Page 7 - Commercial Vehicle Engineer - June 2021

All this planned development of hydrogen and electric fuelled transport
is well and good – but the question remains, how is it to be financed? The COVID-19 crisis has put enormous pressure on the Exchequer, and, in any case, public capital is usually focused
on pilot projects than full roll-out. Most green policymakers and consultants agree that private sector finance is critical to the creation of green, smart public services and cities. See for instance HM Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) ‘Green Finance Strategy’.
Siemens is directly pushing the hydrogen issue: it is one of 40+ companies that have written to the Chancellor, Rishi Sunak, calling for a clearer hydrogen strategy; collectively the companies have stated themselves ready to invest £1.5 billion in hydrogen fuel projects.
To give readers a sense of the carbon emissions benefit for conversion of the national bus fleet to grid-powered and/
or hydrogen-powered electric vehicles,
the report ‘Smart Financing and the road to zero’ (2021) has modelled the carbon reduction gained from converting just 25% of the current fleet [see chart, right].
The chart illustrates the benefits gained and underlines the importance of harnessing private sector capital to fund these acquisitions so that daunting
capital expenditure is converted into a manageable monthly payment which does not tie up (or freeze) precious public funds.
In the light of economic pressures, private sector finance is essential to the great ‘green project’. So what does that financing support need to look like? And where will it come from? First, it will tend to come from financiers who have an intimate understanding of the technology and its applications/benefits in real life. These financiers will tend to offer a range of financially sustainable financing methods that address the multiple needs of green transport development. This will include finance to acquire the vehicles; finance that funds the development of charging or fuelling infrastructures; and financing that allows existing networks to continue to run as new ones are tested and set up, but without having to pay for both at the same time.
In big schemes, some financiers may even be prepared to build in targets that include environmental outcomes – such as improvement in air quality or energy consumption. The most appropriate financiers will also tend to have a track record of commitment and expertise in the area, whether that is financing the infrastructural development of smart cities, or a deep existing involvement in electric vehicle and charging infrastructure finance.
In short, we can expect to see investment in electrification continue, but a hybrid approach, which combines electric with hydrogen, is seen by most policymakers and interest groups as
the most cost-effective green transport strategy for road and rail. The green transport sector will rely on a healthy supply side that is highly competitive, but also commercially sustainable, and smart finance plays a key role in making that possible. A healthy and strong supply chain ensures reliable supply, and the ability to provide added value to the buyside transport companies
and – ultimately – their customers
(us, the citizens!).
You can access the research here. Brian Foster is head of industry finance
at Siemens Financial Services UK
COMMERCIAL VEHICLE ENGINEER > JUNE 2021 7
Yorkshire and the Humber
West Midlands London
South West Scotland
27,057
29,185 196,045 19,409 33,876
POINTS OF VIEW
The UK Bus Fleet: grid-powered or hydrogen-powered EVs– the carbon benefit of 25% Conversion
REGION
TONNES
CO2 SAVED OVER 5 YEARS
North East
15,343
North West
34,326
East Midlands
16,954
East of England
15,787
South East
31,095
England
385,201
Wales
9,087