Shell takes small step to fuel Toyota's giant hydrogen leap

Royal Dutch Shell will build seven fueling stations for hydrogen cars in California through a partnership with Toyota Motor Corp., laying down the companies' latest bet on the demise of the internal-combustion engine.

The stations will nudge the state closer to its goal of having 100 retail sites by 2024 where hydrogen fuel-cell vehicles can fill up. The California Energy Commission is considering $16.4 million in grants toward the stations, with Shell and Toyota contributing $11.4 million.

Toyota plans to rely on hydrogen to all but rid its lineup of traditional-engine models by 2050. The lack of refueling infrastructure is a major hurdle to zero-emission cars catching on with consumers — California has just 25 stations right now.

Shell also is crafting a strategy to wean itself off oil. Demand could peak in as few as five years, Chief Financial Officer Simon Henry has said. The company operates six hydrogen stations — four in Germany and two in the Los Angeles area — and will open a seventh near London's Heathrow Airport later this month.

"Shell wants to be in the forefront of this technology," said Oliver Bishop, general manager for hydrogen. The complexities of producing, storing and delivering the fuel necessitates "the support of governments and of car companies like Toyota to make it work."

California has the toughest clean-air rules in the country and mandates for zero-emission vehicles, making it the natural place for Shell and Toyota to team up in the U.S. While the Trump administration has indicated it may weaken environmental rules, California is aligned with countries in Europe and Asia.

Four companies should be selling fuel-cell vehicles this year in California: Toyota, Honda, Hyundai and Daimler. While Toyota has rendered hybrids commonplace, the industry is facing pressure for more zero-emission products from governments that see carbon pollution as a threat.