Investigating the Investments Required to Transition New Zealand’s Heavy-Duty Vehicles to Hydrogen

Abstract

Reducing greenhouse gas emissions in the transport sector is known to be an important contribution to climate change mitigation. Some parts of the transport sector are particularly difficult to decarbonize; this includes the heavy-duty vehicle sector, which is considered one of the “hard-to-abate” sectors of the economy. Transitioning from diesel trucks to hydrogen fuel cell trucks has been identified as a potential way to decarbonize the sector. However, the current and future costs and efficiencies of the enabling technologies remain unclear. In light of these uncertainties, this paper investigates the investments required to decarbonize New Zealand’s heavy-duty vehicle sector with green hydrogen. By combining system dynamics modelling literature and hydrogen transition modelling literature a customized methodology is developed for modelling hydrogen transitions with system dynamics modelling. Results are presented in terms of the investments required to purchase the hydrogen production capacity and the investments required to supply electricity to the hydrogen production systems. Production capacity investments are found to range between 1.59 and 2.58 billion New Zealand Dollars, and marginal electricity investments are found to range between 4.14 and 7.65 billion New Zealand Dollars. These investments represent scenarios in which 71% to 90% of the heavy-duty vehicle fleet are replaced with fuel cell trucks by 2050. The wide range of these findings reflects the large uncertainties in estimates of how hydrogen technologies will develop over the course of the next thirty years. Policy recommendations are drawn from these results, and a clear opportunity for future work is outlined. Most notably, the results from this study should be compared with research investigating the investments required to decarbonize the heavy-duty vehicle sectors with alternative technologies such as battery-electric trucks, biodiesel, and catenary systems. Such a comparison would ensure that the most cost effective decarbonization strategy is employed.