3.4        Economic Implications

The major barrier to fuel cell market acceptance is the high initial cost; however like most new technologies, as more units are installed and commercialised, prices are likely to fall. The growing public interest and the increased competition of manufacturers will play a major role in driving down the price over the next few years. The advantage of fuel cell power plants - in spite of the high initial costs - is that they have longer life expectancies and lower maintenance costs than their alternatives.

Advanced biofuels including methanol and hydrogen derived via thermo-chemical gasification of biomass are fuels well suited for use in fuel cell vehicles, where they offer good prospects for dealing with the multiple challenges of transportation. Hydrogen or methanol fuel probably would be produced initially by steam-reforming natural gas. This is the least-costly route for which the required technology is commercially available.

The most important economic impact of fuel cells is that it represents a disruptive technology, which will challenge existing technology such as the internal combustion engine that has over 100 years of development behind it. The technical and economic targets, which fuel cells will have to meet, are also severe. This is particularly the case for passenger cars. Other barriers that need to be overcome before the development of a commercially viable product include: fuel choice and availability; fuel storage; reliability; the need for codes of practice, standards and regulation, etc. When calculating the economics of fuel cells all these should be taken into consideration, and therefore developing economically viable fuel cell systems for widespread use is a real challenge of the future.

3.5        Political Implications

There are a number of barriers that need to be overcome before fuel cells can move to a society where their use will become as commonplace as using regular batteries. If costs and security of supply are dominant considerations then coal with CO₂ sequestration will be a sure winner. If the political commitment towards renewable energies is stronger, then biomass, solar, wind and ocean energy will be more or less viable according to regional geographic and climatic conditions. The wide range of these options for both sources and converters demonstrate the flexibility of hydrogen and fuel cells.

As hydrogen and fuel cells are expected to stimulate integrated, “open energy systems”, suitable for answering the challenges of energy security and supply, economic competitiveness, air quality and health improvements and greenhouse gas reduction, many of the developed and even some of the developing nations have invested much in R & D in order to find cost-effective solutions to the wide spread use of hydrogen production and fuel cells.

At present Europe’s competitiveness and efforts to become a world leader are being undermined, as policy and R & D show a fragmented picture both within and across the different countries. In order to overcome these challenges, a political framework should be drawn up to enable new technologies to enter the market within the broader context of future transport and energy strategies and policies. Seen as the core technology of the 21^st century – particularly in the US and Japan - strong investment - both public and private - has been made in hydrogen production and fuel cells all over the world.