Measuring the environmental benefits of hydrogen transportation fuel cycles under uncertainty about external costs

Abstract

In this paper, we attempt to measure the environmental benefits of hydrogen deployment in the transportation sector. We compare the hydrogen pathways to the conventional transportation fuel cycles in terms of external costs, estimated using the results of the most accurate methodologies available in this field. The central values of performed analysis bring us ambiguous results. The external cost of the best conventional solution (“oil to diesel hybrid internal-combustion engine”) in some cases is just higher and in others just lower than that of the best fossil fuel to hydrogen solution (“natural gas to hydrogen fuel cell”). Nevertheless, by accounting for the uncertainty about external costs, we are able to remove this ambiguity highlighting that the hydrogen pathway provides significant environmental benefits ,especially in densely populated areas, assuming 100% city driving.

Introduction

Transport is one of the most fast growing sectors and it is expected to experience an accelerated expansion in the near future. This will have an extremely negative influence on the environment, especially with regard to the impact due to the emissions of atmospheric pollutants.

The deployment of hydrogen fuelled cars is considered one of the most promising options to reduce this impact. In fact, during vehicle operation, hydrogen solutions produce much lower-pollutant emissions than those from conventional fuel ones. Nevertheless, this characteristic does not mean that hydrogen is undoubtedly better than conventional fuels from the environmental point of view. Lower emissions during vehicle operation might be compensated by higher emissions in the upstream phase, especially inse of hydrogen production.

There are considerable differences between hydrogen and conventional technologies in terms of the impact of local-regional pollutant (L&R) emissions (non-green house gases (non-GHG) emissions). Such differences might be mainly due to micro-localization effects. Unlike hydrogen pathways, where emissions mostly occur in extra-urban location during hydrogen production, pollutant emissions of conventional cycles mostly are produced in densely populated urban areas during vehicle operation and remain at ground levels experiencing lower-pollutant atmospheric dilution. As a result, an increase in local-regional pollutants (SO_x, NO_x, particulate matters (PM) and volatile organic compounds (VOC)) concentration takes place in highly populated areas and leads to serious human health damage, resulting in a much higher environmental impact per unit of pollutant emitted.

In other words, while comparing hydrogen and conventional fuels, we may face a trade-off between intergenerational effects (GHG versus local-regional pollutant emissions and impacts). The climate impact (mainly due to green house gas emissions) related to hydrogen production may be larger than that one of conventional solutions, but at the same time, local-regional effects may be lower, despite higher volumes of SO_x, NO_x, particulate and VOC emissions.

As a consequence, it is impossible to make a reliable evaluation of the hydrogen environmental benefits without comparing hydrogen to conventional cycles in terms of external costs, namely measuring the extent of climate and local-regional effects in terms of monetary damage. On one hand, this underlines the importance of the methods adopted to assess the economic value of environmental externalities. On the other, it raises a crucial question of the uncertainty about the economic estimates for some important categories of impact.

The uncertainty about external-cost estimates is one of the main reasons why many authors do not recommend using cost-benefit analysis to support environmental policies. Their main argument is that the high uncertainty about external costs, especially about economic value of global warming, negatively affects the significance of comparison among different technological and organizational solutions. The overall external costs assigned to particular technology or type of energy supply might be higher or lower than that of another one depending, for example, on value assumed for marginal cost of the GHG emissions. This value can vary enormously depending on statistical uncertainty (e.g. uncertainty about physical–chemical phenomena, values of some economic parameters and, etc.), and on political–ethical uncertainty, which affects the choice of the discount rate that is of crucial importance when we deal with distant future as in case of global warming effect.

Nevertheless, when policymakers have to choose between two different solutions, (binary policy decisions, for example the choice between two power technologies), uncertainty is not considered very important generally (Rabl and Spadaro, 1999; Krewitt, 2002). In most comparisons between power plants the situation is, in fact, quite simple because there is a positive correlation between GHG and non-GHG emissions, as well as between the different non-GHG emissions. For instance, coal and oil plants emit much more CO₂ than gas-fired plants, but they also emit much more SO_x, NO_x and particulate matters. As a consequence, whatever the uncertainty about external costs is, gas-fired plants performs better than other fossil-fuel plants from environmental and perhaps social points of view. So we could assume that the environmental ranking of these technologies could be rather easily deduced even without estimating their external costs. It is quite clear; this simple reasoning cannot be applied to the comparison between hydrogen and conventional fuel transportation cycle, even if we limit to consider only their environmental performance.

Unlike different studies focused on analysis of the societal costs and adoption pathways of hydrogen buses and heavy-duty vehicles (Hormandinger and Lucas, 1996; Ally and Pryor, 2007) or of limited hydrogen fuel cycles, we are going to analyze and then to compare a wide range of hydrogen and conventional solutions based on the private mobility patterns. Thus, we examine six conventional fuel cycles and six hydrogen pathways. The environmental externalities are estimated using ExternE methodology, that is one of the most ambitious and internationally recognized attempts to assess the “as real as possible” external cost for different technologies (Krewitt, 2002). We are aware that such methodology is far from being perfect (see paragraph 3). Nevertheless, we think it could provide useful and reliable indicators when used to compare technological alternatives and when uncertainty about estimations can be internalized in employed model. Moreover, since the utilization of a specific methodology does not allow us to account for uncertainty about the choice of the model, we also use the results of meta-analysis based on the literature on the marginal damage of carbon dioxide emissions, in order to improve the reliability of our analysis.

The article is organized in the following sections: Section 2 provides technical assessment of different transport fuel cycles in terms of pollutants’ and emissions. Section 3 describes the methodology adopted to calculate external costs. Section 4 shows the results that are presented in terms of cumulative probability distributions in order to verify the impact of the uncertainty about the external costs. Section 5 sums up the main results of the study.