Cost and Impacts of Policies - Energy.gov · Scenario1 Station Infr. Scenario1 Fuel Subsidy...

Cost and Impactsof Policies

David L. GreenePaul N. Leiby

ORNLDavid C. Bowman

Econotech

2010-2025 Scenario Analysis for Hydrogen Fuel Cell Vehicles and Infrastructure

January 31, 2007Washington, D.C.

Plan of presentation:

Brief review of HyTransCalibration of FCV learning, scale, technological changeScenarios and PoliciesRESULTS

2010-2025 and long-run impacts2010-2025 Government/Industry CostsHydrogen production, infrastructure & cost

HyTrans merges the early transition scenarios with longer-term policies to simulate durable transitions.

In the early transition the model is constrained to meet the scenario sales targets.

Estimates costs of vehicles and hydrogen, infrastructure investments and implicit subsidies.Estimates benefits of learning-by-doing, scale economies, fuel availability and market diversity.2010 DOE targets met, further progress beyond 2010.

In the later period (2025-2050) HyTrans is run in unconstrained optimization mode.

Additional policies may be needed depending on the scenarioCompetition with other advanced technologiesOil & energy prices

Benefits reduced oil dependence Near elimination of GHG emissions but only with strong GHG policies

HyTrans integrates supply and demand in a dynamic market model to 2050.

H2AHydrogen ProductionHydrogen Delivery

PSAT & ASCM Fuel economy2010 cost goals

NMNL Vehicle Choice ModelFuel availabilityMake & model diversityPrice, fuel economy, etc.

Vehicle ManufacturingScale EconomiesLearning-by-doing

GREET GHG emissionsCalibrated to NEMS AEO 2006 through 2030

A new vehicle cost model was calibrated with data provided by OEMs.

Independent tech-progress, learning-by-doing and scale economies.Vehicle Price = Glider + Long-run DrivetrainCost x Technology(time) x Learning-by-doing(stock) x Scale(volume)Technology calibrated to DOE goalsLearning & Scale calibrated to average of manufacturers’ cost estimates.

Technology cost and performance assumptions are based on the PSAT/ASCM analysis by Rousseau, Sharer, Pagerit & Das, 2005. In the “Rapid” case, DOE 2010 goals are met.

DOE 2010 Goals Average Intermediate Goals

Fuel Cell System$/KW

$45 $60 $75

Hydrogen Storage$/kWh

$4/$10 - -

Motor $/kW $4 $4.50 $5

Batteries $/kW $20 $25 $30

Gasoline ICE $/kW $21 $22 $23

Diesel ICE $/kW $21 $24 $27

Component efficiency assumptions also reflect a combination of DOE 2010 program goals and judgment (Intermediate case).

DOE 2010 Goals Average Intermediate Goals

Fuel Cell 60% 57.5% 55%

Gasoline ICE 38% 36.5% 35%

Diesel ICE 45% 42.5% 40.5%

Hydrogen ICE 42% 40% 38%

Learning is exponential and asymptotic to the program goals, scale has a constant elasticity of -0.38.

1000

1000

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2000

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0000

1000 20

00 4000 80

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0

3200

064

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1280

0025

6000$0

$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000

$100,000

Pro

duct

ion

Cos

t

Knowledge Stock Scale Volume

Fitted Scale and Learning Functions$90,000-$100,000$80,000-$90,000$70,000-$80,000$60,000-$70,000$50,000-$60,000$40,000-$50,000$30,000-$40,000$20,000-$30,000$10,000-$20,000$0-$10,000

In all scenarios FCV costs decline dramatically with reasonable correspondence to the average of the manufacturers’ estimates.

Fuel Cell Vehicle Retail Price as a Function of Learning, Scale and R&D in Scenarios 2 & 3

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2011 2013 2015 2017 2019 2021 2023 2025

RPE

of D

rivet

rain

+ G

lider

Assumed CostPredicted 2Predicted3

OEM-basedScenario 2Scenario 3

A closer look shows that only scenario 3 meets the long-term price target by 2025.

Fuel Cell Vehicle Retail Price as a Function of Learning, Scale and R&D in Scenarios 2 & 3

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

2015 2017 2019 2021 2023 2025

RP

E of

Driv

etra

in +

Glid

er

Assumed CostPredicted 1Predicted 2Predicted3

Twelve 2010-2025 cases reflect different policy scenarios, energy prices and degrees of technological success.

POLICIESFUTURES

0 1 2 3Fuel Cell Success+ High Oil Price X X X XFuel Cell Success+ Reference Oil Price X X X XAll Technologies Success+ High Oil Price X X X XCases run with and without C policy.

Time Path of Infrastructure Development(Cumulative Number of Forecourts, LA)

(HytrV262e)

Total Installed H2 Forecourts-LA

0200400600800

100012001400

2010 2015 2020 2025

Stat

ions

Option1 LAOption2 LAOption3 LA

Time Path of Infrastructure Development(Cumulative No. Forecourts, Rest of US)

(HytrV262e)

Total Installed H2 Forecourts -Rest-US

01000200030004000500060007000

2010 2015 2020 2025

Stat

ions

Option1 RestUSOption2 RestUS

Option3 RestUS

Time Path of Infrastructure Development(Cumulative No. Forecourts, ALL US)

(HytrV262e)

Tota l Insta lled H2 Forecourts -All US

0100020003000400050006000700080009000

2010 2015 2020 2025

Stat

ions

Scenario1 A ll U SScenario2 A ll U S

Scenario3 A ll U S

Note that by 2030, the 8,000 stations in

scenario 3 gets down the distributed SMR

learning curve to $2.85/kg, while the 4,000 stations in

scenario 2 get only to $3.30.

Policy Case 1 Incremental cost share of vehicle (50/50)

“Fuel Cell Success” technology assumptionsFCV incremental vehicle production costs (RPE vsHEV) shared 50% through 2025Distributed SMR station capital cost starts at $3.3 million, declining to $2.0 million

Cost share $1.3 million/station, 2012-2017Cost share $0.7 million/station, 2018-2021Cost share $0.3 million/station, 2022-2025

H2 fuel Subsidy$0.50/kg through 2018Declines to $0.30/kg by 2025

In general, vehicle subsidies far outweigh station and fuel subsidies through 2025. In scenario 1, annual costs peak at $1B, cumulative costs reach $8B.

Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r

Scenario1 Station Infr.Scenario1 Fuel SubsidyScenario1 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success

0

2

4

6

8

10

12

14

16

18

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario1 Station Infr.

Scenario1 Fuel Subsidy

Scenario1 Vehicles

In scenario 2, vehicle subsidies decline to almost $0 by 2025 as long-run cost targets are met.

Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r Scenario2 Station Infr.Scenario2 Fuel SubsidyScenario2 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success

0

2

4

6

8

10

12

14

16

18

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario1 Station Infr.

Scenario1 Fuel Subsidy

Scenario1 Vehicles

In scenario 3 vehicle subsidies decline to $0 in 2023 but fuel and station subsidies rise.

Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r Scenario3 Station Infr.Scenario3 Fuel SubsidyScenario3 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success

0

2

4

6

8

10

12

14

16

18

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario3 Station Infr.

Scenario3 Fuel Subsidy

Scenario3 Vehicles

Policy Case 2 – Government cost shares vehicle costs 50/50 to 2017 and provides tax credits after 2018

“Fuel Cell Success”FCV vehicle production costs (RPE vs HEV) shared

50% total vehicle cost through and including 2017Tax credit covers 100% of incremental cost 2018 to 2025

Station capital cost starts at $3.3 million, declining to $2.0 million

Cost share $1.3 million/station, 2012-2017Cost share $0.7 million/station, 2018-2021Cost share $0.3 or 0.2 million/station, 2022-2025

H2 fuel Subsidy$0.50/kg through 2018Declines to $0.30/kg by 2025

Tax credits covering the incremental costs of FCVs raise the max annual cost in Case 1 to $2B.

Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success, Policy Case 2

0

1

2

3

4

5

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r Scenario1 Station Infr.Scenario1 Fuel SubsidyScenario1 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success, Case 2

0

5

10

15

20

25

30

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario1 Station Infr.

Scenario1 Fuel Subsidy

Scenario1 Vehicles

In scenario 2, annual costs peak at $4B, cumulative costs reach $25B.

Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success, Policy Case 2

0

1

2

3

4

5

2010 2015 2020 2025

Billi

ons

of 2

004

Dol

lars

/Yr Scenario2 Station Infr.

Scenario2 Fuel SubsidyScenario2 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success, Case 2

0

5

10

15

20

25

30

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario2 Station Infr.

Scenario2 Fuel Subsidy

Scenario2 Vehicles

In scenario 3, annual costs reach almost $5B and cumulative costs exceed $25B.

Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success, Policy Case 2

0

1

2

3

4

5

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r Scenario3 Station Infr.Scenario3 Fuel SubsidyScenario3 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success, Case 2

0

5

10

15

20

25

30

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario3 Station Infr.

Scenario3 Fuel Subsidy

Scenario3 Vehicles

Policy Case 3 – Additional tax credits are applied as market introduction incentive.

“Fuel Cell Success”FCV vehicle production costs (RPE vs HEV) shared

50% total vehicle cost through and including 2017Tax credit cover 100% coverage of incremental cost 2018 to 2025$2000 additional tax credit from 2018-2025

Station capital cost starts at $3.3 million, declining to $2.0 million

Cost share $1.3 million/station, 2012-2017Cost share $0.7 million/station, 2018-2021Cost share $0.3 million/station, 2022-2025

H2 fuel Subsidy$0.50/kg through 2018Declines to $0.30/kg by 2025

In policy case 3, the $2K subsidy after 2017 keeps government expenditures at $2B/year.

Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success, Policy Case 3

0

1

2

3

4

5

6

2010 2015 2020 2025

Bill

ions

of 2

004

Dolla

rs/Y

r Scenario1 Station Infr.Scenario1 Fuel SubsidyScenario1 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 1, Fuel Cell Success, Case 3

05

1015202530354045

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario1 Station Infr.

Scenario1 Fuel Subsidy

Scenario1 Vehicles

In scenario 2 annual costs do not exceed $5B.

Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success, Policy Case 3

0

1

2

3

4

5

6

2010 2015 2020 2025

Bill

ions

of 2

004

Dolla

rs/Y

r Scenario2 Station Infr.Scenario2 Fuel SubsidyScenario2 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 2, Fuel Cell Success, Case 3

05

1015202530354045

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario1 Station Infr.

Scenario1 Fuel Subsidy

Scenario1 Vehicles

In scenario 3, annual expenditures stay near $5B/year for about 8 years, and cumulative costs exceed $45B.

Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success, Policy Case 3

0

1

2

3

4

5

6

2010 2015 2020 2025

Billi

ons

of 2

004

Dolla

rs/Y

r

Scenario3 Station Infr.Scenario3 Fuel SubsidyScenario3 Vehicles

Cumulative Cost Sharing and Subsidies, Scenario 3, Fuel Cell Success, Case 3

0

5

10

15

20

25

30

35

40

45

2010 2015 2020 2025

Bill

ions

of 2

004

$ (U

ndis

coun

ted) Scenario3 Station Infr.

Scenario3 Fuel Subsidy

Scenario3 Vehicles

Nearly all hydrogen through 2025 is produced at distributed SMR stations, which experience learning-by-doing.

Price of Hydrogen Including Tax and $0.50/kg Subsidy

$2.30

$2.40

$2.50

$2.60

$2.70

$2.80

$2.90

$3.00

$3.10

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

$/kg

Scenario 1, Distr. SMR

Scenario 2, Distr. SMR

Scenario 3, Distr. SMR

What about reference oil prices and other technologies’ success?

Neither has a significant impact on costs through 2025.

When all technologies succeed, government costs are $2B to $5B higher in Case 1, $2B to $10B higher in policy Cases 2 & 3 because the HEV is cheaper.Reference oil price assumptions increase costs by $1B or less.

After 2025 the differences are very significant.

What happens after 2025?

If no policy scenarios to 2025, there is not a plausible business case for FCVs.If “Fuel Cell Success” + High Oil Prices, all three policy scenarios lead to a sustainable transition.If “Fuel Cell Success” + Reference Oil Prices, scenario 3 can still lead to a 30% market share by 2050.

Even with “Fuel Cell Success” and High Oil Prices, without the transition scenarios the business case for a transition before 2050 is not there.

New Vehicle Market Share

0%10%20%30%40%50%60%70%80%90%

100%

2005 2015 2025 2035 2045

CPVGASOCPVH300VCPVH2FC

Gasoline Hybrid

Advanced Gasoline

H2 FCV

Even if oil prices are not high, there is a competition between fuel cells and hybrids for market share (scenario 3).

New Vehicle Market Share

0%10%20%30%40%50%60%70%80%90%

100%

2005 2015 2025 2035 2045

CPVGASOCPVH300VCPVH2FC

Gasoline Hybrid

H2 FCV

Advanced Gasoline

Scenario 1 may be adequate to trigger a transition for the “FC Success” + High Oil Prices case.

New Vehicle Market Share

0%10%20%30%40%50%60%70%80%90%

100%

2005 2015 2025 2035 2045

CPVGASOCPVH300VCPVH2FC

H2 FCVGasoline HybridAdvanced Gasoline

Scenarios 2 & 3 create greater market share options.

New Vehicle Market Share

0%10%20%30%40%50%60%70%80%90%

100%

2005 2015 2025 2035 2045

CPVGASOCPVH300VCPVH2FC

Advanced Gasoline

Gasoline Hybrid

H2 FCV

Carbon price rising to $90/MT CO2 by 2025.Fuel Cell Success, High World Oil Prices, Scenario 2.

H2 Production by Production Technology and Distribution Mode (Billions kg/yr)

0

10

20

30

40

50

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

SMR w/o Seq.

Coal w/o Seq.

Biomass w/o Seq.

SMR w/ Seq.

Coal w/ Seq.

Biomass w/ Seq.

Wind

Refineries

SMR Dist.

Elec. Dist.

Pipeline

Tube Truck

Cryo Truck

Serious climate policy is needed to get to “clean” hydrogen.

Hydrogen pathways, production AND delivery are sensitive to GHG policy.

Delivered costs are nearly the same for several production processes.C emissions in delivery are significant due to electricity use in compression or liquefaction.This makes fuel cycle C emissions dependent on C-intensity of electricity generation.H pathways thus depend on effective price of C and rest of energy sector response.

Several policy pathways can produce a transition to hydrogen.

FC technology success insures transition will proceed without further policy intervention beyond 2025.All technologies succeed also successful with high world oil prices.Transition policy is required.

Costs are feasible - $10B to $50B over 14 yrs.HyTrans is a complex model including many assumptions that are uncertain. This calls for,

Sensitivity analysis of key uncertaintiesContinuous monitoring of the effectiveness of the transition

GHG or Energy Security policies not essential to making the transition but strong GHG policy is essential to insuring hydrogen is produced w/o carbon emissions.Success of competing technology matters a lot.The price of oil matters in the transition but it is critical inthe long run (although strong policies can substitute).

THANK YOU.

The DOE 2010 Goals scenario estimates higher MPG, especially for electronic drive systems.

PSAT Fuel Economy Estimates for Advanced Vehicles(Base LDV = 24.0 MPG)

31.7 33.4

46.1

58.2

33.4

51.9 49.8

62.9

28.331.9

39.5

48.9

31.9

43.6 42.7

52.1

0

10

20

30

40

50

60

70

AdvancedGasolineSI ICE

AdvancedDiesel CI

ICE

AdvancedGasoline

HEV

AdvancedDieselHEV

FutureHydrogen

SI ICE

FutureHydrogen

HEV

FutureGasoline

FCV

FutureHydrogen

FCV

Com

bine

d M

PG

HIGH AVE

Conditions and Policies Applied – Case 4: –Case 1 + Carbon Tax in Succession Period (2056-2050)

All results for “Fuel Cell Success” CaseVehicle cost decline with an “asymptotic learning” model

Mature learning achieved by cumulative vehicle production of ~5 million vehicles

FCV incremental vehicle production costs (vs HEV) shared 50% through 2025Station capital cost starts at $3.3 million, declining to $2.0 million

Cost share $1.3 million/station, 2012-2017Cost share $0.7 million/station, 2018-2021Cost share $0.3 million/station, 2022-2025

H2 fuel Subsidy of $0.50/kg through 2018Declines to $0.30/kg by 2025

C-Tax = $50/ton CO2, phased in (To be determined)

Time Path of Infrastructure Development(Cumulative Number of Forecourts, NYC)

(HytrV262e)

Total Installed H2 Forecourts -NYC

0100200300400500600700

2010 2015 2020 2025

Stat

ions

Option1 NYCOption2 NYCOption3 NYC

Carbon price rising to $90/MT CO2 by 2025Fuel Cell Success, High World Oil Price, Scenario 3.

H2 Production by Production Technology and Distribution Mode (Billions kg/yr)

0

10

20

30

40

50

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

SMR w/o Seq.

Coal w/o Seq.

Biomass w/o Seq.

SMR w/ Seq.

Coal w/ Seq.

Biomass w/ Seq.

Wind

Refineries

SMR Dist.

Elec. Dist.

Pipeline

Tube Truck

Cryo Truck

Serious climate policy is needed to get to “clean” hydrogen.