It’s always interesting to figure out why irrational things occur. In the case of London’s foolish hydrogen buses, apparently Wrightbus going into administration aka bankruptcy proceedings led to well-connected people like Wrightbus owner Jo Bamford’s father, Lord Bamford, the man who inherited British firm JCB and was also knighted for it at some point, lobbying power brokers to buy the lipstick-covered pigs.

I’ve been looking at the odd history of hydrogen vehicle trials globally. Lobbyists convince credulous politicians whose hearts are often in the right place that hydrogen is the answer. The politicians don’t do any due diligence before unlocking big pots of money. Cash-strapped fleet operators salivate and take the money with the thick strings of hydrogen for energy attached and buy very expensive pumping facilities and very expensive vehicles and then spend what’s left on very expensive hydrogen and very expensive maintenance.

Then someone else in government realizes that money is pouring into a bottomless pit and turns off the taps. The hydrogen fleet is quickly abandoned and the fleet operator tries to find money to buy sensible and much cheaper electric charging facilities and vehicles, ones that are also lower maintenance than their diesel trucks and buses.

I call this The Odyssey of the Hydrogen Fleet, and it’s a tragicomedy in six acts that’s restaged in different places every year or two. I’ve documented a couple of dozen examples in Canada, the USA, Europe and even China, covering delivery vans, buses, trains and forklifts.

But there are some places that just never learn from their mistakes and keep repeating them. Good intentions about hydrogen a decade or 25 years ago have led to calcification of brains and bureaucracy. Frothy and delusional projections about a massive future demand for hydrogen vehicles has led to long-lived grant programs, business development promotions, luring companies to focus on hydrogen instead of something useful and generally creating the strategic conditions for failure.

Strategic conditions for failure? Yes. As always, I return to Richard Rumelt’s kernel of strategy, laid out clearly in the only necessary book on strategy to read, Good Strategy Bad Strategy: the Difference and Why It Matters. It’s one of those essential books like Bent Flyvbjerg’s How Big Things Get Done: The Surprising Factors That Determine the Fate of Every Project, from Home Renovations to Space Exploration and Everything in Between, Michele Wucker’s The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore, Jane Jacob’s The Death and Life of Great American Cities, Kishore Mahbubani’s Has China Won?: The Chinese Challenge to American Primacy and Malhotra and Bazerman’s Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond. If you think you have informed opinions on the subjects of these books and haven’t read them, then you don’t actually have a well informed opinion.

The kernel is simple: reality, policy, plan. Have a very clear eyed, dispassionate and accurate perspective on what is actually going on. Figure out how your organization will take advantage of that to create value or avoid risks. Establish a set of monitored actions that are aligned with reality and policy.

What is reality when it comes to hydrogen?

Hydrogen is a global warming problem on the scale of all of aviation globally because it’s made from fossil fuels and the resulting carbon dioxide is dumped into the atmosphere. Hydrogen isn’t a carrier of energy today because it’s inefficient, ineffective and expensive, and it’s very unlikely to be a carrier of energy in the future for the same reasons. It’s an industrial feedstock for an industry which will be going away, oil refining, and for two industries which will stick around, ammonia fertilizer and methanol used in chemical processes. About 85% of hydrogen today is manufactured at exactly the same spot it’s used, in the volumes required, when it is required, because it is so expensive to store and move around.

Fuels made from green hydrogen would be five to ten times as expensive per unit of useful energy as batteries and motors on a total cost of ownership basis, and two to three times as expensive as biofuels. Green hydrogen isn’t going to get much cheaper and will always be a lot more expensive than hydrogen made from fossil fuels. Every total cost of ownership comparison that includes electrification and biofuels and isn’t done by an organization selling hydrogen as hard as they can shows hydrogen for energy is a dead end.

Hydrogen demand is more likely to fall rather than rise. The biggest consumer, a full third, is the oil refining industry, peak oil demand is this decade, and the type of crude that requires the most hydrogen — heavy, sour, impurities filled crude like Alberta’s — will be first off the market.

Hydrogen for energy firms have only limped along despite booking net losses for a decade or longer because governmental money and tax breaks for investors are keeping them afloat. They are mostly dead ends, and throwing more money at them won’t make them succeed any more than the previous 25 years of throwing money at them did. Their success at sucking money out of the innovation funding system is starving much higher potential technologies, and sucking talented engineers away from useful work.

I’ve read, analyzed and published on a lot of hydrogen strategies from around the world. Morocco’s is the only one that makes the slightest sense. Reading between the lines after translating it from French it says “We’ll take all the money these foolish Europeans will give us to build wind, solar, transmission and electricity storage, we’ll electrify our economy and we’ll make green ammonia fertilizer for ourselves and Africa. If there’s any hydrogen left over, we’ll sell it to Europe at a premium.”

These epicenter cities and even a US state fail on the basics of the strategy. They don’t get reality right, despite the glaring evidence of the basics of science, economics and a global history of failures of hydrogen for energy. As a result, they create bad policies and then wasteful action plans. Let’s take a brief tour through Foshan, Vancouver, California, Essen and Aberdeen.

Foshan, China

Let’s start in China. The example there is possibly the only one that might have a rational although still doomed perspective on reality. The city of Foshan, population 8 million, just inland from Hong Kong, has an industrial policy based on hydrogen fuel cells and vehicles. It’s about the only city with fuel cell buses in the country, with a thousand of them on their roads as well as a fuel cell tram. Even they have announced plans for 2,441 electric buses, but they are long on hydrogen. Remember, the rest of China is just electrifying everything, with around 1.2 million electric trucks and buses — and still rising — operating quietly in every part of the country.

When I say that it might have a rational reason for what it’s doing, that’s because some odd things in China are best explained by their export-oriented industrial policies. They have a tendency to look at what the developed world is buying or at least is saying it will be buying, then building a bunch of that locally so that they have strong experience and products, and then selling those things to the west.

I documented that tendency, which sometimes fails but usually succeeds, around their nuclear generation program, where instead of maintaining one of the required conditions for success for scaling nuclear — sticking to a single design or two for the entire fleet — they built one of everything including a European EPR in order to be able to sell any technology and services to other countries. That’s led to their nuclear deployment stagnating, with decreasing gigawatts of capacity added to the grid every years since 2018. In 2023, they only managed to add 1.2 GW to their grid, with the 0.2 being a small modular reactor, something else which ignores the kernel of strategy.

So Foshan, a single mid-sized Chinese city, not even in the top ten by population, has the most experience by far with hydrogen buses and trucks of any jurisdiction in the world. They undoubtedly have the cheapest fuel cells and the cheapest refueling infrastructure, and they are undoubtedly as reliable as it’s possible to make hydrogen vehicles and refueling technology, which is middling. I couldn’t find any evidence that they’d managed to sell any fuel cell buses or trucks outside of the country, or even outside of the city, but you can see the logic.

If any jurisdiction falls into the hydrogen truck or bus trap, they would rationally buy from Foshan manufacturers or Foshan supplied firms in order to waste as little money as possible and get as good a product as possible, but of course, rational purchasing decisions and hydrogen fleets aren’t on the same tab of the spreadsheet, or even in the same spreadsheet.

Meanwhile, of course, Chinese electric buses, trucks and cars are being sold globally. A full third of the electric buses Europe bought in 2022 were fully Chinese or had European shells and seats bolted onto Chinese frames, batteries, motors, steering, suspension and power management. Normally it’s a safe bet for China to read the signals from developed nations and build any thing, stupid or not, that it appears that they are set on buying. However, hydrogen for energy isn’t a growth market and developed countries are full of companies like Ballard, HTEC and Wrightbus with good connections and their hands out.

Foshan chose wrong. Can’t win every time.

Vancouver, Canada

That’s actually the metropolitan area around Vancouver because there are 24 different cities or things that operate like cities in the urban area of 2.6 million. Yeah, pretty chopped up and due for some serious streamlining if provincial and local politicians had any sense.

Home of Ballard Power of course. I spent a bit of time looking at Ballard’s long history of abject failure recently. Formed 45 years ago, it was originally focused on lithium batteries, but pivoted away from the winning technology to focus on hydrogen fuel cells. Yeah, failure number one. Since 2000, they’ve lost an average of $55 million of other people’s money between government money pouring into money pits and credulous investors continuing to throw good money after bad. They are in a $1.3 billion hole per their annual reports, yet are still treated as if they are a credible business.

Ballard being in the city has led to the growth of an entire ecosystem of firms in the hydrogen for energy space around them. HTEC makes hydrogen refueling stations and operates the five in BC, the sole one in Quebec that no longer has most of its customers since that province returned all the Toyota Mirais when their lease expired last year, and one in the USA.

They’ve been living off of governmental largesse since 2005, with their most recent taxpayer infusion being $20.5 million over two announcements for hydrogen fuel cell port vehicles, drayage trucks and some other larger trucks. Looks like 12 vehicles in total, although there might be some double counting between announcements, but easily over the usual clip level of a million of government money per vehicle. Nice work if you can get it, and in BC, there are a lot of firms on the hydrogen grants and tax breaks from losses bandwagon.

As a reminder, A.P. Moller Maersk recently published the results of their total cost of ownership for terminal vehicle decarbonization and hydrogen lost badly. Battery electric won by a kilometer, of course. So that part of the $20.5 million is already a complete waste.

Also as a reminder, the recent North American Council on Freight Efficiency Run on Less two week real world data gathering initiative found battery electric trucks were able to run over 1,600 km of real world routes in a single day, fully capable of all drayage tasks with zero fuss, and were loved by their drivers. And more recently the CEO of European heavy truck manufacturer MAN stated clearly that there was absolutely no way hydrogen trucks had a chance of competing. So the rest of the $20.5 million is wasted too. More good money after bad.

Greenlight Innovation is one of the less obnoxious of local firms, building and selling fuel cell test benches for Ballard and other firms in the region, as well as international firms who just don’t get it yet like Hyundai. They also get governmental largesse of course, with $1.1 million in taxpayer money flowing to them just a couple of months ago. But they are fulfilling a real, if deluded, demand from the other organizations. They wouldn’t exist without the delusion, but neither would a bunch of coffee shops, hair salons and the like in the region.

The BC government is throwing money at pipeline firm Enbridge and natural gas utility firm FortisBC to re-study something that’s been studied to death, blending hydrogen in existing pipelines. Previous studies in multiple parts of the world have already confirmed that there’s no need for hydrogen distribution pipelines to residences or commercial buildings because there’s no use for the substance in them, that hydrogen blending would be very expensive, and that hydrogen blending would have approaching zero benefits for anyone except the pipeline owners.

There are 54 independent studies that violently agree on that bit about homes and commercial buildings, by the way. But that doesn’t stop the hydrogen for energy ball of fail. It has inertia. Too bad it has no intelligence or wisdom.

The province claims 50% of Canadian hydrogen related firms and 60% of fuel cell research are in the province, meaning metropolitan Vancouver. It even turns out that my local member of elected parliament at the provincial level, Josie Osborne, is the one who gets quoted a lot of the time, when the Premier isn’t showing up at press conferences about the subject as he did related to the one actually sensible hydrogen for energy project I’ve found in looking at projects around the world.

Someone just this morning ask if I’d spoken with Osborne, but I don’t force my opinions into discussions and no one in the Vancouver hydrogen bubble is interested in reaching out to me it seems. I have multi-billion dollar clients on multiple continents working on real decarbonization initiatives and I’d be a downer locally. I’d happily help Osborne, the province and Invest Vancouver get some reality if they contact me.

The good hydrogen for energy effort is the Prince George solution where a Chemtrade plant produces 12 tons of hydrogen a day as a byproduct of making paper bleaching chemicals, a hydrogen for energy local firm Teralta will take out the water and chlorine at a new building, the hydrogen will be piped a few hundred meters to a Canfor pulp and paper mill, and Canfor will displace about a quarter of the massive amounts of natural gas it burns by burning hydrogen instead. The province is forcing FortisBC, the gas supplier, to clean up its act, so it’s paying for the hydrogen and charging Canfor only what it costs for natural gas. Even then, it’s only a quarter of Canfor green house gas emissions at one mill that are being avoided, when electrification of the heat would avoid virtually all of them.

Guess which hydrogen for energy initiative received exactly no funding from the government. That’s right, the one that’s actually sensible, has a business case and is lowering greenhouse emissions a lot. None of the other hydrogen firms have actually avoided any emissions because it’s fossil hydrogen 99% of the time, or like the 2010 Winter Olympics Whistler bus fleet, trucking green hydrogen in from Quebec. That was a 9,000 kilometer round trip for a diesel truck to allow a Whistler bus to drive about 10,000 kilometers.

The province and the local economic commission waste an awful lot of time, money and energy on the hydrogen ecosystem here, and seem oblivious to its global history of failure and how much money it’s lost over the years. The hydrogen bubble here has vulcanized rubber for a skin.

California, USA

The Golden State has been a center of hydrogen for energy illusions for probably 30 years. The city of Sacramento, the center of state government, has hydrogen lobbying associations, had five hydrogen refueling stations, now three it seems, something like 3,000 fuel cell vehicles in the region and late last year no hydrogen to put into them.

Most recently that I’m aware, although it’s hard to keep up with California’s gusher of money for dead end hydrogen plays, the county of Santa Cruz picked up a cool $59 million of taxpayer money for 57 hydrogen buses, maintaining that pricey clip level. Per a local contact, there’s a deeply vitriolic hydrogen chorus there that attacks anyone who questions the merits of the molecule, par for the course and part of their vulcanized rubber bubble membrane.

Now the state has been awarded $12 billion from the federal government as part of the hydrogen hub initiative, although hub is an odd way to describe what California is doing. They are spreading the money far across the major port cities of San Diego, Los Angeles and San Francisco/Oakland. They still think hydrogen has a play in maritime shipping, and despite the global successes of battery electric trucks and pretty much non-existent hydrogen trucks, in that space as well.

As shown above, no port vehicles, no trucks. But what about maritime shipping?

The IEA just released an e-fuels report which found that manufacturing synthetic fuels from green hydrogen, even with deeply optimistic electricity rates but more realistic capital costs, would cost 4-6 times what the maritime industry is used to paying for fuels. And pointed out that it was double the cost of biofuels for shipping, but maybe, just maybe, some magic would happen and by 2050 synthetic fuels would only cost as much as biofuels, if biofuels didn’t get cheaper in the meantime.

But that $12 billion won’t spend itself. I wasn’t able to find anything in California’s plans that would move the needle on any real world uses for hydrogen like decarbonizing existing methanol and ammonia. Safe to say most of those billions will be burned away in a clean hydrogen flame, delivering nothing of any particular value.

Yeah, California is going to waste a lot more taxpayer’s money. Sure, the intentions were good and the logic was viable 25 years ago, but it’s 2024 and the climate crisis is upon us. Time to kick hydrogen off of the governmental grant gravy train. No such luck with the new infusion of other people’s money.

Essen, Germany

And now to Europe, where the hydrogen hype bubble is deflating somewhat as only homeopathic levels of deals on hydrogen are actually completed and the actual costs are starting to sink in. Essen is a city of about 580,000 in the west of Germany, about as close as you can get to Rotterdam without having to learn Dutch. It’s smack dab in Germany’s industrial heartland, where the chemical and petroleum industry dominates. Lots of molecules for energy types.

Oh, you’re interested in the evaporating deals? Let’s start with Boston Consulting Group. It published a white paper late last year which showed that only 0.2% by tonnage of the roughly 1,300 announced hydrogen power-to-x deals in their data set had reached operation. And Bloomberg New Energy Finance reported late last year that of the 149 deals in their bigger-deals-only database, only 7.9 million tons, 10% of the proposed 2030 capacity, had any off take agreements, and further, only 13% were actually firm. That means that for all the headlines and hype, there’s only a commitment for anyone to buy about 1/120th of total current demand for hydrogen. Anything else? Yes, the International Energy Agency’s early January update made it clear that hydrogen deals were close to non-existent, but biofuels were hot.

Why all the deal failures? Well, spreadsheet jockeys had to actually put firm numbers into complete cost cases and the results led to a lot of deals quietly being shelved because there was no way anyone would buy the resulting hydrogen or derivatives. BCG reported that the consensus illusion of €3 per kilogram green hydrogen in 2030 was complete nonsense, and that €5 to €8.80 was the reality, with the top end of that reality more likely. DNV was paid by the European pipeline industry to cook the books to show that hydrogen delivered from offshore wind farms in pipelines was going to be cheaper than anything else, they managed, barely, to show that and even then green hydrogen was going to cost ten times what LNG imports cost per unit of energy.

Delusions of low-carbon hydrogen being cheap are evaporating like the boil off of hydrogen that’s been liquified at 20° above absolute zero.

Essen was in the news this week because it’s receiving 19 hydrogen buses for its transit organization. It’s also receiving €4.8 million in funding for its bus fleet from the government, a number I assume to be about €15 million or so short of the actual governmental funding for the fleet. Googling in German isn’t my strong suit despite a couple of years living in the country as a kid, so I’m assuming governmental largesse is present at a million per vehicle but I can’t find it.

What’s going on in Essen? Is it stuck in a decarbonization dead end it created by trying to clean up 25 years ago and creating a big ball of fail that refuses to stop rolling like Vancouver and California? No, of course not. It’s fossil fuel central.

As a reminder, the fossil fuel industry needs hydrogen for energy to be a thing so that their fossil fuel reserves can continue to be extracted by the billions of tons a year, have their carbon stripped off and put back underground at governmental expense, and sell the remaining hydrogen for exorbitant profits. As such, fossil fuel centers like Essen are all over hydrogen for energy.

Yeah, lots and lots of focus on hydrogen for energy in Essen as a result. Like the ammonia and methanol industries, they think that they are going to get rich, rich, rich from hydrogen and its derivatives for energy plays.

Instead, the industries which use hydrogen will have significantly higher expenses and will try to replace hydrogen with other substances. Methanol, for example, will turn to biomethane as much as possible, which while more expensive than natural gas, has the advantage of still being cheaper than green hydrogen.

Essen thinks it’s at ground zero of a new gold rush, but it’s really at ground zero of a tulip bulb bubble. It won’t end well. The city and indeed the region will be hollowing out unless they remove their reality filters.

Aberdeen, Scotland

And now, across the Channel to Scotland, specifically Aberdeen, home port for the UK’s offshore oil and gas industry, and increasingly its offshore wind industry. That city, uniquely, has more hydrogen buses than electric buses of all the cities I’ve looked at globally. Only one more, 25 to 24, but still, having a majority of buses being hydrogen is deeply unusual given that they cost so much to buy, fuel and maintain.

It takes real perseverance and commitment to manage a majority of hydrogen vehicles in a fleet. And a lot of governmental funding, which the UK and Scotland appear to be providing by the dump truck load.

I was expecting to be speaking in Aberdeen in February. The big publishing house DC Thomson has created a North Seas energy transition publishing venture, set of conferences and related material. They ran the first event back in November, and I was tentatively pencilled in to keynote the February event. After the first event, they reassessed and are doing something else. As a result, I’ve spent a couple of hours with the freelancer who they’ve hired to report on hydrogen, a freelancer with no energy or STEM background, to try to inoculate him against hydrogen for energy hype.

Aberdeen’s focus on hydrogen is not, like BC and California’s, a stagnant left over from trying to do the right thing a quarter of a century ago when it seemed as if the exorbitant costs of the substance would be required to fight climate change. No, it’s part and parcel of the fossil fuel industry’s desperate attempt to keep its geological hydrocarbon reserves, revenues and profits from entering free fall.

That doesn’t mean, of course, that all of the people working hard on hydrogen buses and the like are not sincerely trying to do the right thing. It just means that they are misguided and cognitively biased toward hoping that hydrogen will perpetuate their city’s wealth. But it won’t.

And so, the end of our brief world tour of regions that have succumbed to bad visions of reality and hence are hurling bags of money at the wrong people, people who are gladly taking all of that cash and putting it their pockets while achieving next to nothing of any value.

To the good burghers of Vancouver, Fushan, California, Essen and Aberdeen, take a step back. Remove your reality distortion filters and get some rock solid guidance. Then figure out how to get out of the mess you are making.

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