i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4

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The role of hydrogen cars in the economy of California

Guihua Wang*
Institute of Transportation Studies, University of California, 1 Shields Ave, Davis, CA 95616, USA

article info abstract

Article history: Hydrogen has been proposed as an alternative transportation fuel that could reduce energy
Received 23 August 2010 consumption and eliminate tailpipe emissions when used in fuel cell vehicles (FCVs). To
Received in revised form investigate the potential effects of hydrogen vehicles on California’s economy over the
22 October 2010 next two decades, we employed the modified Costs for Advanced Vehicles and Energy
Accepted 24 October 2010 (CAVE) model and a California-specific computable general equilibrium model. Results
Available online 15 December 2010 indicate that, even in the aggressive scenario, hydrogen cars can only account for a minor
fraction of the on-road fleet through 2030. Although new sales could drop sharply,
Keywords: conventional gasoline cars and carryover pre-2010 vehicles are still expected to dominate
Fuel cell vehicles (FCVs) the on-road vehicle stock and consume the majority of transportation energy through 2030.
Hydrogen transportation fuel Transportation energy consumption could decline dramatically, mainly because of the fuel
Macroeconomic impacts economy advantage of FCVs over conventional cars. Both moderate and aggressive
hydrogen scenarios are estimated to have a slightly negative influence on California’s
economy. However, the negative economic impacts could be lessened as the market for
hydrogen and FCVs builds up. Based on the economic optimization model, both hydrogen
scenarios would have a negative economic impact on California’s oil refining sector and, as
expected, a positive impact on the other directly related sectors that contribute to either
hydrogen production or FCV manufacturing.
ª 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.

1. Introduction a lifecycle analysis approach. Greene et al. [5] explored FCV

California has enacted aggressive zero emission vehicle (ZEV)
policies to improve air quality, cut greenhouse gas emissions,
and reduce fossil fuel consumption. Hydrogen has been
proposed as an alternative transportation fuel that could
eliminate end-of-tailpipe emissions when used in fuel cell
vehicles (FCVs). Furthermore, hydrogen vehicles could
substantially improve urban air quality even from a lifecycle
emissions perspective [1,2].
Jacobson et al. [3] quantified the potential health benefit
from air quality improvements in the U.S. due to promoting
a hydrogen fleet with a few feedstock options. Colella et al. [4]
examined the potential change in U.S. primary emissions and
energy use from switching to a hydrogen FCV fleet, using
market penetration scenarios in the U.S., including hydrogen
infrastructure development and FCV technology learning
progress. Similarly, it is meaningful to examine the potential
market trajectory of hydrogen vehicles in California. More
than that, our study also estimates, over the time period
2010e2030, the on-road stock of FCVs, transportation energy
use, and gasoline savings due to hydrogen vehicle penetra-
tions into the market.
Moreover, the widespread adoption of alternative vehicles
could also change the economy structure. Ogden et al. [6]
estimated societal lifecycle costs of hydrogen vehicles.
Kromer and Heywood [7] forecast the incremental cost of
alternative vehicles, including FCVs, compared to the refer-
ence conventional vehicle. National Research Council [8]

* Fax: þ1 530 752 6572.

E-mail address: wghwang@ucdavis.edu.
0360-3199/$ e see front matter ª 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijhydene.2010.10.083
 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4 1767

conducted a buy-down cost analysis to quantify the govern- 16,000

ment/private funding support requirement of developing 14,000

VMT (miles/year)
hydrogen infrastructure and vehicle technologies, as 12,000
compared to conventional gasoline vehicles. However, few
10,000
studies have examined the macroeconomic impacts of alter-
8,000
native fueled vehicles on the statewide economy [9,10]. This
6,000
study also investigates the potential influence of hydrogen
vehicle penetration scenarios on California’s economy over 4,000

the next two decades, including several important macro- 2,000

economic metrics in 2008 dollars or in physical units: state 0
output, gross state product, state personal income, and jobs. 0 2 4 6 8 10 12 14 16 18 20
Vehicle age (years)

Fig. 2 e Average annual VMT and vehicle age for a typical

2. Methodology car [13].

This study focuses on passenger cars only. As such, light

trucks are not included in the fleet analyzed. We use an
average, mid-size car to represent the corresponding car fleet.
Since there is much uncertain in vehicle technology adoption
over time, we particularly investigate the near-term period
2010e2030 which is recognized as an important transition
stage for advanced technology vehicles such as hydrogen
FCVs [8]. To estimate costs, energy use, and macroeconomic
impacts of hydrogen vehicles on California, this study builds
on two models: the Costs for Advanced Vehicles and Energy
(CAVE) model and the Environmental Dynamic Revenue
Analysis Model (EDRAM).
We employ the modified CAVE model to estimate energy
consumption and vehicle/fuel costs associated with hydrogen
transition scenarios [9]. CAVE, developed specifically for Cal-
ifornia, is a steady-state scenario model exploring advanced
vehicle penetrations in the transportation market. The model
develops a representative scrappage curve to project future
electric-drive vehicle stock and, for each vehicle sales
scenario, estimates the corresponding vehicle cost by using
learning curve techniques. For great details on the CAVE
model, see Wang [9]. For simplicity, the modified CAVE
assumes that new car sales over 2010e2030 are only made up
of conventional internal combustion engine vehicles (ICEVs),
regular hybrid electric vehicles (HEVs), and hydrogen fuel cell
vehicles (FCVs). We assume similar size and comparable
performance for all drive trains. Conventional cars and
regular hybrids are included as a point of comparison. The
modified CAVE involves both hydrogen supply options and
FCV penetration schemes in California.
To estimate macroeconomic impacts of FCV penetrations,
we employ the EDRAM, a California-specific computable
general equilibrium (CGE) model. EDRAM captures the
fundamental economic relationships between producers,
consumers, and government in California [10,11]. At equilib-
rium, the quantity supplied (which is a function of price) is
equal to the quantity demanded (which is also a function of
price) in the market. Using nonlinear optimization, EDRAM
solves for the equilibrium price that clears the market. Note
that CGE models are not forecasting models. In contrast,
EDRAM is an economic optimization model, although it is
calibrated to exactly reproduce the economic conditions of the
base year 2003 [10].
3. Modeling assumptions
For benchmarking, vehicle fuel economy is in miles per gallon
of gasoline equivalent (mpgge). Fig. 1 shows the projection for
new car fuel economy which corresponds to the EPA
combined city/highway drive cycle. On a lower heating value
(LHV) basis, 1 kg of hydrogen is equivalent to 1 gallon of
gasoline. The current hydrogen FCV runs at 72 miles per kg
[12], and future fuel economy assumes to grow linearly by

100 6
Gasoline price ($/gallon)

5
Fuel economy (mpgge)

80
4
60
3
40
2

20 FCV HEV ICEV 1

0 0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

Fig. 1 e Projection for EPA-rated new car fuel economy in Fig. 3 e Projection for gasoline retail prices in California, in
miles per gallon of gasoline equivalent. 2008 dollars [14].
1768 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4

New vehicle sales (cars/year) 1,200,000 18,000,000

16,000,000
1,000,000

Vehicle stock (cars/year)

14,000,000

800,000 12,000,000
Pre-2010
10,000,000
600,000 FCV ICEV
8,000,000 HEV
HEV
ICEV FCV
400,000 6,000,000
All sales
4,000,000
200,000
2,000,000

0 0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

Fig. 4 e New car sales mix and resulting vehicle stock: the moderate scenario.

1.4% annually. In addition, we assume, over the next two however, represents a very possible penetration trajectory of
decades, the remaining pre-2010 cars on average to be oper- hydrogen cars, as it was built on the California Zero Emission
ated at 27 mpg, with 10,000 miles/year. Vehicle (ZEV) requirements over coming years. In the
Fig. 2 presents the typical VMT of an average car in the U.S. moderate scenario, the penetration of FCVs will start to
The magnitude of 5300 miles/year applies to cars of 15 years increase rapidly in 2020 and keep ramping up through 2027. In
and older [13]. For simplicity, we assume all kinds of cars e 2030, hydrogen cars will account for 20% of new sales of all
conventional cars, regular hybrids, and hydrogen cars e have California cars, and conventional ICEVs account for 63%
the same annual mileage. The annual VMT data presented in (Fig. 4). In contrast, the aggressive scenario needs strong (and
Fig. 2 are used for analysis of the vehicles other than those almost exclusive) hydrogen policy support, which reflects
pre-2010 cars. somewhat maximum potential of hydrogen vehicle penetra-
Fig. 3 shows California’s gasoline retail prices in the tions in California. In the aggressive scenario, the penetration
coming years, based on California Energy Commission (CEC) of FCVs will start to ramp up in 2018 and the rapid increase
high-price projections. The AEO 2009 Reference Case crude oil period lasts 8 years as well. FCVs will account for 58% of new
prices were used to generate CEC’s high-price forecasts [14]. sales in 2030, and conventional ICEVs account for 25% (Fig. 5).
The on-road vehicle stock, composed of cars sold during
2010e2030, is estimated by vehicle technology category,
4. Results and discussion accounting for vehicle scrappage. Based on a representative
scrappage curve, the average lifetime of passenger cars is
4.1. FCV market scenarios about 16.8 years [9]. Figs. 4 and 5 also present the estimated car
stock by vehicle category. Inevitably, the carryover of pre-2010
Generally, the rollout of advanced vehicles takes place at the vehicles plays an important role in the next two decades. As
national level. Therefore, within the context of the entire U.S. time goes by, conventional ICEVs are expected to dominate
market for FCVs, California is assumed to account for 50% of the on-road fleet and, in the moderate scenario, account for
U.S. new sales in 2010 and drop linearly to 20% in 2030. The on- about three-fourth of the 2030 stock. For comparison,
road stock of all cars is projected by using California’s mobile hydrogen cars are expected to account for 8% of the 2030
emission factor model, EMFAC2007. New car sales each year stock, which is much lower than their sales share 20%.
account for 6.3% of the on-road fleet [15]. In the aggressive scenario, even with strong hydrogen
There is too much uncertainty in forecasting the FCV policy in place, hydrogen cars can only account for 23% of the
market shares in the future sales mix. The moderate scenario, on-road fleet in 2030. Although the new sales drop sharply,

1,200,000 18,000,000
New vehicle sales (cars/year)

16,000,000
1,000,000
Vehicle stock (cars/year)

14,000,000

800,000 12,000,000
Pre-2010
10,000,000
600,000 FCV ICEV
8,000,000 HEV
HEV
ICEV FCV
400,000 6,000,000
All sales
4,000,000
200,000
2,000,000

0 0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

Fig. 5 e New car sales mix and resulting vehicle stock: the aggressive scenario.
 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4 1769

600,000

Hydrogen consumption (kg/day)

500,000

Central SMR
400,000 Onsite SMR
Electrolysis
300,000

200,000

100,000

0
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Fig. 6 e Hydrogen demand growth and near-term supply options: the moderate scenario.

ICEVs still contribute as high as 59% of the on-road stock in market and play a leading role; meanwhile, the market for the
2030; moreover, the carryover of the pre-2010 fleet contributes two small-scale alternatives will shrink as a result of relatively
7%. The slow turnover rate limits modernization of the vehicle high cost of generating hydrogen. Yang and Ogden [16]
fleet, and it makes little sense to expect advanced vehicles like discussed common delivery modes for a central hydrogen
FCVs to make a major contribution to meeting even growing plant and pointed out that a pipeline delivery system is the
travel demand over the next few decades. least-cost option for dense areas with large hydrogen demand.
Note that, in both scenarios, regular hybrids have the same Melaina [17] estimated the number of hydrogen refueling
level of market penetration (from 5% of new sales in 2010 stations initially needed to ensure adequate consumer
linearly to 17% in 2030) and, as a result, the same level of coverage.
accumulated on-road stock. The penetration of central SMR is, to some extent,
hydrogen demand-driven. As stated earlier, the FCV pene-
4.2. Hydrogen supply options tration ramps up starting in 2018, in the aggressive scenario,
and in 2020, in the moderate scenario. That signals to stim-
In the next two decades, fossil fuel-based hydrogen is expected ulate the development of central SMR and pipeline delivery
to dominate hydrogen supply for transportation applications, systems which could begin to supply the majority of
particularly hydrogen made via steam methane reforming hydrogen in a later year. Therefore, in the aggressive
(SMR) of nature gas in California. In the long run, however, scenario, central SMR will start to supply hydrogen in 2021,
FCVs will end up running on renewable hydrogen, such as three years earlier than in the moderate scenario. Because
solar- or wind-based hydrogen from electrolysis. This study a portion of hydrogen demand distributes in a statewide
assumes that both onsite SMR and distributed electrolysis, scattered manner and can only be economically met by onsite
equally important, phase in to meet initial hydrogen demand. production, distributed SMR and electrolysis will remain in
The rationale is that they are capable of being operated at small the fuel supply market for a long time. Figs. 6 and 7 show the
scale and flexible in station siting. Eventually central SMR with estimated hydrogen demand and near-term supply options
pipeline delivery will enter the transportation hydrogen for the two scenarios.

1,800,000

1,600,000
Hydrogen consumption (kg/day)

1,400,000 Central SMR

Onsite SMR
1,200,000 Electrolysis
1,000,000

800,000

600,000

400,000

200,000

0
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Fig. 7 e Hydrogen demand growth and near-term supply options: the aggressive scenario.
1770 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4

Gasoline savings (billion gallons/year)

Fuel consumption (billion gge/year) 6 0.7

5 0.6

Pre-2010 0.5 HEV

4 ICEV FCV
HEV 0.4
3 FCV
0.3
2
0.2

1 0.1

0 0.0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

Fig. 8 e Transportation energy consumption and resulting gasoline savings: the moderate scenario.

Gasoline savings (billion gallons/year)

6 1.6
Fuel consumption (billion gge/year)

1.4
5

Pre-2010 1.2 HEV

4 ICEV FCV
1.0
HEV
3 FCV 0.8

0.6
2
0.4
1
0.2

0 0.0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

Fig. 9 e Transportation energy consumption and resulting gasoline savings: the aggressive scenario.

4.3. Hydrogen and gasoline consumption more efficient hydrogen cars spreading at a fast rate, espe-
cially in the aggressive one. Fuel economy improvements of
Figs. 8 and 9 show estimated transportation energy ICEVs and HEVs are conducive to the drop of overall energy
consumption, in gallons of gasoline equivalent (gge) per year, demand as well.
by vehicle category. Over the next two decades, conventional With regards to energy consumption in 2030, hydrogen
ICEVs and pre-2010 vehicles (mostly ICEVs, too) unsurpris- cars account for 4% and 13% for the moderate and aggressive
ingly take up the majority of transportation energy for both of scenarios, respectively. In terms of vehicle stock in 2030,
the hydrogen scenarios. These cars collectively consume 79% FCVs account for 8% and 23% of the on-road fleet in the
and 68% of transportation energy in 2030 for the moderate and moderate and aggressive scenarios, respectively. The
aggressive scenarios, respectively. However, energy demand comparison highlights a fuel economy advantage of FCVs
significantly goes down for both scenarios, due mainly to the over ICEVs.

300,000
60,000
US market
250,000 50,000
Average vehicle cost ($/veh)

FCV: Moderate 40,000

200,000 HEV
ICEV
30,000
FCV: Aggressive
150,000
20,000

100,000 10,000
2020 2025 2030

50,000

0
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Fig. 10 e FCV cost learning curves.

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4
Table 1 e The cost of hydrogen delivered to the users, in
2008 $/kg of hydrogen. 2

FCV cash flow ($Billion/year)

Electrolysis Onsite SMR Central SMR
0
Current technology 8.50 3.86 3.41 2010 2015 2020 2025 2030

Future technologya 6.72 3.08 2.96 -2

a Future technology is assumed to be available in 2020 and beyond. -4 Hydrogen expenditure

Gasoline savings
FCV expenditure
-6 Net cash flow

Figs. 8 and 9 also show the effects of gasoline savings rela-

-8
tive to conventional ICEVs. Although regular hybrids are more
efficient than conventional cars, their “net” gasoline savings Fig. 12 e Hydrogen and FCV cash flow: the aggressive
would be much dwarfed by hydrogen cars. FCVs running on scenario.
hydrogen completely abandon gasoline. On the other hand,
only the moderate efficiency difference between an HEV and
a reference ICEV matters when estimating gasoline displace- Putting together hydrogen fuel costs, vehicle costs, and
ment, as HEVs rely heavily on gasoline, too. resulting gasoline savings, Figs. 11 and 12 present the net cash
flow (or called the net cost) for each of the two scenarios. Both
indicate that year 2028 is expected be the break-even year
4.4. Vehicle and fuel expenditures when a zero net cash flow occurs. However, the aggressive
scenario achieves the learned-out vehicle price three years
There is much uncertain in projecting FCV costs or retail pri- earlier than the moderate scenario.
ces in the future. Today there are about 400 FCVs on the road The moderate scenario causes a maximum cash flow of
in the U.S., mainly for demonstration purposes, and none of $0.9 billion in 2022, while the aggressive scenario is maxi-
them are commercially sold. To forecast the sales price of mized at $1.1 billion in 2019. That is, the largest cost amount
a hydrogen car in a future year, we employ the learning curve occurs within three years of ramp-up. Recall that the
approach which takes into consideration learning-by-doing moderate scenario assumes that the penetration of FCVs
and technology advancement over time [9]. Fig. 10 shows the ramps up in 2020, while the aggressive scenario increases
estimated FCV costs (or retail prices) each year, in 2008 dollars. rapidly in 2018. Therefore, it is safe to say the first two or three
The aggressive scenario results in a lower vehicle cost than years of FCV marketing ramp-up deserves as strong policy or
the moderate scenario. Eventually, FCVs are estimated to funding support as possible.
meet the final learned-out price of $24,600/car, while a refer-
ence ICEV incurs a price of $19,000/car and an HEV $22,000/car 4.5. Overall economic impacts on California
[9]. Estimating the final price of an FCV, in mass production,
employs the incremental cost compared to the reference ICEV By using the EDRAM model, we investigate four major
projected by a recent study (Kromer and Heywood, 2007). Note macroeconomic indicators in real 2008 dollars or in physical
that we assume California accounts for 50% of new FCV sales units: state output, gross state product (GSP), state personal
of the entire U.S. market in 2010 and goes linearly down to 20% income (SPI), and employment. The future business-as-usual
in 2030. (BAU) scenario assumes no or few hydrogen vehicles; the BAU
Table 1 presents the delivered cost of hydrogen, based on fleet is composed of only conventional ICEVs and regular
a recent hydrogen transition study where industrial prices of hybrids. The economic impacts of moderate and aggressive
electricity and natural gas are used for hydrogen generation hydrogen scenarios are examined relative to the BAU
analysis [8]. In our analysis, we employ the following feed-
stock prices in 2008 dollars: $0.10/kWh for electricity and 5,000
$8.00/mmBtu for natural gas.
BAU, 2020
4,000
2 BAU, 2030
3,000
FCV cash flow ($Billion/year)

2,000
0
2010 2015 2020 2025 2030

-1
1,000
Hydrogen expenditure
Gasoline savings
-2 FCV expenditure 0
Net cash flow
Output GSP SPI Jobs
-3 ($Billion) ($Billion) ($Billion) (x10,000)

Fig. 11 e Hydrogen and FCV cash flow: the moderate Fig. 13 e Macroeconomic indicators for the business-as-
scenario. usual (BAU) baseline scenario.
1772 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4

2 (Fig. 13), the negative impacts are expected to be very small. It

Incremental impacts of hydrogen scenarios vs. the BAU scenario
0
Moderate, 2020 Aggressive, 2020 Moderate, 2030 Aggressive, 2030
-2
-4
-6
Output ($Billion) GSP ($Billion) SPI ($Billion) Jobs (x10,000)
-8
Fig. 14 e Incremental economic impacts of hydrogen
scenarios relative to the BAU scenario. The vertical axis
represents any of the following: state output in billions of
2008 dollars, gross state product (GSP) in billion dollars,
state personal income (SPI) in billion dollars, or state jobs
in 10,000s.
scenario. Note that regular hybrids remain the same pene-
tration/population across the reference and hydrogen
scenarios.
Fig. 13 shows the estimated macroeconomic indicators for
the BAU baseline scenario in 2020 and 2030, respectively. The
economy of California is expected to grow dramatically. These
reference magnitudes can serve as the point of comparison.
Fig. 14 presents the incremental economic impacts of
hydrogen scenarios compared to the BAU scenario. All the
hydrogen scenarios are estimated to have a slightly negative
influence on California’s economy, which is mainly because
FCVs are very costly and, therefore, the resulting gasoline
savings cannot offset the high incremental expenditure on
vehicles and alternative fuels. Considering the economy of
California is expected to grow substantially from today’s level
is interesting to note that the negative economic effect even
occurs in 2030 when the net cash flow is below zero. The
economy is not a linear system. The state economy represents
the overall outcome of all sectors, while the impacts on
different industrial sectors could present varying patterns:
negative, positive, or neutral.
The aggressive scenario, in 2020, consistently results in
slightly worse impacts than the moderate scenario. However,
in 2030, the aggressive scenario could lead to a better situation
measured by most macro indicators; it is even possible to
create more jobs in the aggressive scenario than in the BAU
scenario. The results suggest that, at the early stage of FCV
adoption or ramp-up, aggressive polices impose a larger
burden on the economy and, however, the negative impacts
could be offset or weakened more rapidly with time.
From a longitudinal perspective, a 2030 scenario generally
causes a less negative impact, in absolute terms, than its 2020
counterpart. Recall that the net cost is larger than zero in 2020
and, in 2030, smaller than zero (which means an economic
benefit), as shown in Figs. 11 and 12. This provides further
evidence supporting that the negative economic impacts of
hydrogen polices could be lessened as the FCV market builds up.
4.6. Economic effects on relevant industrial sectors
The EDRAM model has the capability of looking into the
expenditure transactions between disaggregated sectors.
There are about 120 domestic (in-state) industrial sectors in
this economic equilibrium model [10]. Tables 2 and 3
summarize the sectoral impacts of hydrogen vehicle
scenarios in 2020 and 2030, respectively.
The electricity sector, DISTEL, is expected to expand
compared to the BAU scenario, as hydrogen production via
electrolysis drives more demand for industrial electricity.
Similarly, the natural gas sector, DSTGAS, and the basic
chemicals sector, CHMBAS, benefit from hydrogen generation
via SMR. Most prominently, the automobile manufacturing

Table 2 e Sectoral impacts of hydrogen vehicle scenarios: 2020.

Industrial sectora Macroeconomic indicator BAU Moderate, 2020 Aggressive, 2020

Value % change r.t. BAU Value % change r.t. BAU

DISTEL Output ($ Billion) 38.3 39.2 2.3% 39.4 2.8%

Jobs (Thousand) 21.9 22.4 2.4% 22.5 3.0%
DSTGAS Output ($ Billion) 57.0 57.3 0.5% 57.4 0.7%
Jobs (Thousand) 38.2 38.4 0.6% 38.4 0.7%
OILREF Output ($ Billion) 52.4 51.8 1.1% 51.5 1.7%
Jobs (Thousand) 12.4 12.3 1.0% 12.2 1.6%
CHMBAS Output ($ Billion) 12.1 12.1 0.0% 12.2 0.8%
Jobs (Thousand) 14.5 14.5 0.1% 14.6 0.9%
AUTOMF Output ($ Billion) 13.2 15.3 15.5% 15.7 18.8%
Jobs (Thousand) 9.2 10.7 16.0% 11.0 19.4%
RETGAS Output ($ Billion) 105.5 105.3 0.2% 105.4 0.1%
Jobs (Thousand) 177.4 177.3 0.1% 177.4 0.0%

a EDRAM involves about 120 industrial sectors in California. Those relevant sectors are clarified below. DISTEL: electric power generation and
distribution; DSTGAS: natural gas distribution; OILREF: oil refineries; CHMBAS: basic chemical manufacture; AUTOMF: automobile
manufacturing; and RETGAS: retail gasoline or other transportation fuel stations.
 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 3 6 ( 2 0 1 1 ) 1 7 6 6 e1 7 7 4 1773

Table 3 e Sectoral impacts of hydrogen vehicle scenarios: 2030.

Industrial sector Macroeconomic indicator BAU Moderate, 2030 Aggressive, 2030

Value % change r.t. BAU Value % change r.t. BAU

DISTEL Output ($ Billion) 51.2 53.3 4.1% 53.4 4.3%

Jobs (Thousand) 22.9 23.8 4.2% 23.9 4.4%
DSTGAS Output ($ Billion) 77.0 77.5 0.7% 77.9 1.2%
Jobs (Thousand) 39.9 40.2 0.7% 40.4 1.3%
OILREF Output ($ Billion) 55.2 51.9 6.0% 49.6 10.2%
Jobs (Thousand) 10.5 9.9 6.1% 9.4 10.5%
CHMBAS Output ($ Billion) 15.7 16.0 2.3% 16.8 7.6%
Jobs (Thousand) 15.2 15.5 2.4% 16.4 7.8%
AUTOMF Output ($ Billion) 17.2 21.6 25.6% 23.6 37.2%
Jobs (Thousand) 9.7 12.2 26.3% 13.4 38.2%
RETGAS Output ($ Billion) 147.5 149.9 1.6% 152.4 3.3%
Jobs (Thousand) 185.9 189.1 1.7% 192.3 3.5%

sector, AUTOMF, will grow substantially, because of high
demand for the advanced technology vehicles, FCVs. On the
other hand, the oil refining sector, OILREF, is estimated to
shrink, mainly because hydrogen hugely replaces gasoline in
the transportation fuel market. Moreover, the retail fuel sector,
RETGAS, will be exposed to essentially no impact in 2020 and
a positive impact in 2030. This sector involves retail stations for
gasoline and other transportation fuels like hydrogen.
Generally, the aggressive scenario in each year strengthens
the sectoral impacts that the moderate scenario would have:
more negative for the oil refining sector, and more positive for
the other directly related industrial sectors that contribute to
either hydrogen production or FCV manufacturing. Recall that
EDRAM is not an economic forecasting model. Both overall
and sectoral results are based on this general equilibrium
model which assumes economic optimization.
5. Conclusions
Hydrogen has been proposed as an alternative transportation
fuel that could reduce energy consumption and eliminate
tailpipe emissions when used in fuel cell vehicles (FCVs). To
investigate the potential effects of hydrogen vehicles on Cal-
ifornia’s economy, we employed the modified Costs for
Advanced Vehicles and Energy (CAVE) model and a California-
specific computable general equilibrium model. We examined
possible market trajectories of hydrogen vehicles over the
time period 2010e2030, and estimated the on-road stock of
FCVs, transportation energy consumption, and gasoline
savings due to hydrogen use. Furthermore, we also investi-
gated the potential influence of hydrogen vehicle penetration
scenarios on the overall economy of California as well as those
relevant industrial sectors.
Results indicate that, even in the aggressive scenario,
hydrogen cars can only account for a minor fraction of the on-
road fleet through 2030. Although new sales could drop
sharply, conventional gasoline cars and carryover pre-2010
vehicles are still expected to dominate the on-road vehicle
stock through 2030. The slow turnover rate limits moderni-
zation of the vehicle fleet, and it makes little sense to expect
advanced vehicles like FCVs to make a major contribution to
meeting growing travel demand over the next few decades. As
such, conventional cars and remaining pre-2010 vehicles are
estimated to consume the majority of transportation energy
over the next two decades. However, transportation energy
demand drops dramatically for both moderate and aggressive
scenarios examined in this study, due mainly to the fuel
economy advantage of FCVs over conventional cars. Although
regular hybrids are more efficient than conventional cars,
their “net” gasoline savings would be much dwarfed by
hydrogen cars.
Both moderate and aggressive hydrogen scenarios are
estimated to have a slightly negative influence on California’s
economy. Considering the economy of California will grow
substantially from today’s level, the negative impacts would
be very small. Results also suggest that the negative economic
impacts could be offset or weakened as the market for
hydrogen and FCVs builds up. Based on the economic opti-
mization model, both hydrogen scenarios would have
a negative impact on California’s oil refining sector and, as
expected, a positive effect on the other directly related sectors
that contribute to either hydrogen production or FCV
manufacturing.
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