international journal of hydrogen energy 34 (2009) 4243–4255

Available at www.sciencedirect.com

journal homepage: www.elsevier.com/locate/he

Life cycle cost analysis to examine the economical

feasibility of hydrogen as an alternative fuel

Ji-Yong Leea, Moosang Yooa, Kyounghoon Chaa, Tae Won Limb, Tak Hura,*
a
Dept. of Chemical and Biological Engineering, Konkuk University, 1, Hwayang-dong, Gwangjin-gu, Seoul, South Korea
b
Research & Development Division, Hyundai Motors Company & Kia Motors Corporation, South Korea

article info abstract

Article history: This study uses a life cycle costing (LCC) methodology to identify when hydrogen can
Received 26 November 2008 become economically feasible compared to the conventional fuels and which energy policy
Received in revised form is the most effective at fostering the penetration of hydrogen in the competitive fuel
1 March 2009 market. The target hydrogen pathways in this study are H2 via natural gas steam reforming
Accepted 4 March 2009 (NG SR), H2 via naphtha steam reforming (Naphtha SR), H2 via liquefied petroleum gas
Available online 17 April 2009 steam reforming (LPG SR), and H2 via water electrolysis (WE). In addition, the conventional
fuels (gasoline, diesel) are also included for the comparison with the H2 pathways.
Keywords: The life cycle costs of the target fuels are computed and several key factors are examined to
Life cycle costing identify the economical feasibilities of the target systems: fuel cell vehicle (FCV) price,
Hydrogen pathway social cost of greenhouse gases (GHGs) and regulated air emissions (CO, VOC, SOx, NOx,
Fuel cell vehicle PM), fuel efficiency of FCV, capital costs of H2 equipments at a H2 fueling station. The life
cycle costs of a H2 pathway also depend on the production capacity. Although, at present,
all H2 pathways are more cost efficient than the conventional fuels in the fuel utilization
stage, the H2 pathways have lack competitiveness against the conventional fuels in the life
cycle (well to wheel) costs due to the high price of FCV. From future scenario analyses in
2015, all H2 pathways are expected to have lower life cycle costs than the conventional
fuels as a transportation fuel. It is evident that the FCV price is the most important factor
for encouraging the hydrogen economy and FCVs. Unless the FCV price is below US
$62,320, it is necessary for the institution to subsidize the FCV price by any amount over US
$62,320 in order to inject H2 into the market of transportation fuel. The incentive or taxes
on GHGs and regulated air emissions are also expected to effectively encourage the
diffusion of H2 and FCV, especially for the H2 pathway of WE with wind power (WE[Wind]).
The uncertainties in the fuel efficiency of FCV and the capital costs for H2 equipment at
a H2 fueling station have little influence on the life cycle costs of H2 pathways.
ª 2009 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights
reserved.

1. Introduction increased dramatically. Security for oil and gas supplies and
climate change continue to present formidable challenges for
With the advent of the 21st century, concerns over the all countries on the planet. Recently, fossil fuel (oil, natural gas
depletion of fossil resources and global warming have and so on) prices have been soaring, and the economies of

* Corresponding author.
E-mail addresses: jiyonglee197@hotmail.com (J.-Y. Lee), cosmosahoc@hanmail.net (M. Yoo), sorrowheart@hanmail.net (K. Cha),
twlim@hyundai-motor.com (T.W. Lim), takhur@konkuk.ac.kr (T. Hur).
0360-3199/$ – see front matter ª 2009 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijhydene.2009.03.012
4244 international journal of hydrogen energy 34 (2009) 4243–4255
Acronyms
[C] centralized production method, e.g. Naphtha
SR[C] means centralized Naphtha steam
reforming
CIF cost, insurance, and freight
CNG compressed natural gas
FCE fuel cell engine
FCV fuel cell vehicle
G.H2 gaseous hydrogen
GHGs greenhouse gases
ICE internal combustion engine
ICEV internal combustion engine vehicle
LNG liquefied natural gas
many countries that do not produce fossil fuel have been
affected enormously. Korea is presently the world’s second
largest importer of coal, the fourth largest importer of oil, and
the eighth largest importer of natural gas [1]. The energy
consumed in Korea throughout 2004 totals 213.1 million TOE,
86.4% of which was imported. Moreover, the annually
increasing fossil fuel prices impose a heavy burden on the
Korean economy. Thus, the need for energy conservation and
alternative energy development in Korea is greater than in any
other country. In addition, Korea is the ninth largest green-
house gases (GHGs) emitting country in the world [1]. The
international treaty on global warming, the Kyoto Protocol,
requires the GHG reduction and the replacement of fossil fuels
by alternative energy such as hydrogen or other renewable
energy sources. Thus, the costs of potential CO2 reduction in
Korea leave the country with an enormous burden. The
transportation sector has been especially pressed to reduce
CO2 emission and it is near absolute dependence on fossil
fuels. In response, the Korean government has launched
several R&D programs concentrating on alternative energy to
resolve these problems, particularly with the support of the
Ministry of Knowledge Economy (MKE), the Ministry of
Education, Science and Technology (MEST), and the coopera-
tion of the oil and automotive industries.
Hydrogen is an attractive alternative energy source
because it can be produced from various materials such as
water, any hydrocarbon fuel or energy sources including
sources that have yet to be discovered. At present, roughly
48% of the worldwide hydrogen production is accomplished
by the steam reforming of natural gas, 30% by the processing
of crude oil products such as naphtha, 18% by coal and 3% as
a byproduct of the chlor-alkali process. In addition, a number
of more innovative production paths exist, such as the carbon
black and hydrogen process developed by Kvaerner with
parallel carbon black production, and water electrolysis from
various electricity sources or gasification of a biomass [2].
What is most noteworthy is that in contrast to the conven-
tional fuels, hydrogen has high energy efficiency and zero
emission when used in hydrogen fuel-cell vehicles (H2 FCVs)
as a transportation fuel.
However, while hydrogen has many definite advantages as
a transportation fuel, the transition to the hydrogen economy
is likely to take many decades due to the enormous economic
LPG liquefied petroleum gas
LPG SR liquefied petroleum gas steam reforming
Naphtha SR Naphtha steam reforming
NG SR natural gas steam reforming
[S] station type production method, e.g. Naphtha
SR[S] means decentralized Naphtha steam
reforming
TTW tank to wheel
WE water electrolysis
WE[KEM] water electrolysis with Korean electricity mix,
WE[Wind] water electrolysis with wind power
WTT well to tank
WTW well to wheel
costs and infrastructure barriers as most key-technologies in
all domains of the hydrogen life cycle (hydrogen production,
distribution, storage, and utilization) are in the early R&D
stage. In particular, the high cost is a major obstacle in face of
the prospect of successful commercialization of the hydrogen
fueling infrastructure. Thus, it is necessary to analyze the
economic burden for each H2 pathway and identify the most
cost-effective H2 pathway for the penetration of hydrogen in
a competitive fuel market place. Thus, this study diagnoses
the economic feasibility of H2 pathways to make a comparison
with the conventional fuels and then establish a H2 pathway
that is optimal for the regional characteristics of Korea.
2. Definition of the goal and scope
2.1. Goal definition
The main purpose of this research is to identify the econom-
ically optimal H2 pathway as a transportation fuel in Korea
through the life cycle costing (LCC). The objectives of the LCC
are as follows:
 to calculate each fuel’s life cycle costs;
 to examine the economic feasibility in relation to the
conventional fuels (gasoline and diesel);
 to find the cost reduction factor in the entire life cycle of
each fuel; and
 to devise the most effective strategy to help hydrogen
penetrate the fuel market.
2.2. System boundary
As shown in Table 1, this study defines the system boundary
which includes four life cycle stages in a comprehensive LCC:
extraction and transportation of raw materials; fuel process-
ing; fuel distribution; and fuel utilization. Table 1 also shows
the target fuel pathways including the conventional fuels
based on crude oil, and H2 based on crude oil, natural gas and
water.
 international journal of hydrogen energy 34 (2009) 4243–4255 4245

2.2.1. H2 via Naphtha steam reforming (Naphtha SR)

ICEV Driving
utilization

FCV Driving
pathway – centralized and decentralized
Fuel Steam reforming (SR) is the most commercialized H2 produc-
tion technology and is a well-developed, fully commercialized
process by which high temperature steam (þ700  C) in the

compression(350bar), storage and

(5–200 bar) and G.H2 transportation (200–350 bar), storage and fueling
presence of a catalyst is used to crack the C–H bond included

compression (350bar), storage

in natural gas, LPG or naphtha as shown in Eq. (1)–(3); ref. [3]

H2 production (30 Nm3/h),

Transport naphtha by tank trailer H2 production(30 Nm3/h),

Gas storage and fueling

G.H2 2nd compression

Station

Naphtha SR; CnH2n þ 2nH2O ¼ nCO2 þ 3nH2 (1)

and fueling

NG SR; CH4 þ 2H2O ¼ CO2 þ 4H2 (2)

Fuel distribution

fueling LPG SR; C3H8 þ 6H2O ¼ 3CO2 þ 10H2 (3)

diesel, LPG) to a station by a tank

Transfer water in industrial water at Transport industrial water to H2

by tube trailer (315 kg H2/cycle)
Transportation fuels (gasoline,

Transport NG to H2 station by

Naphtha SR is the most popular method for producing H2

Fuel distribution

in Korea because naphtha is traditionally a cheaper raw

material than natural gas. Almost 50% of total H2 production
G.H2 1st compression

station by pipeline

in Korea is produced by Naphtha SR. Naphtha SR plants can be

divided into centralized [C] and station-type [S] (or decen-
tralized) plants according to the capacity of H2 production and
the location of the plant. The ‘‘C’’ in Naphtha SR[C] stands for
pipeline
Life cycle stage

trailer

centralized, meaning that Naphtha SR plants which are

located close to naphtha production facilities, and produce
huge amounts of H2. The Naphtha SR[S] means station type
Refine crude oil to make naphtha in
H2 Production via Naphtha SR[C] –
Transport crude oil from the Refine crude oil to make gasoline,

Naphtha SR plants which are located near consumers (e.g.

Gasify LNG into NG at a LNG port
origin to Korea by oil-tanker diesel, LPG, naphtha in a refinery

inside gas station) and produce relatively small amounts of H2.

Fuel processing

Fig. 1 shows the system boundaries of H2 via Naphtha SR

pathways (centralized/decentralized)
Most Naphtha SR plants in Korea are of the centralized
a refinery complex
[3000 ton/month]

variety, located in petrochemical complexes near port facili-

ties because most crude oil is imported from the Middle East
via oil-tankers. Crude oil is transformed into naphtha at
complex

refineries and moved into Naphtha SR plants through pipe-

WE[Wind] water to water treatment plant (WTP) by pipeline a WTP

lines. Gaseous H2 is produced in steam reformers with Pres-

sure Swing Adsorption (PSA) using naphtha. Gaseous H2 is
Transport LNG from origin

compressed at around 200 bars then stored in the H2 tank

WE[KEM] Extract water from origin and then transport
Transportation

trailer for the distribution to the gas station. At the gas

then liquefied NG to Korea by LNG ships

station, the compressed H2 is kept at around 350 bars for

dispensing to H2 FCV. The H2 production method of the
station type is also an essential part of fuel cell commercial-
Raw material

ization. Station type Naphtha SR[S] has been developed

recently with monitored trial runs presently being conducted
Table 1 – The system boundary of the LCC.

in the Korean peninsula.

Extract crude oil
Extraction

Extract NG and

2.2.2. H2 via Natural Gas Steam Reforming (NG SR)

pathway – decentralized
There is formerly no NG SR plant or station in Korea, as this
(LNG)

type of H2 production entails costs significantly more expen-

sive than Naphtha SR as previously mentioned. Nonetheless,
station type NG SR has been developed with Naphtha SR[S]
Naphtha

Naphtha

NG SR[S]
Conventional Gasoline

LPG SR
Diesel

presently undergoing preliminary tests here in Korea. As

SR[C]

SR[S]
LPG

shown in Fig. 2, most of the natural gas is extracted and liq-

Fuel pathways

uefied from East-South Asia. Liquefied Natural Gas (LNG) is

then transported to the LNG ports in Korea and gasified there.
Hydrogen
fuels

The gasified natural gas is transmitted through the pipelines

to H2 fueling stations, the same as Compressed Natural Gas
(CNG) stations at present. Finally gaseous H2 is produced from
4246 international journal of hydrogen energy 34 (2009) 4243–4255

Crude oil Crude oil

Extraction Naphtha
H2

Transportation
Centralized Naphtha SR

2nd
Fuel Naphtha SR 1st H2 G. H2
Compression
conversion Compression Distribution
and Storage
Refinery Station H2
FCV
1st & 2nd
Transportation Naphtha SR Compression
and Storage
Station Decentralized Naphtha SR

Fig. 1 – H2 via Naphtha SR pathway.

small steam reformers (30 Nm3/h) and stored in compressed
tanks (350 bar) in stations for dispensing to H2 FCV.
2.2.3. H2 via water electrolysis (WE) pathway – decentralized
Electrolysis is a process in which H2 is produced by an elec-
trochemical reaction between electricity and water as shown
in Eq. (4). Besides not only being a renewable energy (e.g. solar,
wind, etc.), H2 can be produced by electrolysis without emit-
ting air pollutants.
[Cathode] 2OH / H2O þ 1/2O2 þ 2e
[Anode] 2H2O þ 2e / H2 þ 2OH
In spite of these advantages, there are few WE plants in
Korea because the energy requirements per mole of H2
produced from WE are much greater than other H2 production
methods, so the H2 production costs of WE are also higher.
Station type WE has been developed in Korea for the distant
future. This study estimates the environmental performance
of two WE pathways. WE[KEM] pathway requires the use of
the Korean domestic electricity mix in WE as electricity for H2
production while WE[Wind] is through the use of wind power
in WE. Fig. 3 presents the two WE pathways which cover from
water treatment to H2 FCV. The H2 is produced by an elec-
trolyzer and stored in its gaseous state (350 bar) at a fueling
system for dispensing to H2 FCV.
2.2.4. H2 via liquefied petroleum gas steam reforming
(LPG SR) pathway – decentralized
Currently, an LPG steam reformer in the 30 Nm3/h class has
been developed, and it is planned to be constructed in a H2
station. The H2 via LPG SR pathway is identical to the H2 via
Naphtha SR[S] pathway with the exception of LPG production.
2.2.5. Gasoline and diesel pathways
Gasoline and diesel, the most conventional fuels in the world,
are included in this study in order to stand as a comparison for
H2 produced from various pathways as transportation fuel.
Crude oil, raw material for gasoline and diesel, is mainly
(4) imported from the Middle East to the petrochemical
complexes in Ulsan and Yeosu in the southern part of Korea.
Later on, gasoline and diesel are produced at refineries there.
Gasoline and diesel are then distributed to gas stations and
dispensed to Internal Combustion Engine Vehicles (ICEV) as
shown in Fig. 4.
3. Method
3.1. The LCC procedures
The economic impact is calculated based upon the LCC
methodology, which enables the compilation and evaluation
of the inputs, outputs and the potential economic impact of

Natural Gas 1st & 2nd

LNG NG SR Compression
H2
and Storage
Station
Natural Gas H2
Extraction and Transportation Gasification Pipeline
FCV
Liquefaction

Fig. 2 – H2 via NG SR pathway.

 international journal of hydrogen energy 34 (2009) 4243–4255 4247

Electricity Domestic
Electricity from
Electricity
Water Wind mill
Grid
H2
Station

1st & 2nd H2

Water Water Water
Pipeline Compression
Extraction Purification Electrolysis FCV
and Storage

Fig. 3 – H2 via WE pathways with Korean electricity mix and wind power.

a product system throughout its life cycle [4,5]. Fig. 5 shows site visits to relevant facilities, industrial complexes, and
the procedure flows of the LCC used in the present study. public market leading corporations are used.
For the LCC, the life cycle costs are defined as follows:
3.3. Key calculation procedures and assumptions
Life cycle costs (US $/functional unit) ¼ well to tank (from
origin to a fuel station) costs þ tank to wheel (fuel utilization)
The cost-categories in this study are consistent so that all fuel
costs þ social costs (e.g. GHGs costs, regulated air emissions
pathways can be compared to each other. They are also
costs)
subject to the standardized calculation procedures and
Well-to-tank costs ¼ capital costs (e.g. production equipment,
assumptions.
tank trailer, dispenser, etc.) þ operation and maintenance costs
The capital costs, which are related to all the equipment
(e.g. material costs, energy costs, labor costs, etc.) þ other costs
used in each fuel pathway, are calculated as shown in Eq. (5),
(e.g. tax, insurance, etc.)
with the assumption that the residual value (R) of all the
Tank-to-wheel costs ¼ vehicle purchasing costsþ operation
equipment is zero:
and maintenance costs (e.g. fuel costs, maintenance costs,
etc.) þ others (e.g. tax, insurance, etc.)
Social costs ¼ the damage or prevention costs inflicted by Capital costs ¼ crf(I  R) þ iR (5)
GHGs and regulated air emissions
I is the initial investment costs for purchasing the equip-
ment i, interest rate, R is the residual value of the equipment
3.2. Data collection and crf is the capital recovery factor, which is expressed as
shown in Eq. (6).
The product system of each fuel pathway is constructed using
n
field data, as well as literature and pilot plant data as shown in ið1 þ iÞ
crf ¼ n (6)
Table 2. For the data collection, questionnaires as well as on- ð1 þ iÞ 1

Crude oil H2
Extraction FCV

Import crude oil Gasoline, Diesel, LPG Transportation

(domestic) Station
Pipeline 1st & 2nd
Fuel
Transportation LPG SR Compression
Conversion
(overseas) and Storage
(domestic)

Transportation
Fuel (domestic)
Transportation Tank trailer Compression LPGV
Conversion
(overseas) and Storage
(overseas)
Import LPG Station
Crude oil
LPG
H2 Gas station ICEV
Gasoline
& Diesel

Fig. 4 – Conventional fuels and H2 via LPG SR pathway.

4248 international journal of hydrogen energy 34 (2009) 4243–4255

Well to Tank Tank to Wheel Scenarios

Raw material extraction Collect Set the scenarios

Simulate the ICEV, FCV
& Transportation stage the cost-parameters
[Model Tucson: FTP-75 mode]
related to fuel utilization - Social costs
(Natural gas, Crude oil, Water)
[GHGs]
[Regulated air emissions]
Fuel processing stage Fuel Efficiency, FE
Vehicle costs
(liter/km) - Cost reduction effects
- Capital costs (US $/EA vehicle)
[mass production]
- Operation & maintenance costs Regulated air emissions
GreenHouse Gases, GHGs [Up-scaling]
- Social costs of GHGs and Taxes (US $/EA vehicle)
(g/km) -……
Regulated air emissions
- Others (Tax, Insurance, etc)

Gasoline LCC DB
(US $/MJ fuel)
Diesel LCC DB 1. Integration
(US $/MJ fuel) [WTT costs + TTW costs]
Naphtha SR[C] LCC DB
(US $/MJ fuel) 2. LCC calculation
Naphtha SR[S] LCC DB [Base case vs Future scenario]
(US $/MJ fuel) [Scenario analysis]

NG SR[S] LCC DB
(US $/MJ fuel)
LPG SR[S] LCC DB
(US $/MJ fuel)
Compare LCC of target fuel pathways
WE[Wind] LCC DB
(US $/MJ fuel)
WE[KEM] LCC DB
(US $/MJ fuel)

Fig. 5 – The procedure flows of the LCC.

Table 2 – Summary of the data sources used for the LCCs.

Development status Data description Source

Fuel processing Gasoline, diesel, LPG Commercialization Average costs Ministry of Knowledge
in Korea Economy, 2007, LP GAS industry
association, 2007
NG Kogas, 2007
H2 Naphtha SR[C] Annual costs SK, 2007
in a specific company
Naphtha SR[S] Pilot plant [30 Nm3/h] Primary data GS-Caltex, 2007 JHFC, 2005
NG SR[S] modified by JHFC Kogas, 2007
LPG SR[S] SK, 2007
WE[KEM] Primary data Elchemtec, 2006, Stuart
WE[Wind] modified by Stuart Energy Energy, 2006
Distribution and Gas station [gasoline, diesel] Commercialization Calculate distribution DOPCO, Korea
storage and storage costs oil station association, 2007
based on primary
Korean data
H2 Tube trailer Annual costs Deokyang Energen, 2006–2007
of a specific company Hyundai motors, 2007
Station [120 Nm3/h] Estimated Estimated cost
data with H2 station [30 Nm3/h]
Station [30 Nm3/h] R & D [30 Nm3/h] Calculate distribution
and storage costs
with primary Korean data
Fuel utilization ICEV – TUCSON Commercialization Calculate fuel Hyundai motors, 2007
H2 FCV – TUCSON R&D utilization costs based
on the fuel
efficiency of a vehicle
and the driving distance
 international journal of hydrogen energy 34 (2009) 4243–4255 4249

The operating costs are estimated with the simulation data
for each hydrogen station at a pilot plant scale. The operation
costs include material costs (such as ancillary materials, and
water), energy costs, and waste treatment costs. These cost
parameters are calculated as shown in Eq. (7):
P
Operation costs ¼ (IMi  PMi þ IEj  ECj þ AWk
 TCWk  ACPl  RCPl)
credible results, this study analyzed the effect of the social costs
on the life cycle costs of each fuel pathway by reflecting the
maximum value, the average value, and the minimum value of
the social costs of the regulated air emissions in Table 3 [9–13].
Future costs of each fuel are calculated by using Eq. (9),
reflecting the annual price escalation rate of each cost
parameter in the future scenarios, except for fossil resources:
X 
(7) FLCCi ¼ Ci;j ARi;j (9)

IMi ¼ amount of input material, i (kg, i/kg produced H2);
PMi ¼ purchasing cost of material, i (US $/kg, i); IEj ¼ input
energy, j (kWh, j/kg produced H2); ECj ¼ energy cost, j (unit
energy costs by the types of users, (US $/kWh)); AWk ¼ amount
of waste, k (kg waste, k/kg produced H2); TCWk ¼ treatment
cost of waste, k (US $/kg waste treated, k); ACPl ¼ amount of
co-product, l (kg co-product, l ); RCPl ¼ revenue of co-product l
(US $/kg co-product, l ).
The maintenance costs include the costs of regular main-
tenance activities such as the replacement costs of catalysts,
and regular repairs. The stacks are assumed to be replaced
once in every 15 years of operation as a recent study, con-
ducted by Marc B (2006), provides supportive evidence for this
assumption [6].
The maintenance costs are calculated as shown in Eq. (8).
 
Maintenance costs $=kg H2
 
Replacement costs ð$=yearÞ þ regularly repair costs ð$=yearÞ
¼   ð8Þ
Hydrogen production amount kg H2 =year
For the labor costs associated with the hydrogen distribution
by tube trailer, averaged distribution labor costs in Korea are
applied [7]. The labor costs of hydrogen stations are based on
the modeling of a hydrogen station at the Korea Institute of
Energy Research; the model requires a gas safety manager and
a gas station attendant to operate the hydrogen station
(30 Nm3/h) [8].
As shown in Table 3, the social costs of GHGs and regulated
air emissions (CO, SOx, NOx, VOC, and dust) differ significantly in
each reference because each publication uses a different
approach to calculate the social costs. Hence, in order to produce
FLCCi is the future life cycle costs of fuel i, Ci,j is the cost
parameter, j, of fuel, i and ARi,j is the annual price escalation
rate of the cost parameter, j, of fuel, i.
In Table 4, the future prices of natural gas, naphtha, and
gasoline are estimated by using the average escalation rates of
their prices for the last 10 years. For the future prices of diesel
and LPG, they are determined as 85% and 50% of gasoline’s
future price by the Korean energy policy, respectively.
4. Results and discussion
This study integrates the well-to-tank costs and the tank-to-
wheel costs for the 160,000 km driven by each vehicle within
its lifetime. The analytical model shown in Table 5 is used to
determine the life cycle costs of each target fuel pathway. In
addition, a future scenario is modeled based upon the
Korean energy policy and the OECD/IEA 2015 target to
predict the H2 penetration in the future transportation fuel
market [15–18]. In 2015, if the H2 fuel market is extended and
relevant technologies are developed, the associated costs are
expected to be reduced due to the mass production and
increased scale of the equipment of H2 stations. Effects of
the mass production and scale increases on the costs are
considered [19,20]. In addition, scenario analyses are con-
ducted to diagnose the effects of the key factors on the life
cycle costs, such as the FCV price, the social costs of air
emissions, or FCV’s fuel efficiency on the economic aspects
of each fuel pathway.
4.1. Well-to-tank results
For a baseline comparison, the WTT costs of the target fuel
pathways are calculated based on the energy unit (US $/MJ
gasoline liter equivalent). Fig. 6 breaks down the life cycle

Table 3 – Comparison of social costs in different studies.

Reference EU-AEA technology Eco-cost UNEP EC Korea Point Average external
environment (Netherlands) carbon costs
[EU-ETS]

Approach Damage cost Prevent cost Social Damage Social Market

(VOLY, VSL) (Willing to Pay) costs costs costs price

Parameter US $/ton
CO2 113 Max. 135 N/A 59 0.00 Min. 22 82
CO N/A N/A Max. 4991 N/A Min. 1500 N/A- 3245
NOx Max. 7821 N/A 6005 4976 Min. 1966 N/A 5192
SOx 10,309 7584 6745 Max.59,463 Min. 2027 N/A 17,226
DUST 47,398 Min. 14,575 19,606 Max.309,770 N/A N/A 78,760
VOC Min. 1659 Max. 59,248 5800 2488 1743 N/A 14,188
4250 international journal of hydrogen energy 34 (2009) 4243–4255

Table 4 – Unit cost data of key cost parameters.

Cost category Parameter Present costs, 2007 Annual price
escalation rate

Materials Natural gas, 0.46 US $/m3 CIF 5.74%

Naphtha 0.46 US $/kg Production cost 5.94%
Water Industrial water 1.30 US US $/ton 6.87%
Energy Electricity Spring: 4.61 US ¢/kWh Spring: 2.34%
Summer: 6.10 US ¢/kWh Summer: 2.48%
Autumn: 4.61 US ¢/kWh Autumn: 2.34%
Winter: 4.94 US ¢/kWh Winter: 2.36%
General cost Applying each market price 3% (since 2003–2007)*
parameter
(labor, waste treatment cost)
Gasoline Pumping price: 1.42 US $/liter 6.61%
Diesel Pumping price: 1.17 US $/liter The future price of diesel ¼ 85% of future
gasoline price**
LPG Pumping price: 0.71 US $/liter The future price of LPG ¼ 50% of future
gasoline price**

* Average price escalation rate in Korea published by Ministry of Finance and Economy, ** Korean Energy policy, 2007.

costs into the cost parameters and life cycle stages for each
fuel production. At present, only H2 via Naphtha SR[C]
pathway can achieve lower WTT costs than gasoline by 12%
(US $0.17). On the other hand, the high WTT costs of station-
type H2 pathways arise from more expensive costs of H2
equipments and lower fuel production efficiency than that of
the conventional fuels.
By 2015, however, the conventional fuel prices are likely to
increase dramatically owing to the depletion of fossil fuel,
whereas H2 WTT costs are expected to be reduced as the results
of the mass production and up-scaling of H2 equipments. Even
though crude oil is also used as a raw material in Naphtha SR[C],
the raw material costs of Naphtha SR[C] pathway are less than
those of gasoline and diesel required to product the same
amount of energy. In addition, the fuel taxes for the conven-
tional fuels also increase as the crude oil price increases.
According to the Korean energy policy, on the other hand, no
fuel tax will be imposed on H2 until 2015. Therefore, the sensi-
tivity of the crude oil price on the WTT costs of the Naphtha
SR[C] is less than that of the conventional fuels.
In 2015, thus, the WTT costs of all H2 pathways studied
here would be US $1.11(WE[Wind]) to US $1.63(NG SR[S])
cheaper than those of the conventional fuels. NG SR[S] is also
expected to have lower WTT costs than the fuel pathways

Table 5 – The analytical model used in the base case (B) and a future scenario (F).
Gasoline Diesel LPG Hydrogen pathways

Centralized Decentralized

Naphtha SR Naphtha SR NG SR LPG SR WE

Functional unit Driving 160,000 km for 10 year ¼ [Daily driving distance (43.57 km/day)  Duraten of the vehicle
(3650 day/10 years) ¼ 15,901.83 km/year]
Fuel production (B) Over 95.0 83.2 62.4 70.0 61.2 60.8
efficiency (%) (F) 75.0a
Station capacity (B) Fueling of more 30 Nm3/h – 14EA FCV fueling a day
(F) than 190EA ICEV 400 Nm3/h – 190EA FCV fueling a dayb
Vehicle type Sport utility vehicle (TUCSON made by Hyundai motors)
Vehicle purchasing costs (B), (F): US $25,000 (B): US $600,000/ea, (F): US $47,619/eac
Engine type ICE (A/T) FCE (A/T)
Fuel efficiency (km/kg) (B) 9.8 12.6 7.9 82.0
(F)c 10.8 13.9 8.7 111.8
Reference flow Fuel consumption for driving 160,000 km
(kg fuel) (B) 11,461 11,124 11,698 1952
(F) 10,400 10,083 10,604 1431

a The energy efficiency of hydrogen production in the future scenario is assumed to be the same as that of commercialized SR plants at
present.[14].
b The capacity of the average gas station in Korea at present.
c The FCV price and the fuel efficiency of vehicles in 2015 are estimated from the data given by Hyundai motors.
 international journal of hydrogen energy 34 (2009) 4243–4255 4251

3.00

2.50
US $/Gasoline equiv. ( )

2.00

1.50

1.00

0.50

0.00
Base Future Base Future Base Future Base Future Base Future Base Future Base Future Base Future

Gasoline Diesel Naphtha SR[C] Naphtha SR[S] NG SR[S] LPG SR[S] WE[KEM][S] WE[Wind][S]

Capital costs Raw materials cost Operating & Maintenance costs Fuel distribution costs Fuel Tax

Fig. 6 – WTT costs of target fuel pathways.

based on crude oil and water because the price escalation of and US $597,700. This excess can be overcome if the govern-
natural gas is slower than that of crude oil and H2 pathways ment supports some of the FCV price as in the current
based on water consume more energy than other pathways in promotional strategy for compressed natural gas vehicle. In
the process of H2 production. 2015, the operating costs (or fuel costs) are likely to be more
dominant in the WTW costs of the conventional fuels owing to
4.2. Well-to-wheel results the rising price of crude oil. In contrast, with the aid of the up-
scaling of H2 stations to 400 Nm3/h and the higher production
Fig. 7 compares the base case and a future scenario in terms of capacity of FCV and H2 equipment, the FCV price is likely to be
the WTW costs of the target fuel pathways. Although, in the reduced by 92%, and the H2 production costs are also expected
fuel utilization stage, the H2 FCV shows high energy efficiency, to be reduced by as much as 11.12% (Naphtha SR[C]) to 68.12%
none of the H2 pathways has lower WTW costs than the (NG SR[S]). For these reasons, although the FCV price are twice
conventional fuels because the FCV production costs are of ICEV price, all H2 pathways will become cheaper than the
currently much more expensive than those of ICEVs. Exces- conventional fuels by US $ 6500 (WE[Wind] vs diesel) to US $
sive WTW costs of H2 pathways range between US $584,900 12,500 (NG SR[S] vs gasoline).

WTW costs of target fuel pathways (US $/160,000 km driving)

WE[Wind]
WE[KEM]
H2FCV

LPG SR [S]
Future

NG SR [S]
Naphtha SR [S]
Naphtha SR [C]
ICEV

Gasoline
Diesel
WE[Wind] US $650,850
WE[KEM] US $646,890
LPG SR [S]
H2FCV

US $650,010
NG SR [S]
Base

US $647,930
Naphtha SR [S] US $648,130
Naphtha SR [C] US $638,000
ICEV

Gasoline
Diesel
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

[Registration costs] [Operation costs] [Vehicle costs]

Fig. 7 – WTW costs of target fuel pathways.

4252 international journal of hydrogen energy 34 (2009) 4243–4255

Table 6 – Effects of FCV price on WTW costs.

The change H2 pathway Naphtha SR[C] Naphtha SR[S] NG SR[S] LPG SR[S] WE[KEM] WE[Wind]
of FCV price (%)

The increase 25 Well to wheel 71,850 70,090 70,040 71,100 70,500 72,910
of FCV price 20 costs (US $/160,000 km driving) 69,360 67,600 67,540 68,610 68,000 70,420
15 66,860 65,100 65,050 66,120 65,510 67,930
10 64,370 62,610 62,560 63,620 63,020 65,430
5 61,880 60,120 60,060 61,130 60,530 62,940
Predicted FCV price in 2015 59,390 57,630 57,570 58,640 58,030 60,450
The decrease 5 56,890 55,130 55,080 56,140 55,540 57,950
of FCV price 10 54,400 52,640 52,590 53,650 53,050 55,460
15 51,910 50,150 50,090 51,160 50,560 52,970
20 49,420 47,660 47,600 48,670 48,060 50,480
25 46,920 45,160 45,110 46,170 45,570 47,980

4.3. The results of scenario analysis
As shown in Fig. 6 and Fig. 7, the key factors are FCV price, fuel
efficiency, and capital costs of H2 equipments. The future costs
predicted are usually uncertain because they are obtained
through the modeling of plausible future conditions. Thus,
sensitivity analyses are carried out to reduce those uncer-
tainties, to promote the credibility of the results, and to identify
the social benefits of H2 pathways caused by the non-emission
of regulated air pollutants and GHGs when H2 is used.
4.3.1. Effect of the FCV price
The FCV price has been shown to decrease over time via
technological development and mass production of the FCV.
According to the studies of IEA/OECD, Hyundai motors, and
Toyota the FCV price is expected to range between US $
49,850 and US $60,750 in 2015 [21,22]. As shown in Table 6, if
there is a 5% change in the FCV price predicted in 2015, the
WTW costs of the H2 pathways are likely to vary from 3.31 %
(WE[Wind]) to 3.44% (Naphtha SR[S]). Within a 15% price
increase of the FCV price prediction (US $49,850/FCV / US
$57,330/FCV), all H2 pathways are still economically
competitive than the diesel pathway (US $67,000) as shown
in fig.7, except WE[Wind]. In fact, even if the FCV price rises
as much as 25% (US $49,850/FCV / US $62,320/FCV) from
the 2015 prediction, H2 via NG SR will still be more
economically efficient than the gasoline pathway because
the WTW costs of the conventional fuels in 2015 would
range between US $66,970 (diesel) and US $70,040(gasoline),
as shown in Fig. 7.

(Life cycle costs, US$)

85,000
G

80,000

75,000 G HE

D
G
70,000 G D

D D

65,000
HE HA HB HD
HC
HF HA HF HA HB HD HF HF
60,000 HA HC
HD HE
HD HE HB HC
HB HC

55,000
WTW costs Scenario 1. Scenario 2. Scenario 3.
WTW costs+Min. Social costs WTW costs+Aver. Social costs WTW costs+Max. Social costs

G : Gasoline HA : Naphtha SR[C] HD : LPG SR[S]

D : Diesel HB : Naphtha SR[S] HE : WE[Korean E mix][S]

HC : NG SR[S] HF : WE[Wind power][S]

Fig. 8 – Life cycle costs of target fuel pathways including social costs.
 international journal of hydrogen energy 34 (2009) 4243–4255 4253

Table 7 – The benefits estimated by the 5% substitution of FCVs for ICEVs.

TOTAL Vehicles (EA) ¼ 21,772,000 The substitution number (5%) ¼ 1,088,600 (EA, FCV)

Benefits (US $) Social benefits

H2 pathways WTW costs If, applied Scenario 1. If, applied If, applied
(w/o Social costs) (w/t Aver. Social costs) Scenario 2. Scenario 3.
(w/t Max. Social costs) (w/t Min. Social costs)

Naphtha SR[C] 685,560,000 806,640,000 1,174,500,000 1,657,780,000

Naphtha SR[S] 877,180,000 951,100,000 1,191,500,000 1,591,680,000
NG SR[S] 883,090,000 969,300,000 1,246,830,000 1,700,450,000
LPG SR[S] 767,130,000 850,850,000 1,122,880,000 1,583,920,000
WE[KEM][S] 832,920,000 806,300,000 621,010,000 37,860,000
WE[Wind][S] 570,060,000 764,390,000 1,364,320,000 2,199,780,000

4.3.2. Effect of social costs inflicted by GHGs and regulated
air emissions
In order to reflect various social costs of GHGs and regulated air
emissions to each fuel’s life cycle costs, this study selects the
maximum value, the average value, and the minimum value of
the social costs of the regulated air emissions in Table 3. Then,
the life cycle costs of target fuel pathways are calculated by
considering the three social costs of GHGs and regulated air
emissions, respectively by using Scenario 1, 2, and 3;
Scenario 1: life cycle costs ¼ WTW costs þ Min. social costs
Scenario 2: life cycle costs ¼ WTW costs þ Aver. social costs
Scenario 3: life cycle costs ¼ WTW costs þ Max. social costs
Fig. 8 shows the effects of the social costs of GHGs and
regulated air emissions on the life cycle costs of each fuel
pathway. All H2 pathways studied except WE[KEM] can
yield the cost-savings of about US $9000 (Naphtha SR[S]) to
US $14,000 (WE[Wind]), compared to the conventional
fuels.
If the maximum social costs are added to WTW costs
(Scenario 1), the best fuel pathway will be the WE[Wind]
because it produces much less GHGs and regulated air
emissions in H2 production owing to the use of a renewable
energy, wind power in the electricity generation. On the
other hand, the WE[KEM] has the highest social costs due to
the indirect GHGs and regulated air emissions from the use
of the Korean electricity mix in the H2 production stage.
Approximately 62.3% of the Korean electricity mix is
produced by the combustion of fossil fuels.[23] Thus, the
energy source of electricity generation is one of the most
important factors in determining the economical feasibility
of H2 via WE pathway.
As shown in Table 7, this study also estimated the benefits
correlated with the substitution of ICEV to FCV in Korea in
2015. The benefits of H2 pathways amount to US $ 685,560,000
to US $ 2,199,780,000 with which we can construct about 100
Naphtha SR[C] plants (120 ton H2/month) or 3500 km H2
pipeline.
4.3.3. Effect of FCV’s fuel efficiency
The life cycle costs of the H 2 pathways in the future scenario
are calculated based upon the estimated fuel efficiency
(30 km/l gasoline equivalent) of FCV. The sensitivity anal-
ysis on the life cycle costs are performed considering the
change of the FCV fuel efficiency predicted in 2015 from
a 40% decrease to a 40% increase [24]. As shown in Fig. 9, this
fluctuation is not as significant a factor for the economical
feasibility of H2 pathways as the FCV price and the social
costs.

The sensitivity of WTW costs by Fuel efficiency of FCV (US $/160,000 km)
64,000
Naphtha SR [C]
Naphtha SR [S]
NG SR [S]
LPG SR [S]
61,000
WE[KEM][S]
WE[Wind][S]

58,000

55,000
-40 -32 -24 -16 -8 0 8 16 24 32 40

The decrease of fuel efficiency of FCV Future The increase of fuel efficiency of FCV
(2015)

Fig. 9 – The effect of the fuel efficiency of FCV on the WTW costs.
4254 international journal of hydrogen energy 34 (2009) 4243–4255
Gasoline WTW costs (US $ 70,000)
70,000
67,500
WTW costs (US $)
65,000
62,500
60,000
57,500
At present 10
costs
The reduction rate of the capital costs on H2 equipments
Fig. 10 – The effect of the capital costs of H2 equipment on the WTW costs.
4.3.4. Effect of capital costs on H2 station
The production costs of H2 equipments are very expensive at
present because their market and production capacity are
very small. The capital costs of H2 equipments are one of the
significant factors in determining the H2 price of station-type
pathways. Since H2 would be penetrated to the fuel markets as
a transportation fuel in 2015, the production capacity of H2
equipments would increase and then the capital costs of H2
equipments would be reduced. This study calculated the
WTW costs considering the mass production and up-scaling
factors derived from Ford and a 1997 US.DOE study [19,20].
However, as the mass production and up-scaling factors have
some uncertainties, this study estimated the WTW costs of
target fuel pathways considering the reduction boundary of
the capital costs of H2 equipments predicted in 2015.
As shown in Fig. 10, even though there would be no
reduction of the capital costs of H2 equipments in 2015, all H2
pathways can generate cost-savings in the range of US $9400
(Naphtha SR[C]) to US $390 (WE[Wind]) compared with gaso-
line. If the capital costs of H2 equipments can be reduced by
30% from the present status, all H2 pathways will yield cost-
savings in the range of US $124 (WE[Wind]) to US $6650
(Naphtha SR[C]), compared with diesel. Therefore, all H2
pathways can ensure the economical feasibility compared
with the conventional fuels in the future scenario because the
capital costs of H2 equipments would not increase more than
those of the present status.
5. Conclusions
The economic burdens of H2 pathways vary since their life
cycle costs depend on the factors such as production capacity,
the FCV price, the social costs of GHGs and regulated air
emissions, and the fuel efficiency of FCV as well as the
hydrogen production method.
In the well-to-tank stage, at present, only H2 via Naphtha
SR[C] showed lower WTT costs than gasoline while station-type
Naphtha SR [C]
Naphtha SR [S]
Diesel WTW costs (US$ 67,000)
NG SR [S]
LPG SR [S]
WE[KEM][S]
WE[Wind][S]
20 30 40 50 60 70 80 90
H2 pathways do not have economic feasibility owing to their
high capital costs and lower production efficiencies. In the fuel
utilization stage, the H2 FCV shows high energy efficiency. In the
well to wheel stage, however, none of H2 pathways has
the competitiveness against the conventional fuels because of
the high FCV price. Needless to say, continuous research and
development will be required in order to reduce the production
costs of FCV and H2 equipment. A government subsidy and
incentives or taxes on GHGs and regulated air emissions may be
effective in encouraging the common use of H2 and FCVs.
By 2015, in contrast with the present, all H2 pathways are
expected to have the economic feasibility compared with the
conventional fuels. NG SR[S] would become the most
economically feasible H2 pathway in the more distant future
since the price escalation rate of natural gas is expected to be
lower than that of crude oil and also NG SR[S] emits less
regulated air pollutants during H2 production than other H2
pathway from crude oil-based fuels. If the maximum social
costs are considered in the life cycle costs, WE[Wind] would
become the best H2 pathway because it emits less GHGs and
regulated air pollutants than any other fuel pathways.
This study provides complementary knowledge about the
consequences of the shift from the conventional fuels to H2. In
the early stage of the introduction of H2 and FCVs, LCC can help
identify the economic feasibility as well as vital needs for
improvement. There are significant uncertainties about how
relevant technology and policies will evolve as future develop-
ments are for the most part unforeseeable. Hence, iterative
update of LCC must accompany ongoing research and develop-
ment to help policy-makers and corporate leaders stay on course.
Acknowledgements
This study was supported by a New and Renewable Energy
Technology R&D program of the Ministry of Knowledge
Economy.
 international journal of hydrogen energy 34 (2009) 4243–4255 4255

references [13] Halsnæs K, Callaway JM, Meyer HJ. Methodological guideline,

main reports: economics of greenhouse gas limitations.
Denmark: UNEP Collarborating Centre on Energy and
Environment, Risø National Laboratory; 1998.
[1] Key world energy statistics 2006. OECD/IEA; 2006.
[14] Dongquan H, Anthony F. Well-to-tank energy use and
[2] Pehnt M. Life-cycle analysis of fuel cell system components,
greenhouse gas emissions of transportation fuels-North
handbook of fuel cells-fundamentals. Technology and
American analysis. GM, Argonne National Lab; 2001.
Applications 2003;4(2):1293–317.
[15] Magdalena M, Veziroglu TN. The properties of hydrogen as
[3] Busby RL. Hydrogen and fuel cells: a comprehensive guide.
fuel tomorrow in sustainable energy system for a cleaner
Pennwell Books; 2004.
planet. International Journal of Hydrogen Energy 2005;30:
[4] Fuller SK, Petersen SR. Life-cycle costing manual for the
795–802.
federal energy management program. US DOE; 1995.
[16] Energy technology perspectives 2006. OECD/IEA; 2006.
[5] Schultz LI, Weber SF. Guide to computing and reporting the
[17] Gregorio M, Teresa V. Towards the hydrogen economy?
life cycle cost of environmental management projects. US
International Journal of Hydrogen Energy
DOE; 2003.
2007;32:1625–37.
[6] Marc B, Michael F. Economic analysis of the hydrogen
[18] Master plan for the environmental friendly hydrogen
infrastructure. CUTE-DELIVERABLE; 2006.
economy. Korean Ministry of Knowledge Economy; 2005.
[7] Yearbook of labor statistics. Korean Ministry of Labor; 2004.
[19] Lipman TE, Weinert JX. An assessment of the near-term
[8] Kim BJ. Estimation of the H2 production cost and
costs of hydrogen refueling stations and station
decentralized H2 station. In: Third Hydrogen energy
components. UC Davis; 2006.
symposium; 2005.
[20] Donna LH, Steven C, Walter P, James M. Direct hydrogen
[9] Karan C, Philippe A. State and trends of the carbon market
fueled proton exchange membrane fuel cell system for
2007. World Bank and IETA; 2007.
transportation applications – hydrogen infrastructure report.
[10] Son UY, Hwang GH. A study on the estimation private and
US DOE; 1997.
social costs of operation for vehicle ownership. Seoul
[21] Lee JY. A study on the establishment of the optimized
Development Institute; 2001.
hydrogen infrastructure in Korea through the environmental
[11] Holland M, Pye S, Watkiss P, Droste-Franke B, Bickel P.
and economic analyses. PhD thesis, Konkuk University, 2007.
Damages per tonne emission of PM2.5, NH3, SO2, NOx and
[22] Dolf G, Giorgio S. Prospects for hydrogen and fuel cells.
VOCs from each EU 25 member state (excluding Cyprus) and
OECD/IEA; 2005.
surrounding seas. AEA Technology Environment; 2005.
[23] The contribution of each energy source on the domestic
[12] Vogtlander JG, Bijma A, Brezet HC. Communicating the eco-
electricity-grid. Korea Energy Economics Institute; 2007.
efficiency of products and services by means of the eco-
[24] Robert R, William V. Fuel cell vehicle world survey 2003.
costs/value model. Journal of Cleaner Production 2002;10(1):
Breakthrough Technologies Institute; 2004.
57–67.