In a development impacting the emerging hydrogen fuel cell electric vehicle (FCEV) market, Shell has announced the permanent closure of its light-duty hydrogen fueling stations in California.
According to S&P Global Commodity Insights (GCI), the decision was made in response to the difficult worldwide environment for FCEV markets, rising pump costs, and supply disruptions. Given the current situation, it is even more unclear what the future holds for hydrogen fuel-cell cars in the US.
Although hydrogen automakers typically include a large amount of free fuel with the purchase of a vehicle, once that runs out, consumers are left with eye-watering prices from stations that are often broken, out of fuel, or crowded with long lines. As a result, the technology has struggled to gain traction.
Hydrogen car owners are concerned
Concerns and skepticism have been raised among Toyota Mirai, Hyundai Nexo, and Honda Clarity Fuel Cell owners. As Shell closes the few hydrogen fueling stations across the country, they seem to fear the hydrogen fueling stations’ future.
Shell is among the few that can convincingly argue that it is the best option since the least expensive method of producing hydrogen uses a significant amount of natural gas. Its proximity to the fossil fuel industry was expected to lower the cost and encourage the development of a strong fueling infrastructure.
That has not happened, though, and one of the biggest oil companies is giving up. We are not sure who can justify investing in the future of light-duty hydrogen infrastructure if even a fossil powerhouse like Shell can’t.
As Shell stated, closures were attributed to issues with the availability of hydrogen and other external market variables, demonstrating difficulties that went beyond operational logistics. California’s supply of hydrogen is facing several challenges, such as rising feedstock prices brought on by geopolitical concerns like Russia’s invasion of Ukraine, unanticipated station running expenses, and a drop in Low-Carbon Fuel Standard credit values.
Heavy trucking hydrogen market expands
While retail hydrogen fueling stations close, the heavy trucking hydrogen market is expanding. Therefore, Shell has decided to only run three hydrogen stations for heavy-duty vehicles, such as class 8 drayage trucks or trash trucks.
This is additional evidence that, although hydrogen has a place in the transportation industry as a clean fuel, that role will not involve passenger cars anytime soon. In a 2008 pilot program, Shell launched its first California retail hydrogen station in Los Angeles. Then, in 2011, it constructed its first pipeline-fed hydrogen station in Torrance, which was ideally located next to Toyota’s then-headquarters.
Six years later, Shell announced its intentions to construct additional hydrogen stations around the state. Some subsidiaries of the California Energy Commission funded Shell’s projects.
However, with “Project Neptune,” which would see Shell upgrade two existing sites and build out 48 new hydrogen stations in California, things began to look a little more ambitious. Toyota, Honda, and Hyundai agreed to help fund the project, which also secured a $40 million, five-year grant from the CEC.
In late 2023, it was disclosed that Shell had canceled their intention to construct and run more light-duty car fueling stations in California, despite having received money for the project. In that same year, Shell also temporarily closed five of its seven retail hydrogen stations.
California will have less than 50 public hydrogen filling stations after these closures; in contrast, the state has 2,045 public DC fast-charging locations for electric cars, with about 11,000 charging outlets.
But hydrogen’s future in decarbonizing transportation still gives some hope to hydrogen enthusiasts. For light vehicles, battery electric vehicles (EVs) have come a long way over the last fifteen years, but when it comes to heavy-duty vehicles, battery weight starts to negatively impact payload, which is where hydrogen fuel cell trucks shine.