Californian legislators mull $300m hydrogen refuelling subsidy — despite admitting that it is a ‘waste of money’

Legislators in California’s state assembly are today (Monday) debating a proposal to carve out up to 30% of the state’s billion-dollar Clean Transportation Programme (CTP) to subsidise new hydrogen filling stations — despite the proposal’s lead author describing the plan as a “waste of money” and the state’s regulator warning that there is insufficient demand to warrant further investment.

Lobbyists, include a group comprising oil giants Chevron and Shell and automaker Toyota, want to increase the proportion of CTP funds allocated to hydrogen filling stations to 30% — amounting to around $300m over the next decade — up from 20% currently spent on hydrogen.

But state representative Eloise Gómez Reyes and state senator Lena Gonzalez, co-authors of a bill designed to overhaul the CTP, are hoping to reduce it from 20% to 10%, having failed to secure enough support from their Democratic colleagues to scrap the subsidy altogether.

The current draft of the AB-241 bill on vehicular air pollution, now in its third reading in the California State Assembly, would slash funding for hydrogen filling stations to $10m per year.

Significantly, the cash, which was previously tied to California’s target of reaching 200 hydrogen filling stations per year — would only be deployed until California achieved a “sufficient network of hydrogen refuelling stations” as determined by the state’s energy agency, the California Energy Commission (CEC).

But the bill has been formally opposed in the state Assembly by the California Hydrogen Coalition, whose members include Shell and Toyota, and the California Hydrogen Business Council, whose members include electrolyser and fuel cell manufacturers Bloom Energy and Cummins, both of which want to increase CTP funding for filling stations to $30m per year or $300 million over a decade to create a network of 1,000 filling stations, five times’ the size of the current state target.

Moreover, the CEC has warned that $300m is “highly unlikely” to be sufficient to fund 1,000 filling stations, noting that each filling station built so far has required $1.5m in state funding. This means that $300m would fund around 200 extra filling stations.

The passage of the bill into law depends on the acquiescence of four Democrat senators who have expressed concerns to Reyes about reducing the amount of subsidies available for hydrogen vehicles — meaning that the legislation could yet be amended upwards in favour of hydrogen filling stations.

If it does, it will fly against advice from the state’s regulator, the California Air Resources Board (CARB) and the CEC, which have warned that there is insufficient demand to warrant the even the current pipeline of hydrogen filling stations.

In a joint report filed earlier this year, CARB and CEC reported that the state’s current 200-filling station target is likely to be met as soon as 2027, and that these will provide more than four times’ the capacity of the car manufacturers’ best-case expected volumes of hydrogen fuel cell electric vehicles (FCEVs) in California.

According to CARB and CEC, part of the problem is that there are only two models of FCEVs available on the market in California, which is dominated by Toyota’s Mirai model, complemented by a few sales of Hyundai’s Nexo.

In addition, existing hydrogen filling stations have been blighted by technical problems and shortages of fuel — with the CEC holding user workshops this in an effort to improve customer experience of subsidised hydrogen networks.

Further subsidising hydrogen filling stations, even at current levels, raises the risk of stranded assets, the duo warned, unless there is a significant number of new FCEV models available in the California market.

“If global automakers do not produce new hydrogen FCEV models and drivers do not embrace these vehicles, then publicly funded hydrogen fuelling stations will not become self-sufficient and the current public funding allocation, 20% through the CECs Clean Transportation Program for passenger, light-duty hydrogen fuelling stations, may become stranded,” the CEC and CARB warned. “Allocating more public funding to passenger, light-duty hydrogen FCEV infrastructure may exacerbate the potential for stranded publicly funded assets.”