Globally, policymakers face the challenging task of reducing greenhouse gas emissions. We develop an integrated systems dynamics model of New Zealand’s energy and economic systems to examine the implications of policies to reduce the carbon intensity of the vehicle fleet under three scenarios of different assumptions of technology improvement, consumer preferences, and oil prices. We model four competing vehicle technologies: petrol/diesel (ICEV) and hydrogen (HICEV) internal combustion engine vehicles, hydrogen fuel cell vehicles (HFCV), and battery electric vehicles (BEV). Consumers choose between vehicle types based on expected vehicle costs and calibrated preference parameters through a logit choice model. Engineering data are used to parameterise the modelling of hydrogen supply chains, energy resources, and electricity markets.

Under our baseline assumptions in Scenario 1, we find a carbon policy of US$90/ tonne of CO₂ by 2012 will lead to a HFCV fleet share of nearly 80% by 2050, with the remainder of the fleet ICEVs. In Scenario 2 we also apply a 30% BEV subsidy and assume HFCV technology does not develop as quickly as expected. This results in BEVs in over half the fleet by 2050, and ICEVs in the rest. In Scenario 3 HFCV technology again develops slowly, but the carbon policy is US$30/tonne by 2012, resulting in an entire fleet of ICEVs. We find the CO₂ emissions profiles for Scenarios 1 and 2 are similar and are both less than for Scenario 3. We conclude that carbon policy and technology are critical elements in determining a hydrogen future.