China’s Hydrogen Readiness
In the 14th iteration of its 5-year planning, covering the period from 2021 to 2025, China has included hydrogen as one of the 6 industries of the future. Previous 5-year plans have focused on electrification of vehicles, resulting directly in China’s leader position in the EV industry.
China’s goals of dramatically reducing its greenhouse gases – and at the same time its dependence on other countries for energy supply – is a key driver in the plan design. Hydrogen is considered a contributor to these goals but comes with a caveat.
Hydrogen extraction, storage, transportation, and delivery is expensive and, on itself, not carbon neutral. As long as the uptake of hydrogen remains marginal, it’s not efficient. However, at a very large scale, efficiency can be brought back into the equation – and that’s exactly what the 14th plan is aiming for.
Research and infrastructure
Local governments have the option to underwrite certain aspects of the plan, implement them as they see fit or even go further. 16 provinces have already demonstrated a wider support for hydrogen and will be investing in hydrogen refueling stations or supporting the development of hydrogen vehicles.
Groups of cities have been selected to pilot the hydrogen project – the usual suspects, such as Beijing, Guangdong and Shanghai are part of the pilot, which can be explained by the urgent need for decarbonization and the visibility of the project.
Current state of hydrogen as a fuel
Complex, expensive and energy-consuming. This is, in a few words, the status quo of hydrogenation. Currently, it costs around USD 10 per kilogram, which needs to go down to (roughly) USD 6 for hydrogen vehicles to become a valid alternative.
More than 70% of the cost goes to the extraction of hydrogen from water, which requires electricity, which on its turn requires the coal-powered electricity production to provide the electricity. In other words, the hydrogen cycle only moves the emissions from the car to the power plants. Therefore, more electricity needs to be produced by wind, solar or hydroelectric sources.
Electricity & Hydrogen Transportation
China has thought about this, and is putting infrastructure in place to increase the availability of green power and reduce its cost. The industry expects green energy to become cheaper than coal energy by 2040 – at which time the production of vehicles and availability of infrastructure should be up and running.
As far as the transportation of hydrogen is concerned, China – like all other countries – is using trailers to bring the gas from production site to consumption site. This is however not sustainable on the long run and, as a result, the 14th plan includes investments in research on hydrogen pipelines and filling stations.
China is not the only country looking into hydrogen. Japan is leading the fuel cell technology sector, whilst the US is ahead of research. Europe sees potential in upstream production. But when economics come to play, China has the biggest market and the ability to make centrally-drive decisions. So, if the starting position, in 2021, is comparable, we should expect China to want a leadership position and competing for it.
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