China’s hydrogen policymaking has been through a historical period in the past months in 2020.
More than 30 new policies were released by central and local governments for advancing the hydrogen energy agenda.
We have the following summary of the Chinese provincial government’s hydrogen energy strategies.
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Active Hydrogen Policy Moves in 2020
The Coronavirus outbreak and China’s growing confrontation with the US have not interrupted the country’s “hydrogen hype” in 2020.
If anything, Chinese governments—both on central and regional levels—show more serious commitments on hydrogen development.
The clear evidence is the significant number of policies and government-led programs this year regarding hydrogen and fuel cell vehicle (FCV) development in the past months.
In the first half of 2020, central and local governments collectively announced 37 policies related to the “hydrogen economy.”A majority of these policies comes from local rulers, who are even more eager now to seek new “sweet spots” to stimulate local GDP growth.
However, Beijing has taken action, too. The central government has introduced a reward-based scheme to push hydrogen demonstrations in the regional level. Although the long-term effect of the scheme remain skeptical, some regional government have introduced new hydrogen policies, as triggered by the national funding promises.
[Check our full review of the subsidy/reward scheme design and comments.]
We saw some new trends in China’s hydrogen policymaking in 2020:
- Hydrogen Hype Spread Across the Country: it used to be a “game” for China’s eastern, coastal, and more prosperous regions. But now various inland provinces have joined easterners’ footsteps.
- FCV-Oriented to Multi-Dimension Policymaking: most of China’s hydrogen policy efforts in 2019 were oriented in fostering FCV and fuel-cell supply chain— they still are the front focus. But we saw some policies introduced in 2020 that bring new edges—such as renewable-to-gas, energy storage, and hydrogen-to-chemicals.
- Led by the locals, But Beijing Quickens Steps: From the very beginning, the regional governments are the leading forces of China’s hydrogen policy development, while central-government remains relatively slow and indecisive of its overall strategy in 2019. But Beijing is now quickening steps in laying down a national strategy, which we expect to be done this year.
Provincial Hydrogen Policies: Status Quo
According to our estimation, 15 provinces in China have announced economy, energy, or automotive-related policies with hydrogen-supporting scopes. (up till 2020/08)
Of the fifteen, six by now released policies addressing hydrogen energy specifically. The five are Shandong, Guangdong, Hebei, Tianjin, and Ningxia.
Most of these hydrogen-specific strategies are unleashed this year.
Some of the local pioneers in promoting hydrogen—Shanghai, Jiangsu, and Beijing—have not introduced specific hydrogen plans. But that does not mean a change of enthusiasm. Instead, most remain active in promoting the hydrogen value chain by launching industry-focused demonstration projects.
[Read our older review of China’s provincial hydrogen development and subsidy packages.]
A new player raising fast is Shandong. The later comer unleashed at least six hydrogen-related polices in the first half of 2020. The eastern coastal province is trying to catch up with its peers in several new energy sectors—besides hydrogen, offshore wind is another industry.
Strategies of Six Leading Areas
Shandong: Highest-Level Hydrogen Strategy
The eastern province last year has written down a mid-to-long-term plan (2023-2035) for hydrogen energy development. The move makes it the first and, right now, the only province in China that has a hydrogen policy announced by the top administrator.
In 2020 it shows determination to double down on its hydrogen bet. It renewed the mid-to-long term plan with more detailed targets and included hydrogen in several of its economy stimulation policy packages.
[Check our full summary of the 2020 plan here.] [山东省氢能产业中长期发展规划]
Notably, the province is the first among peers to launch a floating offshore wind based power-to-gas project, with an unheard-of capacity of 5GW.
Targets: 2022 to build up 30 refueling stations; 2025 with100 refueling stations and10,000 FCVs in operation; 2030 with 200 refueling stations and 50,000 FCVs.
Focused Area: Jinan—set to be China’s “hydrogen valley”; Qingdao—aimed to become the “eastern hydrogen island;” Weifang and Yantai region the offshore wind market.
Guangdong: Hydrogen for the “Bay Area”
The southern province—China’s manufacturing hub and a key economy center—did not launch its provincial-level hydrogen strategy yet. But a draft looking into 2025 has been released to invite comments.
[Check our summary of the draft.] [广东：到2025年，全省要建成加氢站约90个]
Meanwhile, it also has an even “larger” or more ambitious plan reserved. Lately, the province is trying to promote the concept of “Pan Canton-Macau-Hong Kong Hydrogen Demonstrative Region.” The concept resonates with Beijing’s intention to integrate economic activities between Guangdong and the two special administrative regions (SARs).
The province is also featured with active city-level policymaking efforts. Five cities have established hydrogen specific development plans so far.
Foshan has been the country’s first to embark on hydrogen programs and subsidy schemes. The city further advanced its hydrogen move this year, with an administration direct (Nanhai) delivered a mid-to-long-term economy plan dedicated to hydrogen development.
Moreover, competition among cities is on, as Guangzhou—the capital city—and Maoming set up their hydrogen plans and programs.
Target: 2025 to have 90 refuelling stations, with PDH a key gas source
Focused Areas: Foshan is still leading, but Guangzhou is catching up. Other cities keen on hydrogen include Shenzhen, Maoming, and Dongguan.
Hebei: Most Promising Power-to-Gas Market
The wind power rich province released a list of 43 hydrogen-related projects as the local government’s key work priorities in 2020.
[Check our summary of the provincial plan here.] [河北省氢能产业链集群化发展三年行动计划发布]
Focused Areas: Zhangjiakou is the hot spot, with 21 programs listed in the provincial priority task list. The city is a critical wind power production hub in China, supplying green power to nearby Beijing but still having plenty of spare capacity left. Thus, it is keen to advance wind-to-gas agenda to facilitate its wind power consumption, with already six green hydrogen projects announced—much more than other places in China.
Ningxia—Combining Hydrogen and Coal
As critical coal and coal-to-chemical producing region, Ningxia shows the intention to jump on the energy transition train by adding hydrogen into its equation.
The provincial hydrogen energy plan may look like with low ambition. But the plan stands out with its scope to combine green hydrogen—based on its abundant solar power— with the coal-to-chemical industry.
Ningxia is ahead in terms of hydrogen-to-chemical progress, with a demonstrative green hydrogen-to-chemical program already kicked off.
[Check our summary of the provincial plan.]
Target: 2025 to set up 1-2 refueling stations and 1-2 FCV bus lines.
Focused Areas: east of Ningxia (“Ning Dong”宁东) which includes capital city Yinchuan is the province’s key coal-to-chemical hub and is set to see most of the hydrogen value chain development.
Henan—Stimulated by Beijing’s Reward Scheme
The province is the most recent one to announce a provincial-level fuel cell development plan. Its hydrogen planning is clearly a response to Beijing’s new decision to select several cities as the hydrogen demonstrative regions–with national finance providing rewards.
Henan’s planning sets clear targets to secure spots in the demonstrative scheme.
[Check our summary of the policy here] [河南省氢燃料电池产业发展行动方案发布]
Target: 2023 to have 5 cities becoming national FCV demo regions, with 60 FCV bus lines, 3000FCVs and 50 refuelling stations in operation; 2025 to have 5000 FCVs, 80 refueling stations in operation.
Tianjin—A Small Step Forward
The provincial-level city took its first step this year by announcing a short-term plan (2020-2022) for hydrogen development.
Target: 2022 to build up 2 stationary fuel-cell based combined heating and power (CHP) plants, 10 refueling stations, 3 FCV application demo zones, and 3 FCV bus lines in operation.
Hydrogen Policy Focus: from FCV to Infrastructure and Green
The five are not alone in promoting hydrogen. Shanghai, Zhejiang, and Hainan provinces also announced different policies related to the heated industry.
The other ten provinces with provincial-level policies related to hydrogen include:
- Jiangxi (New Energy Industry Development Plan),
- Zhejiang (Automotive Consumption Promotion Plan),
- Hainan, Sichuan, Shanxi, Beijing, and Chongqing (New Energy Vehicle Development Plans)
- Henan (FCV Industry Development Plan)
- Shanghai (FCV Development Plan & Economic Zone Development Plan)
- Zhejiang (Manufacturing Industry Development Plan)
These policies show that FCV and fuel cell technology remain the key factor in the local government’s desire to push for hydrogen development.
However, we expect new momentum from China’s “New Infrastructure” policy and “Internal Circulation” national strategy.
Hydrogen Infrastructure and Equipment a Future Focus
As the country seeks to stimulate capital spending on “new infrastructure,” which define hydrogen as one of the new energy sectors. We expect new policies centered on the hydrogen infrastructure building would emerge. The new cornerstones include gas storage, transportation, and refueling stations.
Governments would also look into technology development and equipment manufacturing related to the infrastructure building.
Green Hydrogen Could Come Earlier Than Expected
While traditional wisdom believes that green hydrogen is unlikely to be a key topic in China until at least 2025 (or later). This conclusion is based on a strict cost comparison between renewable-based hydrogen and that based on fossil fuel.
However, we like to point out that the shifting dynamics in China’s renewable power market may push the green hydrogen agenda faster than expected. Already several provincial and city-level hydrogen policies have touched up the importance of green hydrogen.
We expect that China’s zero-subsidy renewable market and overcapacity issue could spur new demonstrations in that direction.
