Is South Africa ready for hydrogen-powered vehicles?

Mining in a world post-Covid has mostly been dominated by one narrative: there is declining demand for resources as economies slip into recession, where infrastructure projects are scaled back or put on hold. The other dominant narrative is that even if there is commodity demand (as is the case with coal at the moment), Transnet lacks enough capacity to move significant volumes to port.

This has forced many mining companies to scale back their operations or look for innovative ways to reduce production costs. It truly is a transition environment. A significant way to address this was to move towards hydrogen-powered vehicles. This is gaining momentum globally as pilot projects are rolling out hydrogen-powered passenger vehicles off the back of the success of their commercial counterparts.

Is South Africa ready for this transition? Moneyweb spoke to Benny Oeyen from Anglo American regarding the groundbreaking H2 Moves Berlin project.

H2 Moves Berlin

Ryk van Niekerk: The H2 Moves Berlin in Germany is an interesting case study of how hydrogen fuel cells are used to power electric vehicles. The project paired Toyota, SafeDriver [Group] and Anglo American and consists of 115 hydrogen fuel-cell-powered electric taxis. The service kicked off at the end of 2022, and the cars have already covered more than one million emission-free kilometres. Anglo American’s relationship stems from the use of platinum in the fuel cells, which triggers a chemical reaction between hydrogen and oxygen to generate electricity.

On the line is Benny Oeyen from Anglo American, and he is speaking to us from Belgium. Benny, thanks so much for your time today. Give us a bit of background about this H2 Moves Berlin project.

Benny Oeyen: It started basically with the idea that it’s not possible that battery electric vehicles by themselves will take 100% of the market. There are certain applications where ‘electric drive with fuel cells’ is better suited than ‘electric drive with batteries’ because both are electric drives – and we are convinced about that.

We believe in fuel cells, we believe in the hydrogen technology, as do a few OEMs [original equipment manufacturers] already – automakers Toyota and Hyundai – and they have these cars available.

But the problem is the wider public does not know [much] about them.

So what we said is we’re going to work together with some fleet operators and with some OEMs to demonstrate to the wider public what these fuel-cell electric vehicles are capable of. That’s why we chose Germany because the critical factor is hydrogen-refuelling stations and Germany has one of the most [widely] developed networks. They already have over 100 in the country and then Berlin is just an ideal city. They have four or five there, which is perfect. There are a lot of activities and Berlin is the capital of the largest economy in the EU and Europe. So there’s a lot of diplomatic activity, a lot of driving back and forth, shuttling to the airport.

We came in contact with Uber and the Uber drivers. They go 24/7. They do shifts of three hours, and then they lease their vehicle to another of eight hours, and then they’ve three shifts of eight hours and they lease a vehicle to another one, etc, etc. Basically they cannot afford to have so much downtime with recharging; these cars have to go all the time, but they want to be emission-free. So there was an ideal application.

So basically we work together with Toyota and Uber there to demonstrate the advantages of fuel-cell electric vehicles to the wider public. That’s the point.

How does it work?

Ryk van Niekerk: Is there a significant difference between a fuel-cell-powered vehicle and a normal electric vehicle, apart of course from not using a battery? Is it a totally new or redesigned vehicle compared to traditional electric vehicles?

Benny Oeyen: No. They’re both electric vehicles and you have two types of electric vehicles. One is battery powered and one is fuel-cell powered. Basically the only difference is how you carry around your electricity. In a battery/electric vehicle, you carry around your electricity, your power, in batteries which are large, heavy, expensive and take a long time to charge – a relatively long time to charge. And in a fuel-cell electric vehicle, you produce your electricity on board. So you have a tank of hydrogen gas, you have a fuel cell, and also a smaller battery. You also have a battery for buffering. Every car basically has a battery. That is the main difference.

So the bottom line is the same. You don’t have an engine with pistons, you don’t have a gearbox and things like that. You have electric motors which drive the wheels.

The only difference is these electric motors need electricity in a battery/electric vehicle. The electricity is stored and carried around by the battery/electric car. So it comes from the battery. In a fuel-cell electric vehicle, the electricity is made on the spot, on board, by putting hydrogen gas into a fuel cell which mixes it with oxygen and out comes heat and electricity.

The big difference is the recharging time. To have a full drive range of 500 kilometres or 400 kilometres for a BEV [battery-electric vehicle], even in fast charging, it’ll take you somewhere between 30 and 40 minutes, if not longer. And at home it takes much longer.

Basically a fuel cell vehicle [involves] exactly the same usage for a customer as today’s petrol or diesel engine. You drive around and when you have 100 km, your car says. ‘Ping, I need fuel’. You drive and with 100km left you drive to the nearest gas station, you fill up and in three or four minutes you have a 500/600/700km range. That’s exactly the same with electric fuel-cell vehicles. You can recharge them immediately. That’s the big advantage.

The cost question

Ryk van Niekerk: Of course everything comes back to money and costs. How does the cost per kilometre of fuel-cell cars compare to traditional electric cars?

Benny Oeyen: Well, let me first tell you, compared to petrol and diesel cars – don’t forget 95% of cars sold in the world or 94% – the vast majority are still petrol or diesel cars, and 99% of the cars driving around in the world are still petrol or diesel cars. So that’s really the comparison. I’ll come to that.

When it comes to pure fuel usage, it [varies] a little bit from country to country. But, for example, in Europe a kilogram of hydrogen costs around €10 to €12, depending a little on the country, and that drives you about 100km. So one kilogram of hydrogen propels your vehicle for 100 kilometres. So you have €10 to €12 per 100km. Fuel in the EU, here in Europe – because that’s where we’re driving – in Germany costs around €1.7 per litre. A typical car of that size consumes around eight litres per 100 kilometres.

So 8 x €1.7 is actually a little more expensive, but it can vary a bit. But, the big picture: the fuel usage for a petrol and diesel versus a hydrogen car today in most European countries is exactly the same. But the total cost per kilometre of course also includes the purchase of the vehicle. And there is another story.

So fuel-cell vehicles are still quite expensive, but so are battery/electric vehicles. They’re still more expensive than petrol and diesel vehicles.

Petrol and diesel vehicles are the cheapest; battery/electric vehicles are somewhere in between, and the fuel-cell vehicles are the most expensive.

Why is that? When you have a new technology you are always very inefficient. You have no scale, and then you start sliding down the cost curve because of scale and because of more efficient technology.

I would say fuel-cell vehicles are where battery-electric vehicles were 10 years ago. So 10 years ago, battery-electric vehicles were super niche. There were almost no sales, and they were incredibly expensive. Then they started coming down the cost curve. But the sliding down of the cost curve is being decelerated right now because the cost of batteries, which is the major component in an electric car, is not falling any more. Actually these raw materials become more expensive. But fuel-cell vehicles at this moment are still more expensive than BEVs. That is absolutely true, but we think this will change in the future.

Ryk van Niekerk: It normally happens with new technology, but it seems significantly more expensive, and hence, I think the adoption rate could be low. Are there commercial vehicles available, or is it only in part of the test programmes like this where they are available?

Benny Oeyen: No, they are available. In Europe and the United States, there are two fuel-cell electric vehicles which are for sale – passenger vehicles, the Toyota Mirai which is a four-door sedan or limousine car. And there is the Hyundai Nexo, which is a C-segment or compact-segment SUV. So you sit a little bit higher. It’s like a Volkswagen Tiguan type of thing, where the Toyota Mirai is more like a Volkswagen Passat, if you want a reference.

They are for sale, you can have them now. But the issue with fuel-cell electric vehicles at this moment is not so much the price. That’s also an issue, but it was with battery-electric vehicles [as well]. But with hydrogen vehicles, with fuel-cell vehicles, the key point is the availability of hydrogen refuelling stations. They’re still quite low in Europe. Germany is starting to get there, but for the rest you need hydrogen-refuelling stations.

That was not the case with battery-electric vehicles because everybody has electricity at home, you could charge at night. Nobody has hydrogen at home – that is a big difference.

But there’s a chicken-and-egg situation a little bit there. So the fuel cell makers – for example, if you talk to automakers and say, ‘Why don’t you introduce more fuel cells?’ they say, ‘Because there are not enough hydrogen stations’. And if we talk to Shell or BP or Total, the refuelling station people, and say, ‘Why don’t you put in more refuelling?’ they just say because there’s no cars.

So it’s a typical chicken-and-egg situation. That chicken-and-egg cycle will be broken by heavy road transport, because for a long distance, 40-tonne full-size lorries or trucks which go a long distance, battery electric vehicles are not an option, because the battery that you have to put in will be the majority of the weight of your car. You don’t have anything left, or not [enough] ‘left’ for your freight, and there it’ll be either diesel or hydrogen fuel cells.

And that’s why many big makers like Volvo and Mercedes, etc, are working on trucks. And once you have the trucks, they will enable hydrogen-refuelling stations along the big transport [routes]. And once you have the hydrogen-refuelling stations, you can start having an ecosystem for larger passenger cars as well.

Is SA ready?

With petrol and diesel prices increasing constantly, one would assume South Africa would be chomping to enable these projects. However, two significant challenges must be addressed to assess demand honestly.

The first one is cost and infrastructure. New technologies are expensive, and these vehicles may be priced out of the reach of many South Africans. Demand will be low until this technology is priced to be commercially affordable, as is the case where even entry-level cars now feature a high-tech infotainment system. Added to this is the cost of building infrastructure to fuel these vehicles.

The second challenge is political. The Department of Mineral Resources and Energy has been using the fuel levy as a low-hanging fruit to reduce the tax gap in South Africa. In a country where 5% of taxpayers foot the bill for 95% of the country, consumer tax is an easy way to address shortfalls. Is there political will to encourage significant investment in hydrogen vehicles when a tax that is obtainable at purchase is popular among politicians?

The secret to global disruption is that there needs to be a demand for this disruption. Will these vehicles become commercially available in South Africa? They probably will. However, the timeline may not be as short as some people think.