The incentives and regulations driving the demand for high-capacity hydrogen refueling stations 

At Cavendish, we believe these incentives and regulations will pave the way for a hydrogen-powered transportation sector with radically lowered emissions. In the following, we will briefly introduce the central policies and incentives shaping this revolutionary market.  


Driver 1: Gradually stricter vehicle emission targets

Global regulation of vehicle emissions is driving the need for hydrogen infrastructure. In the following years, several market regions will make their vehicle emission reduction targets stricter. California, for instance, has implemented mandated targets for zero-emission vehicle sales for medium- and heavy-duty (MHD) vehicles, with a target of achieving 100% (of annual sales) from 2045. For buses, the target is 100% zero-emissions vehicle (ZEV) sales by 2029 and 100% for cars by 2035. If vehicle manufacturers do not reach these targets, they risk heavy fines. Other so-called ZEV states in the US (up to 13 different states) have adopted similar regulations to California's on ZEVs. Hence, the adoption of mandates for ZEV MHDs is likely to occur in other American states in the future.   

The European Union has set similar goals, aiming to reduce truck emissions by 90% by 2040. Achieving this goal without ZEVs will be difficult. This, in turn, creates a need to produce ZEVs and roll out alternative fueling/charging infrastructure. As it is only feasible to power some of the vehicles needed to reach these targets with batteries, we expect hydrogen-fueled medium- and heavy-duty vehicles to be an essential part of this development.  

These ZEV goals are very promising initiatives, as vehicle regulation is often followed up by support mechanisms or even regulation on the infrastructure side—to ensure the deployment of hydrogen refueling and battery charging infrastructure. At Cavendish, we expect several market regions to follow up and expand on these goals and incentives for the automotive industry.  


Driver 2: Incentives to encourage the rollout of hydrogen technology

At Cavendish, many of our colleagues have a background in wind power development. This is not a coincidence, as hydrogen today is roughly as mature a technology as wind power was 15 to 20 years ago. The sector's successful development as a green alternative to diesel fuel depends on beneficial regulatory frameworks and support for all parts of the hydrogen value chain—from production to distribution and off-take usage, such as hydrogen fuel for transport.  

Luckily, we already see examples of global regions providing the financing necessary to spearhead a radical shift in how we power medium- and heavy-duty transport.   

For the US, that includes the low carbon fuel standard (LCFS)-credits, a California measure to reduce the state's greenhouse gas emissions. The LCFS is an excellent example of how incentives can help cover the initial price gap between renewable hydrogen and fossil fuels. A hydrogen station operator for cars in California can generate credits worth up to $3/kg on any unused daily capacity. The higher the renewable share of the hydrogen on sale, the higher the credit value. Currently, an amendment of the LCFS regulation is planned also to include MHDs. When effectuated, this means that a medium- and heavy-duty station with a capacity of up to 6 tons per day can generate credits for 50% of its daily unutilized capacity. This support is grandfathered for ten years and up to 150% of the original CAPEX in credit value generated, depending on the credit trading price. The support for non-utilized capacity enables the industry to start deploying stations today before vehicle deployments, making such a deployment possible.  

On a US federal level, the passing of the Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) has completely changed the American hydrogen market. Because of IRA, most American states are now promising hydrogen markets for Cavendish.


Driver 3: Infrastructure regulation 

There are also significant plans for rapid and substantial infrastructure support packages to speed up the adaptation of hydrogen and other alternative fuel sources. Chief among these is the Alternative Fuels Infrastructure Regulation (AFIR). Adopted by the Council of the European Union in July 2023, AFIR requires member states to install hydrogen refueling stations serving both cars and lorries every 200 kilometers along the trans-European transport network (TEN-T). This legislation alone means that EU countries must commission and build about 400 hydrogen refueling stations in 2030 at the latest.  

The Bipartisan Infrastructure Law has earmarked up to $7 billion in the US to construct seven regional clean hydrogen hubs nationwide. These H2Hubs will significantly increase the production of green hydrogen in the US and simultaneously support the deployment of hydrogen fueling stations in the hub regions to support hydrogen off-take. A "National Zero-Emission Freight Corridor Strategy" was also recently announced to support the construction of a network of battery-EV chargers and hydrogen fueling stations. As part of the strategy, the US aims to have ZEVs constitute a 30% share of all new MHDs in 2030, ratcheting up to 100% in 2040. The infrastructure support package is also backed by an Alternative Fuel Corridors program that funds the establishment of hydrogen refueling and battery charging along the major highway corridors across the nation. 

We are confident that other market regions will soon roll out binding infrastructure targets similar to the US National Zero-Emission Freight Corridor Strategy and AFIR in the EU.


The future starts now

It isn't easy to make predictions—especially about the future. At Cavendish, however, we are confident that the green transition is underway and that regions across the globe are eager to support a sustainable revolution in heavy-duty transportation.  

With a new generation of modular and reliable high-capacity hydrogen refueling stations, building on 20 years of know-how, Cavendish is set to spearhead a green new era in transportation—serving our clients and helping the transport sector cut its emissions drastically.