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China's hydrogen roadmap: 3 things to know

  • July 09, 2021
China has been cranking up investments in hydrogen, a renewable and potentially clean source of energy. The country's central and local governments have inked the hydrogen industry into the 14th Five-Year Plan (2021-2025) as one of China's six industries of the future.

The China Hydrogen Alliance, a government-supported industry group, predicts that by 2025 the output value of the country's hydrogen energy industry will reach 1 trillion yuan ($152.6 billion), and by 2030 that China's demand for hydrogen will reach 35 million tons, accounting for at least 5% of China's energy system.

Increasing the use of hydrogen -- a gaseous element in great abundance -- could help support the government's goals of dramatically reducing China's emissions of carbon dioxide, one of the main greenhouse gases driving climate change. Hydrogen fuel cells use chemical reactions to generate zero-emission electricity that can be used in transportation and other applications. Expanding production of hydrogen and developing refueling infrastructure may help increase the number of new-energy vehicles on the road and help China hit peak carbon emissions before 2030 and reach carbon neutrality by 2060.

But to achieve those goals, technological obstacles need to be overcome to lower the costs of extracting, storing, transporting and delivering the material to end users. China's advantages lie in strong government support and a huge market. Here are three things to know about the country's plans for hydrogen.


What are China's policies on hydrogen development?

China's 14th Five Year Plan labels hydrogen a "frontier" area that the country pledges to advance. Even though a national strategy for hydrogen development has yet to be developed, 16 provinces and cities have launched their own five-year plans that specifically feature hydrogen. For example, Beijing includes accelerated planning and construction of hydrogen refueling stations. Jiangsu Province's plan includes development of hydrogen fuel cell vehicles and hydrogen fueling infrastructure.
China is initiating a four-year program to support local governments in researching hydrogen technology and developing an industry chain. Five city groups, including the Beijing-Tianjin-Hebei cluster, Guangdong and Henan provinces, and Shanghai have been selected for demonstration projects, participants told Caixin, though the central government has not published the names of cities in the program. Local governments that meet specific targets will be awarded up to 1.7 billion yuan as a fiscal bonus.


Where does China stand in the global hydrogen race?

More than 30 countries have developed hydrogen road maps, and 228 large-scale hydrogen projects were announced across the value chain, according to a report published in February by the Hydrogen Council, a global CEO-led initiative of leading companies. The council projects that hydrogen could meet 18% of total global energy demand and create a $2.5 trillion market with more than 30 million jobs by 2050.
Japan is leading in hydrogen fuel cell technology, while the United States is at the forefront of laboratory research. Europe is more focused on upstream hydrogen production, and China has the largest hydrogen market, said Wang Cheng, director of the hydrogen fuel cell laboratory at Tsinghua University
"In terms of green hydrogen production technology, China basically stands at the same starting line with the U.S. and European countries," Wang said.


What are the main challenges to implementing the plans?

High production costs have kept hydrogen-powered cars from reaching a commercialized stage in China and elsewhere. The difficulties of storing and transporting the highly explosive gas add to the costs.
The most mature method for large-scale production of hydrogen without extracting it from fossil fuels is water electrolysis, using electricity to split water molecules into oxygen and hydrogen. The key challenge of electrolytic hydrogen production is cost, including the initial capital expenditure and electricity expenses.
More than 70% of the cost of extracting hydrogen from water is electricity. It takes about 60 kilowatt-hours of electricity to produce 1 kg of hydrogen. Based on the industrial electricity price of 0.65 yuan ($0.10) per kilowatt-hour, the cost would be as high as 39 yuan per kilogram of hydrogen.
One solution would be to use renewable energy -- such as hydroelectric, wind or solar -- in the electrolysis of water. China Petroleum and Chemical plans to launch its first solar and wind-powered green hydrogen project, also in Ordos, in 2022. Since 2019, China has had more than 30 green hydrogen projects in the works.
The mainstream view in the industry is that green hydrogen will be economical only when the cost of renewable power falls below 0.2 yuan per kilowatt-hour. The cost of wind and solar electricity now is around 0.3 yuan per kWh. Zeng Tao, chief analyst of power equipment and new energy at investment bank China International Capital, said he expects green hydrogen can cost less than coal-based hydrogen by 2040.

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