There are alternatives and when considering the impact on property investments, they may well be more appealing if capable of speedy adoption.
Top Gear – what is on the horizon
A recent segment on popular motoring show, Top Gear, gave a brief insight into what might we could see on our roads in the future…and what bumps in the road there might be.
As well as focusing on just how far technology has come when looking at electric vehicles in terms of reliability, range, charging speed (and of course for Top Gear, appearance) – which it is difficult to argue with – a spotlight was shone on hydrogen power and synthetic fuels.
Hydrogen or synthetic fuel – can we see them in the rearview mirror?
Both hydrogen powered vehicles and synthetic fuels are in their infancy development wise, especially when compared to electric vehicles. Both options are however hyper-low/zero emission fuels, subject to a question mark about them being truly net zero in their production (with hydrogen production being electricity intensive). Some people however make that same comment around electric vehicles, and there are concerns over whether electric vehicle technology (in particular the batteries) is going to get to where it needs to when it comes to the haulage industry. It might not be the silver bullet to all the problems being faced.
With that in mind, there is substantial investment into exploring both alternatives referred to above. Porsche has invested $75 million into development of a synthetic fuel (called eFuel), with development of a plant in Chile underway, and a second plant slated for Tasmania. They intend to use it in motorsport by the end of 2022, and Formula 1 has made a commitment to use synthetic fuel from 2026. Hydrogen and Toyota both have hydrogen powered models available in the UK with BMW, Vauxhall and Land Rover all having cars or vans in the pipeline.
As it stands however there are only around 15 hydrogen fuelling points in the UK (with the vast majority in London, and only one located between North London/Swindon and Teesside!), which is reminiscent of the early days of EV technology, and the cost of synthetic fuel is in the region of £10 per litre (which hopefully petrol and diesel won’t get near to!).
The impact on real estate investment – where it really matters!
For those looking at the roadside sector for potential (or existing) investment opportunities, a shift towards either hydrogen or synthetic fuel would have a real impact on plans.
The first thing to note is that even with the impending ban on the sale of new petrol and diesel vehicles, there’s no proposed ban on the sale of second-hand vehicles. There is still going to be demand for fuel supply for those vehicles already on the road.
To add to that, refuelling a hydrogen car is a similar process to refuelling a petrol/diesel vehicle, and a synthetic vehicle refuels in an identical fashion. This means that the need to redevelop, or re-evaluate the way in which such assets operate, is likely to be diminished. People will drive onto a forecourt, and refuel their vehicles in a matter of minutes, meaning there will not be the need for a total change of infrastructure.
For those looking at more general investment, again, infrastructure considerations will be key. With the constraints of existing infrastructure on the ability to install multiple fast charging points (and substantial financial costs associated with installation of sub-stations to support that), a shift towards vehicles which don’t require EV charging points is likely to be welcomed by investors and developers.
What next?
The market will for the foreseeable future continue to see increased investment in, and pressure on, EV charging development as the main route towards getting more net-zero carbon emissions vehicles on the road. If more of that investment starts to flow towards hydrogen or synthetic fuel, it may be that the change in direction may not be quite so drastic as might otherwise be the case. If one of the major players in the oil sector decided to invest heavily from their record profits, that change could definitely accelerate.
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