Counting on hydrogen for decarbonisation, China will likely install 2.5 GW of electrolyser capacity by the end of 2024, adding to the 1 GW installed last year, which cements the country’s lead in hydrogen production and technology adoption. However, most of China's hydrogen supply is derived from grey hydrogen, produced through coal gasification or steam methane reforming (SMR).
If the government wants to achieve its goals of peaking emissions by 2030 and carbon neutrality by 2060, switching to low-carbon hydrogen production methods will be crucial, Rystad Energy stressed.
A national hydrogen plan, released in early 2022 by China’s National Development and Reform Commission (NDRC), sets out a roadmap until 2035 – with production targets currently being met with relative ease.
“While China's proposed standards and solutions represent progress, they currently fall short of the more stringent benchmarks set by European counterparts. The ambiguity surrounding the definitions of 'low carbon' and 'renewable' hydrogen within China's policies is a notable concern,” Minh Khoi Le, head of hydrogen research, Rystad Energy commented, urging the government to adopt clear and stringent definitions that align with global best practices.
Geographical disparity looms large between China’s hydrogen demand centres in eastern cities and the country’s abundant solar and wind energy resources in the north. Inner Mongolia and Gansu province could together produce more than 1 million tons per annum of renewable hydrogen – yet a 400-kilometre pipeline would be needed to transport the green fuel to Beijing.
Sinopec is developing such a pipeline, connecting Ulanqab in Inner Mongolia to Yanshan in Beijing. With initial capacity of 100,000 tpa, and plans to scale up to 500,000 tpa, this pipeline marks China's first long-distance hydrogen conduit.
Additionally, a 737-kilometer hydrogen pipeline from Zhangjiakou to the port of Caofeidian via Chengde and Tangshan is being developed by Tangshan Haitai New Energy Technology in Hebei, costing $845 million.
Wind and solar power potential abound in China’s north and northwest regions, including Xinjiang, Gansu and Inner Mongolia. Installed solar PC capacity surged 2.5 times last year with 217 GW of new installation. For wind power, 76 GW capacity was added in 2023, double the capacity of the previous year.
Unsurprisingly, most green hydrogen projects being announced in these regions which offer abundant renewable capacity. Inner Mongolia aims for 480,000 tons per annum (tpa) of renewable hydrogen production by 2025, while Gansu has set a target of 200,000 tpa.
Challenges remain in ensuring electrolyser facilities can run at full capacity in China. A major bottleneck is the significant renewable energy capacity required to power the electrolysers. For example, producing 1 million tpa of green hydrogen requires roughly 20 GW of onshore wind capacity.
Consequently, hydrogen projects compete directly with other substantial electrification needs throughout China.
