China leads the world in green hydrogen

In 2022, China set a target of producing up to 200,000 tonnes (t) of “green hydrogen” per year by the end of 2025, to help achieve its “dual-carbon” goal. A Norway-based research company reports China is projected to “exceed that volume” by the end of 2024.

In the article below Carbon Brief looks at China’s green hydrogen production and utilisation, as well as what its future may look like.
___________________________________________

Could ‘green hydrogen’ help China achieve its climate goal?

Hydrogen comes in different “colours”, such as grey, blue and green.

“Green hydrogen”, produced by splitting water using electrolysis powered by renewable energy sources, such as wind and solar power, is seen as the cleanest form.

However, green hydrogen only accounted for around 0.1% of global hydrogen output in 2023, according to a report released by the International Energy Agency (IEA) this week. The rest was produced from “fossil fuels …​ through steam methane reforming of natural gas or gasification of coal”, which generates large carbon emissions, according to a report by the International Renewable Energy Agency (IRENA).

China is the world leader in green hydrogen, installing 1 gigawatt (GW) of electrolyser capacity in 2023, according to research company Rystad Energy. The IEA said the country accounted for 40% of electrolyser capacity that was approved in the past year and “three-quarters of the new capacity additions that could become operational in 2024”.

Its capacity is growing fast and is due to be in a position to make 220,000t of green hydrogen annually by the end of 2024, said Rystad Energy. This would exceed the 200,000t target for 2025 a year early.

However, green hydrogen still only accounted for 1% of China’s hydrogen production in 2023, the South China Morning Post reported, citing data from China Hydrogen Alliance.

Nevertheless, a report by Boston Consulting Group (BCG) and Ouyang Minggao, a prominent energy professor at Tsinghua University in Beijing, said rich renewable resources in north-west China offer a “unique advantage” in supporting the “key” energy required to produce green hydrogen.

Utilisation in transportation

Green hydrogen is gradually “gaining more recognition” with its potential to help China’s low-carbon transition, Yao Zhe, global policy analyst for Greenpeace East Asia, told Carbon Brief.

“It is understood that green hydrogen will play an important role. However, what still needs further clarification is in which specific sectors it will have a more significant impact,” Yao said, adding that one sector mentioned by China was public transport.

A 2022 plan by the National Development and Reform Commission (NDRC), China’s top planner, aimed to produce 50,000 hydrogen fuel-cell vehicles (HFCV) in 2025.

For now, however, the vast majority of “new energy vehicles” being produced and sold in China are electric vehicles (EVs) – including battery electric and plug-in hybrid vehicles – whereas HFCVs account for a very small portion of the market. Yao agreed that HFCVs are “not necessarily needed as a solution to decarbonisation” for transport.

“From the perspective of researchers”, she said, “the primary application of green hydrogen in transportation will be in the long-distance heavy truck sector.”

The report by BCG and Ouyang echoed this idea, saying that long-haul heavy-duty trucks have the “biggest potential” for green hydrogen utilisation in transport, thanks to the fuel’s “higher energy density” and shorter time for refuelling.

China now dominates hydrogen-powered heavy-duty vehicles, with more than 95% of the world’s fuel-cell lorries in use in China, according to the IEA. Business news outlet Caixin reported that, in 2023, sales of “new energy-heavy trucks”, including pure electric vehicles, fuel cell trucks and plug-in hybrid trucks, in China surged by 139% year-on-year.

However, “high costs and the inconvenience of refuelling” remain a big challenge, Yao added: “This is problematic as China’s trucking industry is facing fierce competition, and its profit margins are already very low.”

Prof Yi Baolian, a prominent scientist with the Chinese Academy of Engineering, said in a speech in 2023 that “hydrogen fuel can only compete with diesel if the price drops below 30 yuan ($4.26) per kilogram”.

Currently, the cost of green hydrogen ranges from around 15 to 45 yuan per kilogram, state news agency Xinhua reported in May 2024.

Decarbonising heavy industries

Despite the focus on transport, Yao said, “at least for me, green hydrogen will play its biggest role in the industrial field in the future”.

Xinyi Shen, the China team lead at the Centre for Research on Energy and Clean Air (CREA), told Carbon Brief that hydrogen utilisation in the steel sector was “technically feasible” and “seen as a promising technology”, with “hydrogen metallurgy” being successfully used in some pilot projects. But she added that “green hydrogen” has not been tried due to its high costs and was still “in a very early stage of development”.

Shen said that it takes time for the technology, including the storage and transportation of hydrogen, to become “mature” and the cost to be acceptable for commercial production.

Other industries, such as petrochemicals, fertilisers and heating, are reportedly also attempting to use green hydrogen, but none of them has applied it at a large scale.

Shen told Carbon Brief that the broader use of green hydrogen as “a key pathway to achieve carbon neutrality” in different industries not only needs technology upgrades but also policy support. She said:

“Policymakers need to consider how to design market rules, including subsidies or taxes, to ensure that resources are applied across different industries, generating the greatest emissions reduction effect within the entire system.”

By freelance climate journalist Henry Zhang for Carbon Brief.

Source: China Briefing, October 3, 2024. https://www.carbonbrief.org/china-briefing-3-october…/