China’s release of its first national plan to develop the hydrogen economy six months ago has added momentum to the industry, with projects accelerating in a number of regions.

In March, China’s hydrogen strategy called for the fuel to be “an important backbone for the nation’s energy transition”. Annual investment in the domestic hydrogen sector topped RMB310bn ($44.7bn) last year, according to an industry report published this summer.

China had more than 2,000 hydrogen-related companies at the end of last year, with around 150 of them listed on domestic stock exchanges, according to state media. Some 43 of the 97 state-owned enterprises (SOEs) managed by China’s central government are active in hydrogen sector. And 23 provinces and cities had issued 192 special policies for hydrogen and fuel-cell electric vehicles (FCEVs) by the end of 2021, Zhang Yuzhuo, vice-president of science and engineering organisation the China Association for Science and Technology, said at the World New Energy Vehicle Congress in Beijing last month.

Hydrogen hub forming in Ningxia

A gigawatt-scale green hydrogen hub led by SOEs is starting to take shape in the northwestern region of Ningxia. The local government released a tentative hydrogen development plan this summer that called for green hydrogen production capacity of 80,000t/yr by 2025—which would consume 4.2TWh of renewable power.

80,000t/yr – Ningxia’s target green hydrogen capacity by 2025

Ten solar-powered electrolysis projects in the region are also scheduled to be commissioned by 2025, with 4.2GW of solar PV powering 1.5GW of electrolysers. The developers belong to eight parent companies, five of which are SOEs with carbon reduction plans more aggressive than the national decarbonisation goals.

The largest developer, local coal-chemical producer Ningxia Baofeng Energy, is aiming to have 500MW of electrolysers powered by 2GW of installed PV in place over the next 2-3 years. Last year, the company completed the world’s largest commissioned green hydrogen project in Ningxia, which saw a 150MW alkaline electrolyser powered by a 200MW solar array.

And a proposed plant in the region to produce 100,000t/yr of green methanol from hydrogen and captured CO₂ could be the world’s biggest if it starts up on time in two years. The RMB4.9bn project is being developed by state-owned China Coal Energy, one of the country’s biggest coal producers.

Coal eyes hydrogen future

Luliang—a city in China’s coal-abundant Shanxi province—aims to become a hydrogen hub but will use coal to produce the fuel. The city accounts for 6pc of China’s coke production and is home to some of its largest coke producers. It plans to produce 226,000t of hydrogen from coke-oven gas, coal and natural gas, and 10,000t of green hydrogen by 2025. It also aims to deploy more than 5,000 FCEVs and buses.

Coke-oven gas contains high levels of hydrogen. but extracting it would not only be expensive but also produce methane, a potent greenhouse gas. Producing hydrogen from fossil fuels also results in CO₂ emissions. The city government has not said if it will deploy carbon capture and storage.

To consume the amount of hydrogen Luliang intends to produce, the city would need to deploy 100,000 hydrogen-powered buses or 30,000 trucks, which is far beyond the current target, an industry source tells Hydrogen Economist.

Hydrogen produced from coal—known as brown hydrogen—accounted for 43pc of China’s overall hydrogen output in 2020. It is the country’s cheapest source of hydrogen, coming in at RMB0.9-1.2/m³ compared with RMB1.2-1.5/m³ for gas and RMB1.5-3.0/m³ for electrolysis.

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Author: Shi Weijun