The Transitioning the Transportation Sector workshop was organized around three key questions:

1. For what markets are natural gas and hydrogen in direct competition? How might they complement each other and be better suited for different transportation applications?

2. How do we get fueling stations built? Are there business models that can simultaneously support hydrogen and natural gas?

3. What can we learn from programs and policies that have been implemented at the state level?

Key observations from the workshop include:

• Markets for hydrogen and natural gas will naturally segment. Vehicle selection for commercial applications, such as freight trucks and delivery vans, are driven by economics and business needs. These businesses are already on a path towards broad use of natural gas for trucks and vans. In contrast, automakers expect that fuel cell electric vehicles (FCEVs) will be adopted more broadly for personal transportation. While there may be overlap in selected niches, such as buses or light duty fleet vehicles, the current market and manufacturer signals indicate that hydrogen and natural gas will likely segment to different application areas.

• Starting from common standards and equipment may enable synergistic development of both hydrogen and natural gas. Infrastructure, storage, and delivery have been cited as common challenges in the deployment of both natural gas and hydrogen fuels. Although both are compressed gaseous fuels, current trends indicate that requirements for hydrogen and compressed natural gas are likely to be tailored to optimize each individually rather than focusing on what is common. While different pressure and materials requirements have been developed independently for each fuel, utilizing common equipment, pressures, and manufacturing processes could enable economies of scale for storage equip- ment and handling that could simultaneously drive down costs and advance both alternatives.

• Co-location of hydrogen and natural gas fueling stations would create new business opportunities. Natural gas and hydrogen fueling stations are currently being developed independently. Having both fuels at the same station could improve operational expenditures and also take advantage of common supply chains. Coupling these infrastructure economics with common equipment manufacturing for both vehicle and fuel supply technologies has the potential to create new business models that lowers the cost and reduces the risk of both alternatives in tandem.

• Roles of fuel providers and utilities will shift. The increasing diversity and potential higher margins of alternative fuels will add new players to the fuel supply market. The infrastructure needed for natural gas, hydrogen, and electricity as transportation fuels has brought a diversity of industry stakeholders into the marketplace. Looking forward, new business models may bring together utilities, industrial gas companies, and customer service providers, and thus create new partnerships that alter the customer fueling experience and change the factors that contribute to station profitability. Moreover, models for multi-fuel generation—such as the simultaneous production of natural gas, hydrogen, and electricity— can shift the paradigm from traditional centralized production and distribution.

  Concept for multifuel station that utilizes natural gas to produce three fuel streams: CNG, hydrogen, and electricity that can either charge electric vehicles or be fed to the grid. Figure courtesy of Jeff Reed, Southern California Gas Company. Click to enlarge.

• Thorough system requirements and cost assessments are needed to quantify the benefit of co-development of natural gas and hydrogen. A number of technical and policy barriers will affect the broader deployment of alternative fuels and infrastructure. While the relatively low cost and abundant supply of natural gas has stimulated deployment, uncertainty in fuel costs, vehicle incentives, and technology investments continue to limit hydrogen vehicles and infrastructure. Systematic assessments that elucidate the sensitivities and relative significance of the barriers would help inform a path forward for the development of both natural gas and hydrogen, as well as the potential benefits for multi-fuel stations and common designs for storage and compression technologies. Exploring the economics of scale of common designs, manufacturing, and distribution can quantify the impact of co-development and inform a more efficient roadmap for their development.

• The near term may not grow up to look like the long term. While natural gas has often been described as a bridge to hydrogen, the growth of alternative fuels and vehicles will continue to be unpredictable. Development of alternative fuels is unlikely to follow a linear path in which each station serves as a component of an optimized, long term infrastructure. Accept that the multiple generations of vehicle and fueling infrastructure technologies will coexist, and that the corresponding infrastructure will be built and rebuilt over time.

• Different policies may be more effective for different fuels. For example, aggressive deployment programs for natural gas vehicles have stimulated the development of complementary, unsubsidized fueling infrastructure. In contrast, zero emission vehicle mandates and public investment in early hydrogen infrastructure have motivated automakers to produce hydrogen fuel cell vehicles.