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China's hydrogen fuel price to be competitive against petroleum by 2030: Sinopec Marketing

Highlights

Renewables-based hydrogen fuel cost estimated to reach around $4.69/kg in 2025

Current hydrogen fuel costs range from $6-$11/kg, produced mainly from fossil fuels

Sinopec Yanshan launches PEM hydrogen production station

China's hydrogen-powered Fuel Cell Electric Vehicles (FCEVs) are expected to be cost-competitive in 2030 compared with conventional vehicles powered by gasoline or gasoil, in terms of both the purchasing price and the fuel cost, Jiang Ning, chief specialist with Sinopec Marketing, said at the 10th China International Oil and Gas Trade Congress Nov. 8.

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"By 2025, when green hydrogen [renewables-based hydrogen] cost is expected to be lower than Yuan 30/kg [approx. $4.69/kg] and gasoil price [would be] around Yuan 6.7/Lite [74 cents/Liter before taxes], hydrogen-powered trucks' fuel cost will be competitive against gasoil-fueled ones," Jiang said, sharing the results from the company's recent study.

He added that hydrogen fuel costs below Yuan 34/kg (approx. $5.32/kg) imply fuel cost competitiveness against petroleum by 2030, when FCEVs' purchasing prices are almost flat to petroleum-fueled vehicles amid improvements to technology.

The current hydrogen fuel costs range around Yuan 40-70/kg (approx. $6-11/kg), which is still significantly higher compared with diesel and petroleum costs, Jiang said, adding that the current hydrogen supplies are mainly produced from fossil fuels.

In late September, Sinopec-listed Shanghai Petrochemical launched a hydrogen supply center in Shanghai, offering hydrogen at around Yuan 40/kg. A senior official with Shanghai Petrochemical said in late March that the price was almost equivalent to using gasoline in a car covering a distance of 100 km when the price of crude is about $65/b. however, due to higher cost of FCEVs and weak hydrogen refueling service network, the center can only target to supply public transport vehicles, the senior official said.

S&P Global Platts valued Japanese hydrogen SMR without CCS, include capital expenditure, at $5.72/kg Nov. 8, and Japanese hydrogen PEM electrolysis at $8.19/kg.

FCEVs, powered by hydrogen, have significantly improved energy efficiency than conventional internal combustion engines or ICE vehicles powered by diesel and petroleum, and produce no exhaust emissions except for water vapors. FCEV plays a crucial role in decarbonizing China's transportation sector, which accounts for 7.5% of the nation's CO2 emissions, only behind China's power & heat sector (42%) and industrial sector (23%), official data showed.

Sinopec is the world's top refiner by capacity, while its subsidiary Sinopec Marketing holds the biggest domestic transportation fuel sale network with over 30,716 of retail stations.

These provide leading infrastructure to the company to become China's top hydrogen supplier.

Sinopec's CO2 emission

According to Jiang, the oil giant's annual carbon emission is about 150 million mt, while Sinopec Marketing's CO2 emission was about 2.2 million mt in 2020. Sinopec aims to meet net zero emissions by 2025, with about 40-70 million mt of CO2 emissions by that point in time, Jiang said.

Carbon emissions from fuels sold by Sinopec Marketing is currently over 500 million mt, accounting for 50% of China's CO2 emissions in the transportation sector.

"Building hydrogen service stations to supply clean energy is one of Sinopec's efforts to reduce carbon emissions," Jiang said.

Sinopec targeted to build 1,000 hydrogen refiling stations during the 14th five-year plan period [2021-2025] with the overall refilling service capacity to reach 200,000 mt/year, Platts reported earlier.

By end September, Sinopec had already equipped 31 stations with hydrogen refilling capacities, and established over 600 solar power projects, Jiang said, adding that the company targets to have 7,000 solar power plants by 2025.

Electricity is the main energy source for Sinopec Marketing, making it necessary to develop wind power and solar power to adjust the company's energy consumption mix for cutting emissions.

Sinopec Marketing expects 10,000–30,000 retail outlets with hydrogen refilling services would be required to meet demand in 2030 when registered FCEVs amount to 30 million units, Jiang said.

The company estimated that 30,000 integrated retail stations that are able to supply electricity and offer hydrogen refilling in addition to petroleum and gas will help to reduce more than 500 million mt of CO2 emissions from gasoline, gasoil, accounting for over 40% of carbon emissions from the transportation sector, Jiang said.

Green hydrogen

Jiang also said that four green hydrogen production projects were in the pipeline -- the 20,000 mt/year solar-based hydrogen production in Kuqa, Xinjiang, 10,000 mt/year of wind and solar-based hydrogen production in Ordos, Inner Mongolia, 100,000 mt/year of renewables-based hydrogen production in Ulanqab, Inner Mongolia, and 10,000 mt/year of offshore wind based hydrogen production in Zhangzhou, Fujian.

Sinopec announced Nov. 4 that it had launched and put into use a new proton exchange membrane (PEM) hydrogen production demonstration station in its affiliated Yanshan Petrochemical, which fully adopted domestic technology.

Yanshan Petrochemical has a 2,000 cu m/hour hydrogen purifying unit which was launched in March 2020 and the production amounted to 130 mt as of mid October.

The plant targets to supply hydrogen to Beijing and the neighboring Heibei province, including four Sinopec's retail stations that will cater to the upcoming Winter Olympic Games.

In additional to Yanshan, six Sinopec plants, including Gaoqiao, Shanghai and Guangzhou, have installed hydrogen purifying units for producing hydrogen fuel instead of the typical hydrogen used for removing sulfur in the refining industry.

Yanshan and Guangzhou's hydrogen fuel production will reach 200 mt each this year, Jiang said, adding that Sinopec plans to install five to eight more hydrogen purifying units to produce hydrogen fuel.

Sinopec plans to invest $4.6 billion in hydrogen through 2021-2025, aiming to boost green hydrogen production capacity to 500,000 mt/year by 2025. Platts reported earlier.

With 5.98 million b/d of primary refining capacity, Sinopec's hydrogen production capacity from its refining processes was 3.9 million mt/year, accounting for 11% of China's hydrogen output, the company said earlier this year.