Last week, at the International Carbon Neutrality Expo in Shanghai, many scale models were presented that allowed experts to form a preliminary idea of how China intends to use hydrogen energy.

At the mentioned event, the latest technologies and developments of municipal authorities were demonstrated, which are currently striving for a green future, providing for large-scale application of alternative energy sources concerning traditional ones. Some of these exhibits function through the use of hydrogen fuel.

Lu Yufei, vice-president of Shanghai CEO of Environmental Protection Technology, says that last year only a few hydrogen-related companies took part in the exhibition, and most of them just discussed concepts. This year, the mentioned firms presented real products and detailed solutions. Environmental Protection Technology specializes in the production of sewage and exhaust gas purification equipment.

Dozens of hydrogen companies took part in the exhibition. Last year, this figure was less than 10 firms. More than 20 of the mentioned dozens of hydrogen companies are based in Lingan вistrict, Shanghai. The specified district is home to a Gigafactory owned by US automaker Tesla.

The Shanghai exhibition was a kind of demonstration of China’s ambitions in the hydrogen industry. The most abundant element in the universe, according to the researchers, generates significant opportunities. China is striving to become a world leader in the area of hydrogen production. It is expected that the active use of this element will allow the Asian country to ensure carbon neutrality and reduce dependence on energy imports. Beijing also considers hydrogen as a pillar of economic growth.

Hydrogen, which does not emit carbon dioxide during burning, can be used to generate electricity, and heat, and decarbonize such segments of industry as cement and steel. The International Energy Agency predicts that to limit global temperature increases to 1.5 degrees Celsius, the world needs at least 430 million tons of hydrogen per year by 2050, compared with 95 million tons in 2022. This necessity generates significant business opportunities. In the future, based on hydrogen fuel, millions of jobs will be created around the world. Beijing is aware of this prospect and its realism, which is confirmed by the exhibition held last week in Shanghai.

In March, hydrogen was mentioned for the first time in the Chinese government’s annual work report and listed as a cutting-edge industry, the deployment of which will be accelerated. Two years ago, Beijing officially announced its intentions in the relevant direction. In 2022, the Chinese leadership unveiled its first national strategy for the use of hydrogen, the implementation process of which will be carried out until 2035. This strategy provides that by 2025, at least 50,000 hydrogen-powered vehicles will be deployed. This is not the only item on the list of goals. Beijing also intends to produce 100,000 to 200,000 tons of green hydrogen annually as part of the specified strategy.

Jenhao Han, managing director of Asia at Hy24, a Paris-based global investment firm exclusively focused on the hydrogen industry, says that China is probably showing the most intense aspirations in the relevant sphere of activity. In this case, it means Beijing’s efforts aimed at popularizing hydrogen and developing a hydrogen economy.

In April, at a forum in Beijing, Ouyang Minggao, a Tsinghua University professor, said that China has significant advantages in becoming a leader in the manufacturing of green hydrogen-related products and equipment such as electrolyzers, fuel cells, and fuel cell vehicles. The prospects of the Asian country related to ammonia and methanol, two hydrogen carriers, are also positive.

Ouyang Minggao called hydrogen the fourth pillar of China’s economic system. The Asian country has already been able to achieve success in the production of solar panels, electric vehicles, and lithium-ion batteries, which exports last year amounted to 1 trillion yuan ($138 billion), providing 5.2% growth in the gross domestic product of the GDP of the state. Hydrogen is also likely to contribute to China’s GDP.

Green hydrogen produced using renewable energy sources can solve the problem of excess solar and wind capacity in the Asian country. Last year, China increased its renewable energy capacity by a record 301 gigawatts. This figure is almost 60% of the global total. At the same time, China’s power infrastructure was not able to consume most of the power generated.

Yao Zhe, a Beijing-based global policy analyst at Greenpeace East Asia, says green hydrogen projects can help absorb some of the renewable power. In this case, it means power produced in northwest China, where most large-scale wind and solar projects are based, but at the same time, there is a low level of demand.

It is worth noting that the ambitions associated with the large-scale use of hydrogen are also typical for the United States, the countries of the Middle East, and the European Union. The International Renewable Energy Agency predicts that a race for technological leadership in the hydrogen area will begin during the current decade. Also, within the framework of relevant expectations, it is possible that the mentioned process may change the geopolitics of energy relations.

Jenhao Han says that the mismatch between the regions where there is demand for hydrogen and the regions that can supply it means that, most likely, no one country will dominate the entire chain. The expert also noted that China has both production opportunities and demand.

Li Jing, a partner at KPMG, says that in the context of the mentioned prospects, the Asian country has no guarantees of success, but it has the potential to dominate the production of electrolyzers and fuel cells.

The main advantage of China’s hydrogen sector is government support. Aaron Fleming, co-head of the energy and natural resources industry group for Asia-Pacific at Natixis, says that if Beijing sets a clear and strong goal, the result will be achieved.

To boost the development of the hydrogen supply chain, the central government of China ordered different cities to form clusters and offered a bonus of 1.7 billion yuan.

Backed by the authorities, the China Hydrogen Alliance industrial group plans to increase the installed capacity of electrolyzers to 100 gigawatts by 2030. Achieving this goal means the ability to produce about 7.7 million tons of green hydrogen per year.

The oil giant China Petroleum and Chemical Corporation (Sinopec) intends to annually produce 120,000 tons of green hydrogen per year. This goal is expected to be achieved by the end of next year.

As we have reported earlier, China’s Central Bank Leaves Key Rate Unchanged.