China's state-owned oil majors plan to build supply chains for green hydrogen production, distribution and consumption on the lines of the natural gas sector, including similar commercial strategies and infrastructural frameworks, Sinopec and PetroChina officials said at an industrial forum in Beijing in early May.
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The plans underscore the role that the two national oil companies, who are among the world's largest energy corporations, will play in the development of China's green hydrogen sector given their large capital base and project expertise for high-capex development.
It also signals how the evolution of China's green hydrogen industry is expected to align closely with the long-term energy transition plans of the NOCs and natural gas pathways in its early stages such as usage in refining and transportation.
"We have entered the golden age of hydrogen. China will build an ecosystem for green hydrogen as comprehensive as today's natural gas industry," Zou Caineng, Chief Specialist of New Energy with PetroChina, said.
"In terms of accelerating the construction of green hydrogen infrastructure, it is necessary to build large green hydrogen bases at the same pace as developing our gas field. In future, the potential and the scale of China's green hydrogen industry is likely to go far beyond the natural gas industry," Zou said.
Hydrogen can be utilized in all of the nation's emission-intensive sectors, including power generation, industrial production and transportation, Lin Wei, Deputy Director with Sinopec Research Institute of Petroleum Processing, said. It is crucial to bridge connections between green hydrogen producers and demand centers to achieve supply-demand balance, he added.
At the forum, Sinopec announced the establishment of an expert advisory council for hydrogen deployment comprising different industry segments like fuel cell manufacturers, storage companies and technology researchers.
To start from transportation
A key component of the NOC hydrogen strategy is to piggyback on its transportation fuel supply networks, by retrofitting gasoline and diesel refueling stations, some of which face decreasing utilization rates due to the advent of electric vehicles.
There are currently around 67,000 hydrogen fuel cell vehicles, or FCEVs, in operation globally, out of which 12,682 or 19% are in China, industry association China Hydrogen Alliance's data showed. Out of the 727 hydrogen refueling stations in operation globally, 358 or 49% are in China, the data showed.
Sinopec aims to build up hydrogen refueling networks and FCEV-related infrastructure ahead of the wider growth in FCEV demand, and promote research and development in transportation and storage of liquefied hydrogen, Wang Weimin, senior specialist with Sinopec, said at the forum.
Wang said Sinopec also plans to build a hydrogen pipeline from Ulanqab in the remote Inner Mongolia province to Beijing as a pilot project, with refueling stations along the way.
PetroChina's Zou said it is necessary to take advantage of natural gas pipeline networks and infrastructure to establish a "gas-hydrogen co-development" business model as oil and gas companies have inherent and unique advantages in developing green hydrogen.
Last year, Sinopec had announced plans to build 120,000 mt/year of hydrogen refueling capacity by 2025, up from 20,000 mt/year in 2022, focusing on hydrogen produced from renewables as well as natural gas, methanol and ammonia.
China is the world's biggest hydrogen producer with 33 million mt/year of output, industry data showed, mostly from coal or the industrial processes like refining.
Safety and scale in focus
Besides transportation, hydrogen deployment in the power sector can replace coal and it is key to decarbonize hard-to-abate industrial processes like steel production, ammonia and methanol synthesis. Before renewed interest in hydrogen, natural gas was considered the bridging fuel in China's long-term energy transition.
As opposed to high import dependency for natural gas and LNG, which is a key energy security concern in the current geopolitical environment, hydrogen production is expected to be largely localized and domestic.
Mixing an increasing proportion of hydrogen with coal in thermal power plants is a tailored solution for China, Ouyang Minggao, Deputy Director of the Academic Committee of Tsinghua University, said.
The big solar and wind power bases in northwest China requires a significant number of coal-fired power plants to ensure stable power supplies, and these coal-fired plants can be the pilots to test the hydrogen-mixing technology, Ouyang added.
Large storage facilities are crucial to enable large-scale hydrogen production and deployment. Medium and low-pressure, large hydrogen tanks are the low-hanging fruit for this purpose, said Yang Baoying, President of Hydrogen Business Center with CIMC Enric, a storage equipment manufacturer.
Yang said, based on the government's latest consultation document for hydrogen industry standards, a single balloon tank is allowed to reach up to over 3,000 cubic meters. Yang added CIMC Enric has delivered one 200 cbm hydrogen balloon tank for Anyang Iron & Steel Group, and two 1,500 cbm tanks for Hubei Feilihua Quartz Glass Co Ltd.
Safety standards for hydrogen production, distribution and consumption must be controlled in the same way as the natural gas industry, Cao Xianghong, member of China Engineering Academy, said at the forum.