Study: ‘Hobbled by High Cost, Hydrogen Fuel Cells Will Be a Modest $3 Billion Market in 2030’

Capital cost, not hydrogen supply, will limit adoption to a mere 5.9 GW, dashing dreams of a revolutionary energy future, says Lux Research

As I’ve said for a decade now, hydrogen fuel cells are not going to be a significant, cost-effective CO2 reducer. In a 2005 journal article, “The car and fuel of the future,” I noted that:

Using fuel cell vehicles and hydrogen from zero-carbon sources such as renewable power or nuclear energy has a cost of avoided carbon dioxide of more than $600 a metric ton, which is more than a factor of ten higher than most other strategies being considered today….

A 2013 study by independent research and advisory firm Lux Research finds that despite billions in research and development spent in the past decade, “The dream of a hydrogen economy envisioned for decades by politicians, economists, and environmentalists is no nearer, with hydrogen fuel cells turning a modest $3 billion market of about 5.9 GW in 2030.”

Hydrogen fuel cells won’t be a major contributor to solving the problem of manmade climate change until the market is 100 times larger, which simply won’t happen fast enough to matter to the climate fight, even in the unlikely event they ever become a cost-effective CO2 reducer.

The Lux study, “The Great Compression: The Future of the Hydrogen Economy” (client subs. req’d),  finds that “hydrogen demand from fuel cells will total 140 million kg in 2030, a meager 0.56% of global hydrogen demand.” Looks like I’m going to win my big hydrogen bet!

Here’s the rest of the news release from Lux:

Although the cost of hydrogen impacts fuel cell market adoption, hydrogen fuel accounts for only 35% of the total cost of ownership (TCO) for stationary applications and 21% of the TCO for mobile applications, with fuel cell capital costs and membrane replacement costs making up most of the difference.

“The hydrogen supply chain is not the most critical bottleneck for fuel cell adoption,” said Brian Warshay, Research Associate and the lead author of the report titled, “The Great Compression: the Future of the Hydrogen Economy.” “High capital costs and the low costs of incumbents provide a nearly insurmountable barrier to adoption, except in niche applications,” he added. In order to determine the economic viability and potential of an expansive hydrogen economy in the energy sectors, Lux Research conducted a detailed analysis of the costs of hydrogen generation, distribution, storage, and consumption in an effort to find the greatest constraints and opportunities. Among their findings:

  • Hydrogen generation accounts for less than 33% of the cost at the pump. The costs of hydrogen compression, storage, and distribution make up the majority of the cost of hydrogen, offering the greatest opportunities for improvement and innovation.
  • PEM cells will have a $1 billion stationary market. Proton exchange membrane (PEM) fuel cells for telecom power and backup will reach $1 billion in 2030, while fuel cells of all types for residential, commercial and utility generation will not prove cost-effective.
  • Mobile applications will be worth $2 billion. PEM fuel cells will reach $2 billion on the backs of forklifts and light-duty vehicles, while buses will remain miniscule. A robust hydrogen vehicle fueling infrastructure is necessary but ultimately insufficient to overhaul the passenger vehicle market.
  • Hydrogen demand from fuel cells will total 140 million kg in 2030, a meager 0.56% of global merchant hydrogen demand across all industries.

It is long past time to end the hype about hydrogen.

Related Post:

23 Responses to Study: ‘Hobbled by High Cost, Hydrogen Fuel Cells Will Be a Modest $3 Billion Market in 2030’

  1. Paul Klinkman says:

    Agreed. Hydrogen production can do approximately the same thing as photosynthesis. Both produce a fuel that can be burned with oxygen. Both are, if used properly, an atmospheric closed cycle. With carbon, plants turn carbon dioxide and rainwater into hydrocarbons, which are burned to give carbon dioxide and humidity. With hydrogen, an artificial device turns rainwater into hydrogen, which is burned to give humidity. The difference is that biodiesel is naturally stable in the fuel tank.

  2. Sasparilla says:

    Joe is definitely going to win his bet. There is still a huge amount of government money being poured into this venture however (European, Japanese and U.S.) – for vehicle research…it should be pointed out Oil companies have always been big boosters of Hydrogen Fool Cell vehicles.

    The proponents now talk about 2015 as the year we’ll see “production” vehicles available for sale in the U.S. from several manufacturers ($50k prices are thrown about). Most are talking about using Hydrogen derived from Natural Gas (which has risen ~100% in price from Dec 2011) as the source – since that would make it less than gasoline (but that has probably changed at this point).

    My personal guess is that they will be “production” like the Honda Clarity was (not really a production vehicle, only a couple of hundred made and only leased) – but there is alot of talk & money going on about them.

  3. Anderlan says:

    Electricity, the energy that was, and is, and that is to come.

  4. Thank you, Joe, for exposing the delusional pretensions of the hydrogen lobby in your excellent book, The Hype about Hydrogen, and here on CP. There was certainly no profit motive in authoring the book, and probably considerable blow-back from the Hydrogen Highway promoters and their dupes, so I hope somehow that your courage will be suitably rewarded.

  5. fj says:

    Just curious if using hydrogen for energy storage makes sense as described at this link?

  6. Lou Grinzo says:

    Ah, the ephemeral hydrogen economy, where the air is fresher, food tastes better, and clothes are always fresh from the dryer.

    I’m glad someone mentioned Joe’s book about hydrogen; it’s excellent, and it was my introduction to his writing.

    One key point, which I think I picked up from that book (sorry, Joe, I haven’t looked at in a long time, and it’s currently packed away thanks to a very recent move) is that we simply have to clean up our electricity supply. And if we simultaneously try to clean our transportation sector by shifting a significant portion of it to HFCVs, that will only make the electricity sector transition much harder. The number one thing we need right now in the energy/climate arena, is much better batteries. EVs (like my new Leaf) compared to HFCVs fueled with electrolysis-created hydrogen go about three times farther; we simply can’t afford to throw away that much efficiency when we’re in a rush to retire a massive number of coal and natural-gas fired power plants.

    I suspect that the hydrogen dream will no doubt live on for a while, kept on life support by stubbornly high EV batteries and gov’t grants.

  7. Ed Leaver says:

    An excellent question. It certainly makes sense if you can store the hydrogen. And there’s the rub. As Joe noted, even as is, the cost of the hydrogen electrolysis is only half the cost of transmission and storage. For commercial power generation as envisioned in your link, transmission is not a factor. Hydrogen storage is, and although there has been progress, I’ve seen no real breakthroughs there. And there is competition from other (still expensive) technologies such as pneumatic, and LightSail’s innovative phase change storage: see Thiel and Gates Get Behind Energy Storage Startup, and LightSail Patent FAQ. Pumped hydro still sees occasional deployment, but it too is expensive, and there are few suitable locations. Note that the requirements for fixed hydrogen storage differ somewhat from those for mobile. In its absence, any Really Neat new electrolysis catalysts appear (to me) to be largely a solution in search of a problem. But don’t fault them for trying: research is always good, and you never know what the future will bring.

  8. Sasparilla says:

    Seems like alot of if’s in there, but hopefully the scientists who discovered this are successful…

    Maybe Joe could look at the article and give a WAG on what it might lead to if anything…(sounds like it still won’t come close to touching natural gas for H2 generation on price which is only going up).

  9. The hydrogen economy is vapor ware. We have real solutions now. Wind, solar, EVs, biofuels… Storage. Haven’t we had enough proof to show that hydrogen’s not going to scale fast enough to deal with the problem? Maybe that’s why oil companies keep carting it out.

  10. Ed Leaver says:

    But to partially answer fj’s question, Wikipedia’s hydrogen storage page is informative. Google “hydrogen storage problems” for more resources. The field is hardly stagnant.

  11. Mulga Mumblebrain says:

    Exactly! Hydrogen, like gas fracking, nuclear, carbon capture and storage etc are all diversions designed to delay the real alternatives, solar and wind, and, hence, keep hydrocarbon profits flowing. If we invest in solar and wind, we can do the total decarbonisation job in a couple of decades, and anything else is suicidal madness.

  12. Ed Leaver says:

    The aforementioned Wikipedia link indicates that stationary hydrogen storage is quite feasible, citing one case of underground storage as a proven technique: “The round-trip efficiency is approximately 40% (vs. 78% for pumped-hydro), and the cost is slightly higher than pumped hydro”. European Renewable Energy Network (pg 189) suggests

    Hydrogen (H2) and methane (“SNG”, CH4) are options for long term energy storage, i.e. days, even weeks. Excess electricity is used to produce hydrogen from water; depending on the system design, the hydrogen can then be synthesised with carbon dioxide (CO2) to form methane. Both hydrogen and methane can be used as fuels to provide electricity in times of high power demand or when the renewable electricity supply is not sufficient, e.g. in the case of cloudy conditions and an anticyclone reducing wind output across Europe for several days.

    The main disadvantage of both storage options is the low roundtrip efficiency when hydrogen (40%) and methane (27%-35%) are produced and then re-electrified…

    Several notes: cost of pumped hydro varies widely with installation and whether it can be piggy-backed upon existing stored hydro facilities. If I read the Climate Central article correctly, the Calgary Improved Catalyst speeds up the electrolysis reaction, making it more practical. But catalysts in general do not effect the overall thermodynamics of the net reaction, so its not clear improved catalysts will improve upon the above 40% figure. But there is a lot of solar energy, and decreasing PV prices might eventually make that 40% of less concern.

    The Calgary authors make some deal of the high energy weight density of hydrogen, which for stationary storage is of little or no concern.

    The Wikipedia and EU articles mention hydrogen “pipeline storage”, which by my understanding is only feasible for pipelines that have been specifically designed for hydrogen — much of Europe but probably little of the United States apart from Hawaii. The problem being that hydrogen, being smaller, permeates much better than methane.

    Either way, large-scale energy storage of some sort will probably be required if intermittent are going to penetrate more than about 30% grid contribution — although in this regard see recent research results from Germany: ‘Linked renewables’ can avoid blackouts. The bottom line will always be cost: in continued absence of international GHG restrictions e.g. CAT or carbon-tax, the critical questions will always be (a) whether any new green energy technology can be deployed cheaper than coal, and (b) whether it can continues to be so up to the requisite 80+% grid penetration.

  13. fj says:

    Nice analysis.

    The world’s oceans will be very important in many ways and perhaps hydrogen as well; potable water absolutely.

  14. DanB says:

    My father had one thing to say about Hydrogen storage. Hydrogen molecules are like atoms, incredibly small, able to leak out of almost anything. How can you store something that’s more likely to leak than anything else except radiation?

  15. Spike says:

    Meanwhile we need to bear down on CO2 emissions from conventional vehicles – in the UK this has already shown some significant proress due to regulation, taxationand market forces:

  16. Ken Barrows says:

    I wonder why these studies seldom do a net energy analysis. Is it because it is not possible or is it because doing so would reveal the silver bullet as a limp noodle?

  17. oaw says:

    Hydrogen LEAKS.
    Through iron pipe.
    You need Stainless steel.
    And connections!
    Hydrogen leaks through most things.
    You cannot put hydrogen in a tank and
    expect to find it there later.
    It leaks!

  18. Will Fox says:


  19. Will Fox says:

    Breakthrough in hydrogen fuel production could revolutionise alternative energy market

    Researchers have discovered a way to extract large quantities of hydrogen from any plant, a breakthrough that has the potential to bring a low-cost, environmentally-friendly fuel source to the world.

    Read more –

  20. Mulga Mumblebrain says:

    Another ecological disaster in the making. Our pursuit of technological ‘solutions’ always creates new problems.

  21. MorinMoss says:

    If this process means that the hydrogen can be extracted from the biomass at the point where it’s needed that will solve the transport / compression / infrastructure problem.

    Instead, we’ll be carting around tanks of xylose and have some sort of small onboard processor that makes hydrogen on demand.

  22. fj says:

    We are mobile ecosystems made of trillions of living things and otherwise; much of which has been around for billions of years and on the nanoscale; some of which incredulously morph into grumpy old men.

  23. Spec says:

    Am I crazy if I think that hydrogen fuel cell cars have been a hoax perpetrated by the oil & gas biz to slow down electric cars and avoid regulations requiring them? At best it seems they were a way for them to use their natural gas and a way to keep service stations going since you’ll need to “fill-up” with hydrogen. But they’ve never been close to economically viable so it makes me wonder if they’ve always been an intentional boondoggle.