Factbox: China's national hydrogen plan starts small but aims for economies of scale

China has been making inroads into hydrogen for several years through various sectors such as equipment manufacturing and fuel cell vehicles, and it published its first ever national level hydrogen industry development plan for the 2021-35 period on March 23.

The plan lays out China's strategic view of the hydrogen sector based on economic viability and building economies of scale. China's 2035 target is to make "hydrogen an important backbone for the nation's energy transition."

Government-backed think tank China Hydrogen Alliance (CHA) has forecast China's hydrogen demand will rise to 130.3 million mt in 2060, out of which 100 million mt will be green hydrogen, which will enable 1.7 billion mt of CO2 reductions.

Prices

• China's average green hydrogen production cost is expected to fall to $2.4/kg by 2030, along with solar and wind electricity price reductions to about $0.03/kWh. To achieve such economies of scale, solar and wind power capacity has to hit 1,600 GW by 2030, and electrolyzer capacity 80 GW. (CHA)
• China's current levelized costs of green electricity are $0.05/kWh for hydropower, $0.06/kWh for solar, $0.07/kWh for onshore wind, and $0.10/kWh for offshore wind. (CHA)
• China's current levelized cost of renewables-based hydrogen using alkaline electrolysis is $3.7/kg with hydropower, $4.3/kg with solar, $4.4/kg with onshore wind, and $6.4/kg with offshore wind. (CHA)
• China's current levelized cost of renewables-based hydrogen using PEM electrolysis is $5.3/kg with hydropower, $5.9/kg with solar, $6.1/kg with onshore wind, and $8.2/kg with offshore wind. (CHA)
• Carbon Capture and Storage (CCS) will be used to produce "carbon neutral hydrogen" or blue hydrogen from coal and gas. Currently, China's coal-based hydrogen plus CCS costs around $2.4/kg, and gas-based hydrogen plus CCS costs around $4.0/kg. (CHA)
• As of March 24, S&P Global Commodity Insights' hydrogen price from steam-methane reforming with CCS was $6.58/kg in West Australia, and GBP8.69/kg ($11.45/kg) in the UK. For alkaline electrolysis, the price was $2.69/kg in West Australia, $11.99/kg in Japan, and GBP12.17/kg ($16.03/kg) in UK.
• China's hydrogen-powered Fuel Cell Electric Vehicles (FCEVs) are expected to be cost-competitive in 2030 compared with ICE vehicles in both price and fuel cost, according to Sinopec.
• By 2025, when green hydrogen costs fall below Yuan 30/kg (around $4.8/kg) and the gasoil price is around Yuan 6.7/liter ($1.1/liter), hydrogen-powered trucks' fuel cost will be competitive with diesel trucks. (Sinopec)

Trade Flows

• China's hydrogen development plan expects renewables-based hydrogen production to reach 100,000-200,000 mt/year by 2025, and hydrogen fuel cell vehicles to reach 50,000 in the same period.
• The plan expects about 1 million-2 million mt/year of CO2 emission reductions by 2025 through green hydrogen. This is a small share of China's total emissions, which was 10.8 billion mt in 2021, indicating conservative estimates for green hydrogen growth for the next few years, with a focus on longer term growth.
• China's total hydrogen production capacity was at 41 million mt/year, and annual consumption volume was 33.42 million mt in 2020. (CHA)
• China's hydrogen demand is expected to reach 37.15 million mt in 2030 when the country expects to achieve peak carbon, and 130.30 million mt in 2060 when carbon neutrality is expected. (CHA)
• Currently, the majority of China's hydrogen consumption is by the industrial sector: 32% used in ammonia synthesis, 27% in methanol synthesis, 25% in refining and coal chemical processes. (CHA)
• In 2060, China's hydrogen demand is expected to reach 77.94 million mt in the industrial sector, 40.51 million mt in transportation, 6 million mt in power and 5.85 million mt in buildings. (CHA)
• In 2060, hydrogen is expected to enable 1.7 billion mt of CO2 emission reductions in China, equivalent to 16% of China's current annual CO2 emissions. Some 65% of CO2 reductions are projected from the industrial sector, 27% from transportation, and 8% from power and building. (CHA)
• Currently, 63.5% of China's hydrogen supply is produced from coal, 21.2% from industrial processes like oil refining, 13.8% from natural gas, and 1.5% from water electrolysis. (CHA)
• In 2030, 13.5% of hydrogen demand is expected to be met by water electrolysis with renewables-based power sources. In 2060, the share of green hydrogen will reach 76.7% in China's hydrogen consumption mix. By 2035, blue and green hydrogen supplies are expected to dominate China's hydrogen supply mix. (CHA)

Infrastructure

• Sinopec has announced four green hydrogen projects -- the 20,000 mt/year solar-based project in Kuqa, Xinjiang, 10,000 mt/year wind- and solar-based project in Ordos, Inner Mongolia, 100,000 mt/year renewables-based project in Ulanqab, Inner Mongolia, and 10,000 mt/year offshore wind-based project in Zhangzhou, Fujian.
• China aims to have 1 million hydrogen FCEVs on the road by 2030-35, with at least 1,000 hydrogen refueling stations by 2030. (Ministry of Industry and Information Technology)
• China's FCEVs rose to 7,729 in 2020 from 10 in 2015, and is expected to reach 11 million in 2060. By 2060, 65% of medium and heavy commercial vehicles and 15% private vehicles will be powered by hydrogen. (CHA)
• Sinopec aims to build 1,000 hydrogen refiling stations during the 14th five-year plan period (2021-25) with refilling capacity of 200,000 mt/year
• CHA forecasts China's hydrogen demand for steelmaking is expected to reach 14 million mt in 2060 and it would be used to produce over 30% of the country's steel outputs.
• CHA forecasts China's total hydrogen demand for high temperature heating in cement and steel production to reach 19.8 million mt in 2060, covering 35% of industrial heating demand in the two industries.
• For water and air transportation, hydrogen fuel cell ships will see commercial applications from 2030, accounting for 2.8 million mt by 2060, and hydrogen-fueled airplanes will consume another 2 million mt of hydrogen by 2060. (CHA)
• Ships and airplanes powered by hydrogen can only be deployed for domestic or coastal shipping routes, and short-distance air routes. Synthetic fuels, produced from hydrogen, carbon monoxide and dioxide, will serve long-distance trips. CHA forecasts hydrogen demand for synthesis of sustainable marine and jet fuels will account for another 15.6 million mt in 2060.