Hydrogen meets digital New opportunities for the energy and mobility system Hydrogen Council September 2018 Discussion paper This report was prepared for the Global Climate Action Summit and published in September 2018 to open up a conversation between the hydrogen and technology sectors on the potential of hydrogen for digitization. This report was developed with the Study Task Force of the Hydrogen Council, consisting of senior executives of 6 companies: Air Liquide S.A., Hyundai Motor Company, Cummins Inc., Plastic Omnium, Toyota Motor Corporation, and 3M. McKinsey & Company provided analytical support. Contact [email protected] www.hydrogencouncil.com Hydrogen meets digital New opportunities for the energy and mobility system Hydrogen Council September 2018 The Hydrogen Council is the largest industry-led effort seeking to develop the hydrogen economy. Launched in January 2017 at the World Economic Forum, its members include leading companies that invest along the hydrogen value chain, ranging from hydrogen produc- tion, infrastructure, and retail to end users in the residential, industrial, and transportation sectors. As members of the Council, we are convinced that hydrogen can offer economically viable, financially attractive, and socially beneficial solutions. Furthermore, in certain sectors and regions it may represent the best way to enable the energy transition and improve urban air quality. This report seeks to start investigating the impact of digitization on energy demand and establish a dialogue with the ICT sector on how digitization and hydrogen could comple- ment each other’s impact during the energy transition. We believe hydrogen offers strong benefits that could enable major digital trends and thus serve as an efficient, zero-emission energy vector. Contents Executive summary 3 Methodology 6 Our vision: New opportunities for the energy and mobility system 8 Digitization and new technologies are disrupting our energy usage patterns, driving new demand for versatile, clean energy 8 Batteries and hydrogen can both store and provide green power 9 Our vision: the city of the future 9 Deep dive: Potential and impact assessment for hydrogen within key digital applications 12 Application 1: autonomous taxis and shuttles 12 Application 2: digitally enabled freight chains 15 Application 3: VTOL taxis 18 Application 4: data centers 21 Summary 23 Glossary 25 Bibliography 26 Hydrogen meets digital 1 By 2030, hydrogen could fuel ... ~1.0‑1.5 m ~300‑700k auto­nomous taxis auto­nomous shuttles ~3.0-4.0 m ~4-8k ~1 TWh delivery trucks and vertical take-off and of backup power in vans landing taxis (VTOL) data centers ... amounting up to ... ~5-7 m tons ~5.5-6.5 m of annual hydrogen fuel cells in use demand Executive summary Vision: digitization drives new demand for versatile, clean energy Digital technologies are transforming all sectors. They are changing how we work, live, and enjoy ourselves and how goods and services are created, transmitted, and consumed. Some of these technologies, such as autonomous driving, virtual reality, and artificial intelligence, will have both disruptive as well as cross-cutting effects on many parts of our economy. While digitization can increase energy efficiency, e.g., by sharing of assets such as cars and improving Digitization creates massive energy efficiency in our daily lives through IoT, it also new energy demands creates massive new energy demands. The informa- tion and communications technology (ICT) sector already consumes more than 50% of the US electricity consumption. In the coming years, energy demand for ICT is expected to grow further, doubling by 2050, and this forecast already considers the continuous improvement of ICT energy efficiency. In order to limit global warming to two degrees Celsius, the world will need to make dramatic changes. With the clear imperative to reduce carbon emissions and improve air quality, these new energy demands must come from clean and renewable sources. This implies the need for an energy carrier that can take solar and wind power, channel it to its end use, and release the energy when needed. Two main technologies – batteries and hydrogen – Batteries and hydrogen tech­ can provide the required storage for renewables. While often portrayed as competitors, they are, nologies are comple­mentary in fact, complementary for different applications. for different applications Batteries are widely available, have low conver- sion losses, and have experienced rapid cost decreases in recent years. Their initial deployment does not require much infrastructure, easing adoption in the market. The high energy density of on board hydrogen storage (about 10 times higher energy density Lower space requirements for compared to rechargeable batteries) makes hydrogen infrastructure allow for hydrogen fuel cell systems ideally suited for powering large, heavy or “vertical” (e.g., flying) rapid and cost-effective scaling modes of transport. Longer ranges go hand-in-hand with faster refueling, slashing wait times, increasing utiliza- tion, and reducing infrastructure requirements. Hydrogen meets digital 3 While initial incremental infrastructure investments might be higher, hydrogen infrastructure is less costly at scale and does not affect the electricity network, while direct charging infra- structure will require significant grid upgrades. Use cases: four examples where hydrogen can enable new digital business models Hydrogen is required for the energy transition. In addition to the applications we describe in our report Hydrogen – scalling up1, hydrogen will also power new digital business models. In this report, we highlight four exemplary use cases that will contribute to cleaner, healthier, and more effi­cient cities over the next ten years. Autonomous taxis and shuttles. Fully autonomous, driverless taxis and shuttles should hit the roads around 2020. Given their zero emissions requirements in many future urban centers and the need to drive long distances and remain always on, they can benefit from hydrogen’s high energy density and fast refueling. Since they operate in cities, the lower space require- ments for hydrogen infrastructure allow for rapid and cost-effective scaling. By 2030, approxi- mately 1.0 million to 1.5 million autonomous taxis and roughly 300,000 to 700,000 autonomous shuttles could be powered by hydrogen fuel cells (out of a total of about 20.5 million autono- mous taxis and shuttles on the roads in 2030). Digitally enabled freight chains. Freight is fueled by the booming e-commerce sector and we foresee Hydrogen provides an ideal that all modes of commercial transport will eventu- energy vector to fuel the whole ally switch to autonomous technology. Hydrogen freight chain provides an ideal energy vector to fuel the whole freight chain – from forklifts, long-haul trucks, short- haul vans, and autonomous ships to last-mile parcel drones. By 2030, hydrogen and fuel cells could fuel approximately 3.0 million to 4.0 million delivery trucks and vans globally. VTOL taxis. Vertical take-off and landing (VTOL) taxis are setting out to revolutionize urban transport, Vertical take-off and landing with companies planning to launch first opera- (VTOL) taxis are setting out to tions already by 2020. VTOLs require a safe, clean, energy-dense, and fast-refueling energy storage revolutionize urban transport to power their flights, and hydrogen could allow high aircraft uptime, long ranges, and an efficient buildup of the start and land infrastructure. With some 20 to 40 percent of electric VTOLs powered by fuel cells, between 4,000 and 8,000 hydrogen-powered VTOLs could fly in the skies by 2030. Data centers. Data centers are the backbone of digitization, receiving, storing, and processing vast amounts of data. With more and more computing power and storage at a lower cost and 1 This report focuses on new applications powered by digital technologies. For the application of hydrogen in all (existing) sectors, please see our global road map titled “Hydrogen – scaling up,” available from the Hydrogen Council Website Hydrogen meets digital 4 digitization permeating all sectors, their energy demand is bound to continue to grow drasti- cally. Data centers already account for an energy demand close to that of France and forecasts predict this will double by 2030. Data center operators are already building on-purpose renew- able generation for their data centers and experimenting with fuel cells for power generation. Hydrogen could provide the power when solar and wind are not available, as well as efficient, responsive backup power. Using hydrogen for these applications has the strong potential to unlock CO2-neutral growth in transport, industry, and cities. In the four use cases described, the potential for hydrogen could amount to about 5 million to 7 million tons of annual hydrogen demand, for a total of some 5.5 million to 6.5 million fuel cells in use by 2030. Outlook: developing new hydrogen applications Many of the above-mentioned applications are currently in the development or demonstration phase. While they may seem futuristic and far off, their tremendous potential is fueling today’s momentum and aggressive timelines. Companies are already testing autonomous vehicles (AVs) on the road in specific use cases today, and some service providers have announced the launch of full self-driving ride-hailing services in 2018. VTOL companies are planning for market demonstrations as soon as 2020 for goods and 2023 for passengers. Given this strong momentum and the development cycles for these solutions, we believe that now is the time to develop and deploy hydrogen and fuel Now is the time to consider, cell solu­tions. With comparatively limited infra- develop, and deploy hydrogen structure requirements compared to conventional mass-market technologies, these new applications and fuel cell solutions also provide an ideal entry point for hydrogen and fuel cells. We, the Hydrogen Council, are convinced that hydrogen can enable many of the new energy demands that will emerge over the coming decades from new digital applications. We stand ready to develop these applications jointly and scale the markets with the shapers of the new economy.