This thesis focuses on the transportation sector and its role in emissions of carbon
dioxide (CO2) and conventional pollutant emissions. Specifically, it analyzes the
potential for hydrogen based transportation, introducing this technological option within
a computable general equilibrium (CGE) model of the economy. The transportation
sector accounts for an important part of CO2 emissions and analyses that have imposed
carbon limits on the economy have shown relatively limited reductions in transportation
emissions with current technology, thus the interest in technological options that would
make it economic to reduce emissions. The US Federal government has been particularly
focused on developing fuel cell technology for vehicles that, when powered by hydrogen,
would offer a technological solution that potentially eliminates emissions of both CO2
and other conventional pollutants from the transportation sector. This work examines the
economic conditions under which such a technology might successfully compete in the
market.
The thesis begins with an overview of the fuel-cell vehicle technology and the
technologies used to produce hydrogen. This review serves as a basis for modeling this
technological option. The main conclusions are the following:
• Under market conditions and in the absence of climate policy that would price
carbon, hydrogen fuel cell vehicles penetrate the USA market when the cost of
vehicles is no more than 1.30 times the cost of conventional vehicles, and assuming
hydrogen can be produced at 1.30 times the 1997 price of gasoline. Even if this cost
target is reached and hydrogen vehicles enter the market, CO2 emissions for the US
are reduced only very slightly because coal is used to produce the hydrogen and there
is no incentive to sequester the carbon when the hydrogen is produced.
• The existing fuel tax structure in Europe strongly favors the entry of hydrogen
transportation, even when hydrogen is taxed at the same rate as gasoline. This is
because the hydrogen vehicles are more efficient, and assuming the tax rate is per unitof energy, this implies a lower tax per vehicle mile traveled. Entry is possible in the
middle of the century when hydrogen vehicles are twice as expensive as conventional
vehicles when the fuel taxes based on energy content of the fuel are equal. If
hydrogen were not taxed at all, then hydrogen vehicles could enter if they were less
than four times as expensive as conventional vehicles but this would mean European
governments would lose all fuel tax revenue.
• An emissions constraining policy would favor hydrogen transportation allowing US
penetration with vehicle costs up to 1.7 times conventional vehicle costs.
• The availability of biomass fuels (e.g. ethanol) is a strong competitor, which can
prevent or delay hydrogen entry. When the biomass fuel option was removed,
hydrogen vehicles entered 10 years sooner.
Overall, hydrogen technology faces significant technological hurdles. Cost-reductions
of more than an order of magnitude are needed before hydrogen technology penetrates
the market. The vehicles must also obviously offer comparable or improved features
compared with existing vehicles, and the hydrogen fuel must be conveniently and safely
supplied. Even if significant cost reductions occur, the technology may face competition
from other technologies such as ethanol. Finally, if hydrogen technology is able to
penetrate the transportation sector, CO2 emissions will not be reduced unless a policy
either provides price incentives or mandates the sequestration of emissions from the
hydrogen producing plants.