The rapid announcements of green hydrogen projects in 2021 were followed by a renewed emphasis on electrolyzer technologies in 2022, an industry that had previously been relatively static and lethargic. Policymakers worry that subsidizing large-scale green hydrogen production from intermittent renewable energy (IRE) will only encourage more imports of core components, such as hydrogen compressors, valves, and advanced PEM electrolyzers. Warnings against relying on technologies imported from Japan and Korea were the subject of a speech given by former PRC Energy Department Director Xu Dingming, titled “The Inevitability of The Hydrogen Society,” at the “2022 Hydrogen Energy Industry Spring Period Analysis Forum” this past September.
Xu noted that the ultimate goal of policy supporting the hydrogen energy and fuel cell industry should be in service to the Carbon Peak 2030 Carbon Neutral 2060 targets, together known as the “Double Carbon” goals. Xu says the PRC is now in the “digital energy age” where real-time information on prices allows for fine-tuning of the planned economy. Furthermore, Xu predicts that clear pricing information will eventually lower the price of hydrogen in China to be relatively cheaper than electricity, in comparable units.
In addition to supporting the Double Carbon goals, Xu believes the industry should join in “One Belt One Road” policies to deepen integration of the mainland China economy with those of Central Asia. The same logic that supports building solar projects to power electrolyzers to produce green hydrogen that applies in Xinjiang, in northwest China, also applies to Central Asia; both areas are sparsely-populated and sunny.
Professor Mao Zongqiang of Tsinghua University, also Vice-Chairman of the International Hydrogen Energy Association, emphasizes that local production of hydrogen combined with more use of the molecule in hard-to-electrify sectors such as petrochemicals, industrial chemicals, and steelmaking, will lower the PRC’s carbon footprint and also improve the PRC’s energy security.
Dr. Mao spoke after the announcement of the “Beijing Action Plan for ‘The Fourteenth Five-Year Plan’ Period for Green and Low-Carbon Manufacturing Development.” Energy industries around the world are developing towards low- and zero-carbon fuels and promoting IRE. The PRC should also, according to Dr. Mao, promote the replacement of fossil fuels with IRE. Furthermore, he adds, hydrogen energy storage systems (H2ESS) may be the key to bridging intermittent renewables and grid demand.
Dr. Mao and other leading figures in the PRC hydrogen energy and fuel cell industry have noted the lack of standards governing the industry. This lack of guidelines and requirements hampers the growth of the industry by leading to uncertainty about investments in hydrogen production, transport, and off-take applications. While most PRC standards simply reference specifications from documents in Japan and Korea, because of the additional safety risks posed by hydrogen, committees in China are taking more time and insisting on test data.
As of December of 2021 the PRC Technologies Standardization Committee had released more than 30 standards and was writing about 10. One professor, Dr. Zheng, says that even though the pace of standardization is increasing, most standards today are specifically for the transportation vertical. According to the professor, more standards are needed for hydrogen-proof materials to resist embrittlement, power-to-gas control software, and other green hydrogen production. Longi Solar Hydrogen CEO, Wang Wei, has also called for more standardization of green hydrogen production to define which processes are truly decarbonized.
Initial policy from 2016 to 2019 in the PRC focused on promoting downstream applications – the transportation vertical in particular. Calls to displace some of the country’s 35 million tons per year (MTA) of grey hydrogen production with green led to a surge in power-to-gas (P2G) projects in 2021. The focus in 2022 and going forward seems to be on storage and transport technologies, especially hydrogen liquefaction, as policymakers belatedly try to link together the off-take markets fostered between 2016 and 2019 and the large amount of green hydrogen forecasted to come online later this year, which may reach 5 MTA. The Mainland China Hydrogen Association (CHA) originally forecast 60 MTA by 2050 but now believes production could reach 120 MTA and account for 20% of energy storage in the PRC. Such a large figure is even more than current global production.
The increase from 10% to 20% in the forecast for hydrogen as an energy storage medium in China came after further support was announced for hydrogen energy storage systems (H2ESS) applications in the “Hydrogen Energy Industry Mid- to Long-Term Development Plan (2021~2025),” released in March of 2022. The technology was also mentioned in both the Fourteenth Five-Year Plan (14FYP) and the “Industrial Sector Carbon Peak Implementation Plan,” both also released earlier this year.
The Development Plan highlighted H2ESS as the technology that will enable the PRC to transition away from fossil fuels to IRE to “…promote a sustainable economy and society.” This emphasis on H2ESS as the key to unlocking the potential of large-scale IRE is a marked change from the earlier policy “Regarding an Announcement about Pilot Projects to Develop the FCEV Industry,” colloquially known as the “Five Departments” policy, released several years ago, which only supported downstream core components, such as catalysts and materials.
An early over-emphasis on downstream components over H2ESS and green hydrogen generation technologies led to a dearth of research that recent policy changes hope to correct. Despite subsidies for core components, many firms in the PRC are still reliant on imports from Japan and Korea for carbon paper, hydrogen dispensing pumps, mass flow meters, safety valves, and liquid hydrogen storage tanks, among others.
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According to Dr. Mao of Tsinghua University, what little progress has been made in system integration has been repeated across different provinces leading to redundancy. A better situation, according to Dr. Mao, would be to encourage the emergence of national champions. However, the same national protectionism that works against firms in Japan and Korea is mirrored by the regional protectionism that works against domestic firms within China. Policy overlap has also concentrated capital in the transportation sector to the exclusion of other applications, such as chemicals, steelmaking, and e-fuels like ammonia and methanol.
Dr. Mao and former Director Xu have both called for more technological cooperation with Japanese and Korean firms to bolster the experience of domestic firms which then may lead to faster implementation of industry standards. In support of this theory, Dr. Mao points to the fact that, of the 1,500 firms registered in the past few years classified as in the hydrogen technology industry, only 10% have more than three years’ worth of research and development experience.
Some firms have even reportedly misrepresented “technical goals” as “technical achievements.” More partnerships with foreign firms, especially regarding technologies for H2ESS, will build what Director Xu has called the “Domestic-Foreign Double Cycle,” a mutually-reinforcing exchange of technology and ideas to rapidly elevate the China hydrogen and fuel cells industry to the advanced levels seen in East Asia.