A view of downtown Tokyo from the Mori Tower in Roppongi Hills. Julian Spector

The city is spending big money to make fuel cells affordable. Is that the right way to cut carbon?

Savvy cities design their Olympic facilities to add value after the games finish. Tokyo’s leader isn’t just thinking about real estate, though: he’s using the athletic village for the 2020 Olympics to kickstart a transition to a hydrogen-powered society.

Hydrogen has been kicking around as the energy of the future for decades, but so far it’s potential hasn’t converted into reality. For starters, synthesizing the hydrogen itself is an energy-intensive process, after which it must be super-cooled or pressurized to be transported and used. To get hydrogen fuel to consumers, countries need to invest in infrastructure. And then you have to persuade people to buy a new type of car that runs on a fuel better known for powering rockets.

Tokyo Governor Yoichi Masuzoe

All of that physical investment comes at a premium, and Yoichi Masuzoe, governor of the Tokyo Metropolitan Government, is ready to pay. He’s earmarked $350 million in a special fund to subsidize hydrogen fuel cell cars and fueling stations in the run-up to the Olympics. He’s building the 6,000-unit Olympic village to function exclusively on fuel cell power. And he’s fired up about the benefits this will have for Tokyo’s air quality, resilience to natural disasters, and, most emphatically, the potential to seriously cut contributions to climate change.

If he’s betting wrong, he’ll be throwing away considerable public resources on a red herring while cheaper options already exist. If he pulls it off, Tokyo’s investment could play a key role in bringing down the costs of hydrogen fuel, opening up the clean power to many more people worldwide.

The high cost of getting started

Economies go up and down and disrupt long-term financing plans. To avoid that, Masuzoe—who recently made headlines for some of his personal spending—set aside the special fund specifically for hydrogen society projects. The primary expenditures will subsidize the vehicles so that people might buy them despite a higher initial price tag.

The Mirai, Toyota’s hydrogen fuel-cell car, costs close to $70,000. That’s a lot more than comparable sedans or battery-electric equivalents. To deal with that, the Japanese government offers a roughly $20,000 subsidy and Tokyo adds an additional $10,000, bringing it into competition with other commercially viable clean cars. There’s no point buying one if you can’t fill it up, though, and hydrogen stations cost five times as much to build as a regular gas station. Tokyo will ameliorate that with an 80 percent subsidy on new hydrogen stations, which brings them to cost parity with gas stations. The vision is for 200,000 fuel-cell vehicles on the roads and 150 active fueling stations by 2030.

I sat down with Masuzoe when he was in Washington, D.C., this spring, and asked him whether, given these costs, it makes sense for cities with limited funds to invest in hydrogen. He didn’t mince words.

“Fortunately, we are rich,” Masuzoe tells CityLab. “This is really an investment for the future. Not just for you. The future of the city, the future of Japan, the future of our globe. I think that it deserves this kind of allocation of money.”

The government is providing other kinds of support, too. One of the cost factors in building them is that hydrogen stations are required to be at least eight meters from the nearest building, twice the distance that gas stations face. In Tokyo’s scarce real estate market, those extra four meters make a difference. Masuzoe says he hopes to address this regulation by the end of the year. He also says that, while the costs on hydrogen cars decline, taxes on old cars will gradually increase.

Masuzoe goes for an emission-free ride through Tokyo in a hydrogen fuel cell-powered Mirai.

The good news is that hydrogen technology is ready to roll—it’s been tested for years and it does what it’s supposed to do. Briefly put, that task is converting chemical energy into electrical energy through an oxidation-reduction reaction. This is much more efficient than the conventional power plant, which combusts a fuel to generate mechanical energy to turn a turbine and create electrical energy. Like any new technology, though, fuel cells are most expensive in the beginning when there is no economy of scale. As Eric Wesoff reported at Greentech Media, fuel cells are “a lackluster, loss-filled business,” where companies have struggled for years to turn a profit.

“Right now, because there is no market, each product is like a prototype and it's going to cost a lot of money,” says University of Delaware Provost Domenico Grasso, who has extensive research experience in the energy and environment sector. “As it scales up, the cost will come down.”

Costs also arise from the totally understandable instinct to tread carefully with new things, which can lead to overbuilding the safety protocols, says Yang Shao-Horn, the W.M. Keck Professor of Energy at MIT and co-director of the MIT Energy Initiative’s Center for Energy Storage Research.

“We don’t want to have an accident or something like that that can prematurely terminate a new technology,” says Shao-Horn, who has worked with Toyota to develop hydrogen fuel cells.

The island nation laboratory

Tokyo didn’t enter into this investment lightly. There are several factors that make this city an ideal test site for hydrogen.

For one thing, Japan lacks much in the way of natural energy resources, so fuel has to come as imports from other countries. The nation ranks in the top three for imports of liquefied natural gas, coal, and oil; domestic sources provide less than 9 percent of energy use. That breeds a reliance on international energy markets, which have only gotten more volatile recently, and creates the potential for supply chain disruptions. Hydrogen, on the other hand, can be synthesized anywhere with the right facilities; it’s not limited by the whims of where dinosaurs happened to die millions of years ago. Hydrogen serves the goals of energy security.

(Energy Information Administration)

The island nation sits in seismically active territory, so any new fuel source needs to be resilient to earthquakes, tsunamis, and storms. Fuel cells work especially well in that regard, because they can operate independently of the larger grid; they essentially act as microgrids powering individual buildings or vehicles. Moreover, Masuzoe notes, if the power goes out in a house or a school, you can hook up a hydrogen-fueled car or bus to act as a generator.

So many of Tokyo residents commute by public transit already that revamping the auto sector isn’t as daunting a proposition as it would be in the U.S., for instance. For those who do drive there, hydrogen cars have two big leads over their battery-powered competition: they fuel up much faster—about three minutes as compared to several hours for most EVs—and the Mirai’s range of 312 miles beats even the Tesla. It’s easier to saturate a dense metropolis like Tokyo with fueling stations than it is to build out a useful network across the wide-open American West.

On the residential side, fuel cells are “quite suited for Japanese homes,Shao-Horn says, because the typical household there consumes a fraction of what an American home uses.

It’s also impossible to divorce this initiative from the specter of climate change. The nation with the sixth longest coastline in the world has plenty of reasons to fear rising sea levels and more intense storms. But it’s not just a parochial interest—it’s intimately linked to the experiences of other cities around the globe. Masuzoe tells me he’s in close contact with city leaders, including Paris Mayor Anne Hidalgo and former New York Mayor Michael Bloomberg, who are allies in the fight against climate-induced disruption.

“Without big cities you cannot find out a good answer to climate change,” he says. “Of course nation-to-nation relationships are very important, but now it’s the network of big cities that counts… My ambition is to make Tokyo the model city for the environmentally friendly city.”

This is one area where a local hunger for superiority could actually help a lot of other people.

The other clean car

Fuel cells aren’t the only technology that serves many of these goals. Electric vehicles already sell in the range of $30,000 to $40,000, without $30,000 in government subsidies, and their fueling stations slip nimbly into a built-up urban environment, unlike hydrogen stations.

To be clear, Tokyo supports hybrid and electric cars too—they’re not choosing hydrogen over those options, just concentrating their funds on it. But that still leaves the optimization question: if a government wants to maximize decarbonization with an investment of $350 million, would a concentrated push for EV expansion accomplish more than hydrogen?

After the 2011 nuclear meltdown at the Fukushima Daiichi plant, Japan shut down its nuclear power, leading to a heavier reliance on fossil fuels for energy. (AP Photo/Kimimasa Mayama, Pool)

Dedicating that special fund to electric cars could get more clean vehicles on the road more quickly and circumvent the tricky issue of new hydrogen stations in the tight Tokyo real estate market, but that wouldn’t necessarily eliminate more greenhouse gases. That’s because the electricity has to come from somewhere, and currently 93 percent of Japan’s electricity comes from fossil fuels (that percentage rose when Japan shut down its nuclear plants in response to the 2011 Fukushima meltdown). Electric cars in Japan won’t be truly clean until the grid is.

Of course, hydrogen also comes from somewhere. To understand its ultimate environmental impact, Grasso says, we’ll need a full analysis that factors in emissions and byproducts of hydrogen production. Currently, most synthesized hydrogen comes from a process known as steam methane reforming, which emits carbon dioxide. Factoring in the carbon released from hydrogen production, a hydrogen fuel cell car still cuts down greenhouse gas emissions per mile driven by half or more compared to a 30 mpg gasoline-powered car. It’s also possible, but currently about twice as expensive, to make hydrogen from electrolysis powered by clean energy. That’s one vision for a zero-carbon society: zero-emissions hydrogen synthesis fueling all the cars and houses.

Given Japan’s current energy sources, building up a clean-powered hydrogen supply chain looks less daunting than decarbonizing the electric grid. Hydrogen fuel cells extend their benefits beyond the automotive industry, too. Factories heavily utilize fossil fuels, which means the products that come out of them carry a greater carbon footprint. Many industries use hydrogen itself for chemical synthesis, and would benefit from a cheaper and cleaner supply. “A lot of people don't understand that when they buy products, there was a lot of energy utilization and then byproduct production in the creation of those resources,” Grasso says. Fuel cell-based factories would cut that down.

International trend-setter

The most profound legacy of this hydrogen transition will likely be how it changes the playing field elsewhere in the world.

“Utilizing the Olympic Games as a way to motivate and really transform their infrastructure is really quite exciting,” MIT’s Shao-Horn says. “Whatever learning they have, I think it will benefit other cities, states, or countries that want to push in this direction.”

In the years after World War II, the U.S. sank millions of dollars into researching and establishing civilian nuclear power plants. That learning has spurred dozens of other countries to establish their own nuclear power, often much more cheaply than the first-mover, who had to figure it out along the way. Japan, having shuttered its nuclear fleet, could now perform the bellwether role for hydrogen fuel cells.

“What you need is a proof of concept, something that is an ideal that you're going to aim for,” Grasso, the environmental engineer, says. “If you can prove something like a hydrogen society can work in a city like Tokyo, then it’s a matter of how do we scale it, how do we ensure that all the ancillary consequences have been addressed, and you only really do this by testing it out.”

Tokyo, as the governor declared, has the money to bet on this long-simmering technology. If it doesn’t take off, then Masuzoe paid a premium for cleaner local air. And if a flock of other cities hears the bell and follows along, there will be no doubt of who wins that title of model environmental city.

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