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The Haralds of Hydrogen

Floris Jacobus Adrianus de Klerk Wolters

Chapter 8: Manufacturing

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  • 1 This only includes entities registered under NACE section C: Manufacturing.

1The biggest economic section in the hydrogen coalitions is manufacturing (N=611, 36.59%).1 It is a diverse section, largely split among four larger divisions. These are manufacturers of machinery and equipment not elsewhere classified (n.e.c.) (N=122, 19.97%), motor vehicles, trailer and semi-trailers (N=92, 15.06%), chemicals and chemical products (N=97, 15.88%), and electrical equipment (N=88, 14.40%), together accounting for roughly 65% of manufacturing. In the analyses, manufacturers of machinery and equipment n.e.c. are merged with those of electrical equipment, repair and installation of machinery, and manufacturers of computers, electronic and optical products, as they support hydrogen for mostly the same reasons. The fact that some divisions have fewer registrations does not mean they should not be considered, and some have influential companies among them. Manufacturers of other transport equipment, (N=22, 3.60%) is an example of this: it includes aircraft industry duopolists Airbus and Boeing, the large shipyards Chantiers de l’Atlantique and Fincantieri, the naval constructor Naval Group, the train builder Alstom, and the heavy/industrial transport multinational CNH Industrial. The participation of major companies from these sectors should not be ignored in the larger picture of the hydrogen transition.

Figure 6: Pie chart for manufacturing

Figure 6: Pie chart for manufacturing

8.1 Machinery and Electronic or Electrical Equipment

2Manufacturers in the divisions of electrical equipment; computer, electronic and optical products; repair and installation of machinery; and other machinery and equipment together constitute the largest group of manufacturers in support of hydrogen (N=255, 41.73%). Their number attains 277 with the inclusion of wholesale and retail traders specialised in this sector. Although these divisions specialise in different manufacturing products, their roles and motivations are largely similar. They produce (amongst others) electrolysers, compressors, regulators, taps, valves, PEM fuel cells, sensors, powertrains, fuelling systems, pumps and engines. Some of the most active companies among the different coalitions include Siemens (10), ITM Power (8 registrations), Hydrogenics (8), Nel Hydrogen (7), Swagelok (7), and Ballard Power Systems (7). Although most are SMEs, there is a sizeable number of large multinationals among them. The largest and most actively participating of these is Siemens, but other examples include ABB, Atlas Copco, Liebherr, Rolls Royce, Sandvik, Schaeffler, Swagelok, Vestas and Yanmar.

3 The motivation for these divisions is relatively straightforward: the perspective of sales and market growth. This can also be derived from official statements made by companies such as Swagelok (Shankar, 2019), Siemens (2018), and Sandvik (2016). Swagelok’s expertise in producing leak prevention and storage safety solutions would, for instance, be in higher demand if more hydrogen infrastructure is constructed. Siemens would benefit from increased demand for large industrial electrolysers, as it is one of the few producers (with its “SILYZER”) thereof. Sandvik can mass-produce specific solutions with coated steel in fuel cell plates. This is also very clear for companies like Hydrogenics (industrial hydrogen generators and fuel cells), Nel Hydrogen (electrolysers), ITM Power (electrolysers), and Ballard Power Systems (fuel cell stacks). A transition to a more hydrogen-based economy would rapidly increase these companies’ revenues. This is applicable to most entities in this sector.

8.2 Metals and Non-Metallic Mineral Products

4The manufacturers of basic metals, fabricated metal products, and non-metallic mineral products combined make up the second-largest group of manufacturers (N=99, 16.20%). They consist of companies in different metal and mineral-related industries, which can be broadly split between commodity producers (basic metals & non-metallic mineral products) and intermediate/final good producers (fabricated metals). The commodity producers are big steel producers such as ArcelorMittal, Thyssenkrupp, Tata Steel, US Steel, Salzgitter and Voestalpine, but also precious metals manufacturer Umicore, and a few cement, concrete, brick, and limestone manufacturers. The fabricated metals producers in the hydrogen context focus mostly on storage tanks, cylinders, and the machining and coating of metals, with companies such as NPROXX, Calvera Maquinaria e Instalaciones, and Resato.

  • 2 In a consortium called HYBRIT with mining company LKAB and Vattenfall.

5 There are several ongoing large projects in the steel industry, using recent research (e.g. Otto et al., 2017), that experiment with hydrogen as a replacement for carbon-based feedstocks in high-temperature blast furnaces. Big projects are for instance undertaken by Swedish-Finnish steel company SSAB,2 ArcelorMittal (2019), UK-based Primetal Technologies (2019) and thyssenkrupp (2019). Similar research is ongoing in the cement industry (e.g. Ellis et al., 2019), but the cement industry is practically absent from hydrogen coalitions bar for the Secil Group and Vicat. European and global top-10 cement manufacturers (Edwards, 2017) such as LafargeHolcim (Switzerland), HeidelbergCement (Germany), CRH (Ireland) and Buzzi Unicem (Italy) are absent, despite increasing attention on their emissions (e.g. European Commission, 2017) and aforementioned research developments.

6 The motivations to support hydrogen projects differ for the two groups. The fabricated metals producers are in a similar position to the companies producing machinery and electronic or electrical equipment: more hydrogen investment and a bigger market for hydrogen would lead to sales growth of storage tanks, metal machining, and similar products.

7For the steel producers and the few cement producers in the coalitions, there are very different interests at stake. The steel and cement industry together is one of the biggest greenhouse gas (GHG) emission sources, with an estimate of 94 Mt of CO2 emissions, mostly from the production of heat (FCH JU, 2019b, p. 38). This is approximately similar to the total emissions of Belgium or the Czech Republic (IEA, 2018a). This exposes these sectors to increasing public and regulatory pressure, as well as financial pressure, to find ways to decarbonise (RWE, 2019; thyssenkrupp Steel Europe, 2019). It should be noted that the steel industry and the cement industry also have very different production processes, where CO2 is emitted at different stages of the process. While both have high heat requirements, steel production processes using blast furnace also intrinsically emit CO2.

8Annual reports from companies in the steel sector explicitly note the business operation risks from EU-ETS costs, and possible revisions thereof in 2021 (ArcelorMittal, 2020, p. 19; Thyssenkrupp, 2019, p. 140; Voestalpine AG, 2020, p. 54). The relevance of this can be exemplified by putting the increase in Voestalpine’s annual “environmental expenditure” from €257.7 million to €299.1 million, attributed almost solely to EU-ETS costs, in the context of a pre-tax profit of €646 million (Voestalpine AG, 2020). To add to this, many actors in the steel industry still receive significant discounts on, or even free, CO2 allowances. This is an additional carbon-related risk, as these discounts can be taken away by regulators. The large price volatility of carbon emissions can significantly affect profitability in the longer term, in a sector with already very tight margins.

8.3 Chemicals and Chemical Products

  • 3 Air Liquide, Air Products and Chemicals, BASF, Linde and Taiyo Nippon Sanso Corporation (Technavio, (...)

9The third-largest presence among manufacturers is that of chemical companies (N=97, 15.88%), reaching 99 when chemical wholesale companies are added. This should not raise many eyebrows. Support from the largest companies in the industrial gas industry3 makes for half of the entities registered as chemicals manufacturers. Particularly prominent are Air Liquide (18 registrations), Linde (16) and its subsidiary BOC (3), Nouryon (6), and Air Products & Chemicals (5). In general, close to 80% of the chemicals manufacturers in the hydrogen associations come from the manufacturing of industrial gas specifically. Both Linde (n.d.) and Air Liquide (2017) are very explicit in their goal of promoting the hydrogen economy and the use of hydrogen in mobility, and are actively building HRSs around the world.

10 One clear reason for this sector to participate in hydrogen coalitions is that the sale of hydrogen is a core component of their business model. Industrial gas producers also already have the know-how in handling hydrogen that can be translated into returns. Air Liquide (2017, p. 38) states in its 2017 Annual Report: “Air Liquide is present throughout the hydrogen energy value chain and is actively working to promote this fuel source on an international level. The Group made significant progress in 2017, further strengthening its position in this highly promising market.” Industrial gas producers benefit as they are natural partners in the construction of a large network of HRSs for FCVs, and have been key stakeholders in hydrogen initiatives ranging from steel production (Air Liquide, 2019) to hydrogen trains (Niedersächsisches Ministerium für Wirtschaft, Arbeit und Verkehr et al., 2017). On top of benefitting from selling hydrogen directly, the sector can also sell CCS technologies or benefit from increased demand for oxygen if clean coal were to succeed as a source for hydrogen production (Air Products & Chemicals Inc, 2019, p. 40).

11 Sales growth is not the only incentive to pursue a hydrogen transition in this sector. Continued reliance on carbon-intensive grey hydrogen production presents business risks in the long term. Linde’s (2018, p. 35) 2018 Annual Report explicitly states EU legislation on GHG emissions can impact growth from increased compliance costs, and that hydrogen production plants in the EU (and California) specifically are subject to cap-and-trade regulations on CO2. This is echoed by the global leader in hydrogen production, Air Products & Chemicals (2019, p. 12), which notes that legislative pressure amongst others from the EU-ETS system puts pressure on their non-CCS (grey) hydrogen production. It states that increased public concern could lead to further pressure to reduce GHGs, and explicitly notes: “any legislation that limits or taxes GHG emissions could negatively impact our growth, increase our operating costs, or reduce demand for certain of our products (Air Products & Chemicals Inc, 2019, p. 12).” In other words, business expense risks from climate regulations are mitigated by moving from grey to blue and green hydrogen production.

8.4 Motor Vehicles

12Manufacturers of motor vehicles, trailers and semi-trailers are the fourth-biggest group of manufacturers present in the various hydrogen coalitions (N=92, 15.06%). With the inclusion of vendors and maintenance of motor vehicles from the wholesale and retail trade sector, their number increases to 102. The country background of the manufacturers is also interesting, as it has a high proportion of non-European companies partaking. German manufacturers account for 28.26%, Japanese for slightly less at 16.30%, followed by South Korean manufacturers with 10.87%. Japan and South Korea are primarily represented by individual companies; Toyota (member of 13 associations) and Hyundai (10) respectively. These two companies are some of the most important actors supporting hydrogen coalitions.

  • 4 Additionally, both Volvo and Daimler appear primarily interested in hydrogen for heavy vehicles.

13 Despite the popular focus on passenger cars, manufacturers of heavy motor vehicles will likely play a bigger role in the initial phase of the transition. Analysts expect that the advantages of FCVs over BEVs will be greatest in this sector, such as in weight, refuelling time, and range (IEA, 2019c, p. 137). Specialised lorry and bus manufacturers that support hydrogen coalitions include Van Hool, MAN, Evopro Busz, Iveco, VDL Bus & Coach, Solaris Bus & Coach, CaetanoBus, and Scania. Heavy vehicle manufacturers constitute well over 15% of the members from the sector, even when excluding non-specialised manufacturers with large heavy vehicle divisions (such as Daimler and Volvo).4 There are also several large projects underway in this sector. Examples are the 300 FC buses of the Joint Initiative for Hydrogen Vehicles across Europe (Ruf, 2019), and a Swiss project for 1,600 hydrogen lorries manufactured by Hyundai. More hydrogen models for heavy vehicles are in development for the European market (IEA, 2019c, p. 129). Moreover, dedicated heavy-duty FCV and BEV manufacturers are emerging, such as Nikola in the United States.

  • 5 It is possible to argue that PSA-subsidiary Opel’s membership of Hidrogeno Aragon changes this.

14Comparing the background of manufacturers supporting hydrogen to a general list of global motor vehicle manufacturers (International Organization of Motor Vehicle Manufacturers, 2017) highlights some more patterns. American carmakers and their subsidiaries are, except for two Ford research centres, absent. Although French components manufacturers (e.g. Plastic Omnium and Faurecia) are present in multiple associations, the big French carmakers themselves are absent.5 These findings confirm previous reporting that most of the push for hydrogen in the automotive sector seems to come from Asian carmakers, led by Toyota and Hyundai (Buckland, 2019; Harding & Inagaki, 2017; Society of Motor Manufacturers and Traders, 2019). The only surprises here would be the relative obscurity of Honda and the relatively high participation rate of the German automakers.

Table 4: Largest motor vehicle manufacturers

Table 4: Largest motor vehicle manufacturers

Source: International Organization of Motor Vehicle Manufacturers, 2017.

Table : Country background motor vehicle (parts) manufacturers (excl. retailers and maintenance).

Table : Country background motor vehicle (parts) manufacturers (excl. retailers and maintenance).

Source: Author.

  • 6 Hirose exemplifies this by stating that a battery-electric truck of 40 tonnes with a 500km range ne (...)

15The question then becomes what the explanation is for these differences. The economic arguments put forward by Toyota’s Head of Fuel Cell System Development, Prof Katsuhiko Hirose, are instructive (Schmitt, 2019). They amount to a belief in the economic advantages of FCV over BEV technology, such as the large weight difference between batteries and fuel cells,6 a very large cost advantage of fuel cells compared to batteries and battery production (mostly because of much lower raw resource costs), and more room for economies of scale. Toyota doubts the long-term success of BEVs because of the physical limitations in further improving batteries to become lighter and capable of supporting much longer ranges: Toyota had not produced a pure BEV until it began investing more in BEVs, which was only in recent years (Harding & Inagaki, 2017). On top of this, Toyota’s large investment and long-standing commitment to FCVs creates a certain technological path dependency.

16These concerns about range and refuelling time are more pressing for heavy-duty lorries and buses. As noted, many analysts (IEA, 2019c; Kast et al., 2017; Lambert, 2020) estimate that FCVs will become competitive, especially in heavier vehicles designed to have longer ranges. Refuelling infrastructure is the biggest constraint to achieving this competitiveness in road transport, which is again easier dealt with by commercial fleets. The substantial portion of heavy motor vehicle manufacturers that support hydrogen coalitions appears to confirm these hypotheses.

  • 7 There are some different figures on the number of currently available HRSs, the European Automobile (...)

17The main counterarguments that explain why other manufacturers remain on the fence are lower energy efficiencies of FCVs (in the range of 50% [BMW, 2020)]), the currently still high costs and particularly the lack of infrastructure. Infrastructure remains virtually absent in Europe with only several dozen7 HRSs across the entire EU as of 1 January 2019. This compares to over 140,000 electric charging stations (European Automobile Manufacturers' Association, 2019). There are plans to change this, for instance by building 750 HRSs before 2025, and there is a roadmap for over 3,500 stations by 2030 (FCH JU, 2019b). The estimated infrastructural needs per 1 million FCVs (approx. 400 HRSs) are far lower than for 1 million BEVs, which would need a million private charging stations and up to 10,000 fast-charging stations (IEA, 2019c, p. 133).

18In contrast, by November 2019 Volkswagen (2019) had officially stated that the debate between FCVs and BEVs was “a clear case” and that despite ongoing research the company was officially focusing on BEVs for the masses. The concerns noted earlier were named as a motivation, with a focus on BEVs’ higher energy efficiency, and Volkswagen’s view that hydrogen is better suited to stationary settings than cars (Volkswagen AG, 2019). Renault (2020), the PSA Group (2019), BMW (2020) and Daimler (n.d.) see slightly more merit in the future of hydrogen and have more developed plans for releasing hydrogen-powered models onto the market. Manufacturers must judge the viability of a hydrogen future vision compared to one for electric mobility and they are doing so differently. This is the key reason behind the different policies between for instance Volkswagen and Ford on the one hand, and Toyota and Hyundai on the other.


1 This only includes entities registered under NACE section C: Manufacturing.

2 In a consortium called HYBRIT with mining company LKAB and Vattenfall.

3 Air Liquide, Air Products and Chemicals, BASF, Linde and Taiyo Nippon Sanso Corporation (Technavio, 2019).

4 Additionally, both Volvo and Daimler appear primarily interested in hydrogen for heavy vehicles.

5 It is possible to argue that PSA-subsidiary Opel’s membership of Hidrogeno Aragon changes this.

6 Hirose exemplifies this by stating that a battery-electric truck of 40 tonnes with a 500km range needs 8 tonnes of battery: “you want to transport goods, not a huge battery. A fuel cell stack is much lighter and easier to handle (Schmitt, 2019).”

7 There are some different figures on the number of currently available HRSs, the European Automobile Manufacturers’ Association (2019) names 47, the Fuel Cells and Hydrogen Joint Undertaking (2019b) names 120 and the IEA (2019c, p. 128) names approximately 170.

Table des illustrations

Titre Figure 6: Pie chart for manufacturing
Fichier image/png, 69k
Titre Table 4: Largest motor vehicle manufacturers
Crédits Source: International Organization of Motor Vehicle Manufacturers, 2017.
Fichier image/png, 302k
Titre Table : Country background motor vehicle (parts) manufacturers (excl. retailers and maintenance).
Crédits Source: Author.
Fichier image/png, 140k


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