Call for mechanism to encourage European hydrogen truck uptake

A group advocating the use of hydrogen-powered heavy-duty vehicles has proposed a mechanism that it says would provide long-term certainty on the total cost of their ownership.

The H2Accelerate collaboration has published the third and final paper in a recent policy series, which proposes a pan-European Total Cost of Ownership (TCO) Parity Certainty Mechanism that would guarantee TCO equivalence between hydrogen and diesel heavy-duty vehicles, thereby unlocking demand for hydrogen trucking.

The group comprises hydrogen fuel suppliers Linde, Teal Mobility, and TotalEnergies, and truck makers Daimler Truck AG, Hyundai Hydrogen Mobility, and the Volvo Group.

While some policies implemented in leading European markets are creating conditions for hydrogen trucks to achieve a competitive TCO, says H2Accelerate, the cost advantages of certain policies – such as the renewable fuel credit mechanisms of the Renewable Energy Directive (RED III) – can vary over time, introducing a level of uncertainty for fleet operators.

“European member states have implemented a range of policies to improve the commercial case for zero-emission trucks,” said the collaboration.

“These include capital grants, road toll exemptions and reductions, renewable fuel credit mechanisms and, in future, [the new carbon-pricing system for road transport fuels] ETS II. In leading markets, these policies are reaching a tipping point where hydrogen trucks can be competitive with diesel alternatives.

“In Germany, for example, the THG Quota provides valuable credits for renewable hydrogen used in transport, supporting lower hydrogen prices at the pump under high-volume offtake contracts and enabling TCO to reach levels competitive with diesel equivalents. When combined with other measures in place in Germany, the THG Quota can support a competitive business case for hydrogen-powered trucks.”

But it added: “The future value of market-based measures, such as renewable fuel credits, is unknown and varies through time. Reliance on these variable mechanisms alone can therefore result in a challenging business case which may delay vehicle procurement and create investment uncertainty. When used alongside additional measures however, these mechanisms are a powerful tool which can materially improve the TCO of hydrogen trucks.”

The proposed TCO Parity Certainty Mechanism would work alongside existing European and member state policies, says H2Accelerate, rather than replacing them.

“Support under the mechanism would cover the residual TCO gap after accounting for measures already in place, including national grants, toll exemptions, RED III credits, ETS II impacts and other relevant incentives.

“In markets where existing policies already achieve TCO parity, little or no additional support would be required. Instead, the mechanism would provide a guarantee against changes in policy or the value of market-based support mechanisms.”

According to the H2Accelerate proposal, that support should be awarded through competitive tenders, which it says would incentivise applicants to develop the most cost-effective business cases.

“Operational support could be provided through different structures, including a payment linked to hydrogen consumption or kilometres travelled, or a variable contract for difference mechanism.

“Linking support to operation would also ensure that public funding rewards actual vehicle and infrastructure utilisation and is linked to delivered emissions reductions, while competitive bidding would minimise the level of support required to achieve TCO parity.”

Members of H2Accelerate have outlined key principles for the design of the mechanism, including a focus on zero-emission trucks of 30 tonnes and over (Class N3); the need to reward operation and utilisation, rather than vehicle or infrastructure deployment alone; the support of cross-border operation and development of key European transport corridors; and operation through regular funding rounds, with support levels reducing as the hydrogen market matures.

The collaboration proposed that such a mechanism could be implemented for 2028-34 through the EU’s next multiannual financial framework. It emphasises that the mechanism would be temporary and taper off as the underlying TCO of hydrogen trucks becomes increasingly competitive with diesel.

Charles Cambournac, managing director at Hyundai Hydrogen Mobility Germany, said: “The policies being implemented in leading European markets are demonstrating that hydrogen trucks can reach a competitive TCO with diesel. The challenge for fleet operators is having confidence that this business case will remain in place over the lifetime of the vehicle.

“Providing long-term certainty around TCO parity would give customers greater confidence to commit to hydrogen trucking at scale. That demand is also critical for giving vehicle manufacturers, hydrogen suppliers and refuelling station operators the certainty needed to make their own investments.”

Hannah Bryson-Jones, spokesperson for the H2Accelerate collaboration, added: “Across this series of policy papers, we have set out the measures that can create a competitive business case for hydrogen trucking, and how targeted capital funding can bring trucks and refuelling infrastructure onto the market together. The final piece is providing the long-term certainty needed for customers to invest at scale.

“A TCO Parity Certainty Mechanism would build on policies already being implemented by member states, covering only the residual gap with diesel and providing protection against future changes in policy or market-based incentive values. If designed correctly, this mechanism can unlock customer demand in the near term, support investment across the hydrogen value chain and reduce the level of public support required as the market scales.”

Last week, H2Accelerate also set out a proposal for adapting future European funding programmes to better support the coordinated deployment of hydrogen-powered trucks and refuelling infrastructure.

Its members propose that future relevant European programmes should fund both hydrogen-powered vehicles and refuelling infrastructure; require funded stations and vehicles projects to form joint consortia involving station operators and vehicle users; and provide sufficient notice of future funding calls to allow strong project consortia to form.

Hannah Bryson-Jones said: “European funding has already made important contributions to the development of hydrogen refuelling infrastructure. The next step is to ensure that infrastructure and vehicle deployment reinforce one another and drive a coordinated scaling of the sector.

“Bringing fleet operators, station developers, hydrogen suppliers and vehicle manufacturers together around coordinated projects can reduce risk across the value chain and help public funding translate more quickly into trucks and stations in operation.”