Shell Shuts Down All California Hydrogen Stations Permanently

Source: Flickr/Mike Mozart

Shell Hydrogen confirmed that it will permanently shut all of its pumping stations throughout California down immediately. This means that the company will no longer run any light-duty hydrogen stations within the United States.

How This Decision Impacts The Hydrogen Car Industry

The decision to close all of its hydrogen stations created a major impact within the hydrogen car market. It is important to note that California was the only state that used to have wide availability of this fuel.

Source: Wikimedia Commons

Through the Hydrogen Fuel Cell Partnership (also referred to as “H2FCP”), Shell used to operate 7 of the 55 retail hydrogen stations throughout the state. Therefore, the immediate closing of the Shell Hydrogen stations equals out to be nearly a 13% reduction.

Shell Hydrogen VP Blames ‘Hydrogen Supply Complications’ For Closing

Andrew Beard, the vice president of Shell Hydrogen, reported that the permanent closing of the light-duty hydrogen stations is “due to hydrogen supply complications and other external market factors.” Those paying attention to the market and overall supply throughout the state were likely not surprised by this announcement.

Source: Wikimedia Commons/Dr. Artur Braun

The fantastic station map of the H2FCP reveals that most of the Southern California hydrogen stations have either drastically modified their hours of operation or are currently offline. The “supply complications” that Beard referenced in his letter have reportedly disrupted stations since mid-August of 2023.

The Closing Creates Longer Commutes For Fuel For Affected Car Owners

The permanent closing of the Shell’s light-duty hydrogen stations will also extend the commute distance for affected owners when it comes to getting fuel. This includes the owners of such vehicles as the Honda Clarity Fuel Cell, Hyundai Next, and Toyota Mirai FCV cars.

Source: Wikimedia Commons/Bertel Schmitt

Further reports confirm that more than 3,140 hydrogen-powered vehicles were registered in 2023 alone. This equals out to less than one percent of the electric cars registered within the same period, according to the California Energy Commission (CEC).

Shell Initially Planned To Build More Refueling Stations Last Year

Shell made headlines last year with the announcement of a planned expansion of their hydrogen refueling stations. The company was reportedly going to take advantage of $40 million worth of state incentives to install 48 additional light-duty hydrogen refueling stations throughout California.

Source: Wikimedia Commons/John M

During a September 2023 interview with Hydrogen Insight, a company spokesperson confirmed that the company “discontinued its plan to build and operate” those additional stations. The spokesperson further indicated that Shell would “continue to invest in hydrogen in a disciplined manner.”

A Formal Rejection Of $7M In Funding Raised Concerns

The CEC initially awarded Shell $7.3 million in December of 2020 to fund the company’s plan to create 8 of its projected 48 new filling stations throughout the state. However, in July of 2023, it was reported that the company had formally rejected the multimillion dollar funding.

Source: Unsplash/Giorgio Trovato

According to Hydrogen Insight, Shell blamed the rejection of the funding on the “political and economic uncertainty in the initial stages of market deployment” that resulted in a “significant risk in further investment.” The note, which was created by the hydrogen commercial manager of Shell, indicated that those “barriers” needed to be overcome to enable any “future investment” from the company.

Shell Wanted To Focus On Its Competitive Advantage In ‘Hard-To-Abate Sectors’

The Shell spokesperson confirmed in September that the company still planned to focus on the competitive advantage that it had in “hard-to-abate sectors such as industry and heavy duty transport.” The goal was to emphasize key regions that have “strong adjacencies” to the company’s existing business.

Source: Unsplash/Diggity Marketing

During the same report, the spokesperson indicated that Shell was still active in the hydrogen industry of California at the time. However, they emphasized the operation of its three heavy-duty stations that were included in the ZANZEEF (Zero & Near Zero-Emission Freight Facilities) Shore to Store Project.

Shell Was Projected To Cut 15 Percent Of Workforce In Low-Carbon Solutions Division

News of a projected workforce reduction at Shell first made headlines back in October of 2023. The company was reportedly set to cut 15% of the workforce within its low-carbon solutions division.

Source: Pixabay

This cut, which equaled out to affect nearly 200 jobs, was just the tip of the iceberg. Further reports confirm that an additional 130 jobs were under review as the company decided to eliminate the hydrogen light mobility unit.

Shell CEO Focused On Boosting Profits As Part of Revamped Strategy

When Wael Sawan, the new CEO of Shell, first took on his executive position last January, he made it clear that the focus would be shifted towards boosting the company’s profit. This focus would require major organizational changes and staff cuts as a result.

Source: Wikimedia Commons/Chatham House

The objective was to revamp the company’s overall strategy to focus more on steady oil output and natural gas production increases. In addition, Sawan wanted the company to pay more attention to higher-margin projects. The reduction of jobs and review of other positions reportedly affected nearly 1,300 employees.

Sawan Claimed The Company’s ‘Destination’ Has Not Changed

Sawan reported to the Energy Intelligence Forum within London that the “destination” the company set for itself had not changed “for avoidance of doubt.” This statement was made in response to a rare open letter that was issued by two employees pleading with him not to scale back the company’s investment plans regarding renewable energy.

Source: Wikimedia Commons/John Englart

The Shell CEO confirmed that the new “pathway” taken by the company was intended to meet the goal of becoming a net zero carbon emitting organization no later than 2050. Investors are clearly concerned about the future returns projected by Shell, BP and TotalEnergies regarding their reported reductions in oil and gas production.

Hydrogen Filling Stations Cost $2M To Build

According to the Hydrogen Fuel Cell Partnership, the estimated cost of building a hydrogen filling station is $2 million. When you compare this expense to the fact that only 17,284 fuel cell cars have ever been leased or sold in California, the challenge of recouping that investment becomes evidently clear.

Source:Wikimedia Commons/Damian B

Further reports calculated that the largest H2 fuel retailer in the state, True Zero, recently increased the price of hydrogen to $36 per kg. This meant that running a Tesla EV essentially became 14 times cheaper to operate than a Toyota hydrogen car in California.

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Sally Reed

Written by Sally Reed

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