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China issues first national-level hydrogen development plan
04 April 2022Megan Jenkins
On 23 March 2022, China released the first national-level
development plan for the hydrogen industry (the Plan), underscoring
the importance that the central government now places on the role
of the hydrogen industry in achieving China's emissions
ambitions.
The Plan lays out several principles to guide the industry's
development in the near and long term across the value chain,
focusing on producing hydrogen from low-carbon sources, improving
storage and transport, and diversifying end uses.
On the production side, the Plan emphasizes low-carbon options
and "strict control" over fossil-fuel based hydrogen production.
Hydrogen by-products—from existing facilities like chemical
plants and coke ovens—and green hydrogen produced from
renewable power will be prioritized until green hydrogen production
scale improves to become the main source of supply. In the
midstream segment, the Plan highlights the need for technologies to
increase efficiency and reduce costs for hydrogen storage and
transport to address the locational mismatch between green hydrogen
supply and demand. On the demand side, the Plan calls for
diversifying hydrogen use beyond the transport sector to include
seasonal energy storage, heat and power for distributed energy
projects, and feedstock substitution or heat for industry uses.
The plan only includes two quantitative targets: 50,000
fuel-cell electric vehicles (FCEVs) and 100,000-200,000 metric tons
per year of green hydrogen production by 2025. The two targets
reflect not only the existing progress but also the high
expectation for these sectors, with financial assistance a key
enabler going forward. China's FCEV fleet will need to increase by
around fivefold to reach the targeted level by 2025, and annual
growth will need to more than double from the average rate seen
during 2020-21. There are enough proposed green hydrogen projects
to support the production target, but uncertainty over downstream
demand may cause headwinds for some projects.
Looking beyond to 2030 and 2035, the Plan lays out key market
expectations but shies away from setting concrete targets. By 2030,
the Plan aims for a relatively complete hydrogen industry with
"orderly" and "reasonable" hydrogen consumption and green hydrogen
playing a role in helping China to achieve its peak carbon
emissions goal. In 2035, a comprehensive hydrogen industry will
have been established with diversified uses of hydrogen across the
transport, energy storage, and industry sectors.
Like most high-level central government development plans, the
Plan leaves out details and, instead, wraps up with a proposal for
a "1+N" style framework to issue follow-up policies. In the coming
months and years, other government agencies will issue supporting
measures and implementation plans to realize the overall
development goals set forth.