Analysis of a hydrogen-based transport system and the role of public policy in the transition to a decarbonised economy.

Summary What is the long-term (2030-50) economic and regulatory framework to support the energy transition from fossil fuels to hydrogen in the European transport sector? This research combines theoretical and empirical approaches to answer the following three questions:1. How to design appropriate support policies to overcome market imperfections in the deployment of hydrogen mobility technologies? 2. How to model abatement costs taking into account learning effects (LBD)?3. How to define the optimal deployment trajectory when LBD and convexity of investment costs are present? The paper 'Transition to a Hydrogen Passenger Transport System: Comparative Policy Analysis' scrutinizes support policies aimed at solving market imperfections in the deployment of hydrogen mobility. The paper makes an international comparison of instruments to support vehicle deployment. Ex-post indicators of policy effectiveness are developed and calculated to classify countries according to their willingness to promote fuel cell vehicles (FCEV). Today, Japan and Denmark appear to be the best providers of an enabling environment for hydrogen mobility deployment. Local authorities are introducing strong pricing instruments (such as subsidies and tax exemptions) to make FCEVs more attractive than their gasoline counterparts and are coordinating the deployment of hydrogen infrastructure in the territory.The paper 'Modeling Abatement Costs in the Presence of Learning Effects: The Case of the Hydrogen Vehicle' presents a model of the transition of the transportation sector from a polluting state to a clean state. A partial equilibrium model is developed for an automotive sector of constant size. The social optimum is reached by minimizing the cost of the transition of the car fleet over time. This cost includes the private costs of producing decarbonized vehicles (subject to learning effects) as well as the social cost of CO2 emissions which follows an exogenous upward trend. The paper characterizes the optimal trajectory as a gradual replacement of polluting vehicles by decarbonized ones. During the transition, the equalization of marginal costs takes into account the impact of present actions on future costs via the learning effect. The paper also describes a sub-optimal trajectory where the deployment trajectory would be an exogenous data: what would be the optimal starting date of the transition? The paper presents a quantitative assessment of the substitution of FCEVs for internal combustion vehicles (ICEs). The analysis concludes that FCEV will become an economically viable option to decarbonize part of the German car fleet by 2050 as soon as the carbon price reaches 50-60€/t.The paper 'The Role of Learning Effects in the Adoption of Green Technology: The Linear LBD Case' studies the characteristics of an optimal deployment path of decarbonized vehicles in the case where learning effects and convexity are present in the cost function. The partial equilibrium model of Creti et. al (2015) is used as a starting point. In the linear LBD case the optimal deployment trajectory is obtained analytically. Strong learning induces an earlier transition to green vehicles in the weak convexity case and a later transition in the strong convexity case. This result allows us to revisit the H2 Mobility project in Germany. A stronger learning effect and an accelerated deployment lead to a less costly transition and a shorter period of negative cash flow.