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Understanding China’s Hydrogen Economy; By Mr. Arjun Gidwani

Image Courtesy: sideplayer.com

Article No. 53/2019

“Hydrogen Economy” is a term given to an economy or a nation that relies on Hydrogen as a commercial fuel, as it is a low carbon energy source, to meet a large percentage of the nation’s energy and services demand. Hydrogen is an attractive energy source because, whether it is reacted with air in a fuel cell to produce electricity or it is burned to produce heat, the only byproduct is water. Fossil energy is unsustainable, environmentally and economically, and its reserves are finite. Countries have begun to look towards Hydrogen as the fuel of the future as it is a secure and clean energy source.

Hydrogen has to be produced from compounds such as natural gas, biomass, alcohols or water as it is not found in its pure form on earth. The climate change impact of using hydrogen depends on the carbon footprint of the energy used to produce it. This is so, as a lot of energy is required to convert compounds like natural gas, water or alcohol to hydrogen.

One of the most useful ways of using hydrogen is in electric vehicles in conjunction with a fuel cell that converts hydrogen into electricity. The biggest advantage of Hydrogen Fuel Cells is the highly improved efficiency when compared to the internal combustion engines that they replace.

China’s Hydrogen Story:

Overview

Presently, China has the largest hydrogen production capacity in the world. From generating approximately 16 million tonnes of Hydrogen in 2012, it has grown to generate approximately 20-22 million tonnes of Hydrogen in 2018. According to The Blue Book on the Infrastructure Development of the Hydrogen Energy Industry of China (2016) , prepared by the China National Institute of Standardization and The Technical Committee of the National Hydrogen Economy Standardization, by the year 2020 as much as 72 billion cubic metres of Hydrogen energy will be utilized as energy and the gross industrial output value of the industry will reach USD 44.4 billion. This has been predicted to further increase to USD 148 billion in 2030 and USD 592 billion by 2050.

Evolution Timeline:

Year: 2014

President Xi Jinping called for ‘4 Revolutions’ and ‘1 Cooperation’ in the area of Energy.

Four Revolutions:

  1. Promote the energy CONSUMPTION revolution

  2. Promote the energy SUPPLY revolution

  3. Promote the energy TECHNOLOGY revolution

  4. Promote the energy SYSTEM revolution

One Cooperation:

  1. Strengthen all round international cooperation

Post the ‘4 Revolutions’ call made by the President, China has seen a turn towards energy development with the focus on establishing a clean, low carbon, safe and efficient energy system.

Year: 2015

The Chinese government published the Made in China 2025 initiative which is a ten-year plan to upgrade the manufacturing industry in China. Hydrogen was included as a key technology to develop in the energy vehicle market.

  1. On 9th December 2015: The First domestic FCV (Fuel Cell Vehicle) model was listed for sale commercially.

Year: 2016

The release of the first Hydrogen Fuel Cell Vehicle Technology Roadmap in China. Later, in the same year, H2 (Hydrogen) new energy vehicles and hydrogen infrastructure were added to the 13th Five – Year Plan outlining targets for mass application of Hydrogen in the Transport Sector.

Source: Hydrogen FCV Technology Roadmap (2016)

Year: 2018

  1. As of May 2018, 45 FCV models were listed for sale commercially and 12 HRS (Hydrogen Refueling Station)

Year: 2019

In March 2019, China announced an adjustment to its decade long central subsidy program for new energy vehicles (NEVs). The program which was introduced as the Ten Cities Thousand Vehicles project in 2009 is set to be phased out after 2020. At the end of the year, the subsidy for pure battery-electric cars will be cut and moved to hydrogen fuel-cell vehicles. The funding saved from EVs will be spent on hydrogen charging infrastructure and services.

The aim is to achieve mass production of FCEVs (Fuel Cell Electric Vehicle) by 2020.

Research & Development:

  1. Hydrogen Liquefaction

China Aerospace Science and Technology Corp. has made significant breakthroughs in the liquefaction, storage and high-pressure applications of hydrogen leveraging its R & D foundation in aerospace.

  1. Fuel Cell and System Integration

Tongji University has been engaged in Fuel Cell R&D for 18 years. It currently has 200+ FCVs in operation. The G4 Fuel Cell Powertrain has been bench tested.

Commercial Strategy:

Priority has been given to launching buses and delivery vehicles powered by Hydrogen Fuel Cells. The roll-out of passenger cars on a large scale will follow.

It has been determined that the main source for producing Hydrogen in China, will be from coal as it is much cheaper than natural gas or water electrolysis. The cost of producing hydrogen from coal is approximately 0.8 yuan per cubic meter.

India and the Road ahead:

  1. Indian Oil Corporation Ltd. (IOCL) has initiated a pilot project for using hydrogen-enriched compressed natural gas (H-CNG) in vehicles.

  2. A hydrogen fuel cell bus has been launched in India by Tata Motors in collaboration with ISRO and IOCL

  3. Even though markets like China, Japan and South Korea take the lead in the development of Hydrogen Fuel Cell technology, the sales are negligible.

  4. China still has less than 1500 units of hydrogen vehicles on the road today.

  5. As there is no shortage of agricultural waste in India, procuring Hydrogen from methane through the process of bio-methanisation would be a good India centric method to produce Hydrogen energy in large volumes as observed by the R & D in IOCL

  6. Importance should be stressed on making Hydrogen economically viable in order to compete with conventional fuels and electric vehicles.

  7. The government of India would need to come up with a cost-effective plan to develop fuel cell technology and the infrastructure to support it.

  8. As per recommendations of the Steering Committee on Hydrogen Energy and Fuel Cells, the Central Motor Vehicle Rules, 1989, will have to be amended to include hydrogen as an automotive fuel. The Gas Cylinder Rules, 2004, will require amendments to incorporate standards and regulations pertaining to hydrogen storage cylinders.

Conclusion:

It is important for India to monitor Chinese progress in the area of hydrogen technology. India must focus on developing its own hydrogen technology by having more sound policies in place, strengthening the regulatory framework, encouraging R&D and stressing the importance of making Hydrogen energy economically viable.

(Arjun Gidwani is currently an International Business Analyst based in Hyderabad and has more than 10 years of experience in Market Research, Industry and Sector Analysis, Trade analysis, Macroeconomic forecasting and Financial Analysis. He has earned his post-graduate degree from the Indian Institute of Foreign Trade (IIFT), Delhi and has also completed his studies in Advertising Management and Public Relations from MICA, Ahmedabad. Specializing in research and strategy, he has worked on market entry strategies for Indian manufacturing companies into new geographic markets with a focus on the Middle East and North Africa (MENA) countries, revenue generation strategies for a Hyderabad based consultancy, and has been a member of the policy drafting Race Committee for the Dubai World Cup – Horseracing.)

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