Appendix G. FCVs and the Market for Platinum

Projected Demand for Platinum by FCVs

As noted in Chapter 4, as of 2007, 80-kilowatt fuel cell systems use 1.7 ounces of platinum, which is equivalent to 0.6 grams per kilowatt, and the DOE R&D goal is to reduce the platinum needed in PEM fuel cells to 0.56 ounces by 2015, which is equivalent to 0.2 grams per kilowatt. To achieve FCV sales volumes of 500,000 units per year using a platinum catalyst, an additional 8 tons will have to be produced for the new units assuming the 2015 goal is met,¹²⁴ and assuming that the 0.56 ounces will work well enough in an 80 kilowatt system.¹²⁵ If the 2015 goal cannot be met, then 25.6 tons of additional platinum will be needed, assuming the current platinum requirement of 0.6 grams per kW. Additionally, unless the platinum catalysts can be economically recycled to the purity needed, additional platinum will have to be mined to replace the platinum in the refurbished fuel cells in the existing fleet.

If PEM-based new vehicle sales took a 50-percent share of the United States new LDV market, about 10 million new vehicles in 2025, the incremental demand for platinum by the new FCVs would be between about 160 tons and 513 tons above the entire word-wide platinum production in 2007, or 71 and 228 percent respectively depending on whether each 80 kilowatt fuel cell unit used 0.56 or 1.7 ounces (Figure G.1). Given the scarcity of platinum, which has one thirtieth the availability of gold, such penetration is likely to create large platinum spot price increases that are well above current prices of about $1,700 per ounce, making achievement of the economic fuel cells even more challenging. A breakthrough in the development of a much more plentiful and low-cost catalyst will be required to achieve a 50-percent FCV market share of LDVs if the remaining challenges are overcome.

It should be noted that both public and private research is making strides in reducing platinum requirements. Nissan, for example, recently claimed to have reduced its catalytic platinum use by 50 percent.¹²⁶ Current estimates for FCV platinum use are around 100 grams per car;¹²⁷ thus, Nissan's breakthrough could be significant. As with all advances, it is reasonable to assume that further testing for fuel cell performance and durability outside the laboratory will need to be performed before commercialization. However, there is no doubt that Nissan's progress is yet another example of how technological advances will continue to reduce platinum usage in fuel cells just as they have done in catalytic converters.

Additional Issues to Platinum Pricing and Availability

This discussion has focused entirely on the incremental demand for platinum used in fuel cell LDVs in the United States. Since platinum is used in catalytic converters in the United States and the rest of the world, the reduction of platinum use in catalytic converters would marginally reduce platinum demand for the pollution control market and act to reduce the upward price pressure from increased platinum use in FCVs. In addition, further research may lead to breakthroughs that result in further reductions in the need for platinum or the development of alternative catalysts to replace the use of platinum. These successes cannot be predicted with any confidence. However, other factors are likely to drive the worldwide platinum demand higher:

• Increased use of catalytic converters in automobiles in rapidly developing countries like China and India to control severe pollution will significantly increase platinum demand.

• Rapid industrial growth in developing countries like China and India are likely to increase the demand for platinum, a crucial catalyst in some processes.

• Successful FCV penetration in the United States could lead to FCV adoption in the rest of the word, increasing platinum demand further.

• The demand for jewelry made from platinum has been growing, most rapidly in Japan, and continued growth in the use of platinum for jewelry could further exacerbate the upward price pressures on platinum.

Implications of Successful PEM Diffusion into the U.S. Transportation Market

When the 11 millionth FCV is sold, almost 900,000 megawatts of PEM generation capacity, approximately equal to the total electricity generation capacity of the United States in 2005, will have been built to power transportation fuel cell vehicles. The implication of continued penetration to 50 percent of new LDV sales is that more than 900 gigawatts of PEM generation capacity will be added every year thereafter for at least 10 years.¹²⁸ If FCVs are assumed to represent about half of the LDV fleet, about 148 million vehicles in 2030, the total PEM generation capacity in FCVs would be over 12 times larger than the total electricity generation capacity in the United States in 2005. Unless R&D breakthroughs occur to dramatically reduce the need for the platinum catalyst or to develop a much cheaper and effective catalyst to replace it, about 160 tons of platinum will be required for the first 10 million FCV vehicles, assuming the DOE goal of 0.56 ounces per FCV is achieved. The cumulative platinum demand to ultimately gain a 50-percent LDV market share for FCVs is roughly 2,400 tons, about 10 times the 2007 demand for platinum. Such platinum demand increases could result in a significant rise in the price of platinum.

Notes