now about 15,000 fuel cell passenger cars on the roads, 25,000 fuel cell forklifts and 5,000 fuel cell buses and commercial trucks operating in the field. At Ballard, we focus on the heavy-duty motive markets of bus, truck, rail and marine. This is because the value proposition for fuel cells is strongest in heavy duty motive applications, as fuel cells offer unique value propositions with zero emissions from the tailpipe, long range and fast refueling. In addition, because many of the use cases in heavy duty motive rely on centralized depot refueling, the barrier to entry for fueling infrastructure is lower than in the passenger car market, which needs a distributed hydrogen refueling infrastructure. Finally, we are also addressing the disproportionate share of emissions the heavy-duty market represents. For example, 4% of vehicles in California are commercial trucks, but they disproportionately cause 25% of greenhouse gas emissions in the state’s mobility segment. That is why we are focusing on heavy-duty motive as the key market area for initial penetration of fuel cells.
If you look at trucking as an example, delivery of goods is estimated to grow 40% by 2050. We can’t have all of these new delivery trucks emitting. Interesting, labor comprises a significant portion of costs in this business. But with autonomy, we have a roadmap to dramatically reduce the cost of trucking through automation and electrification. Since these applications require hundreds of kilometers and many hours per day, I think we will see a convergence of these technologies that that will favor fuel cells.
In the passenger car market, there is an increasing number of cars connected to shared mobility platforms in the urban environment. So rather than owning a car, we will have Mobility as a Service (MaaS). This means the next generation will simply use their phones for pick-up and delivery from point A to point B in a driverless electric vehicle, rather than cause car pollution. Today, a typical car is used just one hour a day with around 1.5 passengers per five seats, so the utilization rate is under 2%. In the future, we expect autonomous shared mobility platforms to reach a very high utilization rate, potentially as high as 23 hours per day. Since these vehicles will potentially cover hundreds of kilometers per day, they will need the long range and fast refueling that fuel cells can provide.
"I believe we are in the first second of a 24-hour day in the cost reduction journey."
In my opinion there has been more disruption, momentum and understanding of the opportunity and value proposition presented by fuel cells in the last 12 months than in the prior 12 years. Already we’ve seen extraordinary improvement in durability, reliability, power density and efficiency, just as we have seen dramatic cost reductions even without the benefit of high volumes.
However, I believe we are in the first second of a 24-hour day in the cost reduction journey. In the last five years we have seen a two-thirds cost reduction, all through design improvements. I would expect to see another two-thirds cost reduction as volumes increase in the coming five to ten years, such as we saw with wind and solar. Once the cost of fuel cell vehicles comes down, we should see commercial adoption without subsidies. I believe we will also see high power density above 5 kilowatts per liter and over 50,000 hours of durability, which is critical to a number of applications, such as the Class 8 fleet and delivery vehicles that can travel up to 200,000 kilometers per year.
Regulations will notably favor zero-emissions going forward. For example, a number of cities have defined roadmaps to restrict or outright ban diesel or internal combustion engines, while several countries aim to ban combustion engines by 2030-40. Many cities will also have zero-emission buses as early as 2025. One of the most underreported and underappreciated developments is that the EU implemented its first emissions regulations on Class 8 trucks in February: Class 8 trucks must reduce their emissions by 15% by 2025 and 30% by 2030. In 2022, the EU will extend these regulations to cover buses and other heavy-duty trucks. Similar regulations are being contemplated in California. As a result, truck OEMs are now working towards decarbonization and zero emissions. Both battery and fuel cells will work together as power train options going forward.
"Infrastructure scaling becomes complex and potentially cost prohibitive on the battery side, particularly when you consider the impact of scale on the electrical grid. In contrast, hydrogen is very cost effective to scale."
First of all, it is clear today that these technologies are highly complementary. Some use cases favor fuel cells and others favor battery technology. For vehicles above seven tons and travel distances over 100 kilometers a day, fuel cells offer a better value proposition. The same applies to infrastructure scaling. It is one thing to charge a battery electric car in your garage, but it is quite another thing to charge a large fleet of cars, buses or trucks. Infrastructure scaling becomes complex and potentially cost prohibitive on the battery side, particularly when you consider the impact of scale on the electrical grid. In contrast, hydrogen is very cost effective to scale.
Most hydrogen today comes from natural gas reforming, but there is an extraordinary opportunity here given the low cost of renewables. Particularly when talking about stranded or curtailed renewables, such as wind or solar, the ability to produce hydrogen in my mind is compelling. Some regions with immense renewable resources, such as Australia, could begin producing and exporting hydrogen to other markets for industrial applications, mobility or energy. Countries like Canada with reserves of natural gas could also become leaders in the production of hydrogen using carbon sequestration technologies. There is a lot of opportunity on that front, and I think it enhances energy security by reducing our dependence on oil reserves for legacy combustion engine vehicles or raw materials for batteries. In these areas, policymakers need to think about the supply chain and ethical sourcing. By contrast, I don’t see those issues at this time in the fuel cell industry, neither with generating hydrogen nor manufacturing fuel cells.
"In terms of our environmental footprint, we aim to offer the lowest possible emissions of any technology from cradle-to-cradle (distinct from cradle to grave) by using green hydrogen in our fuel cells."
As a storage medium for energy, hydrogen is the missing link to a sustainable society. It can store energy not just for hours and days, but for much longer periods of time. It can then be used as fuel to decarbonize energy, industry and mobility. One area where we need more investment is high-volume electrolysis, which will allow us to generate hydrogen using renewable power. We have an opportunity to generate renewable or green hydrogen, while developing fuel cell technology that runs on this hydrogen. Interesting our fuel cells enable reuse and recycling after their initial cycle life. They are 95% recyclable – what I call cradle-to-cradle instead of cradle-to-grave. I think another issue batteries will face is what to do with them after use. Some groups are looking at recycling and second-life opportunities for batteries, but that remains to be validated. The plates we use at Ballard are recyclable and completely reusable. In terms of our environmental footprint, we aim to offer the lowest possible emissions of any technology from cradle-to-cradle (distinct from cradle to grave) by using green hydrogen in our fuel cells.
"We need to simplify regulations, lower cost and make sure hydrogen fuel cell technology is applicable in all global markets."
The first obstacle is consumer acceptance, which will come when people understand the range and refueling time of fuel cell vehicles, as well as the comfort level of driving a quiet, low-vibration vehicle – in reality though, unlike batteries, fuel cell vehicles don’t require a change in consumer behaviour. Next is the global harmonization of vehicle standards: we need to simplify regulations, lower cost and make sure hydrogen fuel cell technology is applicable in all global markets. Third is the fact that consumer vehicles will require significant investment to build distributed refueling infrastructure. Today, there are around 380 refueling stations globally, including over 100 in Japan, over 70 in Germany and around 50 in California, where you can drive from San Diego to San Francisco in a fuel cell car with no problem. However, there is still more work to be done on expanding and lowering the cost of refueling infrastructure. A key way to do that is to lower cost by scaling hydrogen generation and utilization of the hydrogen refueling infrastructure.
"We must take action immediately, but I think we’re better equipped today to take action than ever before."
I think this is the most exciting time in the history of energy and mobility, where you have regulators, governments, corporations and individuals spurned on like we’ve never seen before. Sustainability is a global trend that is also converging with other trends like electrification. Some paint a bleak picture about our ability to meet the 2 degree or 1.5 degree temperature rise scenario. We must take action immediately, but I think we’re better equipped today to take action than ever before. I think we’ve made a significant turn where corporations and investors are now focused on sustainability, unlike 20 years ago. This will also help drive required policy and market changes.