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The future of the car: electric or hydrogen?

25.2.2021
The future of the car: electric or hydrogen?

Is electricity or hydrogen better? When it comes to the impact of mobility on climate, this question has been much debated recently.  To answer it, we must understand which technology makes sense in different fields and how to make the energy transition happen.

Felix Matthes is the Research Coordinator for Energy Policy and Climate Protection at Berlin’s Institute for Applied Ecology (the Öko-Institut). His research focuses on decarbonisation strategies, coal phase-out, emissions trading and regulation of the electricity market. He was also a member of the German government’s Coal Commission and is currently a member of the National Hydrogen Council. Clearly an expert on the subject. And a man with pretty clear views.

“In terms of the target of becoming carbon neutral by 2050, if we consider emissions trading then the European Union is on track with its interim targets for 2030. This applies to CO₂ emissions from the energy sector, energy-intensive industry and domestic European air traffic. However, the same does not apply to other sectors. In transport, buildings and agriculture, the situation is less positive because emissions trading is not in place. In these sectors, government incentives for climate-friendly cars and the modernisation of buildings are key,” explains Matthes. “We should link the running costs of vehicles and heating to CO₂ emissions more closely. We need a European emissions trading system for petroleum products too.”

Renewable sources

The key to reaching a climate neutral supply of energy is electricity generated from renewable sources. That means a dramatic increase in the share of renewable energies. To do this, we must develop the areas available for wind power and solar energy more rapidly and intensely.

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Electricity and hydrogen

In economic terms, the cheapest climate-neutral energy source is electricity. However, as mentioned, it must come from renewable sources. Hydrogen can also be a pillar of the energy transition, although it will not be cheap – even in the long term. There are three reasons for this: conversion losses, investment costs, and transport costs. “The best solution? As much electrification as possible, as much hydrogen as necessary. In the case of cars, we should have the courage to make a clear decision and give absolute priority to electric mobility. It makes no sense here to spend money on more experiments,” says Matthes. “In other sectors however, such as heavy transport, the best solution has not yet been determined. That’s where we need to organise a research process. In contrast, hydrogen is indispensable in the iron and steel sector or the chemical industry.”

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Alternative solutions

Matthes also has a view on synthetic fuels – he thinks they could be used in sectors where there is no alternative, such as air travel and parts of shipping, or in other small niches. But this is not an option for large-scale solutions. In the long term, the conversion technologies are too inefficient and costly.

A realistic path

Sustained commitment is the only way to get results. “A practical example? The charging infrastructure for electric cars is growing rapidly. In most cases it’s in line with current usage, but we need to intensify our efforts to support the development of e-mobility. This doesn’t just apply to the automotive sector, but across the board. For example, we also need to do more in the case of heating networks. At the same time, the use of hydrogen in industry should be ramped up.”

The social issue

Matthes says we come from a system with medium investment costs and high operating costs – be it cars, power plants or steel mills. In the future, however, initial costs will be more significant. Over its lifetime, new technology usually brings cost savings. “But how do you deal with people who don’t have the initial investment funds needed to save money over time? This is a problem that has not been addressed so far. In the case of cars, leasing and rental models can make a contribution. Another option is to reduce the initial cost of the loan by absorbing a part of it into charging costs, paying a manageable instalment of the loan off each time the car is charged. This would benefit from electricity being much cheaper than gasoline. Such models for spreading the initial capital over time will be a big topic.”

SourceVolkswagen AG