Hydrogen Fuel in Sweden, a Comparative Study of Five Countries

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Hydrogen Fuel in Sweden, a Comparative Study of Five Countries

Master thesis

Author: Neda Fereidounizadeh Supervisor: Professor Michael Strand Examiner: : Associate Professor Leteng Lin

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Abstract

Under the shadow of the climate change dilemma and its consequence for the human’s future, the need for secured and stable energy sources is vital.

Academia, political leaders, and influential business actors play a key role to introduce schemes to facilitate the adaptation of new technologies and energy systems improvement. Hydrogen as an energy carrier is one of the solutions to tackle environmental concerns in recent decades. However, hydrogen technology needs constant development to reduce its cost and to find production methods by which fossil fuels can be replaced by clean hydrogen.

In this study, five different countries in terms of hydrogen technology introduction, their National Strategy on Hydrogen, influential variables on hydrogen application have been investigated. Along with a comparison between five countries, the differences in policies and political incentives and their effect on hydrogen applications have been studied. Policy incentives work differently according to the various cultural norms. In some countries such as Japan financial incentives work better but in some such as Sweden non-financial incentives work well. Along with policy introduction, collaboration between policy, industry, and academia contribute to the successful introduction, diffusion, and application of new technologies.

Regarding hydrogen technology in Sweden, introduction of National Strategy on Hydrogen, a shift from hydrogen application in industry to transport section, and giving less priority to biogas and more to hydrogen fuel, applying suitable policy incentives can be helpful for Sweden to act faster and benefit more from hydrogen.

Words

Hydrogen fuel, Sweden, policy incentives, financial and non-financial incentives

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Acknowledgments

I would especially like to express my sincere gratitude to my supervisor Professor Michael Strand, without whom this thesis would not have been possible. Thanks for all your advice, professional academic manner, availability and giving me the chance to follow my ideas.

Especial thanks to my caring and loving husband, Reza, who is always by my side through all ups and downs, and my lovely parents for always supporting me, you are all the absolute best.

I also would like to thank to our daughter Nelly, who joined us when I was writing my thesis, for giving us unlimited happiness and pleasure.

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1 Introduction

The world provides a wide variety of energy sources which can be converted to a wider variety of energy carriers. Some energy sources are energy carriers too, such as fossil fuels, but some should be first converted to an energy currency which is commonly electricity. There are two main concerns about fossil fuel as its sources are finite and their negative environmental impacts.

Therefore, alternative energy sources are crucially required (Marc A. Rosen, 2016). Since 2015 and the Paris agreement, many countries have actively planned to tackle climate change which means huge efforts must be made within a relatively short time (Yuki Ishimoto, 2020).

Among all energy carriers, hydrogen is a valuable energy carrier too. It can be used as a fuel or converted to electrical energy through fuel cells. Hydrogen can be transported and stored, and it can be environmentally friendly based on the energy source that is produced from (Marc A. Rosen, 2016). Some leader and pioneer countries have released a National Strategy on Hydrogen which is a pathway and guidance on hydrogen for industries, policy makers, universities, related public and private sectors, and so on.

Considering the COVID-19 crisis, hydrogen investment can play a key role to foster sustainable growth and the creation of jobs to help countries to recover from period of the crisis (European Commission , 2020).In the next sections different aspect of hydrogen production and applications are explained.

Facts about Hydrogen

Despite the fact that hydrogen with Z= 1 is the simplest element, its chemical and physical properties are unique in many cases. Hydrogen is the most abundant element in the universe and it can be found for instance in fossil fuel, water, and biomass with advantages such as being non-poisonous, colourless, tasteless, and without odour. H2 is a gas at ambient conditions and very light. Therefore, hydrogen is difficult to be liquified. Hydrogen

diffusion speed in air is high, as a result, hydrogen will be spread fast, which contributes to safety, although the explosion range in air is broad (Kasper T.Møller, 2017). Regarding the energy aspects, hydrogen is an interesting material. Hydrogen is the smallest molecule in the world, with a very low volumetric energy density, and a very high gravimetric energy density. These facts make hydrogen an interesting material in terms of energy (Mary Helen McCay, 2020). There is a perspective, as hydrogen cleanness which is defined by three colours code: grey, blue, and green. These codes are to determine the source of energy or any technology utilised to produce hydrogen. Hence, grey hydrogen is the polluting type of hydrogen. Blue hydrogen is the hydrogen type with Carbon Capture and Storage (CCS), and green hydrogen refers to a 100% renewable energy source in the production of hydrogen which is defined as clean hydrogen.

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However, the above-mentioned colour coding model does not determine exactly how clean or low-carbon-emission is that hydrogen because it does not determine the GHG emission during the production process, sub-systems, or from the lifecycle of equipment utilized and it is only to define the origin of the hydrogen (Furat Dawood, 2020). According to (Furat Dawood, 2020) the hydrogen-based energy system includes four main stages; production, application, storage, and safety which are briefly described in the following sections.

Hydrogen Production

Energy systems can benefit from a variety of sources to produce hydrogen, such as, fossil fuels (natural gas and coal) however, with carbon capture and storage is preferred, biomass or using nuclear energy and renewable energy sources such as solar, wind, geothermal, and electrolysis of water. These various production sources make hydrogen a reasonable and useful energy carrier. Hydrogen can be produced from large or medium scale plants to small, distributed units, such as at refuelling stations or stationary power sites (Muhammet Kayfeci, 2019). Although hydrogen appears to have various advantages, hydrogen production still requires many efforts in terms of technology development and cost-effectiveness (Marc A. Rosen, 2016). (Furat Dawood, 2020) explains that cos-effectiveness depends on the type of feedstock, catalyst, energy cost, and cost of technology equipment including Capex and Opex. Production of hydrogen based on raw material utilized can be divided into two groups, conventional and renewable technologies. As it is shown in figure 1, conventional refers to fossil fuels which include hydrocarbon reforming and hydrocarbon pyrolysis. Hydrocarbon reforming includes steam reforming, autothermal steam reforming, and partial oxidation are the applied chemical techniques. In renewable resources, hydrogen is produced either from water or biomass. If water is the source, the methods are to split water through electrolysis, thermolysis, and photo-electrolysis.

Regarding biomass as the feedstock, there are two main subcategories as thermochemical and biological methods. Thermochemical methods are pyrolysis, gasification, liquefaction, and combustion. Biological techniques mainly include direct and indirect bio-photolysis, photo fermentation, dark fermentation, and sequential dark and photo fermentation (Pavlos Nikolaidis, 2017). According to the European Commission, the EU prefers to develop renewable hydrogen production (European Commission , 2020).

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Figure 1. Hydrogen production techniques (Pavlos Nikolaidis, 2017)

Hydrogen Application

Hydrogen can address various needs. There are diverse potential applications for hydrogen from industry to the transport sector (Figure 2.). Due to the characteristics of hydrogen production and being an environment-friendly product, there are wider services such as application in the electric system to offer than primarily market utilizations (Christine Mansilla, 2018)

Figure 2. hydrogen applications (Christine Mansilla, 2018)

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According to (Christine Mansilla, 2018) hydrogen applications can be categorized as follows:

1) Using hydrogen in refineries, which is a complex process involving a series of chemical reactions. Some require hydrogen as an input e.g., hydrocracking, and some as a by-product e.g., catalytic cracking.

2) The fertilizer industry is the second major sector (ammonia production, NH3) with 22.8 million tons per year demand.

3) For the production of fuels (synthetic and biofuels) that require hydrogen as an input. This application is categorized in the industry sector because hydrogen is not directly used as an energy carrier but as a chemical input to generate energy carriers. Since these fuels can be used in classical internal combustion engines directly, they can be an attractive step toward a more sustainable energy system.

There are some other industrial applications such as the glass industry, methanol production, food industry (for the hydrogenated fats), and fuel for space rockets.

4) Green gas application in which hydrogen is defined as an energy carrier, to be substituted (at least partially) for natural gas. It can be reached through two different routes. First, direct injection into the natural gas network, second, to go from hydrogen to synthetic methane.

The second route would overcome any barrier regarding injection limits (Christine Mansilla, 2018).

5) Mobility application which is often understood as fuel for passenger cars. However, it includes a wide range of vehicles in land, maritime, and aeronautic mobility. For instance, for cars, vans, buses, trucks, bicycles, ferries, smaller boats, jet fuel, and so on. The market maturity is different for different vehicles due to the availability of each product.

6) Stationary application is the utilization of fuel cells to produce electricity with hydrogen and hydrogen is used as an energy carrier.

Stationary application is being developed for off-grid sites, for backup power (like batteries), for microgrids, and for the coproduction of heat and electricity (i.e., CHP) that is useful for households, or generally buildings.

Hydrogen Storage

Contrasting electricity, hydrogen can be stored in large quantities in various forms. The choice that what form is the best form for hydrogen to be stored for each specific application depends on different factors, for example, what the hydrogen is to be used for (Marc A. Rosen, 2016). At atmospheric pressure and ambient temperature, 1kg of hydrogen gas occupies 11 m³ which means a low density of 0.09 kg/

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m³ that causes barriers in H2 storage. The main methods to store hydrogen is as a gas or liquid, or on the surfaces by adsorption or within the solids by absorption (Pavlos Nikolaidis, 2017)

Hydrogen Distribution

There are different ways to transport hydrogen such as first, bulk transportation via truck trailers, railway, containers, and second through pipelines. Pipelines make long-distance transport possible with lower losses than losses via electricity transport using high-voltage electrical lines (Marc A. Rosen, 2016). However, the low carrying capacity makes the cost of the transportation via trucks (first above means) very high (Pavlos Nikolaidis, 2017)

Objectives

This study focuses on hydrogen applications and how different countries through variables such as policies, initiatives, funding programs, and so on have introduced hydrogen technologies, specifically how policy incentives both financial and non-financial are introduced and implemented in five studied countries.

2 Comparative Inventory

Hydrogen technology and its utilizations have gained great interest in the last years; however, the level of acceptance and implementation is totally different in various countries. Some countries put a great effort to be leader and pioneer in this regard, some countries are more conservative, and some have not started yet. In this section, the literature review has been done to compare four different countries in terms of hydrogen development and relative policies and initiatives with Sweden and investigation of reasons behind Sweden not being very active in this field comparing developed countries. The countries include Japan as a very developed country with considerable background in terms of hydrogen, Norway, as a Nordic neighbour country with similarities and differences with Sweden, Germany as one of the leaders and influential countries in the EU with a large fleet of HVs and the superpower of the automotive industry, The US with good background particularly in the transportation sector, a considerable number of HVs and refuelling stations specifically in some states such as California. All mentioned countries, except Sweden, have released a pathway and guidance named “National Strategy on Hydrogen” with the assist of policy makers, scientists, and business leaders to clarify the goals and framework of hydrogen technology deployment and utilizations in their countries. Sweden has not released its National Strategy on

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Hydrogen yet, but it is expected to be published by the end of July 2021 (Nordic Hydrogen Corridor, 2021)

Japan

Hydrogen as an energy carrier in Japan is to attain three main goals as follows:

• Decarbonisation of the country’s energy system is a matter of great importance. However, due to nuclear power concerns, limited potential for CCS, and the high cost of renewable electricity; Japan’s alternatives of low-carbon fuels are limited. As a result, clean hydrogen can play an important role.

• Japan’s energy security improvement. Japan’s energy policy has been under the influence of the first oil crisis in 1973. Since there are different ways to produce hydrogen, it can contribute to the diversification of Japan’s energy supply.

• New export technologies improvement. Since Japanese automotive companies are the most advanced fuel cell vehicle manufacturing and Japan is the world’s pioneer in stationary fuel cell technologies, the export of the new hydrogen technology can contribute to the improvement of Japan’s hydrogen economy (Miha Jensterle, 2019).

Japan’s 3Es (Environmental protection, Energy security, Economic growth) shapes the efforts to innovative energy technologies development.

Government’s constant policy support, continuous research, improvement, and commercialisation activities on fuel cell technologies the mentioned goals by industries and authorities would be possible. Japan’s New Energy and Industrial Technology Development Organization (NEDO) which is an R&D and administrative agency under METI (The Ministry of Economy, Trade, and Industry) works closely with relative actors such as the industrial sector and academia to encourage innovative energy technologies. Japan with a brand name called ‘ENE-FARM’ became the first country to commercialise residential fuel cell systems worldwide. In 2009, Japan reached the world’s first commercial residential fuel cell and by the end of March 2014 the total number of installed units was 70,000 and in terms of fuel cell vehicles, selling mass-produced FCV by 2015 was planned. Table 1 indicates the budgets for NEDO and METI for financial years 2013 and 2014. METI’s budget is subsidies for stationary fuel cells and hydrogen refuelling stations (HRS) and NEDO’s budget is mostly for R&D (National Members and Operating Agents of IEA, 2012).

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Table 1. NEDO’s budget for FY2013 and 2014 (National Members and Operating Agents of IEA, 2012)

Million JPY Million JPY FY 2013 FY2014 R&D Activities (NEDO)

Development of PEFC technologies 3,190 3,440

Development of SOFC technologies 1,240 1,500

Hydrogen Utilization Technology Development

2,000 3,850

FCV and HRS demonstration project 750 ….

R&D for the technologies on H2

storage and H2 transport considering H2 produced by renewable energy source, etc.

1,130 2,200

Promotion of safety infrastructure on next generation hydrogen supply system

…. 270

Installation Support (METI)

Subsidy for HRS 4,600 8,250

Subsidy for ENE-FARM 25,050 22,400

2.1.1 Japan’s National Strategy on Hydrogen and Main Policies

Japan as an industrialized country with the world’s third largest GDP has the second highest dependence on importing fuel among countries of OECD. Fuel import provides 93% of Japan’s primary energy need. Nuclear power had been the most viable option to improve energy self-efficiency for Japan. However, they were remained idle due to Fukushima nuclear disaster in 2011.

Considering the limited possibility to expand hydropower and geothermal sources in Japan and concerns about nuclear power, hydrogen can play a key role if it can be commercialized. The Basic Hydrogen Strategy was released in December 2017. However, the public and private initiatives have been under development since 1970s. Cost reduction of hydrogen fuel and related technologies is the key element for the success of the “hydrogen Society” in Japan. The strategy focuses strongly on cost reduction of hydrogen production and applications aiming at reducing the cost to 80% by 2050. To achieve a national strategy on hydrogen, Japanese companies are working on hydrogen production from oil, hydropower, and coal in Saudi Arabia, Australia, Norway, and Brunei. Shipping hydrogen from these countries to Japan is under testing (Nagashima, 2018). Japan also works strongly on carbon capture and storage

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(CCS) technologies which can play a key role to reduce emissions, However, these technologies are not technically and commercially feasible yet and are at the very early stage. The main production methods according to the Japanese development timeline on hydrogen are petroleum steam reforming + CCS and coal gasification + CCS. Annually $ 150 million is allocated by METI and MoE (the ministry of environment) to R&D on CCS (Nagashima, 2018) Some main policies and initiatives are described in the following section:

Cool Earth-Innovative Energy Technology Program: The Ministry of Economy, Trade, and Industry (METI) in 2008 announced this program. 21 key technologies were introduced to help Japan regarding the agreement on halving global emissions by 2050. FCEV, residential fuel cell systems, and hydrogen production/storage/transport are emphasised among the 21 key technologies (Miha Jensterle, 2019)

Japan Revitalization Strategy: It was announced by the government in June 2013 as assistance to revitalise the Japanese economy confirming the importance of the technology for stationary fuel cells and FCEV. Regarding stationary fuel cells, it aims at installing 5.3 million units by 2030. This amount means stationary fuel cells for 10% of all households. Regarding the FCEV, the strategy through reviewing the regulation and supporting hydrogen infrastructure deployment targets to make Japan the leader in FCEVs worldwide (National Members and Operating Agents of IEA, 2012)

The 5th Strategic Energy Plan : The 5th Strategic Energy Plan (2018) highlighted the central role of hydrogen and fuel cell technologies in Japan’s energy strategy focusing on the mobility and power sector ensuring support from the government. However, more expansion of stationary fuel cells is a priority. The stationary fuel cell applications at the time will continue to use hydrogen sourced from natural gas and LPG reforming. Clean hydrogen import along with domestic PtX are as the two main important sources (Miha Jensterle, 2019).

Basic Hydrogen Strategy: The Basic Hydrogen Strategy (2017) is the first complete government plan clarifying several supporting programs by different ministries. This strategy is essentially a summary of all plans that were already discussed to make Japan a hydrogen-based society (Miha Jensterle, 2019).

Strategic Roadmap for Hydrogen and Fuel Cells: Japan’s Strategic Roadmap was released in 2014 and revised in 2016. The roadmap explains three phases for Japan’s hydrogen and fuel cell development as follows:

Phase 1: Significant expansion of hydrogen mobility applications and development of stationary fuel cells. Using natural gas/LPG reforming instead of clean hydrogen in the short term.

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Phase 2: Complete and mature introduction of hydrogen power generation, a large-scale hydrogen supply system establishment by the second half of the 2020s, commercialization of hydrogen technologies for the long-distance transportation system.

Phase 3: A clean hydrogen supply system establishment by around 2040 (Miha Jensterle, 2019)

2.1.2 Initiatives

As (Miha Jensterle, 2019) mentions, there are several initiatives formed by private companies in Japan, that receive support from the government or institutions related to the government. These companies are responsible for the demonstration and commercialization of hydrogen technologies. Some of the main partners, demonstration, and pilot projects are as follows:

• Hydrogen Energy Supply-chain Technology Research Association (HESTRA): aimed at launching a Japan-Australia hydrogen supply chain focused on demonstration of the feasibility of brown coal gasification and hydrogen refining at Latrobe Valley in Australia.

• Advanced Hydrogen Energy Chain Association for Technology Development (AHEAD): the responsibility of the Japan-Brunei Hydrogen Supply Chain project to demonstrate the feasibility of long- distance methyl cyclohexane (MCH) hydrogen transport.

• Advanced research project on hydrogen application technologies: a scientific research aimed at improving the performance of electrolysis technologies, R&D of large-scale hydrogen application technologies, research on high efficiency power generation technologies and research on energy carrier systems run from 2014 to 2022. The funding was about 0.9 billion JPY (~ 7 million EUR) in 2018.

• R&D on technologies for building hydrogen society: R&D and demonstration projects for hydrogen production from renewable energy, hydrogen transportation, and storage, as well as hydrogen supply chains focusing on hydrogen production from overseas energy resources, R&D on hydrogen gas turbines, run from f2014 to 2020.

The funding was about 8.9 billion JPY (~ 72 million EUR) in 2018.

• R&D on hydrogen application technologies: focusing on FCVs and hydrogen refueling stations, cost reductions for them, and improve the safety of hydrogen refueling stations, research on global policy, market, and R&D trends for clean hydrogen, ran from 2013 to 2017 and had funding of about 4.1 billion JPY (~ 33 million EUR)

• Initiatives by the Tokyo Metropolitan Government: a fund of about 40 billion JPY (around 322 million EUR) for purposes such as the introduction of fuel-cell buses, an increase in demand for passenger

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FCVs, the establishment of hydrogen refueling stations in Tokyo, implementation of green hydrogen supply systems source from renewable power for areas surrounding Tokyo, promoting the introduction of hydrogen pipelines and hydrogen fuel cells, an education center with the task of providing information about hydrogen energy to the interested companies and public.

Table 2 shows the targets related to hydrogen as defined by the Japanese official energy strategy (Miha Jensterle, 2019)

Table 2. Japan’s Hydrogen and Fuel Cell technology overview status and future targets (Miha Jensterle, 2019)

2019 2020 2030 2030 ~ 2050

Consumption andprice

H2 consumption: 200 ton/y

Hydrogen price: JPY 100/ Nm³ (H2

refuelling station)

H2 consumption:

4,000 ton/y

Commercialized hydrogen supply chain

H2 consumption: 300,000 ton/y

Hydrogen CIF price:

JPY 30/Nm³

H2 consumption:

More than 10 mil.ton/y (depending on H2

power generation)

Hydrogen CIF price:

JPY 20/Nm3

Hydrogenproduction

Produced from fossil fuel, by product from industrial process

Clean Hydrogen

Coal + CCS

Demonstration project in Australia

Establishment of core technologies (brown coal gasification, CO2

capture, etc.)

Large scale hydrogen supply from brown + CCS

Natural gas+ CCS Natural gas reforming is already matured technology CCS is still in pilot stage

Electrolysis usingREelectricity

Demonstration projects

Electrolyser cost target: JPY 50,000/kW

Commercialization around 2032

H2 production using

domestic RE

electricity is comprehensive against imported clean H2

Hydrogenpipeline

Demonstration projects

Demonstration of hydrogen town near Tokyo Olympic/

Paralympic village

Hydrogen pipeline network near the hydrogen receiving terminal

Compressedhydrogen

Established

technology for domestic delivery

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Liquifiedhydrogen

Established

technology for domestic delivery R&D and pilot project for large scale international shipping and storage

Commercialization of liquid hydrogen supply chain

Large scale

international shipping of hydrogen

Organic Hydride (MCH) R&D and pilot project (shipping from Brunei to Japan, supported by NEDO)

Commercialization of MCH hydrogen supply chain after 2025

Ammonia

Established technology

Ammonia (produced rom clean H2) blended with coal for power generation

Ammonia (Produced from clean H2) gas turbine for power generation

Stationary fuel cell (residential)

PEFC: JPY

1,400,000/unit

SOFC: JPY

1,750,000/unit

Penetration: 220,000 units Ene-Farm with onsite NG/LPG reforming

Payback time: 18 years

PEFC: JPY

800,000/unit

SOFC: JPY

1,000,000/unit

Payback time: 7-8 years

Penetration: 5.3 mil. Unit Payback time: 5 years

Large scale Ene-Farm:

power generation efficiency higher than 60%

Penetration of Ene- Farm using clean H2

Fuel cell vehicle

•H2 refueling station:

100

• FCV: 2,500

• FC bus: 2

• FC forklift: 40

•H2 refueling station: 160

•FCV: 40,000 (200,000 by 2025)

• FC bus: 100

• FC forklift: 500

•H2 refueling station: 900

• FCV: 800,000

• FC bus: 1,200

•FC forklift: 10,000

•Replacing

conventional fossil fuel vehicles and buses

• Fuel cell truck, fuel cell ship, other applications in the transportation sector

Hydrogenpower generation

•R&D and

demonstration

• H2 power generation cost:

JPY 17/kWh

• Capacity: 1GW

• H2 power generation cost: JPY 12/kWh Installed capacity:

15~30GW

• Required hydrogen demand: 5~10 mil.

ton/y

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2.1.3 Policy Incentives (Financial and Non-financial)

Tax deduction of up to 10% of capital expenditures for producing goods that result in decarbonization was introduced by the Japanese government. The government decides which areas would lead to emissions cuts, for instance, hydrogen fuel cells, lithium-ion batteries, wind power equipment. For example, the tax deduction may apply to cut electricity consumption or expansion or investment in production facilities. When a company applies for a tax deduction, a business plan should be submitted to explain how their plan would lead to emissions cuts. Based on the degree of decarbonization, the tax deduction would be either 5% or 10%. The tax policy would be for three years from fiscal 2021. Japan’s prime minister’s plan for budget and tax policies is meant to support digitization and green efforts, which he sees as two key sources of growth (Nikkei , 2020). Previously, Japan introduced different financial incentives to buy green vehicles such as exemptions from acquisition tax and some tonnage tax reduction, both together amount to approximately 5.7% of the purchase price(Urwah Khana, 2020).

Norway

2.2.1 Norwegian National Strategy on Hydrogen

In June 2020, the Norwegian government presented its national hydrogen strategy. Technology-readiness level and high costs of hydrogen form the barriers for increased use of hydrogen, particularly in the transport sector and as the feedstock of some industries. Since there is a firm commitment to zero emission technologies and solutions in Norway, increasing the number of pilot and demonstration projects in Norway is an important task for the government (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020). The government, companies, and interested local industrial groups focus on the transition from fossil fuels to hydrogen for passenger cars, land, and sea transport. The aims are finding solutions for greenhouse gases emission and local pollution, both hydrogen-related technology and product development, development of hydrogen as a fuel with the aim of becoming more independent regarding the sale of fossil fuels to the market globally. Norway, based on its natural resources, has three main sources for hydrogen as follows:

ⅰ) electrolysis using electricity from hydropower

ⅱ) steam reformation of methane from natural gas in combination with CCS

ⅲ) the gasification of biomass with CCS

For the third option, the biomass can be from forestry and agricultural waste or municipal solid waste which is available and under study in the region around Bergen on the Norwegian west coast. (Maria F. Renkel, 2018)

There are some advantages for Norway regarding hydrogen production and applications:

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• many years of industrial experience in the entire hydrogen value chain.

Already there are many developing, supplying equipment and services for different sectors in terms of the production, distribution, storage, and application of hydrogen.

• Norway has considerable natural gas resource and the potential to increase renewable energy production.

• The Norwegian continental shelf can act as a CO₂storage which is required for the natural gas conversion to clean hydrogen.

• There is strong experience and background of processing gas and managing major industrial projects, due to the petroleum industry. The maritime industry already has experience in development and implementation of new technology solutions in maritime transport. For instance, the application of batteries and LNG (liquefied natural gas).

As a result, there are several projects in this industry that are focusing on hydrogen or ammonia as energy carriers.

The following parts are retrieved from Norway’s National Strategy on Hydrogen.

Clean transport and industry: Some sectors in Norway seem to be most relevant for the use of hydrogen, for instance, the maritime sector, industrial sector, and heavy-duty transport. An ambitious policy of the government for zero emissions solutions in the transport sector promoted several institutions.

For instance, Innovation Norway, The Research Council of Norway, and the state enterprise Enova. For example, Enova, through the Zero Emission Fund, contributes to the early market introduction of hydrogen for vehicles and vessels used by business. As a part of the green restructuring package, the government increased funding by 20 million NOK for high-speed vessels under the funding facility "Klimasats" which helps to increase regionally promoting high-speed passenger ferries including hydrogen powered vessels with zero and low emission, (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020). For instance, to promote hydrogen, vehicles and battery electric vehicles receive the same user benefits and tax break which is influential in public acceptance.

2.2.2 Policy Incentives (Financial and Non-financial) Taxes:

• Hydrogen vehicles as same as electric vehicles are exempt from vehicle registration tax and VAT.

• From 1 January 2018, they have been exempted from the tax for road traffic insurance and registration transfer fee.

• In 2020, to calculate the benefit for the use of a company car, there was a 40% discount on the list price compared with the normal rules.

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User incentives:

A national rule has been announced that zero emission vehicles do not pay more than half the normal rate to pass through toll stations and on ferries.

There was a similar rule for parking, but this has not come to effect at the time of this document. 149 hydrogen cars, 5 hydrogen buses, 1 light van, and 1 hydrogen truck had been registered in Norway by the end of 2019 (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020). Literature shows that policy incentives have had a positive impact on electric vehicle adoption by individuals and can be the right path for hydrogen fuel too. (Urwah Khana, 2020)

2.2.3 National research and Funding

Hydrogen-related technology fields have been a topic of Norwegian research communities. The research Council of Norway during the last 10 years has provided funding worth nearly NOK 550 million for hydrogen development and research. Energy research program ENERGIX is the most important policy instrument, focusing on hydrogen as a prioritized area. Considering the Covid-19 situation, the government granted NOK 120 million to the Research Council of Norway’s ENERGIX program. This funding is for innovation projects with a commercial focus. In 2019, the government granted NOK 25 million to promote high-speed passenger ferries with zero and low emissions.

In 2020, there was a budget of NOK 80 million as a booster for high-speed ferries. However, the government proposes increasing the grant by NOK 20 million for the Klimasats high-speed ferry scheme (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020).

Norwegian GHG emissions: The government targeted GHG emissions in 2050 to be decreased by between 90 and 95 % compared to 1990 levels. In 2018 the amount of greenhouse gas emissions was 52 million tonnes of CO2

equivalents. One-third of the total emission was generated by the transport sector and mainly industrial operations and oil and gas recovery were responsible for around 50 % of the emissions. As a result, there is an important need to introduce and develop zero emission technologies in the transport sector. According to the Norwegian government’s report Climate Cure 203033, the cost for the use of hydrogen and ammonia is at the upper end of the cost spectrum (costing more than 1,500 NOK/tonne of CO2). This is an estimation, however, the widespread use of hydrogen in many applications mainly depends on cost reductions through technology developments outside of Norway (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020)

Hydrogen in the Armed Forces: The Armed Forces sector is working on the development of power supply systems for vessels, vehicles, and land-based stations. Hydrogen as the energy carrier can reduce fuel expenses and the

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negative environmental impact of the Armed Forces’ activities. For example, the Armed Forces are in the process of obtaining new submarines with fuel cell technology. However, the Armed Forces is possibly a small player in comparison with the potential use of hydrogen by the civil sector (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020).

Maritime transport: The Norwegian maritime industry can contribute to both emissions reduction and economic value increase. Norwegian domestic shipping and fishing produce 8.6 % of Norwegian emissions. Hydrogen and ammonia can be appropriate for different vessel types. Over two-thirds of the required energy in the ferry sector can come from electricity and for the remaining routes, hydrogen and batteries could be suitable. Hydrogen could be more suitable for high-speed ferries since they have higher energy and lower weight requirements. The Norwegian Public Roads Administration has a contract with the Norled AS shipping company to develop, build and operate a hydrogen-electric ferry for some routes in Norway from 2021 onward and hydrogen can provide almost 50 % of the ferry’s energy needs. Norled is also involved in an EU-funded development project in maritime transport in Norway (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020).

Industry: Applications of hydrogen in industrial processes are in three categories: as a chemical feedstock in production, as an energy carrier, or in the process itself. There are some industrial processes that produce hydrogen as a by-product. This hydrogen can be used in other applications. The hydrogen currently being used is almost exclusively produced through natural gas reforming without CCS, this process produces large emissions. If hydrogen is produced through electrolysis or CCS is used, the emissions would be considerably decreased (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020)

2.2.4 International trade

International collaboration is a matter of great importance for Norway since mostly technology development and future demand for hydrogen will come from out of Norway. In terms of hydrogen export, it will be possible to export hydrogen produced through natural gas reforming and electrolysis in Norway to the rest of Europe using existing gas pipelines or ships. If existing pipelines are to be used for hydrogen transportation, the pipelines must be adapted and re-qualified, since the properties of hydrogen gas and natural gas are different. International collaboration includes the exchange of experience, the design of common standards, participation in large joint projects and facilitation of global trade. For instance, there are also ongoing initiatives to improve coordination at a European level (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020)

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Nordic and EU collaboration: The Helsinki Declaration was signed in the summer of 2019 in Helsinki by the Nordic prime ministers to work together to decarbonize the transport sector and remove barriers to low emission

systems. Each of the five Nordic countries

(Denmark, Norway, Sweden, Finland, and Iceland) show interest in investing in hydrogen based on renewable energy. Three of these countries (Denmark, Finland, and Norway) have also investigated the possibility of hydrogen as an alternative fuel in the maritime sector. There are some collaboration participated by Norway (mostly at the EU level) such as The EU arena, The Fuel Cells and Hydrogen Joint Undertaking (programme no 2) (EUs FCH 2 JU), ZEP (Zero Emission Platform), Horizon Europe (2021- 2027), IEA Hydrogen TCP, IEA Greenhouse Gas R&D (GHG TCP), International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), Carbon Sequestration Leadership Forum (CSLF) (Norwegian Ministry of Petroleum and Energy, Norwegian Ministry of Climate and Environment, 2020).

Germany

Using green hydrogen to support a rapid market increase is the goal of the German government. In terms of the number of hydrogen recharging stations, Germany with 43 stations in operation is the second country in the world, (Urwah Khana, 2020). According to (Amelang, 2020) Germany will use its EU presidency to highlight and push the use of hydrogen. For Germany to meet its international obligations from the Paris Agreement and become GHG- neutral, hydrogen is considered as a decarbonisation option. As a result, in Germany, only green hydrogen is considered sustainable in the long term.

Carbon-free hydrogen will be a suitable option for Germany considering Germany’s close integration in the European energy supply infrastructure.

However, based on the status quo, there is a limitation in the capacity of Germany’s renewable energy generation. Therefore, it is not likely that Germany can generate the large quantity of hydrogen required for the energy transition alone and Germany will import much of the necessary energy from countries across the EU where large quantities of renewables-based electricity are generated. To achieve it, international cooperation and partnership on hydrogen should be intensified. To achieve Germany’s hydrogen targets establishing a sustainable and strong domestic market for the production and application of hydrogen is the first step to be taken. To foster this process, designing incentives play an effective role. By 2030, it is expected that Germany needs around 90 to 110 TWh of hydrogen. Germany plans to establish up to 5 GW of offshore and onshore generation facilities to cover a part of its need. This amount corresponds to 14 TWh of green hydrogen production that requires 20 TWh of renewables-based electricity. An additional 5 GW of capacity is to be added, if possible, by 2035 but not later than 2040. (The Federal Government of Germany, 2020).

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2.3.1 National Strategy on Hydrogen

The National Hydrogen Strategy was released in 2020. Its implementation and development are an ongoing process that is carried out through regular review by a new committee consists of state secretaries for hydrogen from various ministries. The committee is supported by a National Hydrogen Council formed from high-level experts from science, business, and civil society with expertise in production, innovation, research, decarbonisation of industry, buildings/heat, transport, infrastructure, international partnerships, climate, and sustainability. The first evaluation of the Strategy will be carried out after three years (The Federal Government of Germany, 2020).

The status quo and expected trends for hydrogen: Demand for hydrogen is mostly linked to the production of materials in the industry to produce with an even share between basic chemicals (e.g. ammonia, methanol, etc.) and the petrochemicals sector (to produce conventional fuels). About 7% of demand is produced through electrolysis (chloralkali) processes. Since some of the hydrogen used in the petrochemicals industry is a by-product of other processes for instance catalytic reforming, the current consumption of hydrogen that is around 55 TWh cannot totally be substituted with ‘green’

hydrogen, and mostly grey hydrogen is produced (The Federal Government of Germany, 2020)

The main targets of the National Hydrogen Strategy in the future are as follows:

1) Hydrogen production 2) Industrial sector 3) Transport

4) Heat market (The Federal Government of Germany, 2020) 2.3.2 International Trade

For Germany to reach its climate targets by 2030 and greenhouse gas neutrality by 2050 import of renewable energies beyond the European market is a matter of importance. Therefore, the international trade of hydrogen is an important industrial and geopolitical factor (Amelang, 2020).

Hydrogen international trade provides many opportunities, for instance, new international value chain establishment, the EU’s internal energy market expansion, and so on. Germany also has a well-developed gas infrastructure and network, and the gas storage units are connected to it. In the future, part of this infrastructure will be used for hydrogen; however, more networks are necessary for the exclusive transport of hydrogen. Considering Germany’s geographical location as an important transit country within Europe, international trade of hydrogen can be effectively shaped in cooperation with its European neighbours. Above all, greenhouse gas emissions as a result of hydrogen transportation should be assess and avoided as much as possible (The Federal Government of Germany, 2020)

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Cooperation between the Federal Government and the Länder: The Länder (states) have also been planning and executing their own hydrogen-related measures Apart from what actions at the federal level are taken. Figure 3 briefly illustrates the governance structure of the National Hydrogen Strategy in Germany (The Federal Government of Germany, 2020).

Figure 3. Governance structure of Germany’s National Strategy

Action Plan: steps necessary for the National Hydrogen Strategy to succeed:

The Federal Government’s Action Plan basis for private investment in hydrogen generation, transport, and uses has been arranged. In the first phase until 2023, 38 measures focusing on the basis for a well-functioning domestic market, R&D, and international aspects will be taken by the Federal Government. The next phase which starts in 2024, is about establishing the new domestic market, shaping the European and international aspect of hydrogen, and applying it to German industry (The Federal Government of Germany, 2020).

2.3.3 Main initiatives

According to (Miha Jensterle, 2019), there are various initiatives regarding hydrogen development in Germany, the following section summarized the main initiatives.

Fuel Cells and Hydrogen Joint Undertaking (FCH-JU): Including the European Commission, stakeholders from the research sector represented by Hydrogen Europe Research, and industrial stakeholders represented by Hydrogen Europe. The first phase from 2014 to 2020 focuses on R&D and

National Hydrogen Council Chair

Coordination Office

Project management secretariat Coordinates

supports

Action plan

Monitoring report

Monitoring and support Develops

Strategic management: decides on targets, objectives, action plans, etc.

Supports ministries and council

Project structure for implementing the strategy

Advises and makes recommendation for action, provides specialist support

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demonstration projects of fuel cell and hydrogen energy technologies with a budget of 1.3 billion EUR and the second phase focusing on cost reduction of hydrogen technologies.

European Hydrogen Initiative: In 2018, it was signed by 25 European countries focusing on the conversion of hydrogen to renewable methane, energy storage, direct injection into the gas grid, sector coupling, and hydrogen applications in the industrial and transport sectors.

German – French cooperation on energy transition: A directive focusing on R&D activities to promote sustainable energy supply for Europe. Hydrogen and fuel cells are precisely stated as target technologies.

7th Energy Research Program: Focused on increasing the support for R&D, demonstration across all domains of energy, further sector coupling (specifically with the transport sector), more international cooperation, and funding. A special role to support the term “large-scale real-environment laboratory” including the production of hydrogen by water electrolysis. Nearly EUR 6.4 billion has been allocated for funding until 2022.

National organisation for hydrogen and fuel cell technology / National innovation programme for hydrogen and fuel cell technology:

The National Organisation for Hydrogen and Fuel Cell Technology (NOW) is one of the main stakeholders and the partner of the German Government for sustainable mobility and hydrogen technologies. The NOW as a coordinator and facilitator of several national and international networks and it is a link between politics, industry, and academia. Moreover, the NOW is the German’s representative in the IPHE, IEA, and IC-8. Within different European networks, NOW is strongly active in the policy, regulatory, and coordination of funding programs. For example, NOW is involved in the Sino-German collaboration on regulation and long-standing partnership with NEDO focusing on PtX and hydrogen infrastructure and coordinating the National Innovation Programme Hydrogen and Fuel Cell Technology (NIP). NIP phase I (2007 to 2016) with funding over 1.4 billion EUR by both private and public sectors (roughly equally) in the hydrogen and fuel cell technologies. It aimed at basic research and demonstration projects. Market introduction only received about 1% of overall funding and the transport sector received less than half of the funding. NIP phase II (2017 and foreseen to run until 2026).

The transport sector remains in focus, more funding will go towards the market introduction and integrated projects in hydrogen. The overall investments for phase II are mainly provided by the private sector and it is predicted to be over 2 billion EUR.

Strategic platform Power-to-Gas

:

The intention of the Strategic platform Power to Gas is to promote market-ready technologies and facilitate their

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market entry. It has created more than 40 research and pilot projects, among which 24 of them are operating addressing all stages of the hydrogen life cycle.

Global alliance power fuels: It targeted to bring international industrial enterprises together and create a wide network of partners from research, politics, and society to develop international markets for synthetic fuels from renewable energies.

Federal-state and regional initiatives: Germany is working on regional initiatives as well. For instance, the Fuel Cell Initiative of Baden Wuerttemberg, a network aimed at the promotion and expansion of sustainable energy production and storage technologies based on fuel cells and batteries.

Demonstration and pilot projects: There are different demonstration and pilot projects in Germany. Germany’s focus has been more on demonstration rather than market introduction. Among German’s demonstrations, HYPOS East Germany, BIC H2, Energiepark Mainz, Climate friendly living, and Carbon2Chem can be named (Miha Jensterle, 2019).

Drivers and Barriers: As it was explained above and retrieved from literatures, hydrogen fuel is a promising alternative fuel in Germany. However, according to (Gregory Trencher, 2021) there are some factors influencing hydrogen development and market penetration as follows:

• First factors as a driver: cost, supply, and fuel cell technology and knowledge situation, maintenance and repair networks, environmental policies targeting automakers. Germany could evidence a significant market growth if, through economies of scale, various supply of vehicles and models was achieved by several automakers with high production volumes. This would result in cost reduction.

• Cost, availability, technical reliability of refuelling stations, and their profitability. This can be a driver since it sends signals to the automobile manufacturers that necessary infrastructures to source hydrogen are available.

• Purchase incentives, demand for vehicles, and awareness in the public at large. The presence of attractive financial incentives and subsidies to decrease the upfront purchase costs for consumers, reductions in vehicle registration charges, free or discounted charging or refuelling can be important drivers. However, non-financial incentives such as free parking or priority parking, and exemptions from driving restrictions are also important. Lack of attractive incentives is expected to decrease the rate of vehicle uptake.

• Signals from government policy are crucial for market penetration.

Weak political support results in hampering the automakers’ ambitions for production.

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Germany’s Hydrogen Strategy shows the need to boost incentives for switching to green H2 via a demonstration project and to formulate a decarbonization program (PLECHINGER, 2020). Apparently, Germany’s focus is more on non-financial incentives. However, according to (ACEA, 2020) there are some other incentives running in Germany as the below list:

• temporary VAT reduction effective from 1 July 2020 until 31 December 2020, from 19% to 16% for EV buyers.

• 10‐year exemption for BEVs registered by the end of 2020

• Reducing taxable amount for BEVs (from 1% to 0.5% of the gross catalogue price per month)

• Additional reduction of the taxable amount for BEVs with a gross list price of up to €60,000 (from 1% to 0.25% of the gross catalogue price per month)

• All eligible new and used BEVs and FCEVs registered from 4 June 2020 have a temporarily environmental bonus until 31 December 2021

• Bonus for cars with net list price ≤€40,000:

✓ €9,000 for BEVs and FCEVs.

• Bonus for cars with net list price > €40,000:

✓ €7,500 for BEVs and FCEVs.

U.S.A

California is a very active state in terms of the application of hydrogen in the transport sector. Regarding the number of hydrogen vehicles and hydrogen buses, California’s hydrogen market is larger than Japan’s where is the leader of HFV. The number of hydrogen-powered vehicles in the world is around 11,000, of which half of them are in California. However, refuelling stations in Japan are more than double that of California and Japan has the largest hydrogen station network worldwide. (Urwah Khana, 2020). In terms of market introduction in the US, besides all actors from policy makers to business leaders and academia, the U.S. Department of Energy’s DOE's goal is to enable the widespread commercialisation of hydrogen and fuel cell technologies.

2.4.1 National Strategy on Hydrogen

The National Hydrogen Vision Meeting was held in November 2001.

Participants included more than 50 business executives, policy leaders from Federal and State agencies, environmental organizations, and the U.S.

Congress. Conclusions about the visions are as follow:

• Introduction and implementation of consistent energy policies that highlight hydrogen as a priority

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• Focusing on finding new ways on the development and application of hydrogen energy from private and public sector

• Development of a National Hydrogen Energy Roadmap (United States Department of Energy, 2002)

Hydrogen Production: Annually, about 9 million metric tons of hydrogen are produced in the US of which mostly it is produced in three states: California, Louisiana, and Texas. Steam methane reforming accounts for 95 percent of the hydrogen production and hydrogen is mainly used in refining, treating Metals, and processing foods (Hydrogen and Fuel Cell Technologies Office of the U.S.A., 2018). Moreover, the rapid development of hydrogen fuel cells can be seen in two sectors in the US: ⅰ) for fork-lift trucks, ⅱ) backup power for hospitals, mobile phone towers, and offices. Specifically, the use of hydrogen in these sectors could be the most financially competitive for some companies (Swedish Agency for Growth Policy Analysis, 2016)

Vision of Hydrogen Applications: Hydrogen will be available for transportation, industrial process heaters, power generation, and portable power systems as follows:

• main fuel for commercial and government vehicle fleets

• light duty trucks and personal vehicles

• in turbines and reciprocating engines to generate electricity and thermal energy for offices, homes, and factories (direct combustion and mixing with natural gas)

• in fuel cells for both stationary and mobile applications

• in portable devices e.g. mobile phones, computers, and other electronic equipment.

However, to achieve this vision, the following challenges should be overcome.

ⅰ) technological and engineering solutions for transportation, stationary, and portable applications

ⅱ) Customers’ acceptance of hydrogen technologies and fuel cell vehicles solutions can be listed as follows:

• research and development to address mentioned challenges

• significant increase of demonstrations

• regulations, codes and standards to foster customer acceptance of hydrogen applications

• encouragement of use of hydrogen as a fuel (United States Department of Energy, 2002)

The Emergency Economic Stabilization Act in 2008 was authorised by Congress introducing tax incentives to decrease the cost of fuel cell systems.

Based on this Act, applicants could receive an investment tax credit of 30%

for USD 3,000/kW of the fuel cell nameplate capacity or for qualified fuel cell

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property. The Act also introduced for CHP systems a credit of 10% (United States Department of Energy, 2002). According to literature there are different incentives in the US financial incentives such as, license tax, purchase subsidies, Electric Vehicle Supply Equipment (EVSE) financing, free parking and electricity, and insurance discounts. Non-financial incentives such as emissions testing exemption, high-occupancy vehicle access, public charger availability. However, there are some disincentives in regulations that have negative impact such as annual charge for EV to pay off revenue from lost gasoline (Kristin Ystmark Bjerkan, 2016). The latest update on tax reduction and incentives is “Taxpayer Certainty and Disaster Tax Relief Act of 2020,”

which significantly shows the act on extensions of clean energy and renewable credits (Botts, 2020)

2.4.3 State and Regional Policy Incentives

There are some financial incentives offered at States levels for fuel cell installation.

ⅰ) Self-Generation Incentive Program was introduced by the State of California, under which the applicants who install CHP/Co-generation systems will benefit from a state discount for fuel cells (CHP or electric only) of USD 1.83/W, however the incentive payment is capped at the amount of 3MW.

ⅱ) 2013 Zero Emission Vehicles (ZEV) Action Plan, that includes a goal of 1.5 million ZEV by 2025 for state agencies.

ⅲ) Assembly Bill 8 (AB8) was signed into law in 2013. AB8 funds for at least 100 hydrogen stations with a commitment of USD 20 million annually.

Moreover, California Energy Commission in 2014 provided almost USD 50 million to add 28 new hydrogen refuelling stations to the nine existing stations and 17 stations under development. There is also different cooperation between some other states to promote hydrogen and fuel cell supply chain.

(National Members and Operating Agents of IEA, 2012)

Education: Education and awareness of consumers, industry leaders, and public policy makers about the benefits of hydrogen is critical to achieving the US vision of hydrogen, for instance, stakeholders lack any real understanding about the application of hydrogen. To ensure success in this area, following actions must be taken:

• regional, state, and local networks

• influencing U.S. energy policy on hydrogen

• a comprehensive public education

• a public demonstration hydrogen village

• long-term education of students at all levels (United States Department of Energy, 2002)

Hydrogen Fuel in Sweden, a Comparative Study of Five Countries