Platinum and hydrogen for fuel cell vehicles

Publications

Executive Summary

This report by AEA technology presents the findings of a short study on hydrogen and fuel cells focusing on the three key issues of likely future platinum availability and cost, hydrogen resource costs and the atmospheric impacts of hydrogen. The aim of the study was to provide DfT with information on which to base its assessment of the implications of and potential for the widespread introduction of hydrogen fuel cell vehicles.

Platinum availability and cost

The following conclusions have been drawn based on a literature review, discussions with Johnson Matthey and spreadsheet modelling of future platinum demand.

Platinum loadings - Fuel cell stacks for hydrogen-fuelled cars currently use about two ounces of platinum, which represents a ten-fold reduction in loading since 1994. Further reductions are expected with an ultimate goal of about 0.2 oz per car. In comparison, autocatalysts use about 0.05 oz platinum and 0.15 oz palladium.
Platinum demand - The main demand sectors for platinum are currently jewellery (41%), autocatalysts (41%), electrical equipment manufacture (6%), chemicals processing (5%) and glass manufacture (5%). The total demand has doubled in the last 20 years and currently stands at 6.1 million oz per year.
Platinum supply - Most of the world's platinum supply comes from South Africa (70%) or Russia (22%). Production is increasing and is expected is to outstrip demand in 2002. A study of South African reserves has concluded that there are sufficient accessible reserves to increase supply by up to 5% per year for each of the next 50 years.
Environmental impacts of platinum - There are significant environmental impacts associated with platinum mining and refining. These include groundwater pollution and atmospheric emissions of sulphur dioxide, ammonia, chlorine and hydrogen chloride. However these impacts are reducing as the industry becomes more environmentally aware. The carbon emitted through the mining and processing of platinum is currently about 180 kg C per ounce. This equates to 360 kg for a current fuel cell car; or 36 kg for a future car with the target platinum loading of 0.2 oz.
Platinum recycling - Recycling of platinum from fuel cell stacks is expected to be technically and commercially viable when there is a volume market for fuel cell cars. Recycling rates are likely to be up to 98% as it is easier to recycle platinum from a fuel cell stack than from an autocatalyst.
Alternatives to platinum - There is currently no practical alternative to platinum as a catalyst for fuel cells in transport applications, except perhaps palladium which offers little advantage in terms of cost or availability.
Platinum availability for fuel cell vehicles - Modelling of likely future platinum demand under different scenarios of fuel cell vehicle penetration suggests platinum availability should not be a constraint to the introduction of fuel cell cars. But this result is sensitive to assumptions about the platinum content of fuel cell engines, the growth in worldwide car sales and the rate at which platinum mining can be increased.
Platinum costs for fuel cell vehicles - The volatile price of platinum may cause difficulties for fuel cell vehicle developers, although recent trends towards greater recycling of platinum should help to stabilise prices and reduce supply uncertainties. At current platinum prices and projected loadings, the platinum component would cost only 3% of the total target cost of a fuel cell engine ($50/kW).

Hydrogen resource costs

The figure below summarises the likely resource costs of hydrogen as a transport fuel in pence per kilometre, as derived from a literature review and subsequent analysis of hydrogen production, delivery and storage costs. The following options were considered:

Centralised reforming of natural gas with pipeline distribution.
Centralised reforming of natural gas with road distribution.
Localised reforming of natural gas.
Gasification and pyrolysis of biomass with pipeline distribution.
Gasification and pyrolysis of biomass with road distribution.
Centralised electrolysis using least cost future renewable electricity and pipeline distribution.
Centralised electrolysis using least cost future renewable electricity and road distribution.
Localised electrolysis using least cost future renewable electricity.
Centralised electrolysis using prospective future nuclear electricity and pipeline distribution.
Localised electrolysis using prospective future nuclear electricity.
Centralised reforming of natural gas with carbon sequestration and pipeline distribution.
Centralised reforming of natural gas with carbon sequestration and road distribution.

In all cases resource costs are based on volume manufacture of hydrogen for passenger cars with prospective future technology.

Graph of UK petrol and diesel price

Atmospheric impacts of hydrogen

The breakdown of organic pollutants and nitrogen oxides (which originate from the combustion of fossil fuels) in the lower levels of the atmosphere (troposphere) by sunlight can lead to excess formation of ozone ('photochemical smog'). This ozone can damage vegetation, building materials and human health. In the upper region of the troposphere, ozone can act as a significant greenhouse gas contributing to climate change.

Replacing fossils fuels with hydrogen should therefore reduce these adverse impacts as a direct result of reducing polluting emissions. However, the situation is more complicated because hydrogen influences the reducing capacity of the atmosphere and therefore by its presence in the atmosphere affects the breakdown processes creating the ozone. While hydrogen is present in the atmosphere through natural processes, increased direct emissions of hydrogen to the atmosphere from human activity may alter the natural chemistry of the atmosphere and exacerbate problems relating to impacts of photochemical pollution (ozone) and climate change - particularly if high levels of organic pollutants continue to be emitted to the atmosphere even in the hydrogen economy.

The impact of hydrogen in the highest parts of the atmosphere (the stratosphere) is also important given its potential to assist in the catalytic destruction of ozone and thereby the potential to confound measures taken under the Montreal Protocol. It is not possible to scope the scale of this problem without carrying out very detailed work.

On balance it is likely that substituting hydrogen for fossils fuels will have a positive environmental impact in reducing both photochemical smog and climate change. There could be an adverse impact on the ozone layer but this is likely to be small, though potentially more significant if hydrogen was to be used as a aviation fuel. However the highly complex nature of chemical reactions in the atmosphere means that we can not be certain about these assumptions without carrying out extensive modelling.

1 Introduction

This report by AEA technology presents the findings of a short study on hydrogen and fuel cells focusing on the three key issues of likely future platinum availability and cost, hydrogen resource costs and the atmospheric impacts of hydrogen. The overall aim of the study was to provide DfT with information on which to base its assessment of the implications of and potential for the widespread introduction of hydrogen fuel cell vehicles.

The specific questions to be answered on platinum were:

How much platinum does a car-sized fuel cell stack currently use?
How is this likely to change by 2020 assuming mass production of stacks?
How did platinum loadings change over time for 3-way automotive catalysts?
How did this differ from predicted reductions?
What is the present world platinum production/consumption?
What is platinum currently used for?
What is the projected demand for platinum for current and prospective applications, including stationary fuel cells?
Where does platinum come from?
Are there accessible reserves in other countries?
How easily could production be expanded?
How would a major expansion of production affect the price of platinum?
What are the environmental impacts of platinum extraction and production? Specifically, how many tonnes of ore must be mined to extract a tonne of platinum and what is the energy and CO2 burden per tonne of platinum extracted?
How cost-effective is the recycling of platinum from fuel cell stacks likely to be?

What are the energy and CO₂ implications of platinum recycling?

Are there alternatives to platinum and how to they compare in terms of the above questions?

In the longer term, do non-rare metal substitutes offer any real prospects?

The objectives of the hydrogen tasks were:

To estimate the prospective future resource cost (by c.2020) of delivering gaseous hydrogen to the consumer, including distribution and infrastructure costs, excluding tax.
To establish whether there are likely to be any climate change implications of hydrogen leakage to the atmosphere and the associated risks and uncertainties.

This report comprises three sections in addition to this introduction. Section 2 presents answers to the 14 platinum-related questions listed above and assesses the implications for total platinum demand between now and 2050 under different scenarios. Section 3 presents an analysis of the future costs of hydrogen for a range of different production and distribution options. Section 4 presents a brief review of the potential for climate change impacts from leakage of hydrogen to the atmosphere.

2 Platinum

Platinum is a precious metal belonging to the Platinum Group Metals (PGMs) widely used in the automotive, jewellery, chemical and electrical industries. Its properties allow it to be used as a catalyst in conventional petrol and diesel catalysts, and also in fuel cell stacks. Commonly, platinum is alloyed with other PGMs such as Rhodium or Palladium to form catalysts. However, platinum is used on its own in hydrogen fuel cell stacks and in diesel engined autocatalysts. The current demand for PGMs is greater than the supply, but historically supply has risen to match increasing demand. This supply is sourced from only a few countries worldwide, and as such, the reserves are geographically limited. The anticipated introduction of fuel cell vehicles has raised many concerns about the future availability of platinum and other PGMs. The mass penetration of fuel cell vehicles as part of the world fleet could have a serious impact on the demand for PGMs, and raises the question of the potential availability of alternative metal catalysts for both fuel cells stacks and autocatalysts. A further constraint is the cost, which is currently about £450 per ounce. Platinum is a traded commodity and, as such, its prices are subject to major annual and monthly price fluctuations.

Platinum and other PGMs are usually quantified in ounces (oz) or troy ounces (troy oz), where 1 oz = 28.3 g and 1 troy oz = 31.1 g. We have tried to use ounces throughout this report for consistency, but note that the literature is not always clear on which units are being used.

2.1 Platinum Loadings

How much platinum does a car-sized fuel cell stack currently use?

How is this likely to change by 2020 assuming mass production of stacks?

How did platinum loadings change over time for 3-way automotive catalysts?

How did this differ from predicted reductions?

Fuel cell platinum loadings have fallen dramatically in recent years, with a reduction of a factor of ten between 1994 and 1999 (Cahn, 2002). According to General Motors purchasing director David Andres, fuel cell stacks for cars currently use about 2 oz of PGM per unit. Pure platinum catalysts are used for hydrogen-fuelled fuel cells, while alloys of platinum with ruthenium are typically used for reformed hydrocarbon fuels to improve the tolerance of the catalyst to carbon monoxide.

Fuel cells. The fuel cell research team at Johnson Matthey believes that loadings can be reduced to about 1 oz by 2010 through better utilisation of platinum and thinner deposition layers (Potter 2002). Other experts at Johnson Matthey and Advanced Power Sources estimate that when fuel cells are commercially produced each engine will require between 0.2 and 0.3 oz of platinum (Evans 2002; Uravan Minerals 2002; Adcock 2000). The lowest laboratory data on platinum loading for efficient performance of fuel cells is currently about 0.8 oz (Borgwardt 2001).

Catalysts. Tighter vehicle emissions controls have meant that PGM loadings for petrol and diesel catalysts are increasing. There is evidence that future emissions legislation in the USA, Europe and Japan will drive even higher PGM loadings (Tom & Das, 2001; Resource Opportunities, 2001), but it is difficult to obtain quantitative projections. Based on current estimates of supply, cost and the amount of PGM needed for the world fleet of cars subject to low emissions regulations, General Motors engineers have been instructed to estimate future loadings of no more than 0.048oz platinum and 0.096 oz palladium (Automotive News 2002).

Note that the above figures for PGM loadings assume a conventional European style car with an engine size of 50-80 kW. Sports Utility Vehicles (SUVs) and light trucks favoured in North America may have much higher platinum requirements.

2.2 Platinum Demand

What is the present world platinum consumption?

What is platinum currently used for?

What is the projected demand for platinum for current and prospective applications, including stationary fuel cells?

Historical and Current Demand

Table 2.1 and Figure 2.1 show trends in the worldwide demand for platinum. The two main applications are autocatalysts and jewellery. Other applications, in descending order of current demand, are the electrical, chemical, glass and petroleum refining sectors.

Johnson Matthey 2002

Figure 2.1: Worldwide demand for platinum by application, 1976-2001 (from CPM Group, 2001)

Figure 2.1: Worldwide demand for platinum by application, 1976-2001 (from CPM Group, 2001)

Each application and its recent demand trend are described below.

Autocatalysts. The main consumer of world PGM supply is the automobile industry. 41% of platinum demand in 2001 was accounted for by autocatalyst use. (Hilliard 2001). PGMs are used in autocatalysts to facilitate the removal of three of the main combustion by-products; CO, hydrocarbons and NOx. Data from Johnson Matthey shows that in 2001 demand for platinum in autocatalysts was 2.52 million oz. In Europe, consumption of platinum for autocatalyst use increased. The use of platinum increased by 375,000 oz in 2001 due to strong growth in production and sales for diesel cars. Diesel autocatalysts only use platinum rather than the mixtures of platinum and palladium commonly used in petrol autocatalysts. In 2001, diesel catalysts accounted for over 70% of auto demand for platinum in Europe (Johnson Matthey plc 2002).
Jewellery. Platinum jewellery is increasing in popularity across the world. Typically the demand has been strong in Japan, the US and Western Europe. China is now showing major demand. Demand for platinum jewellery dropped by 10% in 2001, associated with economic downturn in Japan and the US. However, Chinese demand increased. Platinum jewellery is rarely manufactured using pure platinum. More often it is strengthened by having it alloyed. Platinum purity of a piece of jewellery is measured in parts per thousand. In Western markets, the jewellery market is dominated by the bridal products which are generally less sensitive to price increases. Total demand in the jewellery sector was 2.55 million oz in 2001.
Chemical. Platinum is used in the manufacture of silicone. As most of the platinum is lost during the production process. Silicone is important in the manufacturing of adhesives, synthetic rubber, sealants and a range of personal car products. Platinum demand is closely related to silicone output. Platinum use in other sectors of the chemical industry is small compared to silicone. A small amount is used in the fertilisers. The total demand last year was 290,000 oz.
Electrical. Computer hard disks are the largest single electrical application for platinum, and demand almost doubled between 1998-2000. Over 90% of computer hard disks use a platinum alloy layer (Johnson Matthey plc 2002). A small amount of platinum is used in thermocouples. Consumption in the electrical sector in 2001 was 385,000 oz, representing a fall of 15%, attributed to a sharp downturn in the global electronics industry.
Glass. Glass manufacturing uses platinum. The demand worldwide was driven by growth in China for new televisions and investment in Japan and Korea of LCD glass. The total demand in this sector was 285,000oz in 2001.
Petroleum refining. Petrol refineries use platinum based catalysts in several stages of the refining process, particularly the reforming of naphtha into downstream products (Johnson Matthey plc 2002). The consumption in Europe, China and Japan was stable last year, though is forecast to rise in Latin America and South East Asia. There was an overall increase in demand in this sector to 125,000 oz in 2001.
Other applications. Platinum alloys are used in the dental industry as replacement fillings. Oxygen sensors for cars, sparkplugs, catheters and pacemakers all contain PMG alloys. The demand for other applications rose by 16% in 2001 to 435,000 oz.

Future demand

Projected demand for platinum depends on a number of different parameters; estimated platinum reserves, platinum demand factors, platinum supply factors, penetration rate of fuel cell vehicles and platinum recycling rates. Historically supply has met demand as new resources are exploited on the basis of expectations of demand growth.

Platinum demand projections expect there to be a significant increase in the use of platinum for current automotive technology. Development of fuel cell vehicles, and stringent vehicle emissions standards has led to the development of more advanced autocatalysts for both petrol and diesel cars. J.M Christian (1999) shows that consumption of platinum for autocatalysts is projected to rise by 5% each year. The current market penetration of diesel engined cars has important implications for the future use of PGM. In some parts of Europe, diesel cars have penetrated over 50% of the market (Johnson Matthey plc 2002). Fuel cell vehicles are expected to start to penetrate the market within the next 5-10 years, hence demand for platinum will increase.

Fuel cells are also being considered for stationary applications such as power generation, CHP and portable power (laptop computers etc.). Large-scale power generation applications are likely to use higher temperature fuel cell types such as Molten Carbonate Fuel Cells or Solid Oxide Fuel Cells, neither of which use platinum in the stack. However, platinum-containing fuel cells are being considered for small-scale power generation, CHP and portable power. If these lower temperature fuel cell systems were to provide 10% of new power generation equipment sales by 2010 then this would equate to about 14 GW per year (DTI 1997), or about 0.1 million oz/year of platinum assuming platinum loadings are about twice those required for transport applications. Loadings for stationary applications are likely to be higher as the stacks operate for many more thousand hours and catalysts are degraded by hydrocarbon fuels. Future markets are very uncertain but the mass deployment of fuel cell vehicles is likely to boost the technology and bring down prices such that fuel cells are also attractive in stationary applications. Typically the cost targets for fuel cell engines are about £400/kW for stationary applications and below £50/kW for transport.

Projected demand for platinum and its relationship with the rate of penetration of fuel cell vehicles is explored further in Section 2.7 of this report.

2.3 Platinum Supply

Where does platinum come from?

Are there accessible reserves in other countries?

How easily could production be expanded?

How would a major expansion of production affect the price of platinum?

South Africa and Russia dominate world supply of PGMs, as shown in Table 2.2. South Africa holds about a 70% share of the world supply of platinum and Russia about 22%. The remainder comes from Canada, the US and Zimbabwe. In 2001, South African supplies of platinum rose from 3.8 million oz to 4.1 million oz (8% increase) as producers added to output. Russian supply increased from 1.1 million to 1.3 million oz (18% increase) and North American supplies increased by from 285,000 oz to 350,000 oz (23% increase). The total world supply for 2001 was 5.86 million oz up from 5.29 million oz in 2000, representing an overall increase of 8%.

Table 2.2: Platinum supply by region in 2001

Region	'000 oz
South Africa	4,100
Russia	1,300
North America	350
Zimbabwe and others	110
Total	5,860

Historical trends in supply and demand for platinum are shown in Figure 2.2. The two have generally tracked each other closely over time, but demand has outstripped supply in recent years.

Figure 2.2: Supply and demand of platinum, 1976-2001 (from CPM Group, 2001)

Current supply pressures are likely to ease as South African mines increase output, and Russian exports increase. Long-term supply is more uncertain. The market for platinum group metals (PGM) is very volatile resulting in cyclical price patterns for each of the main PGM metals. The US Geological Survey estimates that world reserves of PGM stand at 3.21 billion oz (Tonn and Das 2001). The majority of platinum reserves are found in the Bushveld Complex, South Africa. Cawthorn (1999) has investigated these reserves and concluded that that 939 million oz is likely to be present within 2km of the surface and mining below this level could be possible in future. He concludes that production in South Africa could be expanded at a rate of 5% per year for at least another 50 years. A major reserve estimated at 139 million oz can be found in the Great Dyke of Zimbabwe, but political problems in the country restrict mining activities. Estimated reserves in the Noril'sk deposit in Russia are 50 million oz. In addition there is by-product output from ores in the US, Canada and Peru (Blair 2000). There are also some deposits in other countries such as Australia and Greenland, but these are not economic at current platinum prices (Evans 2002).

The price of platinum has fluctuated over the last decade, as shown in Figure 2.3, but actually fell during 2001. The price appears to depend on market expectations of future supply and demand. There is also a relationship with the price of other PGMs. For example, the peak in 2000 was largely due to the substitution of platinum for palladium in some catalysts due to soaring palladium prices (Johnson Matthey plc, 2002). Any supply squeeze is expected send prices of platinum higher, and any pre-emptive buying for automotive purposes in the event of an economic turnaround could force prices still higher (Mineweb 2002).

Figure 2.3: Price variation of platinum between January 1990 and October 2001 (from CPM Group, 2001)

Figure 2.3: Price variation of platinum between January 1990 and October 2001 (from CPM Group, 2001)

It is difficult to comment on the likely platinum cost implications of increased demand for autocatalysts or fuel cells. This will be dependent on a number of factors such as industry structure, market pricing mechanisms, industry's ability to temporarily absorb costs in order to promote future markets, and the future supply and demand of other PGMs, particularly platinum. Many of these issues are outside the scope of this report but it is safe to say that supply constraints may cause platinum prices to rise in future.

Security of supply concerns may be alleviated somewhat by the fact that platinum is increasingly sourced "above ground", i.e. an increasing proportion of platinum supply comes from recycled autocatalysts rather than mining (Potter, 2002). This recycled material is owned by automotive companies who are required to take responsibility for end-of-life vehicles in many countries. This should lend stability to the market and reduce the potential impact of political or economic changes in South Africa or Russia.

2.4 Environmental Impacts of Platinum

What are the environmental impacts of platinum extraction and production?

How many tonnes of ore must be mined to extract a tonne of platinum?

What is the energy and CO2 burden per tonne of platinum extracted?

According to Friends of the Earth 12.7 tonnes of ore is extracted for one ounce of platinum (FoE 1996), and jewellery companies give a slightly lower figure of 9.1 tonnes ore per ounce of platinum.

Water and air pollution are both serious problems associated with the mining and processing of platinum. Flotation plants recycle water through several processes before releasing back into the groundwater system. Pollutants then become concentrated in a very small volume of water. Smelting of ores releases sulphur dioxide into the atmosphere. Ammonia, chlorine and hydrogen chloride gases are all released as process emissions. Most significantly, effluent is left at the end of the process. This is the base metal liquor containing iron and zinc, which is removed and the residue metals are precipitated and then landfilled. The presence of the base metal precipitate in landfill can cause groundwater to be contaminated and add to landfill leachate problems. In addition, this process generates sulphates which are converted to sodium sulphate. Some is sold to glass and detergent manufacturers though due to a fall in price, most of it is simply dumped (International Centre for Science and High Technology 2002).

The environmental impact of mining and processing operations is dependent on the grade of ore and the processes used. South Africa is more environmentally aware and uses lower impact processes and remediation. Russia has traditionally been less environmentally aware but the situation is improving (Evans 2002).

A German study (Okoinstitute 1997) on the environmental footprint of autocatalysts found that the mining and processing of each gram of platinum required 23.76 KWh of electricity and 10.45 MJ of natural gas. Based on average emission factors for South Africa (Eskom 1999), this equates to 6.4 kg carbon per gram, or 180 kg C per ounce of platinum. A current fuel cell car contains 2 oz platinum, so the processing of platinum for the fuel cell stack would give carbon emissions of 360 kg C per car. If the target platinum loading of 0.2 oz is achieved, this would fall to 36 kg C per car. This compares with lifetime carbon emissions of about 6,750 kg C per car for a diesel car with an efficiency of 1.392 MJ/km, an average distance travelled of 20,000 km/yr and a lifetime of 12 years.

2.5 Platinum Recycling

How cost-effective is the recycling of platinum from fuel cell stacks likely to be?

What are the energy and CO2 implications of platinum recycling?

The platinum in fuel cell stacks is not currently being recycled in commercial operations (McKinley 2000) though both the DOE and USGS agree that fuel cells will be recycled cost-effectively eventually. Platinum is currently recovered from autocatalysts and the processing is likely to be easier for fuel cell stacks (Potter, 2002).

Two options can be considered for the fuel cell stack:

Re-use of the stack
Recovery and recycling of platinum

The re-use of the fuel cell stack is not possible: improvements in flow field design over the product life mean that bipolar plates ten years old will be 'out of date', even in the absence of degradation.

The USGS suggest that fuel cells would be recycled in a way similar to catalytic converters where the platinum is separated from the stainless steel so both metals can be recycled. USGS also predicted that fuel cells would be recycled on a toll basis, where the consumer retains ownership of the valuable metals. The materials balance in existing toll recycling is better than 98% (only 2% of the metal is lost in the closed loop).

Platinum recycling from fuel cell stacks will comprise three process steps: incineration to assay a sample of platinum, smelting and solvent extraction. It may also be necessary to remove the bipolar plate and electrolyte membranes from the fuel cell stack to increase the concentration of platinum and avoid hydrogen fluoride emissions from incineration (Handley 2000).

In a life cycle analysis of the solid polymer fuel cell for passenger cars: the primary energy demand is reduced by a factor of 20 and the sulphur dioxide emitted is decreased by a factor of 100 and when the platinum is recycled as opposed to mining from the ore (Pehnt 2000). This is illustrated in Figure 2.4. The resultant saving in energy would make the recycling of platinum cost effective at current platinum and energy prices.

A 70 kWe PEMFC stack currently contains approximately 2 oz of platinum but the platinum loading could drop by a factor of ten over the next twenty years (see Section 2.1). Handley (2000) believes that platinum recycling from fuel cell vehicles would still be economically viable even at 0.2 oz per stack.

Figure 2.4: Relative energy and sulphur dioxide impacts of primary and recycled platinum (Pehnt 2000).

Figure 2.4: Relative energy and sulphur dioxide impacts of primary and recycled platinum (Pehnt 2000).

2.6 Alternatives to Platinum

Are there alternatives to platinum and how to they compare in terms of demand, supply, cost, environmental impacts and recyclability?

In the longer term, do non-rare metal substitutes offer any real prospects?

The main alternative to pure platinum catalysts, are those using alternative PGMs. The main competitor to platinum is palladium which is sold at approximately the same price per oz as platinum, and which is closely linked in market terms. Prices of both have remained high since about 1997 when there were delays to Russian exports, which is the primary supplier of palladium. Since then, disruptions to this supply have kept prices high. As a result there has been a decrease in demand for palladium in the autocatalyst industry, and since palladium has a narrower demand base (Mineweb 2002) its future is more uncertain. The global demand for platinum fell last year by 9% at the expense of platinum, particularly in the autocatalyst market. Similarly, demand for chemical applications fell last year by 8%. Palladium in this sector is primarily used in the production of fine and specialist chemicals. Early last year palladium prices soared to over $1000 per oz which lead to an 18% decrease in demand for dental alloys. The impact was more significant in Europe where demand fell by 60%. There was a 70% slump for demand in palladium for electronic applications in 2001.

Trends in the demand for platinum are shown in Figure 2.5. The two main applications are autocatalysts and the manufacture of electrical equipment. Other applications include, in descending order of current demand, dental applications, petrochemical processing and jewellery.

Figure 2.5:Worldwide demand for palladium by application, 1976-2001 (from CPM Group, 2001)

Figure 2.5: Worldwide demand for palladium by application, 1976-2001 (from CPM Group, 2001)

The supply of palladium comes mainly from the Noril'sk deposit in Russia. 4.34 million oz of palladium came from Russia in 2001 compared to 2.01million oz from South African mines. North America and Zimbabwe & others supplied 850,000 and 120,000 oz respectively last year.

The other PGM that is mainly consumed by the autocatalyst market is Rhodium, supplies of which to all sectors fell last year. It is often used with platinum to form an alloy catalyst for petrol engined cars. The use of Rhodium in catalysts last year actually withstood the overall decrease in demand, due to slight increases in metal loading. This helped offset the lower production of petrol cars (Johnson Matthey plc 2002).

A small amount of Iridium is used in catalyst production, though again, the demand for it fell considerably, by 33% last year.

Supply of the rarer PGMs comes as a by-product of mining for other metals, as they are typically found in alloys of platinum and palladium. The irregular price patterns of these metals are linked primarily to a main product, and therefore slow to respond to its own demand conditions (Campbell and Minnitt 2001). Any shift in supply and demand is typically large relative to the small market and causes a large reaction in price.

As the rarer PGMs are mined as by-products of platinum or palladium mining, the impacts on the environment of these individual metals is likely to be on a similar scale to those of platinum and palladium.

There are currently no substitutes for PGMs in the manufacture of autocatalysts or hydrogen fuel cells. Various combinations of PGMs have been shown to be more efficient, but there are no examples of non-PGM metals showing the same level of performance (Financial Express 2000). Johnson Matthey has confirmed that they are not investigating alternatives to platinum for hydrogen fuel cells, and that they do not believe such alternatives would provide any advantage on a £/kW basis (Potter 2002).

A breakthrough has been made by Medis Technologies LTD in developing a fuel cell using a base metal catalyst instead of platinum. The fuel cell is a direct liquid ethanol/methanol fuel cell but nevertheless highlights the possibility of base metal catalysts for low temperature fuel cells. Another low temperature fuel cell option, the Alkaline Fuel Cell (AFC), also uses non-PGM catalysts, but the AFC has other disadvantages such as lower efficiency and the need for pure oxygen supply.

Research is presently being carried out in California to assess the potential of a possible alternative to precious metal catalysts. Biofuel cells make use of the catalytic activity of living cells and/or their enzymes. (Butlin 1999). It has been concluded through research in this area that it is feasible to genetically tailor certain enzymes for reaction on the surface of fuel cell electrodes. This represents a very long term alternative to PGMs which has yet to be proven at a significant scale.

2.7 Projections of Future Platinum Demand

We have developed a simple spreadsheet model to explore the likely impact of hydrogen fuel cell vehicles on the demand for platinum between now and 2050. The model does not provide an accurate prediction of future platinum demand, due to the simplicity of the model and uncertainties in key assumptions, but it is a useful tool for exploring sensitivities to factors such as vehicle demand growth, platinum recycling rate and the rate of penetration of fuel cell vehicles.

This section describes the assumptions and data used for the model, shows the demand projections developed for different fuel cell vehicle penetration scenarios and discusses the implications and uncertainties associated with these projections.

Assumptions and methodology

The model estimates the platinum demand from automotive applications in the years 2000, 2010, 2020, 2030, 2040 and 2050. Demand from non-automotive applications is assumed constant at 2000 levels as we have no information on likely future demand in the jewellery, chemicals, electrical and other sectors. In practice this may underestimate future demand as these applications have grown in recent years.

There is assumed to be no penetration of platinum-containing fuel cells in non-transport applications. Again this is likely to introduce an underestimate as cost targets for stationary applications are less challenging than those for transport applications. However, as discussed in Section 2.2, platinum use for fuel cell power generation is unlikely to exceed 0.1 million oz per year and so the effect is not large.

Total sales of cars worldwide are assumed to increase at a rate of 45% per decade from a 2000 figure of 48.7 million vehicles per year (WVMA 2002) to 312 million vehicles per year in 2050. The rate of growth is based on USDOE (2000) predictions of future car stock growth which indicate that there may be 3 billion cars on the road worldwide by 2050. This is consistent with projections of car demand in the period 2010-2030 in other publications (e.g. Automotive Online 2002). The above figures include light trucks and SUVs which are used interchangeably with cars in North American markets.

The model does not take account of platinum usage in vehicles other than cars and light trucks. Buses may offer an attractive initial market for fuel cells but the worldwide market for buses is very much smaller than the car market, and is growing more slowly.

Cars are assumed to have a lifetime of 10 years such that the stock is replaced after each time period and recycled platinum is returned to the market one time period after it is used in car manufacture. In reality, car lifetimes may increase due to improved materials and the faster pace of growth in developing countries where people are unlikely to be able to afford to replace their vehicles so often. Longer lifetimes would have the effect of reducing car sales and lengthening the time between platinum use in vehicle manufacture and the availability of recycled platinum.

Fuel cell stacks are assumed to last the lifetime of the vehicle. This seems a reasonable assumption since fuel cell stacks being developed for stationary applications are expected to have a lifetime of over 20,000 hours and a car is used for less than 5,000 hours over a typical life (based on 10 years x 20,000 km at 50 km/hour).

Platinum loadings for autocatalysts are assumed constant at 0.05 oz per car throughout the time period (Automotive News 2002). This is based on the assumption that emission standards will continue to become more strict, driving higher loadings, but this will be balanced by improvements in catalyst technology.

Platinum loadings for fuel cell stacks fell from about 20 oz per car in 1990 to 2 oz per car in 2000 (Cahn 2002). This is expected to fall to 1 oz per car by 2010 (Potter, 2002). Ultimately levels are expected to reach 0.2-0.3 oz per car (Evans 2002; Uravan Minerals 2002; Adcock 2000), so 0.3 oz is assumed for 2020 and 0.2 oz for 2030 and beyond.

The rate of recovery and recycling of platinum from autocatalysts is assumed to be 90% from 2010, and the rate of recovery and recycling from fuel cell stacks 95%. These figures are based on current best practice (Handley 2000) and have been confirmed in discussions with Johnson Matthey (Evans 2002). The current rate of recovery from autocatalysts is currently much lower at about 70% because autocatalysts are not always recovered from end-of-life vehicles (Evans 2002).

All cars are assumed to be either hydrogen fuel cell cars or conventional diesel or gasoline internal combustion engine (ICE) cars, i.e. there is no significant penetration of alternative fuels such as natural gas or methanol.

All new ICE cars are assumed to have autocatalysts fitted from 2010. For 2000, it is estimated that 78% of new cars have autocatalysts, based on the proportion of cars manufactured for markets in the North America, the European Union and Japan.

Demand projections

A base case and three scenarios have been modelled. The base case assumes no penetration of fuel cell vehicles while the three scenarios assume different and increasing rates of penetration, as shown in Table 2.3.

Table 2.3: Different scenarios for fuel cell penetration (% of new car sales)

Scenario 3 is probably unrealistic but represents a useful "worse case" scenario from the perspective of platinum demand. Scenario 2 is more realistic but still assumes rapid development of fuel cell technology and the widespread introduction of hydrogen fuelling infrastructure in most countries. Scenario 1 represents a slower pathway whereby fuel cell vehicles find a significant niche by 2040 for urban applications where hydrogen infrastructure is less costly to install.

The demand projections for each scenario are shown in Figures 2.6 to 2.9 overleaf. For scenarios 2 and 3 there appears to be a dip in the platinum required for jewellery in 2040 and 2030, respectively, but this is actually due to a net positive contribution from autocatalysts in those years, i.e. more platinum is returned to the market from recycling than is needed for new autocatalysts.

Figure 2.6: Base case demand projection (million oz Pt)

Figure 2.6: Base case demand projection (million oz Pt)

Figure 2.7: Scenario 1 demand projection (million oz Pt)

Figure 2.7: Scenario 1 demand projection (million oz Pt)

Figure 2.8: Scenario 2 demand projection (million oz Pt)

Figure 2.8: Scenario 2 demand projection (million oz Pt)

Figure 2.9: Scenario 3 demand projection (million oz Pt)

Figure 2.9: Scenario 3 demand projection (million oz Pt)

The base case (Figure 2.6) shows fairly flat net demand for autocatalysts up to 2020 as increasing sales of cars with autocatalysts are balanced by increasing amounts of recycled platinum entering the market from end-of-life vehicles. Thereafter demand increases with car sales such that demand for automotive applications reaches 5.9 million oz by 2050, which is equal to the total platinum demand for all applications in 2000.

Scenario 1 (Figure 2.7) shows the effect of a gradual introduction of fuel cell vehicles to reach the level of 20% of total new car sales by 2050. This pushes up total platinum demand by about 50% in 2050 compared to the base case (from 10.4 million oz to 15.1 million oz) due to increasing demand for fuel cell catalysts, which contain at least four times more platinum per car than the autocatalysts which they displace. In the longer term, the higher percentage recovery of platinum from fuel cells would help to close the gap such that a fleet of fuel cell cars would use only twice as much new platinum as a similar fleet of ICE cars if vehicle demand was constant over time.

Scenarios 2 and 3 (Figures 2.8 and 2.9) show the greater impacts of faster introduction of fuel cell cars. Platinum demand is much higher here for two reasons: the high platinum content of fuel cell cars compared to ICE cars and the 10 year lag between fuel cell car manufacture and platinum recycling from fuel cell stacks. In both scenarios, platinum demand rises to a maximum of about 25 million oz per year, which is over four times the current demand. Interestingly this peak comes earlier in Scenario 2 where the rate of penetration is slower overall. This is because this scenario assumes a large increase from 30% to 70% of total sales between 2030 and 2040, which is a greater increase in sales of fuel cell cars than over any of the time periods in Scenario 3.

Conclusions on future platinum demand and availability

The above projections, coupled with the statements from Cawthorn (1999) about accessible platinum reserves in South Africa, suggest that platinum availability should not be a constraint to the introduction of hydrogen fuel cell cars. If South Africa alone can deliver up to 5% per year additional platinum supply between 2000 and 2050, this equates to an additional 13.6 million oz in 2030, 24.8 million oz in 2040 and 42.9 million oz in 2050, which is sufficient to meet demand under any of the scenarios considered.

However there are many important assumptions and uncertainties built into this model. For example, this additional South African platinum supply would be insufficient to meet worldwide platinum demand by 2040 under Scenario 2 (realistic penetration) if any one of the following alternative assumptions is made:

South African supply can only be increased by 4% per annum instead of 5%.
Jewellery demand grows at more than 2% per annum - it is currently assumed to remain constant but grew by an average of 6% per annum between 1994 and 2001.
Fuel cell stacks require more than 0.3 oz of platinum per car in 2040 - it is currently assumed that only 0.2 oz will be required but this is a factor of 10 less than current stack technology.
The demand for cars grows by more than 55% per decade - it is currently assumed to increase by 45% per decade based on USDOE projections.

The platinum loading for fuel cell stacks is an important factor in determining the commercial viability of fuel cell cars as well as determining potential platinum demand constraints. The price of platinum is not likely to be a constraint to the introduction of fuel cell vehicles if the expected reductions in platinum loadings are achieved. At current platinum prices and the target platinum loading of 0.2 oz per car, the platinum required for a single car would cost about $90 or $1.5/kW, compared to a cost target of $50/kW for the whole fuel cell engine.

3 Hydrogen Resource Costs

The following options have been considered in terms of hydrogen production, delivery and storage costs. In all cases we have assumed volume manufacture of hydrogen in 2020, consistent with the widespread introduction of hydrogen fuel cell cars during the period 2010-2020.

Centralised reforming of natural gas with pipeline distribution.
Centralised reforming of natural gas with road distribution.
Localised reforming of natural gas.
Gasification and pyrolysis of biomass with pipeline distribution.
Gasificationand pyrolysis of biomass with road distribution.
Centralised electrolysis using least cost future renewable electricity and pipeline distribution.
Centralised electrolysis using least cost future renewable electricity and road distribution.
Localised electrolysis using least cost future renewable electricity.
Centralised electrolysis using prospective future nuclear electricity and pipeline distribution.
Localised electrolysis using prospective future nuclear electricity.
Centralised reforming of natural gas with carbon sequestration and pipeline distribution.
Centralised reforming of natural gas with carbon sequestration and road distribution.

This section is presented in five subsections:

Section 3.1: Production costs from natural gas reforming, biomass and electrolysis, including the additional costs of CO2 sequestration.

Section 3.2: Distribution costs using road transport and pipeline distribution.

Section 3.3: Storage costs, for compressed hydrogen gas, liquefied hydrogen and metal hydride options.

Section 3.4: Delivered hydrogen costs, bringing together the production, distribution and storage costs associated with each of the 10 options to give a final delivered cost to the customer.

Section 3.5: Conclusions on hydrogen resource costs.

3.1 Hydrogen Production Costs

Hydrogen from natural gas steam reforming (options 1, 2, 3, 10)

Steam methane reforming (SMR) is a fully developed, fully commercial process. Typical prices quoted for hydrogen production (BP, 2002) by steam reforming are around £4/GJ ($6/GJ). A review of the literature shows typical ranges of £3.2 - 5.2/GJ ($5 - 8/GJ), or for smaller facilities £3.3 to £7.3/GJ. The literature on production costs for SMR are summarised in Table 3.1.

The price is highly dependent on the scale of production, and also on the cost of the natural gas feedstock, as shown in Figure 3.1. Feedstock can account for up to 68% of the total cost of hydrogen production for large plants and around 40% for smaller ones (Padro and Putsche, 1999).

Table 3.1: Production Costs for Steam reforming of natural gas

Facility (Million	Reference	Capital Costs	Hydrogen Price
Nm3/d)		(£/GJ)	(£/GJ)	(£/kg)	(p/km)*
6.75	Foster-Wheeler 1996	6.5	3.6	0.43	0.50
25.4	Blok et al 1997	7.1	3.9	0.47	0.54
2.2	HyWeb, 2002	9.2	7.3	0.88	1.02
Not	CLRC, 2002		3.3 to 7.3	0.40-0.88	0.46-1.02
Specified	FCW, 2002		3.7	0.44	0.52
	DERA, 2001		3.3 to 5.2	0.40-0.62	0.46-0.72

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Figure 3.1: Production Costs of Hydrogen from Natural Gas.

Additional costs of CO₂sequestration (options 11 and 12)

An analysis of sequestration costs and disposal technologies in the UK (Watkiss and Forster, 2001) assessed the most likely sequestration options for the UK for power generation plants, based on an analysis of costs, resource, environmental constraints, and technical maturity. This concluded that the most likely disposal route (indeed probably the only realistic option) was disposal offshore in saline aquifers or depleted oil and gas reservoirs. The study provided a best estimate of the costs of capture and disposal from power generation, including transportation of the CO₂, disposal and verification at £25-38 per tonne of CO₂ ($40 - 60/tCO2).

A number of studies have attempted to quantify the additional costs of SMR hydrogen production with sequestration. These indicate that sequestration might add £1 - 2/GJ to the price of production, though a closer look at the underlying studies (Foster-Wheeler, 1996; Blok et al 1997) show the values are based on somewhat optimistic assumptions. These results are summarised in the Table below.

Table 3.2: Production Costs for hydrogen from natural gas reforming with and without sequestration.

Facility (Million Nm3/d)	Reference	Hydrogen Price			CO2 disposal costs
Facility (Million Nm3/d)	Reference	(£/GJ)	(£/kg)	(p/km)*	CO2 disposal costs
6.75	Foster-Wheeler 1996	3.6	0.43	0.50
Plus sequestration	Assuming capture efficiency 85% (amine scrubbing and ocean disposal)	4.5	0.54	0.63	£15/tCO₂
25.4	Blok et al 1997	3.9	0.47	0.54
Plus sequestration	Assuming capture efficiency 70% (no scrubbing and reservoir disposal)	6.5	0.78	0.90	£8.5/tCO₂)

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Biomass gasification and pyrolysis (options 4 and 5)

The major operating cost is the feed, which can be about 40% of the cost of the hydrogen (e.g. dedicated biomass production could be as much as £30/dT, though waste biomass may be available for almost a third of this price). Direct gasification is expected to be slightly more expensive (i.e. by around 5%). Some literature estimates give relatively low prices, e.g. £5.3 to £8.6/GJ (for BCL/FERCO gasifier) and £6.5/GJ (for WM gasifier), though most estimates are in the range £6.5 to 11/GJ for gasification and £6 to 10/GJ for biomass pyrolysis.

Table 3.3: Costs of Biomass Gasification

Facility (Million Nm3/d)	Reference	Capital Costs (£/GJ)	Fuel price (£/dry tonne)	Hydrogen Price (£/GJ)	Hydrogen Price (£/kg)	Hydrogen Price (p/km)*
0.7	Mann 1995a	24.9	30.3	8.6	1.03	1.20
0.22	Mann 1995a	27.5	10.8	7.0	0.84	0.97
0.022	Mann 1995a	48.3	10.8	11.2	1.34	1.56
	NREL, 1999			5.7 to 11.2	0.68-1.34	0.79-1.56

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Table 3.4: Costs of Biomass Pyrolysis

Facility (Million Nm3/d)	Reference	Capital Costs (£/GJ)	Fuel price (£/dry tonne)	Hydrogen Price (£/GJ)	Hydrogen Price (£/kg)	Hydrogen Price (p/km)*
All reformed
1.0	Mann 1995b	9.7	30.3	8.1	0.97	1.13
0.3	Mann 1995b	11.2	10.8	8.4	1.01	1.17
0.03	Mann 1995b	17.1	10.8	10.1	1.21	1.41
Coproduct
0.81	Mann 1995b	10.9	30.3	5.8	0.70	0.81
0.24	Mann 1995b	12.6	10.8	6.6	0.79	0.92
0.024	Mann 1995b	20.1	10.8	8.3	1.00	1.16

	NREL, 1999			5.8 to 10.1	0.70-1.21	0.81-1.41
	CLRC, 2002			5.8 to 7.9	0.70-0.95	0.81-1.10
	IPPR, 2001			5.9 to 8.5	0.71-1.02	0.82-1.18
	DERA, 2001			5.9 to 8.5	0.71-1.02	0.82-1.18

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Hydrogen from electrolysis (options 6, 7, 8, 9, 10)

Large commercial electrolysers cost between £170-340/kW_elec., but smaller plants are considerably more expensive. The smallest 1 kW_elec electrolysers can cost up to £3,400 with the price only falling to the £170/ kW_elec figure in the MW range.

The literature on production costs for electrolysis is summarised in Table 4. Hydrogen production costs cited in the literature, taking into account all capital and operating costs are estimated at £7 to £16/GJ. Note, no market value is attributed to the low pressure oxygen produced by the process as in most cases it has been estimated that it would cost more to compress than it could be sold for (DERA, 2001).

The major cost of production is electricity used (e.g. at 3 pence/kWh, the cost is 80% of the hydrogen selling price). This is important because of the higher price of electricity (relative to a primary fossil fuel) and can be seen in Figure 3.2 below (along with the effect of economies of scale). The production costs also vary widely according to choice of generation technology (see table).

Table 3.5: Production Costs for Low Pressure Electrolysis.

Facility	Reference	Capital Costs (£/GJ)	Fuel price	Hydrogen Price
Facility	Reference	Capital Costs (£/GJ)	Fuel price	(£/GJ)	(£/kg)	(p/GJ)
6.75 Mill. Nm³/d	Foster-Wheeler, 1996	20.3		16.0	1.92	2.23
	FCW, 2002			13.1	1.57	1.82
2 Mill. Nm³/day	NREL, 1999		1.3 p/kWh	7.8	0.94	1.09
(125MW_elec.)	NREL, 1999		2.6 p/kWh	16.0	1.92	2.23
	Andreassen 1998	20.8		18.8	2.26	2.62
PV based
0.195 (2000)	Mann 1998	318		27.3	3.28	3.80
0.209 (2010)	Mann 1998	158		16.2	1.94	2.26
Wind based
0.247 (2000)	Mann 1998	104		13.2	1.58	1.84
0.279 (2010)	Mann 1998	61		7.2	0.86	1.00

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Costs vary with electricity price as shown in the following figure.

Figure 3.2 Production Costs of Hydrogen from Electrolysis.

Figure 3.2 Production Costs of Hydrogen from Electrolysis.

Costs vary with electricity price as shown in the following figure.

3.2 Hydrogen distribution costs

Hydrogen can be compressed and transport by road in tankers, or distributed by pipeline. The costs associated with road transport are shown in Table 3.6 (from CLRC 2002).

Table 3.6: Costs of Hydrogen Transport by Road.

Distance	Transport Cost Liquefied			Transport Cost Compressed
(miles)	(£/GJ)	(£/kg)	(p/km)*	(£/GJ)	(£/kg)	(p/km)
10	0.2 to 1.0	0.02-0.12	0.03-0.14	3	0.36	0.42
100	0.3 to 1.2	0.04-0.14	0.04-0.17	7	0.84	0.97
200	0.7 to 1.4	0.08-0.17	0.10-0.19	12	1.44	1.67
500	1.3 to 2.0	0.16-0.24	0.18-0.28	27	3.24	3.76
1000	2.5 to 3.1	0.30-0.37	0.35-0.43	52	6.24	7.24

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

Pipeline transport may offer a cost-effective option for short transport distances with high flow rates. For example, the cost for a 10 km pipeline transmitting about 400,000 Nm³/day could be of the order of £1/GJ (Ogden, 1999). Hydrogen is, however, expensive to transport over long distances by pipeline (it requires about 4 - 5 times more energy to move than is needed for natural gas). The energy consumption is almost 1.4% of H₂ flow per 150km, compared with 0.3% for natural gas.

Table 3.7: Transmission Costs by Pipeline.

Trans-mission rate	Reference	Hydrogen Transmission Cost 100 miles			Hydrogen Transmission Cost 100 miles
(GW)	Distance (miles)	(£/GJ)	(£/kg)	p/km*	(£/GJ)	(£/kg)	p/km*
0.15	Amos 1998	1.8	0.22	0.25	9.0	1.08	1.25
	Oney et al 1994	1.3	0.16	0.18	5.8	0.70	0.81
0.5	Oney et al 1994	0.5	0.06	0.07	1.9	0.23	0.26
1.0	Oney et al 1994	0.4	0.05	0.06	1.0	0.12	0.14
1.5	Amos 1998	0.5	0.06	0.07	1.4	0.17	0.19
	Oney et al 1994	0.3	0.04	0.04	0.8	0.10	0.11

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

3.3 Hydrogen Storage Costs

The main options for hydrogen storage at central production facilities or fuelling depots are compressed gas storage, liquefied gas storage and metal hydride storage. Carbon-based systems such as carbon nanotubes are also being developed, primarily as on-board storage systems. The cost of storage will depend on the technology employed and also the size of the unit and the length of the storage period. Typical costs are shown in Table 3.8, based on work by Padro and Putsche (1999).

For the purposes of calculating delivered hydrogen costs (in Section 4), we have assumed short-term compressed gas storage for both centralised and localised hydrogen production options. The storage costs of the two options differ because (a) centralised production requires larger storage units (b) there is a smaller buffer required for localised production because some of the hydrogen can be produced on-site in response to demand.

Table 3.8: Storage Costs.

Storage system	Capital cost	Hydrogen Storage Cost
Storage system	(£/GJ capacity)	(£/GJ)		(£/GJ capacity)
Compressed gas:
Short term (1-3 days):
131 GJ tank capacity	5,888	2.75	0.33	0.38
13,100 GJ tank	1,956	1.30	0.16	0.18
20,300 GJ tank	1,493	1.20	0.14	0.17
Long term (30 days):
3,900 GJ tank	2,114	24.14	2.90	3.36
391,900 GJ tank	672	8.07	0.97	1.12
Liquefied hydrogen#:
Short term (1-3 days):
131 GJ tank	23,300	11.19	1.34	1.56
13,100 GJ tank	4,706	4.37	0.52	0.61
20,300 GJ tank	1,194	3.35	0.40	0.47
Long term (30 days):
3,900 GJ tank	1,103	14.91	1.79	2.08
108,000 GJ tank	690	16.56	1.99	2.31
391,900 GJ tank	237	5.29	0.63	0.74
Metal hydride:
Short term (1-3 days):
131 - 130,600 GJ capacity	2,739	1.89-4.88	0.23-0.59	0.26-0.68
Long term (30 days):
3,900 - 3.9 million GJ capacity	12,008	134.19	16.10	18.68

* Based on assumed efficiency of 1.392 MJ/km from Ricardo.

# Including liquefaction costs.

3.4 Delivered Hydrogen Costs

This section predicts the potential future pre-tax costs of hydrogen delivered to the customer for different hydrogen options listed in the introduction and summarised in Table 3.9. These costs have been estimated from the literature values for production, distribution, storage and refuelling of hydrogen discussed above, and assume volume production of hydrogen for transport applications.

Table 3.9: Summary of production, fuel and distribution options

	Production	Fuel	Distribution
1	Central SMR	Natural gas	Gas Pipeline
2	Central SMR	Natural gas	Road (comp. H2)
3	Local SMR	Natural gas	N/A
4	Gasification / Pyrolysis	Biomass	Gas Pipeline
5	Gasification / Pyrolysis	Biomass	Road (comp. H2)
6	Central Electrolysis	Electricity (from least cost future renewables)	Gas Pipeline
7	Central Electrolysis	Electricity (from least cost future renewables)	Road (comp. H2)
8	Local Electrolysis	Electricity (from least cost future renewables)	N/A
9	Central Electrolysis	Electricity (from prospective future nuclear)	Gas Pipeline
10	Local Electrolysis	Electricity (from prospective future nuclear)	N/A
11	Central SMR with CO2 capture	Natural gas	Gas pipeline
12	Central SMR with CO2 capture	Natural gas	Road (comp. H2)

The results are shown in Tables 3.10 to 3.12 and Figures 3.3 and 3.4.

Table 3.10: Total Delivered Hydrogen Costs by Option, £/GJ

Option	Production Cost, £/GJ		Transmission Cost (100 miles), £/GJ		Storage Cost, £/GJ		Refuelling Cost, £/GJ		TOTAL H2 Cost, £/GJ
	Low	High	Low	High	Low	High	Low	High	Low	High
1	3.27	7.31	0.3	1.8	1.00	2.75	2.61	3.92	7.18	15.78
2	3.27	7.31	6.9	6.9	1.00	2.75	2.61	3.92	13.80	20.90
3	7.18	30.69	N/A	N/A	1.37	2.44	2.61	3.92	11.17	37.04
4	5.67	11.17	0.3	1.8	1.00	2.75	2.61	3.92	9.59	19.63
5	5.67	11.17	6.9	6.9	1.00	2.75	2.61	3.92	16.21	24.76
6	8.29	17.35	0.3	1.8	1.00	2.75	2.61	3.92	12.21	25.82
7	8.29	17.35	6.9	6.9	1.00	2.75	2.61	3.92	18.83	30.94
8	22.32	44.83	N/A	N/A	1.37	2.44	2.61	3.92	26.31	51.19
9	10.10	16.67	0.3	1.8	1.00	2.75	2.61	3.92	14.01	25.14
10	32.83	42.66	N/A	N/A	1.37	2.44	2.61	3.92	36.82	49.01
11	4.41	9.60	0.3	1.8	1.00	2.75	2.61	3.92	8.32	18.07
12	4.41	9.60	6.9	6.9	1.00	2.75	2.61	3.92	14.94	23.19

Production accounts for the major component of the final delivered cost of hydrogen cost, especially for electrolysis where local/on-site generation at refuelling stations can account for almost 90% of the total delivered cost. As already discussed, the major cost component of production is fuel cost (natural gas/biomass feedstock or electricity), illustrated in Table 3.11. Costs are dependent on a range of parameters such as facility size, fuel/feedstock price, location and transmission distance.

Table 3.11: Breakdown of Hydrogen Production Costs by Option, £/GJ

Option	Capital Cost (amortised), £/GJ		*Fixed Annual Op. & Maint. Costs, £/GJ**		Variable (Non-Fuel) Costs, £/GJ		Fuel Costs, £/GJ		Total Production Cost, £/GJ
	Low	High	Low	High	Low	High	Low	High	Low	High
1	1.01	1.40						3.27	7.31
2	1.01	1.40						3.27	7.31
3	3.07							7.18	30.69
4	1.51	3.86						5.67	11.17
5	1.51	3.86						5.67	11.17
6	1.00	2.53	0.97	2.45	0.25	6.08	12.12	8.29	17.35
7	1.00	2.53	0.97	2.45	0.25	6.08	12.12	8.29	17.35
8	1.40	2.99	1.23	2.63	0.25	19.45	38.96	22.32	44.83
9	1.00	2.53	0.97	2.45	0.25	6.43	9.99	8.65	15.22
10	1.40	2.99	1.23	2.63	0.25	24.44	32.10	27.32	37.97
11								4.41	9.60
12								4.41	9.60

* Estimated as 15% of capital cost for electrolysis plants

The delivered costs of hydrogen production on-site may compare favourably with those from central production and distribution when additional infrastructure costs are included (handling, transport and distribution). The various options are compared in Figure 3 with current UK petrol and diesel resource costs. All hydrogen costs are above petrol and diesel costs, to varying degrees. It should also be noted that the hydrogen production figures also do not include profit margins. In line with other studies, the costs of local production by electrolysis appear to be prohibitively high compared to other options. This is largely as a result of the higher price of electricity from the grid compared to that obtained at the point of generation.

Delivered hydrogen costs are also presented in terms of pounds per kg H₂ and in pence per kilometre driven (Tables 3.12 and 3.13).

Range of Potential Delivered Costs of Hydrogen by Option (in £/GJ).

Range of Potential Delivered Costs of Hydrogen by Option (in £/GJ).

Table 3.12: Total Delivered Hydrogen Costs by Option, £/kg

Option	Production Cost, £/kg		Transmission Cost (100 miles), £/kg		Storage Cost, £/kg		Refuelling Cost, £/kg		TOTAL H2 Cost, £/kg
	Low	High	Low	High	Low	High	Low	High	Low	High
1	0.39	0.88	0.036	0.216	0.12	0.33	0.31	0.47	0.86	1.89
2	0.39	0.88	0.83	0.83	0.12	0.33	0.31	0.47	1.66	2.51
3	0.86	3.68	N/A	N/A	0.16	0.29	0.31	0.47	1.34	4.45
4	0.68	1.34	0.036	0.216	0.12	0.33	0.31	0.47	1.15	2.36
5	0.68	1.34	0.83	0.83	0.12	0.33	0.31	0.47	1.95	2.97
6	1.00	2.08	0.036	0.216	0.12	0.33	0.31	0.47	1.47	3.10
7	1.00	2.08	0.83	0.83	0.12	0.33	0.31	0.47	2.26	3.71
8	2.68	5.38	N/A	N/A	0.16	0.29	0.31	0.47	3.16	6.14
9	1.21	2.00	0.036	0.216	0.12	0.33	0.31	0.47	1.68	3.02
10	3.94	5.12	N/A	N/A	0.16	0.29	0.31	0.47	4.42	5.88
11	0.53	1.15	0.036	0.216	0.12	0.33	0.31	0.47	1.00	2.17
12	0.53	1.15	0.83	0.83	0.12	0.33	0.31	0.47	1.79	2.78

Table 3.13: Total Delivered Hydrogen Costs by Option, p/km

Option	Production Cost, p/km		Transmission Cost (100 miles), p/km		Storage Cost, p/km		Refuelling Cost, p/km		TOTAL H2 Cost, p/km
	Low	High	Low	High	Low	High	Low	High	Low	High
1	0.45	1.02	0.042	0.251	0.14	0.38	0.36	0.55	1.00	2.20
2	0.45	1.02	0.96	0.96	0.14	0.38	0.36	0.55	1.92	2.91
3	1.00	4.27	N/A	N/A	0.19	0.34	0.36	0.55	1.55	5.16
4	0.79	1.55	0.042	0.251	0.14	0.38	0.36	0.55	1.33	2.73
5	0.79	1.55	0.96	0.96	0.14	0.38	0.36	0.55	2.26	3.45
6	1.15	2.42	0.042	0.251	0.14	0.38	0.36	0.55	1.70	3.59
7	1.15	2.42	0.96	0.96	0.14	0.38	0.36	0.55	2.62	4.31
8	3.11	6.24	N/A	N/A	0.19	0.34	0.36	0.55	3.66	7.13
9	1.41	2.32	0.042	0.251	0.14	0.38	0.36	0.55	1.95	3.50
10	4.57	5.94	N/A	N/A	0.19	0.34	0.36	0.55	5.13	6.82
11	0.61	1.34	0.042	0.251	0.14	0.38	0.36	0.55	1.16	2.51
12	0.61	1.34	0.96	0.96	0.14	0.38	0.36	0.55	2.08	3.23

Because of the greater efficiency of hydrogen fuel cell vehicles relative to petrol or diesel internal combustion engine powered analogues, the cost in pence per kilometre driven favours hydrogen powered vehicles, as illustrated in Figure 4. However even with this advantage, only option 1 appears capable of delivering car transport more cost-effectively than petrol and diesel at current prices (although this does not take into account profit margins for H₂ production).

Figure 3.4: Range of Potential Delivered Costs of Hydrogen by Option for a 2020 Passenger Car (in p/km).

Figure 3.4: Range of Potential Delivered Costs of Hydrogen by Option for a 2020 Passenger Car (in p/km)

The estimates of hydrogen delivery costs are based on a number of assumptions, which are summarised as follows:

Cost Calculations		2002 UK Fuel Price, p/litre
Large plant lifetime	25 years	Petrol (inc. tax)	73.9
Small plant lifetime	15 years	Diesel (inc. tax)	74.9
Amortisation discount rate	15%	Petrol (pre-tax)	17.07
Fixed annual O&M costs	15% Capital Costs	Diesel pre-tax)	17.92
Availability	90%

2020 Electrolysis Efficiency	Low	High	2020 Car Efficiency, MJ/km
Large scale advanced (nuclear heat assisted)	75%	95%	H2 Fuel Cell	1.392
Large scale advanced	75%	80%	Petrol ICE	1.98
Small Scale	70%	75%	Diesel ICE	1.80

2020 Electricity Costs^[1]	Low	High
Central least cost renewable	1.75	3.27	(On-shore wind)
Central future nuclear	2.20	2.70
Local least cost renewable	5.25	9.82	Est. as 300% of central cost
Local future nuclear	6.60	8.09	Est. as 300% of central cost

Transmission (100 miles)
Pipeline	1.5 - 0.15 GW dedicated H₂ gas pipeline
Road	Truck - as compressed hydrogen

Storage (up to 3 days)
Central Production	Up to 100% of average daily production is stored
Local Production	Up to 50% of average daily production is stored
Pipeline transmission	Storage as compressed gas
Truck transport (comp. H₂)	Storage as compressed gas

Note [1]: electricity costs for centralised generation of hydrogen are based on the Markal work undertaken by AEA Technology for DTI, as requested by DfT and DTI. For localised generation, grid electricity prices are assumed, which average about 3 times the generation cost at present.

3.5 Conclusions on hydrogen resource costs

Cost estimates for hydrogen as a future transport fuel have been made for 12 different possible production and distribution routes based on literature values. The results are presented as ranges as there is considerable variation in the literature values and uncertainty over future fuel and electricity prices.

For all options, including low range assumptions, Hydrogen costs are expected to exceed diesel and petrol on a p/km basis. The costs for hydrogen from localised electrolysis are likely to be higher, due to the higher cost of electricity.

The most cost-effective route for producing hydrogen is expected to be natural gas steam reforming, followed by natural gas steam reforming with carbon sequestration followed by biomass gasification and pyrolysis.

For electrolysis, the major cost component is electricity and different assumptions about future electricity price lead to very different estimated costs for hydrogen. Our estimates are based on renewable and nuclear electricity costs from Markal modelling work carried out for the DTI (AEA Technology 2001). The greatest uncertainty is in the cost of electricity for localised electrolysis of hydrogen, and we are seeking further guidance from DTI on this issue.

4 Atmospheric Impact of Hydrogen

Molecular hydrogen (H₂) is a trace component of the lower atmosphere. Recent extensive surface and some limited altitude measurements give an abundance of about 500ppbv [Novelli et al., 1999] which is increasing at about 5ppb year^-1 [Wuebbles et al., 1997]. This is supported by the work of Simmonds et al. (2000) at Mace Head in Ireland who measured the mean concentration in midlatitude Northern Hemisphere baseline air to be 496.5 ppb over a four year period.

Molecular hydrogen can contribute to the following environmental issues:

ground-level ozone production;
tropospheric ozone production;
climate change;
stratospheric ozone chemistry.

These are discussed further below:

4.1 Ground-level Ozone Production

During summertime, the UK frequently experiences photochemical pollution episodes, which are characterised by concentrations of ozone which exceed environmental quality standards for the protection of human health and vegetation (e.g., crops). Ozone is not emitted directly into the troposphere, but is a secondary photochemical pollutant usually formed from the sunlight-initiated oxidation of volatile organic compounds (VOC, for example hydrocarbons) in the presence of nitrogen oxides (NO_x). Under conditions characteristic of photochemical pollution episodes, its formation and transport can occur over hundreds of kilometres, with the ozone concentration at a given location influenced by the history of the airmass over a period of up to several days [PORG, 1997; NEGTAP, 2001].

One of the key factors in assessing episodic ozone production is the rate of reaction of ozone-precursor compounds with OH (Equation I - click the image below).

The reaction of H₂ with OH is slow with a rate coefficient which is comparable to that for the reaction of OH with methane. The atmospheric lifetime of methane (and hence hydrogen) with respect to this reaction is about 10 years [as cited Wuebbles et al., 1997 or Derwent et al., 2001]. Molecular hydrogen will therefore make an insignificant contribution to episodic ground-level ozone production on the 4-5 day timescale.

4.2 Tropospheric Ozone Production

The complete oxidation of hydrogen to water in the troposphere leads to the production of ozone (O₃), as shown by Equation (II) (click the image below):

The tropospheric chemistry of hydrogen is strongly coupled to that of methane as the oxidation of methane produces formaldehyde (HCHO), as an intermediate. One of the photodissociation channels formaldehyde produces molecular hydrogen.

Equation 3a and 3b

The molecular route (IIIa) is a major source of atmospheric hydrogen [Simmonds et al., 2000]. The free radical route (IIIb) is a significant pathway in the formation of ozone and photochemical smog conditions. As HCHO is also produced in the oxidation of other organic compounds, these compounds are also sources of molecular hydrogen.

In addition to the photochemical sources (i.e., from the oxidation of methane other organic compounds), there are two combustion sources (fossil fuel combustion and biomass combustion). These sources account for ~90% of the total source strength of 77±16 MTonne H₂ per annum, with the remainder attributed to volcanic emissions, the oceans, and production from leguminous plants [Novelli et al., 1999]. Oxidation by hydroxyl radicals (OH) acts as an important sink for hydrogen in the troposphere. The other main hydrogen sink is deposition to earth. Soil deposition is biologically driven, probably using the enzymatic properties of soil hydrogenases [Novelli et al., 1999].

The measurements of hydrogen in the troposphere have been used to construct a budget for molecular hydrogen [Novelli et al., 1999]. The mean concentration of hydrogen in the Northern Hemisphere is lower than that observed in the Southern Hemisphere but show a stronger annual cycle, confirming the significance of the loss by deposition to soils. The deposition of hydrogen is estimated to be the larger loss term by a factor of three although this estimate is not consistent with the isotopic measurements of H₂ and HD. Using the budget developed by Novelli et al. [1999], the lifetime of hydrogen in the atmosphere would be between 2-3 years.

4.3 Climate Change and Radiative Forcing

Hydrogen is not radiatively-active and therefore does not have a direct impact on climate change (i.e., it is not a greenhouse gas). This is for two reasons: (1) the fundamental vibration of hydrogen is not infrared active and (2) the wavelength of the vibration (2.3 µm) is outside the key atmospheric window region between 7-13 µm.

Hydrogen does have an indirect impact on climate change as (a) it is involved in the production of tropospheric ozone, a strong greenhouse gas and (b) it can modify the concentration of methane (another greenhouse gas) through its affect on the concentration of the hydroxyl radical (OH).

Derwent et al. [2001] have used the STOCHEM global 3-D tropospheric chemistry model to calculate the indirect effects of hydrogen (and also CO, CH₄, NO_x) on climate change. In Table IV of their paper (see Table 1 below), they presented global warming potentials that resulted from changes in (a) the OH radical concentration and its affect on methane; (b) the O₃ produced and (c) the CO₂ produced in the complete oxidation of methane and carbon monoxide. The calculations were based on following the pulse emission of the same mass of tropospheric ozone precursor species over a 100-year time horizon.

Table 4.1: Global Warming Potentials for Three Radiative Forcing Mechanisms for a Range of Different Emission Pulses of Tropospheric Ozone Precursors over a 100-year Time Horizon [relative to the GWP(direct CO2) = 1].

Tropospheric Ozone Precursor	GWP from Impact on CH₄Concentrations	GWP from Changes to O₃Concentrations	GWP from Changes to CO₂Produced during Oxidation
Methane (CH₄)	20.0	3.3	2.4
Surface nitrogen oxides In NH (NO_x)	-8.5	13
Surface nitrogen oxides In SH (NO_x)	-24.0	39
Aircraft nitrogen oxides (NO_x)	-65.9	343
Carbon monoxide (CO)	1.0	0.6	1.6
Hydrogen (H₂)	3.4	2.4

Each GWP has been expressed relative to an emission pulse of 1 Tg (as CH₄, NO_x, CO, CO₂ and H₂).

As noted by Derwent et al., the GWP(O₃) values for methane, CO and H₂, on a mass basis, are heavily influenced by the low molecular weight of hydrogen. On a molar basis, the relative radiative forcing indices change order and become 4:14:53 respectively.

4.4 Stratospheric Ozone Chemistry

Together with water vapour itself and methane, molecular hydrogen is an important source gas that controls the stratospheric water vapour budget. These three species act as sources of odd hydrogen (H, OH), which can catalyse ozone destruction in the upper stratosphere.

An equation

4.5 Summary of environmental impacts

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Publisher:	Department for Transport
Publication type:	Research report
Published date:	26 January 2006
Mode/topic:	Roads, Science and research, Sustainable travel, Vehicles

Executive Summary

Platinum availability and cost

Hydrogen resource costs

2.1 Platinum Loadings

2.2 Platinum Demand

Historical and Current Demand

Future demand

2.3 Platinum Supply

2.4 Environmental Impacts of Platinum

2.5 Platinum Recycling

2.7 Projections of Future Platinum Demand

Assumptions and methodology

Demand projections

Conclusions on future platinum demand and availability

3.1 Hydrogen Production Costs

Biomass gasification and pyrolysis (options 4 and 5)

Hydrogen from electrolysis (options 6, 7, 8, 9, 10)

3.2 Hydrogen distribution costs

3.3 Hydrogen Storage Costs

3.4 Delivered Hydrogen Costs

3.5 Conclusions on hydrogen resource costs

4.1 Ground-level Ozone Production

4.2 Tropospheric Ozone Production

4.3 Climate Change and Radiative Forcing

4.4 Stratospheric Ozone Chemistry

4.5 Summary of environmental impacts

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Platinum and hydrogen for fuel cell vehicles

Executive Summary

Platinum availability and cost

Hydrogen resource costs

2.1 Platinum Loadings

2.2 Platinum Demand

Historical and Current Demand

Future demand

2.3 Platinum Supply

2.4 Environmental Impacts of Platinum

2.5 Platinum Recycling

2.7 Projections of Future Platinum Demand

Assumptions and methodology

Demand projections

Conclusions on future platinum demand and availability

3.1 Hydrogen Production Costs

Biomass gasification and pyrolysis (options 4 and 5)

Hydrogen from electrolysis (options 6, 7, 8, 9, 10)

3.2 Hydrogen distribution costs

3.3 Hydrogen Storage Costs

3.4 Delivered Hydrogen Costs

3.5 Conclusions on hydrogen resource costs

4.1 Ground-level Ozone Production

4.2 Tropospheric Ozone Production

4.3 Climate Change and Radiative Forcing

4.4 Stratospheric Ozone Chemistry

4.5 Summary of environmental impacts

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