Surface Transportation News: Will hydrogen fuel replace fossil fuel in vehicles?

In this issue:

• Hydrogen propulsion: hope or hype?
• A major change in environmental law
• New York to proceed with transit tax
• Japan’s proposed automated logistics roads
• Bike lane battles in Washington, DC
• News Notes
• Quotable Quotes

Hydrogen Propulsion: Hope or Hype?

With government agencies and a growing number of vehicle producers and operators committed to phasing out fossil fuels within the next several decades, there is growing interest in hydrogen as an alternative energy source for vehicles—ranging from personal vehicles to heavy trucks, freight and passenger railroads, and even commercial airlines (outside the scope of this newsletter).

Here are a few headlines from some of the many articles I’ve seen discussing mostly hydrogen fuel cells, but, in some cases, hydrogen is also being considered as a replacement fuel in conventional fossil-fuel engines:

• “BMW and Toyota Partner on Hydrogen-Powered EVs”
• “The Great Hydrogen Train Debate”
• “Bosch Ramps Up Trucking’s Hydrogen Future”
• “Trucking’s Hydrogen Future Nears Reality Overseas”

There is no question that hydrogen fuel cells can be built and can deliver energy to power electric motors in cars, trains, and trucks. Indeed, for long-distance heavy trucks, the trucking research group the American Transportation Research Institute (ATRI) has found that hydrogen fuel cells would be far more useful than battery-electric power –in terms of weight and payload, “refueling” time, and cost (see my article summarizing this study in the June 2022 issue of this newsletter).

On the other hand, for railroad locomotives, one study found that “Hydrogen trains currently require roughly three times more energy per mile than trains powered by overhead wire.”

The underlying reason for considering hydrogen to power vehicles is to reduce or eliminate greenhouse gases that are released from fossil fuel use. Whether hydrogen really does that depends on how it is produced. Hydrogen cannot be mined or directly extracted from the air around us. Until very recently, commercial hydrogen has been produced by either an energy-intensive process called electrolysis of water (H2O) or using the energy-intensive Haber process to produce hydrogen from natural gas. The electricity used for generating hydrogen has nearly always been fossil-fuel electricity. This is not a green solution. “Blue” hydrogen is produced using conventional electricity, but with the carbon emissions from the process captured. “Green” hydrogen is produced using green energy to begin with, and that is the only form of hydrogen that directly yields the sought-after benefits.

The problem with green hydrogen is its cost. A new study in the science journal Joule, from Harvard University researchers, found that “for every metric ton of carbon dioxide that it now reduces, green hydrogen costs between $500 and $1,250. By contrast, using current technology to capture and store the same carbon dioxide costs between $100 and $1,000 a ton, making it more viable to extract atmospheric carbon dioxide instead.”

A further concern is what the rate of growth in producing green hydrogen must be in order to have a significant impact on greenhouse-gas reduction. In September, the International Energy Agency published its most recent global review of progress toward the hydrogen economy. While hydrogen demand is increasing (by 2.5% in 2023 compared with 2022), “for the full project pipeline to materialize, the sector would need to grow at an unprecedented compound annual growth rate of over 90% from 2023 until 2030, well above the growth experienced by solar PV during its fastest expansion phases.”

One ray of hope for green hydrogen is using nuclear energy to generate the required heat. Rockefeller University researcher Jesse Ausubel explained the process and its implications in a 2015 paper, “Power Density and the Nuclear Opportunity.” But as of now, no such projects are planned or under way.

To sum up, current plans to convert large fractions of personal vehicles, commercial trucks, and railroads to green hydrogen over the next two decades appear to be impossible. There are fractions of various markets where the advantages of hydrogen fuel cells (long-distance trucking, railroad lines where overhead electrification would be enormously costly) might be viable despite the high cost of blue or green hydrogen. But in the lifetimes of many of us, hydrogen will most likely serve a few niche markets, at very high cost, where it is the least-bad green option.

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A Major Change in Environmental Law

On Nov. 12, the U.S. Court of Appeals for the D.C. Circuit issued a ruling that invalidates the power of the White House Council on Environmental Quality (CEQ) to issue regulations. CEQ has done this since the late 1970s thanks to Executive Order (EO 11991) by President Jimmy Carter giving CEQ that authority. The 2-1 vote of the Circuit Court upheld a long-standing precedent that the President may not authorize a government official (in this case, an executive branch official) to issue rules and regulations. As a Nov. 13 issue brief from the Nossaman law firm explains, “neither NEPA nor any other statute specifically confers rulemaking authority on CEQ.” It was created to advise the President regarding agencies’ NEPA compliance and to make policy recommendations to the President.

In my recent Reason Foundation policy study, “Reforming Environmental Litigation,” I pointed out that the Carter executive order empowering CEQ to regulate was one possible provision that could be rescinded via a bipartisan bill to reduce the cost and time imposed by extensive litigation against energy and transportation infrastructure projects. Empirical studies of the outcomes of such litigation from both Stanford University and the Breakthrough Institute show that only a small fraction of large infrastructure projects are cancelled due to lengthy litigation, but they typically lead to long delays and hence increased construction costs.

Assuming this decision is upheld, it’s an important reform that should enable many CEQ regulations to be challenged. But it’s unlikely to significantly reduce or eliminate litigation against needed energy and transportation projects. Streamlining environmental litigation is still a key task for the new Congress that will take its seats in January.

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New York to Proceed with Transit Tax

New York Gov. Kathy Hochul announced last month that a new version of the congestion tax she rescinded this summer will go into effect in January. Instead of taxing personal vehicles $15 to enter Manhattan below 60th Street, the new plan calls for it to be $9. Higher rates apply to commercial vehicles.

New York officials continue to refer to the new tax as either a “congestion price” or a “congestion toll.” A toll is intended to pay for the capital and operating costs of a roadway, bridge, or tunnel. But from the outset, the plan has been to bond the revenue stream to pay for a very large array of projects solely for the New York subway and bus system. So, it is very clearly a transit tax.

The original $15 per day amount was arrived at to generate $15 billion for projects that include extending the Second Avenue subway, purchasing new electric buses, replacing obsolete subway signaling systems, and much more. The unfunded transit system budget determined the rate, not any empirical research into what daily amount would be most effective at reducing traffic congestion.

Obviously, a 40% lower daily rate will not generate the targeted $15 billion. But a New York Times article explains how Gov. Hochul and the Metropolitan Transportation Authority plan to deal with the shortfall. The key is that the $9 daily amount is only temporary. In the fourth year, the amount will increase to $12, and it will go up to the original $15 in 2031. After six years, the revenue stream would be back to the original amount.

That will have consequences. First, some of the transit improvement projects will likely be delayed in starting, while transportation construction costs continue to increase year after year. Second, the NYT reporters note that “tinkering with the borrowing terms attached to the $15 billion in bond financing could also yield higher costs for the authority, fiscal experts said.”

There are also threats to the plans being implemented. At least nine lawsuits against the program are still in process, mostly from residents of New Jersey and New York City’s outer boroughs. Moreover, President-elect Donald Trump has said he will kill the project when he takes office in January.

Manhattan’s congestion is a serious problem that has worsened in recent decades. Some form of congestion pricing would likely make sense there. But congestion charges should be based on serious modeling of traffic flows under various types of pricing. And, as in Stockholm, the proceeds could be dedicated to both street operations and maintenance and the transit system. But, the purpose would be to reduce congestion, not to raise an arbitrary amount for the subway system. This program, if it is actually implemented, will impose a tax, not a toll.

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Japan’s Proposed Automated Logistics Roads
By Marc Scribner

A shrinking truck driver workforce and a new labor policy limiting driver hours have spawned a looming logistics crisis in Japan, known as the “2024 problem.” Japanese industry turned quickly to automation as a potential solution. The government, for its part, has been similarly investigating automated freight transportation, including new dedicated infrastructure and cargo vehicles that would constitute a new mode of surface transportation. Japan’s approach to its partially self-inflicted logistics problem can be contrasted with freight automation efforts in the United States, where developers of automated road and rail cargo vehicles plan to mostly leverage existing infrastructure.

In April 2024, the Japanese government ended an exemption on overtime hours for truck drivers. These stricter labor regulations coupled with a shrinking driver workforce have alarmed the broader business community that is dependent on reliable freight movements. In response to widespread concern that government policies have amplified a looming goods-movement crisis, Japan’s Ministry of Land, Infrastructure, Transport, and Tourism established a Study Group on Automated Logistics Roads that began meeting in Feb. 2024.

On Oct. 10, 2024, the Study Group published a market sounding survey (Microsoft Word document in Japanese) for the preferred project type. They envision a fully automated (including loading and unloading) cargo transportation system capable of moving 3.6-foot Type 11 pallets up to 5.9 feet tall that would be propelled by clean energy at 18 mph.

The automated logistics road must utilize existing road space between Tokyo and Osaka (e.g., highway medians on the Tomei Expressway, Shin-Tomei Expressway, Meishin Expressway, and Shin-Meishin Expressway). The 320-mile system should have at least eight stops (one for each prefecture between Tokyo and Osaka) and be able to handle between 120,000 and 140,000 tons of cargo per day.

The market sounding survey explicitly asked about contractor qualifications to develop the automated logistics road as a public-private partnership. The survey further suggested that a concession consortium should involve companies with expertise in infrastructure design-build, financing, vehicle manufacturing, system operation, toll collection, maintenance, and disaster recovery. Responses were due to the Study Group on Nov. 7.

I have two general concerns with automated logistics roads. First, procuring new dedicated infrastructure—and indeed a new mode of cargo transportation—is much riskier than leveraging existing road or rail infrastructure. Even if the project moves forward and is completed on time and within budget, operating uncertainties are large and may be difficult to manage. Second, moving individual pallets will not allow Japan’s automated logistics roads to realize the economies of scale that arise from the movement of larger standardized containers or trailers loaded with pallets.

Part of the Study Group’s focus on the automated logistics road model may be due to Japan’s relative inexperience with palletization, as well as more stringent size and weight limitations on highways and railways than those found in the United States. But existing truck-load capacity is underutilized in Japan, suggesting substantial efficiency gains are possible even before automation enters the picture. By committing to a vertically integrated and pallet-centric transportation system, the Japanese government may be less inclined to examine long-standing policies and business processes that may be hindering Japanese domestic freight transportation productivity.

The Study Group’s infrastructure-intensive approach to freight transportation automation standards is in stark contrast to the approach of U.S. developers, which are mainly focusing on creating automated vehicles capable of using existing infrastructure networks.

In an Oct. 30 investor presentation, autonomous truck developer Aurora Innovation said it plans to launch commercially in the I-45 corridor between Dallas and Houston in April 2025. In 2026, the company aims to add a new route between Fort Worth and El Paso, and then begin operations on I-10 to Phoenix. Aurora hopes to be able to cover the entire Sun Belt on public highways in 2027 before gradually moving north into snowier states in 2028.

One of Aurora’s Texas competitors, Torc Robotics, has planned for a slightly slower commercial deployment. Prominent automated driving consultant Richard Bishop wrote in November for Forbes that Torc projects it will begin testing “production-intent” autonomous trucks next year on the I-35 corridor between the Dallas metro area and Laredo on the Mexican border, which is home to the largest U.S. inland port. Torc’s majority owner is Daimler Trucks, which has given the autonomous truck developer unique access to embed its automated driving technology directly into Freightliner Cascadia truck tractors. Torc has announced it is aiming for a full commercial launch in 2027, after which it will begin adding routes to scale service for shipping customers.

Beyond over-the-road automated trucking, freight railroads are also examining automation opportunities. One particularly interesting automated freight rail application comes from Parallel Systems. Parallel was founded in 2020 by former SpaceX engineers to develop fully automated, self-propelled, battery-electric railcars. Each automated railcar can move standard 40-foot containers weighing 65,000 pounds at up to 25 mph. Parallel’s railcars are designed to be operated individually or in a platoon formation, which can reduce stopping distances by 90% when compared to conventional trains of the same mass. A major selling point for Parallel is that it hopes the enhanced flexibility offered by its autonomous, self-propelled railcars will allow railroads to compete with trucks in the short-haul market.

In Aug. 2023, the Georgia Central Railway and Heart of Georgia Railroad—both owned by short-line railroad holding company Genesee & Wyoming—petitioned the Federal Railroad Administration to conduct a seven-phase test of Parallel’s technology. The proposed 160-mile pilot territory runs from Pooler near the Port of Savannah to Cordele in central Georgia, which has a large inland port and interchanges with two Class I railroads. This test petition remains pending.

In the United States, emerging automated freight transportation technologies share two characteristics, regardless of if they are road- or rail-based: a narrow focus on vehicle automation while leveraging existing infrastructure; and carriage of large, standardized containers or trailers commonly in use today. While Japan’s proposed automated logistics roads are intriguing from an engineering perspective, the economics are more dubious.

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Bike Lane Battles in Washington, D.C.

The Washington Post on Nov. 15 published a fairly long article about citizen battles for and against adding “bike lanes” on various D.C. streets. In recent visits to D.C., I’ve been surprised that some streets downtown have fewer traffic lanes than a few years ago, with the former lanes now used for either parking or bike lanes. This has a very negative impact on travel by taxi, ride-share, bus, or car.

Five days after the news article appeared, conservative Post columnist Marc Fisher posted an op-ed, “The Truth About Bike Lanes: They’re Not About the Bikes.” In discussing recent battles about proposed bike lane projects (mostly in D.C. residential areas), Fisher argued that very few D.C. residents bike to and from work. That’s true, but largely irrelevant. As my Reason colleague Marc Scribner pointed out, nationally the share of travel by bike for all trips is about 80% greater than the bike commuting share.

Marc referred me to a “successful” bike lane added recently on Maine Avenue in a rapidly growing area near the Wharf in Southwest D.C. The automated bicycle counter installed for that project measured only about 1,000 trips per day, or only about 25% of the average daily auto trips per lane on Maine Avenue.

Columnist Fisher makes the more relevant point, also brought out in the Nov. 20 news article, that the real purpose of D.C.’s bike lanes program is to implement “road diets” so as to slow down traffic and reduce accidents and deaths due to speeding. There is evidence that fewer, narrower traffic lanes lead to reduced auto speeds in the remaining lanes. Proponents argue that converting one lane to a protected bike lane is the lowest-cost way to implement a road diet (e.g., compared to widening the sidewalks as part of narrowing but not eliminating the traffic lanes).

But if a residential street has a speeding problem, there are simpler and lower-cost ways to reduce speeds. One is adding speed humps and posting lower speed limits. Just posting a lower speed limit does very little, but speed humps really do lead to slower speeds. We have them on the street where I live, so I’ve seen this effect, but my street does need several more to really be effective.

Although Fisher was mistaken about bike commuting, I think his concluding point is on target: “It’s obviously healthy to provide bicyclists with safe lanes where it makes sense. What doesn’t make sense is to hand over car lanes to cyclists when your real motive is to gum up traffic to discourage people from driving. That’s not an honest way for government to push its goals.”

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News Notes

Tennessee Proceeds with First “Choice Lanes” Project
Tennessee Department of Transportation (DOT) in mid-November issued its request for qualifications (RFQ) for teams interested in bidding on the state’s first express toll lanes project. The project would add 26 miles of express lanes (dubbed Choice Lanes) on I-24 between Nashville and Murfreesboro. Teams must document their experience with design-build-finance-operate-maintain (DBFOM) public-private partnerships (P3s) in order to qualify. The expected term of the long-term P3 agreement is 50 years. The RFQ notes that TDOT is prepared to seek a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan and arrange for tax-exempt private activity bonds (PABs) to assist with financing the project. A draft environmental assessment of the project is expected in March 2025.

Austin May Get More Express Toll Lanes
The Central Texas Regional Mobility Authority (CTRMA) is proposing to extend its existing express toll lanes (ETLs) on the MoPac expressway eight miles through South Austin. Some portions of the project would add two ETLs each way, while lower-traffic portions would get one new lane each way. This project was first proposed in 2015, but it faced significant community opposition. CTRMA revised the design and re-introduced it in 2021. A 48-day comment period began on Nov. 12. Independent toll agencies such as CTRMA are not affected by the Texas legislature’s current ban on the Texas Department of Transportation’s involvement in ETL projects.

$1.4 Billion Expressway Under Way in Malaysia
World Highways (Nov. 7) reports that the P3 company East Coast Road Sdn Bhd is proceeding with the $1.4 billion West Ipoh Span Expressway (WISE), a 61 kilometer tollway from Gopeng to Kuala Kangsar in Perak. It will provide a bypass of the existing expressway’s “winding and steep gradient.” The concession term is 55 years and the projected opening date is 2028. WISE will make use of Multi-Lane Fast Flow tolling technology.

Elevated Expressway for Jakarta Outer Ring Road
Metro Pacific Tollways Corp., a toll road developer/operator, will invest $1.36 billion to add a 21-km elevated section to the 65 km tolled ring road around Jakarta, Indonesia. The elevated addition is aimed at relieving congestion on the highest-traffic portion of the ring road. Construction will begin next year and will take three to four years. The Jakarta Outer Ring Road (JORR) is part of the Trans-Java Toll Road.

Japan Fund Exits Texas High-Speed Rail
Infralogic reported (Nov. 8) that the Japan Overseas Infrastructure Investment Corporation has notified the Texas Central passenger rail company that it will no longer provide financial assistance to its planned Dallas-Houston high-speed rail (HSR) project. The corporation has lost $272 million on the Texas Central project. It did not rule out possibly investing in the successor project which Amtrak is considering taking on. In a Nov. 27 follow-up, Infralogic reported that a government-appointed committee recommended that the Corporation not invest equity in overseas high-speed rail projects because these “are high-risk and do not offer a potential for earnings.” Meanwhile, a Texas legislator on Nov. 21 pre-filed a bill that would require TxDOT to support an HSR project between Dallas and San Antonio.

Argentina Launches Privatization of Railroad Company
The state-owned railroad company, Trenes Argentinos Cargas, owns 4,722 miles of track over which it operates freight trains using 4,429 employees. Under the plan announced by the reform government late in October, the company’s rail lines and land will remain state-owned, but the operations will be taken over by private companies under concession agreements. A similar railroad privatization plan in the United Kingdom has not worked very well due to poor coordination between the government’s track management and the needs of the train operators.

Can $2.50 Tolls Finance a $3.5 Billion Alabama Bridge?
Back in 2019, when the new Mobile River Bridge and Bayway project was planned as a $2.1 billion public-private partnership, the proposed toll rate of $5 per crossing for passenger vehicles led to the P3 plan being abandoned. State policymakers promised that when the project was revived, tolls would be limited to $2.50. Then construction cost inflation took place, and the project cost is now between $3.3 and $3.5 billion. The Alabama Toll Road, Bridge, and Tunnel Authority said it would borrow $940 million for the project, but that is a very low share of debt for a $3.5 billion project. Alabama DOT continues to maintain that tolls must not exceed $2.50 per crossing. “Something’s gotta give,” to make this project feasible.

New Mississippi River Bridge A Year Behind Schedule
The planned new bridge across the Mississippi River near Baton Rouge, LA, envisioned as a long-term P3 concession, has slipped behind the original schedule by one year, reports the Louisiana Department of Transportation & Development. Project manager Paul Vaught told The Center Square on Oct. 2 that negotiations with Atlas Technical Consultants, dealing with environmental policy, topographical studies, and geotechnical issues has led to the schedule change. The bridge will be tolled, and could become Louisiana’s third P3 toll bridge, with an estimated cost of at least $2 billion.

License-Plate Flippers Now Illegal in Pennsylvania
Reacting to high losses on the Pennsylvania Turnpike since it switched to all-electronic tolling, the legislature this year enacted Act 150, which makes use of license-plate flippers illegal. These devices are increasingly being used on U.S. toll roads that rely on license-plate imaging for electronic toll collection. Act 150 imposes a fine of up to $2,000 for those caught using such devices.

Oklahoma Completes Transition to Cashless Tolling
Last month, the Will Rogers Turnpike became the last toll road in Oklahoma to cease cash toll collection. All tolling on the Oklahoma Turnpike System will henceforth be done via either Pikepass (transponder) or PlatePay (license plate imaging).  

New Mobility Winners & Losers
Bloomberg’s Hyperdrive newsletter released an assessment of which “new mobility” sectors have succeeded and which seem to be failures. One winner is ride-hailing, at the expense of the traditional taxi industry (which has been improved thanks to the competition, but has shrunk in size). Car-sharing is also a loser, in both the United States and Europe. But micromobility (bike and scooter-sharing) continues to grow, despite some setbacks and bankruptcies.

Florida DOT and Florida State University Launch Transportation Study
Transportation Today News reported that FDOT and FSU have launched a two-year research project, the Florida Freight Corridor Planning project. Study Director Sam Staley of FSU said that the focus will include major highways, seaports, and airport facilities.

San Francisco Muni Plans to Replace Floppy Disks
The San Francisco Municipal Transportation Agency (Muni) in October approved a $212 million contract with Hitachi Rail for a new train control system for its light-rail trains. As Govtech.com reported, “The software that runs the system is stored on floppy disks that are loaded each morning and an outmoded type of communications using wire loops that are easily disrupted.” That system was installed in 1998. The new system is planned to be operational by 2028, and Hitachi will provide support services for 20 years.

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Quotable Quotes

“Protecting a company from the discipline of the market all but guarantees if gets worse rather than better. It doesn’t help that politicians often load the beneficiaries with counterproductive requirements. Take the news that the Environmental Protection Agency handed out $3 billion in Clean Ports Program funds from the Inflation Reduction Act on the strict condition that ports do not use automation. Welcome to the industrial policy stone age, where ‘keeping America competitive’ doesn’t mean keeping costs low for us as consumers through efficiency.”
—Veronique De Rugy, “Central Planning Won Big on Election Night,” Reason.com, Nov. 7, 2024.

“Just three California gravy trains are on track to burn through billions of dollars. The California High-Speed Train is costing about $1.8 million a day to build and won’t be completed for another decade. The current cost estimate to complete the project is $128 billion—nearly $100 billion more than the original price tag. President Trump previously cancelled federal funding for the project, but President Biden restored the money. The price tag of Nancy Pelosi’s six-mile subway extension from San Francisco to Silicon Valley is $9.3 billion, more than $1.5 billion per mile. The 1.3 mile extension of San Francisco’s Caltrain service is one of the costliest transit projects in the world, with a price tag of $6.7 billion, or $5.15 billion per mile.”
—Sen. Joni Ernst (R-IA), memo to Elon Musk and Vivek Ramaswamy, Department of Government Efficiency, Nov. 28, 2024

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