Much is made of the electrification of the UK’s transport system. However, there is a quieter, but no less significant revolution happening in another area of clean transport – namely, hydrogen fuel cell vehicles. These vehicles have no waste product other than water vapour, are quick to refuel and have a range between refuelling of hundreds of miles (for a bus, typically 200-250 miles).

In a hydrogen fuel cell, the clean burning compressed gas is converted first to electricity and then powers the bus, train or even aircraft or ship engine. So the likely mainstream solution may be hybrid vehicles that can either take electric power from a direct source, or generate it from hydrogen combustion.

The breakthrough for hydrogen appears to be mainly happening in the field of transport, specifically buses. Hydrogen buses have been running routes in London since 2015 – 8 hydrogen buses on the RV1 route with 5 refuelling stations ran for eight years clocking up over a million miles. The world’s first hydrogen-powered double decker buses are to be working in Aberdeen this year, assuming no interruption from the COVID-19 crisis. This follows the city’s successful JIVE sponsored hydrogen bus project.

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.

To give readers a sense of the carbon emissions benefit for conversion of the national bus fleet to grid-powered and/or hydrogen-powered EVs, the report Smart Financing and the road to zero” (2021) has modelled the carbon reduction gained from converting just 25% of the current fleet.

The UK Bus Fleet: grid-powered or hydrogenpowered EVs – the carbon benefit of 25% Conversion


Tonnes CO2 saved

over 5 Years

North East


North West


Yorkshire and the Humber


East Midlands


West Midlands


East of England




South East


South West








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’. Finance 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 which 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.

In short then, 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 both 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:

Author: Brian Foster, Head of Industry Finance, Siemens Financial Services, UK