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19 February 2021

Hydrogen Fuel Cell Legal Framework in the United States, Germany, and South Korea—A Model for a Regulation in Malaysia

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Faculty of Law, Universiti Kebangsaan Malaysia, Bangi 43600, Malaysia
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Sustainability2021, 13(4), 2214;https://doi.org/10.3390/su13042214
This article belongs to the Special Issue Energy System Sustainability
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Abstract

As a party to the United Nation Framework Convention on Climate Change (UNFCCC), Malaysia is committed to reduce its greenhouse gases (GHG) emission intensity of gross domestic product (GDP) by 45% by 2030 relative to the emission intensity of GDP in 2005. One of the ways for Malaysia to reduce its GHG emission is to diversify its energy mix and to include hydrogen fuel cell (HFC) in its energy mix. Since Malaysia does not have any legal framework for HFCs, it is best to see how other countries are doing and how can it be replicated in Malaysia. This paper reviews the HFC legal framework in the United States, Germany and South Korea as these countries are among those that have advanced themselves in this technology. The researchers conducted a library-based research and obtained the related materials from online databases and public domain. Based on the reviews, the researchers find that these countries have a proper legal framework in place for HFC. With these legal frameworks, funds will be available to support research and development, as well as demonstration of HFC. Thus, it is recommended that Malaysia to have a proper HFC legal framework in place in order to support the development of the HFC industry.

1. Introduction

Malaysia ratified the United Nation Framework Convention on Climate Change (UNFCCC) in its mission to reduce the greenhouse gas (GHG) emission. In 2002, the Kyoto Protocol to the UNFCCC emphasized the principle of common but differentiated responsibilities in reducing carbon emission. Malaysia ratified this protocol in 2002 and the Paris Agreement as a commitment to ensure the increase of the world’s temperature below 2 degrees Celsius. Under the Paris Agreement, Malaysia is committed to reduce 45% of GHG by 2030 in relation to its 2005 gross domestic product (GDP). In line with this international obligation, Malaysia has taken various steps to fulfill its commitment.
In Malaysia, the energy sector is the biggest carbon dioxide (CO2) emitter since 1990. In 2017 alone, 107 million metric ton (MT) of CO2 was emitted, while the transportation sector emitted 61 MT CO2 [1]. Reducing the CO2 emission will dramatically reduce the GHG emission. Diversifying Malaysia energy generation mix can assist in reducing CO2 emission. The Renewable Energy Act 2011 (the Renewable Energy Act) which encourages the production of renewable energy through feed-in tariff (FIT) scheme. However, the Renewable Energy Act only covers five types of renewable energy which are biogas, biomass, small hydropower, solar photo voltaic, and geothermal energy [2].
In the Ninth Malaysia Plan which ran from 2006–2010, Malaysia was set to achieve 5% of renewable energy in its energy generation mix. In 2010, Malaysia introduced the National Renewable Energy Policy and Action Plan (the Renewable Energy Policy) where it targets 9% of renewable energy in the energy mix by 2020 [3]. To date, Malaysia’s renewable energy penetration level is only 2% [4]. It can be concluded that after a decade, Malaysia’s share of renewable energy has failed to increase significantly. This indicates that the Renewable Energy Act and the Renewable Energy Policy has failed to achieve its objective.
Despite this, Malaysia remains committed to increasing the share of renewable energy in the energy generation mix by renewing its target of 20% renewable energy in the energy mix by 2025 [5]. With this renewed commitments, Malaysia should explore other energy options to increase the renewable energy share. One option is to include HFC as seen in several countries including the United States, Germany, and South Korea. In Malaysia, despite the existence of a Fuel Cell Institute at the Universiti Kebangsaan Malaysia, together with huge investment for the HFC development, Malaysia does not have any legal framework to cater for the industry.
Without proper law and policy, private entities would be cautious in making investment, hence impede the development of the HFC industry. In addition, the government also has no proper channel to fund the HFC industry. This paper reviews the HFC legal framework in the United States (US) (and the state of California due to its advancement in the HFC industry), Germany, and South Korea. With these reviews, the researchers hope to recommend a proper legal framework to support the development of HFC industry in Malaysia.

2. Methodological Approach and Used Materials

This paper employs a library-based research where the researchers find all the materials needed from primary sources (such as statutes, regulations, and policies) and secondary sources (such as online databases). The researchers have relied on online databases such as ScienceDirect [6], Scopus [7], and Web of Science [8] to search for relevant materials. Among the keywords use for the searches are ‘United States hydrogen’, ‘United States fuel cell’, ‘Germany hydrogen’, ‘Germany fuel cell’, ‘South Korea hydrogen’, and ‘South Korea fuel cell’. From these materials gathered, the researchers then used the ATLAS.ti software to code them into specific codes such as ‘energy body’, ‘energy regulatory framework’, ‘hydrogen’, ‘hydrogen body’, ‘overview’, ‘RE goals’ and ‘RE status’. These materials are then being grouped based on their countries into code groups such as ‘US’, ‘California’, Germany’, and ‘Korea’. By grouping them in accordance with their country (and state as for California), this helps the researchers to extract relevant information to be used in the result’s part of this paper. This paper does not follow the strict methods of doing reviews in social sciences’ discipline. As the researchers are from legal background, the researchers use a legal methodology which is a doctrinal method. Although this paper is a qualitative in nature because there is an involvement of reading materials (rather than field work such as survey in quantitative method); however, it is also a doctrinal in nature because it involves the reading and interpreting laws, acts, or provision of laws. These research methods are use in order to answer two research problems of this paper. Firstly, how do the United States, Germany, and South Korea support the development of HFC industry in their country? Secondly, what are the advantages obtained by each country by having a proper legal framework on HFC? With regards the selection of countries in this review, there are four criteria that the researchers consider. Firstly, the countries have policies or laws on the HFC industry. Secondly, the materials to be reviewed are available in English. Thirdly, the countries (at least one country) must have the same system of government as Malaysia. Fourthly, the countries are from different regions of the world. As for the first criteria, the US, Germany, and South Korea are all have policies and/or laws related to HFC industry. As for the second criteria, the materials in English are easily accessible by the researchers for the three countries stated above. Although Japan is one of the leading countries in HFC industry; however, there are limited materials in English. Thus, there is not much that can be analyzed for the purpose of this review. As for the third criteria, the US has the same system of government as Malaysia, which is federalism. Last but not least, the US, Germany, and South Korea are from different continents which are the North America, Europe, and Asia, respectively.

4. Discussion

4.1. Legal Framework for Advancing the Hydrogen Fuel Cell Industry in the US

It is acknowledged that the US has been exploring into hydrogen as early as 1990. The Spark M. Matsunaga Research, Development, and Demonstration Program Act and Energy Policy Act of 1992 were enacted to support the early development of HFC industry. It is evident that the existence of these laws help to support the RD&D in HFC industry. The coverage of the laws is wide as they cover the aspect of production, storage, and transportation of hydrogen.
The HFC industry in the US receives continuous support from the government with the introduction of Energy Policy Act of 2005. Millions of dollars were allocated for HFC development and various bodies were established to support the industry, including the Hydrogen and Fuel Cell Technical Task Force and the Hydrogen Technical and Fuel Cell Advisory Committee. These bodies would not have come into existence should there is no law enacted as their source of power.
Besides these legal documents, there are also other legal frameworks supporting the HFC industry. This can be seen from the existences of various policies and plans such as the ‘National Vision of America’s Transition to a Hydrogen Economy—to 2030 and beyond’, National Hydrogen Energy Roadmap, Hydrogen Fuel Initiative, Advanced Energy Initiative and the Department of Energy Hydrogen and Fuel Cells Program Plan. The difference between these policies and plans with the Energy Policy Act of 2005 is that the Act is a general law that caters the whole energy aspect, while the policies and plans are specifically focusing on the HFC industry.
When it comes to effectiveness, the laws have more effect in ensuring the success rate of any plan. However, like many countries, the government is not willing to devote themselves fully to the HFC industry. The researchers are of the opinion that perhaps they are not 100% confident that hydrogen is a way forward. Besides, financial allocation is also needed in other sectors. Policies and plans do not really bind the government to fulfill what has been targeted. Nonetheless, they provide good guidance for future needs and funding. In all, it is safe to conclude that by with legal frameworks be it laws, policies, or plans, it enables the US to provide support in the development of HFC industry.
The existence of laws, policies, and plans from the government have also increased the level of confidence among the private sector to invest in the HFC industry. Established companies such as BP America, Chevron, ConocoPhillips, Exxon Mobil, and Shell Hydrogen LLC have formed a partnership with the government to work together in realizing the establishment of a hydrogen economy. The private sector and various stakeholders have also supported the HFC industry when the Fuel Cell and Hydrogen Energy Association produced a Road Map to a US Hydrogen Economy. This shows that they are serious in moving toward hydrogen economy. Based on the recent allocation of funding, approximately USD 64 million, to 18 hydrogen-related projects by the Department of Energy, the HFC sector in the US is still alive and kicking despite the worries by certain quarters that the President would not support the development HFC industry. It is hoped that the US government would continue its support for the HFC industry.
The same result can be seen in California. Determined to protect the local environment, California established the Low Carbon Fuel Standard. This brought California ahead of other States and the federal government. It aims to reduce the GHG emission by mandating automakers to produce cars which emit low carbon. As time goes by, the law has become stricter in mandating the automakers in producing the ZEV. The law also puts a lower GHG emission rate target as compared to the rate targeted by the federal government. Although the law is not specifically focusing on HFC (because it aims is to reduce the GHG emission); however, it allows California to actively supporting the HFC industry as a way to reduce the GHG emission.
California has also introduced various policies, plans, and programs to support the development of HFC industry. On top of that, the law such as Senate Bill 1505 and the executive order by the Californian Governor Brown Jr. and Assembly Bill 8 also put in place sufficient support for the HFC industry. With these laws and other legal frameworks, the government of California has funded massively on the HFC industry. In return, the private sectors supported the government efforts in moving toward hydrogen economy. This can be seen by the establishment of the California Fuel Cell Partnership, which has been so active in HFC industry in California.

4.2. Legal Framework for Advancing the Hydrogen Fuel Cell Industry in Germany

Moving on to Germany, the HFC has been supported through their national policy named Energy Concept. Although this is just a policy and does not have a legal effect as compared to any laws, it provides a new energy pathway in Germany. It guides the government on prioritizing things to achieve energy security and at the same time environmental-friendly. Based on the result stated in Section 3.2, this policy has identified FCEV as the vehicle for the future provided that the hydrogen is produced from renewable sources.
Germany also supports the HFC industry with the enactment of Electric Mobility Act of 2015 and provides subsidies for the purchase of FCEV. The law allows the government to provide billions of euros to move toward electric vehicles. From here, it shows that the government has supported the development of HFC industry via the establishment of policy and law. All these efforts justify Germany’s action in an effort to reduce the GHG emission.
In return, the private sector in Germany is more willing to invest and take part in the HFC industry. This can be seen from the establishment of the National Innovation Program. This program has made Germany as the third largest country in the world in providing funding for the HFC technology. The latest development from Germany also shows that it is serious in developing the HFC industry with the establishment of the National Hydrogen Strategy in June 2020. Although this is also a policy, and not a law, it allows the government to provide EUR 9 billion for the development of renewable hydrogen.

4.3. Legal Framework for Advancing the Hydrogen Fuel Cell Industry in South Korea

Last but not least, South Korea. Based on Section 3.3 of this paper, it can be seen that the South Korea has been supporting the HFC industry by having various laws and policies in place and this can be seen since as early as 1973. The HFC industry is further supported by the establishment of centers such as Hydrogen R&D Center and Fuel Cell R&D Center, focusing on the development of HFC. The existence of policies such as Second Basic New and Renewable Energy Plan have enabled the government to provide millions of dollars to support the development of HFC industry.
The usage of the term ‘new and renewable energy’ in South Korea also shows that the alternative sector in Korea is much wider than in most countries that focused on renewable energy only, including Malaysia. With this wider term, South Korea has the advantage of diversifying its alternative sources to ensure that it achieves its energy security and fulfill its international obligation in reducing the GHG emission.
Furthermore, South Korea can be seen as very serious in moving toward a hydrogen economy when it put in place the Hydrogen Economy Roadmap 2040 in 2019 followed by the enactment of Hydrogen Economy Promotion and Hydrogen Safety Management Act in January 2020. Compared to the US and Germany, which do not have specific laws on the HFC, South Korea has moved one step ahead by enacting, in details, various aspect of HFC. However, as the law can only be accessible in Korean language, the researchers can only rely on the help of Google Translate to examine the law. Nonetheless, based on the translated version of the law, this law allows the government to establish a special body on HFC, it also allows the government to support the development of HFC and HFC-specialized company and provide an allocation for the education program on HFC. The law also establishes the safety center in order to ensure the safety aspect of HFC are being prioritized. South Korea has once again shown that it is determined to establish HFC economy through this Act and to spur the development of HFC in South Korea.

4.4. Current Market for Hydrogen FCEV

The government of US, Germany, and South Korea are all putting the focus on transforming the transportation industry from diesel-engine vehicle into FCEV. There are two factors to this: the transport sector is the biggest CO2 contributor in most cities, and transportation is indispensable for the general public. Compared to the HFC-based power plant, vehicles are closer to the general public. Thus, if the governments can convince the public to accept this HFC technology, it would be easier to spur the development of HFC industry. In reality, lack of public support has impeded many government’s plan.
As for the status of FCEV in the US federal government and/or the Californian state government, up until 1 October 2020, there are currently 8654 fuel cell cars that have been sold or leased in the US and 48 fuel cell buses operating in California. In California alone, there are 42 hydrogen refueling stations (HRS) are operating [54].
Moving on to Germany, as of June 2019, there are 386 registered FCEV in Germany [55]. As for HRS, up until 2019, Germany has the second largest HRS available in the world with 60 HRS operating, just behind Japan with 96 HRS. Out of this, there are 17 HRS come into operation in 2018 alone [56].
Last but not least, for South Korea, as in 2019, the total FCEV sold in South Korea has reached more than 5000 units as compared to only 87 units in 2016 [57]. In terms of HRS, South Korea has 39 station operating where 20 stations were built in 2019 alone.
Taking stock of number of FCEV in these countries, it is argued that specific laws policies on HFC can assist in advancing the HFC industries. Compared to other countries that do not have any legal framework on HFC, it is unlikely that FCEV will run on their highways. The ability of the car manufacturers to produce FCEV in particular, and HFC technology in general, is very much depend on a clear government framework for this industry, Li (2021) argues that HFC technology today has matured and can move to mass production and commercialization. What is lacking is the commitment and political will in transitioning into the hydrogen economy [58]. If countries continue to invest on the heavily subsidized fossil fuel-based industry, the HFC industry could never compete on a fair ground. In addition, if governments continue to shape the policies and laws as lobbied by the fossil fuel-based industry, there shall be no real support from the government for the development of the HFC industry.
Similarly, FCEV will not be able to compete with the battery electric vehicles (BEV) without the same support from the government and public awareness on FCEV and HFC. As of 2019, there are five million BEV sold in the world if compared to 7500 FCEV sold [59]. The reasons for this blatant difference is obvious; the BEV is more popular with the general public and they are more familiar with the range, price, performance and re-charging facility of BEV. Contrary to the public perception, FCEV prevails over BEV in term of performance and recharging or refueling conveniences. Nevertheless, BEV has greater range and the cost of owning and maintaining BEV are much cheaper than FCEV [60].
With regard to the range, there is an urgent need to educate the public about HFC and FCEV. When the public knows about the advantages of HFC technology, the public will be more willing to accept the technology. This can be evident in the case of BEV. With regard to the refueling facility, the FCEV is not attractive because of limited HRS. This is a “chicken and egg” problem that could be solved by investing more on HRS. Experts and car manufacturers have predicted that the price of FCEV will go down as the production increases. Thus, it is crucial that HFC technology is being mooted out as the energy of the future because of the world’s fight against climate change. Both FCEV and BEV will work together to achieve sustainable development goals (SDG) 7 on clean energy and SDG 13 on climate action. Mr. Mark Kirby, the President and CEO of Canadian Hydrogen and Fuel Cell Association has rightly put it that this is not a fight between FCEV and BEV, but this is a fight between FCEV and BEV against fossil fuels [58].

4.5. The Status of HFC Industry in Malaysia

Malaysia is one of rapidly developed Southeast Asia countries. The relocation of the administrative capital from Kuala Lumpur to Putrajaya, and the development of the new Kuala Lumpur International Airport in Sepang, have expanded the conurbation, but also bring new problems including water and air pollution [61]. Rapid increase in transportation, which is the biggest CO2 emitter, is inevitable. There has been initiative towards low carbon cities through a real time carbon abatement measures, but the progress is very slow [62]. Since HFC and FCEV are carbon free, they are regarded as the best mechanism to speed up emission reduction.
In 2010, Malaysia introduced the Renewable Energy Policy and enacted the Renewable Energy Act in 2011. After a decade, Malaysia’s share of renewable energy in the energy generation mix has not increase as hoped. The Renewable Energy Act is also limited in increasing five types of renewable energy which are biogas, biomass, hydropower, solar photo voltaic, and geothermal energy. It does not facilitate the use of alternative and carbon-free energy such as HFC.
The emergence of HFC can be seen as early as 1995 when Malaysia built its first sin-gle cell proton exchange membrane fuel cell and developed the advanced materials for polymer composite bipolar palates. This started upon research collaboration between the Universiti Kebangsaan Malaysia and the Universiti Teknologi Malaysia funded by the Ministry of Science, Technology and Environment (MOSTI) under the Seventh Malaysia Plan [63]. The Malaysia Plan is a five-year development plan that highlights the govern-ment’s budget commitment for every five years for the economy, society and environment including the water and energy sector [64]. HFC was recognized as a ‘potential alternative energy’ in the Eighth Malaysia Plan (2001-2005). In the following Ninth Malaysia Plan (2006-2010), the government introduced financing mechanism for the technology development and sharing of knowledge of HFC [65].
Under the Tenth Malaysia Plan (2011–2015) and Eleventh Malaysia Plan (2016–2020), HFC was no longer mentioned. Nevertheless, FCEV was developed as a demonstration project by the national automaker, PROTON. Although HFC was no longer highlighted in the development plan, MOSTI has recognized HFC as one of its priority research areas and has allocated RM41 million funding from 1995 to 2017 [65]. In 2017, the Academy of Sciences Malaysia (ASM) published the Blueprint for Fuel Cell Industries in Malaysia. Although it is not a national plan for the HFC industry, it lays down the short, medium and long-term goals for the development of HFC industry in Malaysia until 2050 [66].
Malaysia’s sluggish progress in achieving its renewable energy target and the absence of HFC in the recent government’s development plan could be due to the fact that Malaysia is rich in natural gas and crude oil. In 2011, Malaysia ranked 28th in the world and 4th in the Asia-Pacific after China, Indonesia, and India in crude oil production. For natural gas, Malaysia ranked 11th in the world and 3rd in the Asia-Pacific, behind China and Indonesia [67]. This leads to “resource curse” or “paradox of plenty” that leads to crowding-out effect when billions are spent on fuel subsidies. This hinders investment in the renewable or alternative energy sector [68].
Meanwhile, the government-linked power company continues to lobby for policies favorable to them. This will thwart government efforts to formulate policies or laws to increase the renewable and alternative energy share in the national energy mix. What is now needed is a strong political commitment to bring the laboratory works on HFC into real life. This can be seen in the state of Sarawak where the Chief Minister has been championing HFC through the state-linked energy producer, Sarawak Energy. There are now several FCEV on the road of Sarawak and this has encouraged stakeholder to take part in the hydrogen industry and economy.

5. Conclusions

The US, Germany, and South Korea have been successful in advancing HFC from merely a laboratory exercise to a profitable industry. This is partly contributed to the political will in ensuring better awareness and acceptance towards HFC. This is also contributed by well drafted laws and policies to regulate and incentivize the industry players and consumers. These include the 2001 National Energy Policy and the Energy Policy Act 2005 in the US; the Electric Mobility Act and the Climate Action Plan 2050 in Germany; and the Alternative Energy Technology Development and Usage Promotion Act 1987 and the Hydrogen Economy Promotion and Hydrogen Safety Management Act 2020 in South Korea.
Malaysia is ambitious to reduce its carbon emission, but there is no significant commitments for climate mitigation, for example in the energy and manufacturing sectors, on carbon tax, or innovations in the carbon-saving technology [69]. Malaysia government need to embark on a more serious endeavor in promoting HFC as in the US, Germany, and South Korea. By providing a friendly legislative framework that entices both industries and consumers to invest in the HFC industry, Malaysia will also achieve its Paris Agreement commitment to reduce carbon emission by 45% in 2030. A proper roadmap on the HFC industry, and perhaps the hydrogen economy, can increase the level of confidence among the investors in the sector. This should be followed by a proper law, which are not only regulate, but also facilitate the sector.
Malaysia should also leverage on its tropical weather where it has abundant sunlight that could be used for large solar plant to produce renewable hydrogen as compared to the northern countries. By moving forward,, a decade of research and development on HFC worth millions of dollars will not go in vain. As a matter of fact, researchers in Malaysia has been advancing the fuel cell research beyond HFC to include methanol [70] and Nafion membrane [71] Rapid development of renewable and alternative energy will also assist Malaysia towards achieving SDG7 on clean energy and SDG 13 on climate action.

Author Contributions

M.A.A. (methodology, software, formal analysis, writing—original draft preparation) and R.M.K. (conceptualization, writing and editing, project administration, funding acquisition). All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by Ministry of Higher Education of Malaysia and Universiti Kebangsaan Malaysia (grant number: TRGS/1/2018/UKM/01/6/3).

Institutional Review Board Statement

Not applicable.

Data Availability Statement

Not applicable.

Acknowledgments

The authors would like to thank their family and friends who had supported the authors directly or indirectly in the preparation of this paper.

Conflicts of Interest

The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.

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