Why local initiatives for the energy transition should coordinate: The case of cities for fuel cell buses in Europe

Hydrogen is a possible alternative to the internal combustion engine, alongside battery-powered vehicles, in the context of reducing greenhouse gas emissions associated with transport activities. The costs associated with hydrogen vehicles are currently high, even when considering the greenhouse gas emissions and other pollutants avoided by their use. Efforts to reduce these costs, which will determine the social and environmental desirability of hydrogen vehicles, face two challenges: the high cost of refueling, linked to the crucial problem of coordination between development of the vehicle fleet and refueling infrastructure; and high purchase prices, which may decrease when enough generate experience effects. This paper argues that each of these two handicaps calls for a specific policy design: at a local level for coordination between actors, and at a European level to generate sufficient volumes. The example of hydrogen-powered urban buses analyzed through the Joint Initiative for Hydrogen Vehicles across Europe (JIVE) offers a telling illustration of these issues. JEL classification: Q55, Q42, C61.