China’s Strategic Embrace of Green Hydrogen: A Catalyst for Emission Reduction and Energy Security

To achieve substantial reductions in carbon emissions and ensure energy security, China must pivot toward the widespread use of green hydrogen, according to assessments from think tanks. The CNPC Economics and Technology Research Institute, affiliated with China National Petroleum Corp., underscores the pivotal role of green hydrogen—produced through water electrolysis using renewable energy sources—in revolutionizing sectors crucial for decarbonization.

Wu Mouyuan, Vice President of the institute, highlights hydrogen’s significance in decarbonizing challenging sectors like heavy industry, aviation, and long-haul transportation, where direct electrification is complex. By serving as a clean alternative to traditional fossil fuels, hydrogen not only mitigates carbon emissions but also plays a vital role in consuming and storing renewable energy.

Currently, hydrogen production primarily relies on carbon and natural gas, resulting in significant carbon emissions (“gray hydrogen”). China’s transition involves the promotion of “blue hydrogen,” where carbon emissions are captured, stored, or reused. The institute predicts a soaring demand for hydrogen in the coming decades, projecting China to become the world’s largest producer and consumer, surpassing 36 million metric tons in 2023.

China’s heavy reliance on oil and natural gas imports, constituting 71.2% and 40.2%, respectively, makes hydrogen adoption a strategic move, reducing dependence on conventional fossil fuels. Global consultancy Accenture notes that local authorities in China are aligning policies to harness emerging opportunities in the hydrogen sector.

Provinces are formulating plans to develop green h2, leveraging regional conditions or creating industry clusters to cover the entire value chain. China’s 2021-35 plan outlines ambitious targets, including 50,000 hydrogen-fueled vehicles and hydrogen fueling stations by 2025, and annual production of 100,000-200,000 tons of green hydrogen. Domestic companies like China Petroleum and Chemical Corp and State Power Investment Corp are investing billions in scaling up hydrogen production and addressing challenges related to renewable power intermittence.

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China’s role as the world’s largest hydrogen producer, coupled with decreasing production costs and technological breakthroughs, positions it for substantial growth in the green hydrogen sector. However, Accenture advises industry players to consider uncertainties in demand, infrastructure, technology, and policy as the sector evolves.

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