The Poultry Problem. Government incentives will undoubtedly be required to initiate any new alternative vehicle transportation system.  Energy suppliers will not install new fuel systems until there are many cars on the road, and automobile companies will not produce large numbers of alternative vehicles until the fueling infrastructure is in place....the “poultry” or “chicken and egg” problem.  Government incentives or subsidies will most likely be required for both the fueling infrastructure and for buying down the incremental cost of alternative vehicles.

Summary of fueling infrastructure investments required.  The model calculates total government incentives required for hydrogen infrastructure to support fuel cell electric vehicles (FCEVs) and the necessary public charging outlets to support battery electric vehicles (BEVs)   [Note: previous versions of this table were based on the assumption that the initial hydrogen fueling stations used on-site steam methane reformers; however, it is less expensive to install mobile refuelers or stations based on storing liquid hydrogen. although these options result in higher hydrogen costs, they do reduce the initial capital investments necessary to jump-start the new fueling infrastructures. The results are summarized in this table: along with a summary of the government incentives required to buy-down the cost of alternative vehicles

H2 Infrastructure BEVPublic Charging Infrastructure government Investments $29.3 billion $41 billion Net Present Value (10% discount) of govt. invest $2.12billion $3.31 billion Private Industry Investments $51.6 billion $234 billion Total Investments $80.9 Billion $276 billion Net Present Value (10% discount) of Investments $2.57 $12.19 billion Government Vehicle subsidies with 3 year fuel savings $1.94 billion $1.07 Trillion!! Government Vehicle subsidies required with 10 years fuel savings $73.5 million $45 million Total Government Investments (fuel infrastructure plus vehicle subsidies with 3 years fuel savings accounted for) $31.2 billion $1.1 Trillion!

[Hydrogen infrastructure incentives] [Vehicle Incentives] [Charging outlet incentives]

Industry investments between $52 billion to $234 billion over several decades may seem like a lot of money, but these sums are not exceptional compared to past energy industry expenditures.

For example, we estimate that the oil industry has invested over $100 billion each year for the last three years just in the US to support the existing US gasoline and diesel fuel infrastructure.  The annual industry incentives required for  hydrogen infrastructure and for public fueling outlets  are minor compared to past fueling industry capital expenditures to maintain the gasoline and diesel fuel infrastructure:

 [Source for oil industry expenditures estimate: Marilyn Radler, Oil & Gas Journal]

Similarly, the government incentives for hydrogen and public charging outlets are less than past government support to achieve major societal objectives such as the Federal highway system beginning in 1956 and putting a man on the moon in the 1960’s and much less than the projected government subsidies for ethanol: for example, if the Congressional goal of producing 36 billion gallons of ethanol by 2022 is achieved, and if ethanol is subsidized at 45 cents/gallon (Down from past subsidies of 51 cents/gallon, then the total ethanol subsidies will increase to $16.2 billion per year in 2022;  As shown below, these ethanol subsidies are much greater than the maximum government hydrogen infrastructure investment of $1.36 billion in 2044:

Similarly, the $16 billion/year ethanol subsidy would be huge compared to the maximum annual government incentive for public charging stations of $2.88 billion in 2045:

Finally, the total government incentives required for public charging outlets ($41 billion) and for a distributed hydrogen infrastructure ($29.3 billion) are both small compared to past government programs such as President Eisenhower’s 1956 national highway system ($197 billion in today’s dollars) or President Kennedy’s project to put a man on the moon ($151 billion in today’s dollars):