Total Unconvinced by Hydrogen Cars as France Unveils Subsidies

(Bloomberg) -- France’s biggest energy company expressed skepticism about the economics of hydrogen-powered vehicles as the government unveiled subsidies to promote the gas as way of cutting fossil-fuel consumption and fighting climate change.

“We find it difficult to be convinced it has a future in 10 years time,” Total SA Chief Executive Officer Patrick Pouyanne said in an interview with local daily Ouest France published on Friday. “This is still very expensive.”

On Thursday, the French government announced plans to spend 100 million euros ($117 million) by 2023 to subsidize the purchase of vehicles powered by hydrogen and encourage cleaner production of the gas. The policy aims to cut France’s carbon emissions caused by the production of hydrogen -- used in everything from oil refining to the production of glass, steel and fertilizers -- by 10 percent within five years, while encouraging a more than 20-fold increase in vehicles powered by the gas.

The government will subsidize private companies to help them purchase 5,000 vans and 200 trucks, buses, boats and trains powered by hydrogen by 2023, it said in a presentation late Thursday. That compares with just 260 vehicles currently using hydrogen cells in France. It will also subsidize the installation of electrolyzers to help manufacturers produce hydrogen on site instead of trucking it in.

Hydrogen Advocates

French companies such giant gas producer Air Liquide SA, McPhy Energy SA, a maker of electrolyzer and hydrogen filling stations, and Engie SA, the country’s second-largest utility, are advocating greater use of hydrogen to power vehicles. However, carmakers PSA Group and Renault SA have fallen behind Japan’s Toyota Motor Corp. and Korea’s Hyundai Motor Co. in that domain, focusing instead on developing battery-electric cars.

Proponents of hydrogen point out that the fuel cells can run for a lot longer than batteries, and filling a car tank takes just a few minutes. It’s also a way to produce and store clean energy if electrolyzers are using excess wind and solar power, as fuel cells create electricity by chemically fusing with hydrogen with oxygen in the air, emitting just steam in the process.

”Hydrogen will be a necessary complement to the electric mobility,” Engie head of business to business, Franck Bruel, said at a conference in Paris on Friday. “It’s the solution to the intermittency of new energies” and will ”therefore contribute to the decline in their costs.”

Read more: California’s Eight-Figure Hydrogen Subsidies Aren’t Paying Off

France’s Alstom SA is testing a hydrogen-powered train in Germany, while McPhy said it has a pipeline of ”very short term” commercial opportunities worth 80 million euros. McPhy is in ”advanced talks” for electrolyzer projects of more than 100 megawatts, CEO Pascal Mauberger said Friday, as he welcomed the government plan.

McPhy shares rose as much as 12 percent, the most in almost a year, in Paris trading and were 6.7 percent higher as of 11:35 a.m. local time.

However, hydrogen fuel cells remain expensive, while huge investments in lithium-ion battery technology are pushing down prices of electric vehicles. There is also limited availability of hydrogen filling stations.

“The electric battery is still one step ahead,” said Pouyanne, adding that Total will develop a network of electrical charging stations while investing in natural gas for trucks.

French Targets

Big Oil is preparing for a future in which fossil fuels are diminished in the energy mix. In April, Total agreed to buy Paris-based utility Direct Energie, after previously acquiring French battery maker Saft Groupe SA and taking a minority stake in France’s Eren Renewable Energy SA.

Rival Royal Dutch Shell Plc has said hydrogen may offer a solution to storing power in the long term, and last year raised the idea of a grid based on the lightest element. Shell entered a joint venture with partners such as Daimler AG to dispense hydrogen from its filling stations in Germany, aiming to roll this out at 400 locations by the early 2020s.

France targets 100 hydrogen stations by 2023, up from about 20 currently. That number would rise to between 400 and 1,000 by 2028 to supply as many as 50,000 vans and 2,000 heavy vehicles, the government said. France will also test the injection of a fraction hydrogen in natural gas networks.

By contrast, France aims to have 600,000 electric vehicles on the roads by 2022, up from 120,000 now, and 400,000 hybrids, Economy Minister Bruno Le Maire said on May 22. The government will help increase the number of electric charging points almost five-fold to 100,000 by then, assuming sales of electric cars meet its target.

©2018 Bloomberg L.P.

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