A cost benefit analysis of fuel cell electric vehicles.

Summary This study develops a consistent framework to compare FCEV with gasoline ICE (ignition combustion engine) and applies this framework to the German market over the period 2015-2050. As such it provides for: - The formulation of a proper cost benefit analysis, including the definition of the abatement cost for the hydrogen technology. - The simulation of the results under various technological and cost assumptions. - The identification of the major conceptual issues to facilitate analytical developments. The sources used in the analysis are based on an update of previous industry studies. The main conclusion is that FCEV could be a socially beneficial alternative for decarbonizing part of the projected German car park at the horizon 2050. The corresponding abatement cost would fall in the range of 50 €/t CO2 to 60 €/t CO2. This range is higher than the current estimate for the normative cost of carbon as expressed in Quinet (2009 and 2013), which is around 30€/t in 2015. Still the gap is not out of hand. We identify the market and cost conditions that would shorten the gap. The methodology used in this study could be expanded to integrate two pending issues noted in the literature for the successful deployment of FCEV: - Making the deployment for FCEV endogenous and depending on the public and private instruments that could induce the decreasing of costs and the acceptance of the FCEV technology by consumers. - Designing an appropriate institutional framework to promote cooperation for manufacturing FCEV, producing carbon free H2 and investing in the distribution of H2. The initial sunk costs necessary for investment cannot be recouped through pure market equilibrium behavior. This study already provides an order of magnitude to quantify these issues.