China is using surplus renewable energy to develop a green hydrogen industry

Japan's Nikkei Asian Review article on March 5, the original title: China uses surplus renewable energy to aggressively develop green hydrogen energy industry China is rapidly advancing the construction of "green" hydrogen energy infrastructure, with the aim of using its extensive renewable energy generation capacity to lead Western countries in hydrogen energy production and transportation.

In January, Chinese oil giant Sinopec was approved to invest 20.5 billion yuan in the Ulanqab green hydrogen project in Inner Mongolia. The electricity generated by local solar and wind energy will be used in the water electrolysis plant, which will be able to produce 100,000 tons of green hydrogen per year. This is not the first time Sinopec has invested in green hydrogen projects. In Ordos, the company has been advancing a demonstration project with a total planned hydrogen production capacity of 30,000 tons per year since February 2023. In June of the same year, Sinopec announced a Xinjiang project with a hydrogen production scale of 20,000 tons per year.

Green hydrogen energy is positioned as the next generation of decarbonized alternative energy. The International Energy Agency predicts that to achieve net zero CO2 emissions by 2050, the share of green hydrogen energy in all environmentally friendly hydrogen energy must increase to 77.8%. Chinese companies are also large-scale manufacturing of electrolytic hydrogen production equipment that is essential to the production of green hydrogen energy. Some Chinese-funded enterprises in Handan and Shandong have accumulated relevant technological capabilities and started exporting to more than 30 countries and regions. The International Energy Agency estimates that by the end of 2023, China's installed capacity for hydrogen production electrolyzers will account for half of the world's total installed capacity.

Green hydrogen energy-related industries are booming in China. China's planned production of green hydrogen appears to be concentrated in the interior. Inner Mongolia is expected to become the largest green hydrogen production area. But China's energy-hungry megacities, such as Shanghai and Guangzhou, are mainly on the coast. Long-distance power transmission is a challenge, and hydrogen can be transported by pipeline like natural gas. The International Hydrogen Council and McKinsey predict that China will be the largest single market for clean hydrogen energy by 2050.

China has positioned its hydrogen industry as a strategic emerging industry and plans to produce 100,000 to 200,000 tons of hydrogen per year from renewable energy sources by 2025. Governments across China are heeding the call. At least 24 provinces, municipalities and autonomous regions have announced plans for hydrogen energy development.

Europe is also developing green hydrogen production plans, and is expected to establish a production system of 10 million tons per year in the region by 2030. But the renewable energy sector, a prerequisite for green hydrogen, is facing headwinds, including the cancellation of several large offshore wind power projects. The Biden administration is encouraging hydrogen investment through tax credits provided by the Inflation Reduction Act, and is looking for ways to attract European companies to compete with China on cost competitiveness and production volumes.