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China's new fuel cell vehicle subsidy policy focuses on whole value chain

Energía eléctrica

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China's new fuel cell vehicle subsidy policy focuses on whole value chain

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Subsidy is dependent on meeting targets on development of fuel cell technology,

Subsidy promotes use of fuel cell vehicles, building refueling infrastructure

Policy could support the introduction of between 37,500 – 60,000 vehicles over 2020–23

  • Autor/a
  • Sebastian Lews
  • Editor/a
  • Daniel Lalor
  • Materia prima
  • Carbón Energía eléctrica

Singapore — At the end of last month China released its long-awaited revised subsidy policy for fuel cell vehicles, replacing a previous policy which subsidized purchases, making fuel cell vehicles cheaper for end users.

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That helped increase in the number of FCVs and filling stations in China which, as of July, numbered more than 7,200 vehicles and 80 hydrogen refueling stations according to the government.

However according to the new policy, which was published on government websites on Sept. 21, China's FCV industry still faces challenges including weakness in core technologies and production of key components as well as a lack of refueling stations.

The new policy is intended to rectify this, and instead of subsidizing the purchase of FCVs will focus on developing China's FCV sector in four key areas:

  1. Achieving breakthroughs in core technologies and key components along the FCV value chain.
  2. Carrying out demonstration projects promoting the use of fuel cells in medium and heavy-duty commercial vehicles.
  3. Reducing costs and creating economies of scale across the FCV value chain from hydrogen production through to distribution.
  4. Improving the policy and institutional environment to support the adoption of fuel cell vehicles across the whole value chain from capability in core technologies through to construction and operation of refueling stations.

The new policy will initially run for four years with the subsidies targeted at a selected number of cities and city clusters.

The policy does not explicitly state which cities will be chosen for the scheme, but it is widely thought that similar to an earlier "Ten cities, thousand vehicles" policy for battery electric, plug in hybrid and fuel cell vehicles, ten cities will be selected to advance the adoption of fuel cells, with Shanghai, Beijing as well as Shandong, and Shanxi provinces all drawings up plans for "fuel cell vehicle demonstration cities", according to a report last month in Xinhua, China's state-owned news agency.

Each city cluster can obtain up to 1.5 billion Yuan ($220 million) in subsidies dependent on how successful they are in meeting various targets related to the application of technology and promotion of fuel cell vehicles.

Targets include: meeting technical parameters on the power and power density of fuel cells, achieving a minimum range according to type of vehicle and putting at least 1,000 vehicles in the city or city cluster.

Another 200 million Yuan is available to each city cluster for meeting targets related to refueling infrastructure including provision of at least 5,000 mt/year of hydrogen, ensuring carbon emissions are no more than 15 kg of CO2 per kg of hydrogen supplied and reducing the cost of hydrogen at the pump to below 35 Yuan/kg.

Total central government subsidy available to the fuel cell vehicle sector could therefore amount to as much as 17 billion Yuan over four years, assuming the government funds 10 city clusters.

That could double to 34 billion Yuan if local governments also extend a similar level of subsidy to their cities, according to Bernstein, an investment manager, which also calculated that, assuming it was rolled out to 10 cities, the subsidy scheme could support the introduction of between 37,500–60,000 vehicles over the four-year period 2020–2023.

That is more or less in line with a previous government target to have 50,000 FCV on China's roads by 2025.