The California government is planning to provide substantially greater funding to increase the sale of fuel-cell electric vehicles (FCEV) and other zero-emission road vehicles in the state, as well as to boost construction of hydrogen fuelling stations and charging infrastructure.

In the second week of January, Governor Gavin Newsom proposed a $4.5bn coronavirus stimulus package within California’s 2021-22 budget—the fiscal year begins on 1 July—including $1.5bn earmarked for the state’s road transport transition.

This proposed spending supports efforts to implement the state’s ban on the sale of new internal combustion engine (ICE) passenger cars and trucks as of 2035, and medium and heavy-duty road vehicles by 2045.

“A significant proportion of this new spending should go towards developing the market for hydrogen fuel vehicles in California” CaFCP

California is a big fish in a small pond when it comes to FCEVs on the road and the number of retail hydrogen filling stations, both nationally and internationally. As of 12 January, the state accounted for most of the 8,931 hydrogen fuel-cell cars ever sold and leased in the US, based on data from the California Fuel Cell Partnership (CaFCP). This is unsurprising because it is the only state where they are sold and it has 43 of the 45 retail-fuelling stations in the country. But the number of FCEVs on California roads is dwarfed by battery electric vehicles (BEVs), with BEV sales now greater in a single month than all-time sales for hydrogen fuel-cell cars.

On the international front, California had the most FCEVs on the road until last year, at which point South Korea edged ahead. But the state has roughly twice as many hydrogen vehicles and filling stations as Japan, again according to the CaFCP. However, the sale of FCEVs in California could be curtailed in the short-term, with the expiry of an important federal tax credit at the end of last year, despite greater state support.

California boost

Approximately $1bn of the stimulus package will be leveraged with private sector capital to increase the pace and scale of construction for zero-emission vehicle infrastructure. It aims to accelerate the rate of adoption of such vehicles by supporting the expansion of the California Energy Commission’s (CEC) Clean Transportation Program.

The other $465mn is to provide extra funding to a range of programmes already in place to subsidise the relatively high cost of battery electric vehicles (BEVs) and FCEVs compared with ICE vehicles. The most substantial programme is the California Air Resources Board’s Clean Vehicle Rebate, which already covers between $4,500 and $7,000 of the cost of electric passenger vehicles, depending on income level of the purchaser.

$1.5bn – California package for road transportation transition

“A significant proportion of this new spending should go towards developing the market for hydrogen fuel vehicles in California, although the split has yet to be formally announced,” Keith Malone, a spokesperson for the CaFCP, tells Hydrogen Economist. “And this is on top of the California Energy Commission’s recently announced infrastructure plan.”

In December, the CEC approved a plan for the Clean Transportation Program to invest up to $115mn to help triple the number of retail hydrogen filling stations in the state to 179—including seven privately funded stations—by 2027. Since 2009, this programme has invested $125mn, helping to open 45 retail hydrogen stations, with another 16 under construction. The proportion of public to private funding for these filling stations has flip-flopped from a 70pc-30pc split, respectively, to the reverse over time as construction costs have dropped.

Federal drag

On the other hand, a tax credit of $8,000 for buyers of fuel-cell cars in the US expired on 31 December. Making matters worse for FCEV sales in California, the same federal credit remains in place for buyers of BEVs—the criteria for ending each was different—while fuel-cell electric cars remain much more expensive than battery electric ones. For example, a 2020 Toyota Mirai starts at $59,545, according to CarsDirect, compared with $40,000 for a base Tesla Model 3.

Fortunately for FCEV sales in California, the present divergence in the federal tax credit should be relatively short-lived, according to CaFCP’s Malone. “The hydrogen lobby in Washington has been fighting hard to have this fixed quickly, and with support from both sides of the aisle,” he says. Nonetheless, the recent power shift to Biden and the Democrats will surely help and the combined effect means “we should see the $8,000 credit for fuel-cell vehicles reinstated before the end of this year”.

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Author: Vincent Lauerman