In 2024, the Chinese government is more active in issuing hydrogen energy policies. The annual top-level planning by the central government has frequently mentioned hydrogen energy, with the national-level hydrogen energy policies from January to April surpassing half of those in 2023. Across the country, 22 provinces have included hydrogen energy in their annual main tasks, highlighting green hydrogen and hydrogen fuel vehicles (FCVs) as key development directions.
Restrictions on green hydrogen production are gradually being eased. By the end of April 2024, nine provinces/regions in China have permitted hydrogen production and refueling stations outside chemical industrial parks. Some regions have even explicitly stated that hazardous chemical permits are not required for green hydrogen production, which helps reduce hydrogen transportation costs.
Shandong and Sichuan provinces are at the forefront of exempting hydrogen vehicles from highway tolls. For example, Shandong exempts a 49-tonne hydrogen-powered heavy-duty truck from tolls. Provided the hydrogen pump price does not exceed 35 yuan/kg, the toll exemption would make the hydrogen truck more economically efficient than traditional diesel heavy trucks and pure electric heavy trucks, even without purchase subsidies.
However, current hydrogen prices render hydrogen energy economically unviable for end-use applications. To compete purely on fuel costs over the entire lifecycle of a 49-tonne heavy truck, hydrogen fuel prices would need to drop by at least 50% compared to diesel heavy trucks.
Focus on Hydrogen Energy Industrialization
China has been strategically developing the hydrogen energy industrial chain across production, storage, transportation, refueling, and application segments. In 2023, China's hydrogen production is about 35.33 million tonnes/year, accounting for over one-third of the global output. Driven by energy transition and industrial development, the hydrogen energy industry urgently needs to transit from isolated segment progress to an integrated industrial chain to achieve commercialization.
Unlike previous years that focused on specific tasks as well as medium- and long-term planning, this year places a strong emphasis on the industrialization of hydrogen energy.
9 Regions Permit Hydrogen Production Outside Chemical Industrial Parks
By April 2024, nine provinces/regions in China, including Hainan, Inner Mongolia, Anhui, Sichuan, Xinjiang, Guangdong, Hebei, Jilin, and Dadong District of Shenyang in Liaoning Province, have allowed hydrogen production and refueling stations outside chemical industrial parks. Some regions have even waived the need for hazardous chemical permits for hydrogen production. These moves will help reduce the costs for hydrogen storage and transportation. These costs currently constitute about 30%-40% of the total cost for hydrogen end-use applications.
Hydrogen refueling stations in China primarily rely on external hydrogen supply via tube trailers. Pipeline transmission is restricted by both capacity and distance. Therefore, there is a spatial mismatch between hydrogen production and consumption that is difficult to resolve.
Hydrogen Vehicles More Economically Viable with Toll Exemptions
Local governments are introducing innovate measures to support the adoption of hydrogen fuel cell vehicles, extending subsidies from vehicle purchase and infrastructure construction sectors to vehicle usage.
Since March 1, 2024, Shandong has exempted hydrogen-powered vehicles from highway tolls. Preliminary assessments suggest that a 49-tonne hydrogen heavy-duty truck with toll exemptions and hydrogen pump price below 35 yuan/kg, would be more economically viable than traditional diesel and pure electric heavy trucks, even without purchase subsidies. However, without fuel subsidies, hydrogen pump prices exceeding 60 yuan/kg could impede viability.
For a 49-tonne heavy truck to compete on fuel costs alone throughout its lifecycle, hydrogen fuel prices would need to fall to around 30 yuan/kg and 20 yuan/kg to rival diesel and electricity trucks, respectively. In 2023, the national average hydrogen prices were around 34 yuan/kg for production and yuan 57.7 yuan/kg for consumption.
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Edited by Aggie Hu, huchenying@mysteel.com
