Article written and supplied by Aon
Aon’s David Joo – EMEA Intellectual Property Lead, Digital Transaction Advisory Services and Marc Spurling – Director of Future Mobility Strategy, consider the promise of hydrogen in the mobility sector including the barriers it faces and the value it could deliver.
There is plenty of misconception, myth, and scepticism when it comes to linking hydrogen with mobility. Partly that’s because hydrogen is a new technology with currently limited supporting infrastructure needed for successful roll out, which means there is less confidence in its future role versus competing fuel technologies. Many commentators see choosing the best mobility sector fuel for net zero as a binary choice between battery electric and hydrogen, with batteries seemingly already well advanced in many areas of mobility use.
But, looking at this choice in a binary way understates the vital role that hydrogen will play in creating the sustainable mobility solutions needed for the future and, in so doing, generating a hydrogen-based value chain; provided, of course, that the industry can overcome the barriers to more widespread adoption.
Nothing New About Hydrogen
One myth is that hydrogen is a new technology. It’s been around for some time in the mainstream mobility sector with Toyota, for example, marketing the Toyota Mirai saloon car in Northern Europe since 2016. Hydrogen fuel cell production can even trace its lineage back as far as the 19th century, with the first hydrogen fuelled car taking to the road in 1860[1].
Hydrogen Can Compete
Such is its promise as a fuel of the future, hydrogen could play an important role throughout the mobility sector from cars, to trucks, public transport, shipping and even aviation. In the world of HGVs, a scale-up technology company operating in the commercial vehicle hydrogen mobility space – Hydrogen Vehicle Systems (HVS) – has identified how hydrogen can compete effectively with diesel, stating: “In many jurisdictions diesel is heavily taxed and so green hydrogen can approach cost parity with road transport fuel much quicker than displacing, for example, natural gas prices.”
Barriers to Adoption
The barriers to hydrogen adoption, however, include issues surrounding hydrogen production, storage, and distribution, while there is a perception issue around the safety of hydrogen powered vehicles. Fortunately, many of these barriers are starting to come down, not least from a safety perspective given the number of redundancies that are being built into the technology to prevent incidents. And mobility businesses are starting to prove that there is a way to develop the infrastructure needed by tackling some of the practical challenges.
HVS, for example, is pioneering not only the manufacture of hydrogen powered trucks but also the creation of infrastructure that will support the use of those vehicles in the UK in areas like refuelling and servicing, with the business estimating that they can “service around 95% of the long-haul and regional haul markets with seven strategically placed sites”. To address the insurance challenge hydrogen still faces, given the lack of understanding of the technology means insurers’ capital is not currently easily deployed towards hydrogen risk, HVS is also exploring the provision of insurance products as part of their overall offering to help ease adoption.
Digitalisation is Key
Digital innovation will also be key in helping to lower those barriers. In the hydrogen supply chain, that could mean using technology like AI to optimise production driven by the availability of renewable energy, through to the widespread adoption of IoT sensors to increase safety during the storage, distribution and usage of hydrogen. HVS’s SEMAS™ technology, for example, provides a rich data set on how trucks are used “enabling improved vehicle performance, repeatability, range predictions, and load-specific capabilities”. That means operators will always know how their hydrogen electric vehicles are performing, with the ability to “allow over the air updates and planned preventative maintenance, reducing risk”.
Value Creation
Much of this digital innovation points to significant value being created within the hydrogen sector and the importance of intellectual property (IP) in securing competitive edge and attracting investment when it comes to enterprise valuations and investor confidence. A report from the European Patent Office and International Energy Agency[2] finds that automotive companies were the top filers of hydrogen-based patents, second only to the chemical industry players, and quickly followed by universities and research organisations.
In turn, the larger deal sizes for early-stage companies with patents indicates that holding patent assets is a good indicator of whether a start-up will keep attracting finance. In terms of hydrogen, areas such as electrolysis, fuel cells, or low-emissions methods for producing hydrogen from gas are all areas that have patenting opportunities and offer routes to securing exclusivity and, as a result, achieving a competitive edge. And the potential interest in that IP is likely to be significant given McKinsey estimates an annual investment into hydrogen of US$100-150 billion by 2025[3].
The Hydrogen Future Looks Bright
Given these conditions, the future outlook on the role of IP in enhancing the growth and sustainability of hydrogen-powered solutions in mobility is positive but it will require continued input from universities and research organisations, OEMs, start-ups like HVS, risk management firms, and investors. As the digitalisation of the sector continues, creating more value while further reducing perceived risk and driving greater adoption of hydrogen powered mobility solutions, there is every likelihood that hydrogen will take its place as a recognised and established fuel for a net zero future.
Supporting deployment of hydrogen technology to achieve a net zero mobility economy is just one of ways Aon’s approach to future mobility solves for the emerging needs of mobility players. From those looking to evolve mature business models, to those driving rapid growth from a start-up to scale up, Aon is a partner supporting a client’s growth cycle. We help our clients to make better decisions to protect assets, attract and retain the best talent and control risk. If you want to talk to us about this or any area of future mobility come and meet our team at Stand 23 at MOVE2024 or contact david.joo@aon.co.uk.
The information contained in this document is intended to assist readers and is for general guidance only.
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[1] https://www.fastechus.com/blog/the-surprising-history-of-hydrogen-vehicles
[2] https://link.epo.org/web/hydrogen_patents_for_a_clean_energy_future_2023_en.pdf
[3] https://www.mckinsey.com/capabilities/sustainability/our-insights/innovating-to-net-zero-an-executives-guide-to-climate-technology
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